Letter to City Council: Regulating Short-term Rentals

Hi Mayor & Council,

The best way forward right now would be to remove the non-owner-occupied STR ban from the existing proposed ordinance, pass the rest of it and revisit it in a year or so. This will push many of the worse actors out, improve the behavior of remaining operators, give us tools for accountability and will allow us to make better informed decisions in the future.

I support the need to regulate STRs and the proposed ordinance has a number of positive features that I hope we will implement. However, I think we can get the majority of the benefit of the ordinance without the full (non-occupied) residential ban. Including it will likely lead to worse outcomes.

I agree with comments by CM Grand that much of the classist, anti-renter and anti-student language used by the STR landlords last night casts them in an unsympathetic light; and I don't think we need to prioritize the needs of real estate investors over our needs to house people. But I also think grandfathering existing STRs in at this point would be the worst possible outcome from this process for everyone except these land-rush investors.

Grandfathering existing STRs will be granting current operators a perpetual entitlement on existing properties. This will freeze in place the right to operate STRs only on properties where it exists now and lock out all competition. This will inflate these property values even higher and ensure they remain STRs longer than they might otherwise. Also, because we have no clear data, we will inevitably force staff to sort out claims of who is a "real" STR operator, who is not and what the criteria are to make such a determination. Given the potentially very high value of getting a guaranteed monopoly on the ability to operate an STR on a property, I would expect a number of property owners to attempt to game this system in a land rush to secure this entitlement. This would be an incredibly contentious, possibly litigious process for staff.

I also suspect the operators' threatened lawsuit is credible. I take them at their word that they're not "backed" by AirBNB but if their case is strong and, especially if it has the chance to set a statewide precedent beneficial to AirBNB, AirBNB will almost certainly intervene when it comes to court and drive up the cost of litigation. This also risks inviting AirBNB to lobby harder in Lansing with the current anti-regulation, GOP-controlled legislature to curtail the proposed ordinance entirely via state law.

My suggestion to get the ordinance passed without a legal challenge (or inviting State-level meddling) is to remove the ban on non-owner occupied STRs but keep the rest of the ordinance. The requirements for registration, permitting, inspection and fees will drive out some of the worst operators who are already skirting rental inspection laws and give us additional mechanisms to penalize bad actors. It will also make it easier to hold existing operators accountable. Removing the ban will also avoid the "land rush" of potential operators trying to get in before the grandfathering window closes. Most importantly, registration will give us data about the real impact of these operations in the City so we can make better decisions going forward. If it turns out we do need to enact a residential ban after all, and the only way we can do that without legal liability is to grandfather, we will have an existing registry so we will know exactly who is in and out.

Finally, on the affordable housing front, while it is refreshing to hear density skeptics finally acknowledge that supply is a factor in housing affordability and 100 units is not nothing:

1. as CM Grand pointed out, most of these properties will be market rate and not cheap; and

2. this is a one time shot of 100 units; we can build 100 new units a month if we want to (from 1994-2004 the County built on average ~200 units of housing a month)

There is no ongoing or compounding benefit to supply like there would be for newly added housing and we will be negatively impacting a large number of guests in our community, including people with long term hospital stays, visiting scholars, people house hunting or temporarily between homes in our tight supply, people whose older homes are undergoing renovations, etc.

Let's get the majority of the benefit with the minimum of risk, and put ourselves in a position to make a better informed decision later.

Scott Trudeau
Ward 1

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