MUSKEGON, MI - The city of Muskegon officially passed a short-term rental ordinance, setting a cap on how many of this property type can exist in the city.
The ordinance will go into effect on Nov. 8, simultaneously ending the current moratorium on new STR licenses.
The new short-term rental ordinance defines the property type as “a property in which a tenant is allowed to lease the dwelling unit, without a host, for periods of less than 28 days but more than 24 hours” and limits STRs to be only 4% of the housing stock of each given section of the city, according to U.S. census tracts.
The ordinance also includes a new feature: one-time transferability of current STR licenses with sale.
This would not apply to future STR license holders and only applies to those STR owners in a zone currently above the cap - which is just Beachwood-Bluffton. A neighborhood along Lake Michigan, Beachwood-Bluffton is located south of the Muskegon channel between Muskegon Lake and Lake Michigan.
The notion of transferability became a concern for STR owners when the caps were proposed and, without the option of transferability, owners feared they would lose value in their property if they couldn’t sell it as an STR.
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There are a total of 232 registered short-term rental units in Muskegon comprised out of 190 different structures, since some buildings contain multiple units. Currently, the neighborhoods with the most short-term rentals are Beachwood-Bluffton, with 76 total, and Lakeside/West Glenside, with 81.
Beachwood-Bluffton has a total of 861 units, making the number of short-term rentals at about 9% of the total housing amount. Those areas that are over their 4% limit will not be able to take in any new short-term rentals.
Under the proposed new ordinance, areas within the Downtown Development Authority and Lakeside Business Improvement District/Corridor Improvement Authority boundaries are exempt from the cap on the number of units, meaning there would be no limit to the number of short-term rentals in those areas.
The majority of resident feedback on the issue - both positive and negative - has come from the Beachwood-Bluffton neighborhood.
Mayor Ken Johnson explained during Tuesday night’s commission meeting that the conversation on establishing the ordinance first came “in response to concerns I had heard predominantly coming from the Beachwood-Bluffton neighborhood.”
“That‘s where it is highly concentrated, that is where the quality of life was most affected,” Johnson said. “As we move that forward, and as I’ve examined this and considered this policy, it is with the entire city in mind.”
“The staff has done a fantastic job on engaging the community on this - holding forums, providing incident reports online, surveys online, meeting with short-term rental operators and owners, meeting with residents - taking that feedback and then crafting policy - and also engaging with us,” Johnson said. “I think they’ve done a fantastic job under difficult circumstances and brought forward something to us that we then looked at refining and trying to balance it to serve a multitude of interests.”
The ordinance passed by a 4-3 vote, with Commissioners Willie German, Rachel Gorman and Kristina Kochin, who represents the Beachwood-Bluffton neighborhood, voting no. Kochin took several minutes to state her vote during the roll call, expressing earlier in the meeting that she had not slept well worrying about this issue.
Commissioners Destinee Keener and Jay Kilgo said they received “almost threatening” calls and in-person comments from residents on this topic.
“Sometimes we have to make adjustments and go back to the drawing board, the great thing about being in a small city is, is that you come back to the drawing board if it does not work,” Keener said. “We simply did this so there would be housing for the multitude of unhoused people and the multitude of people who still want to live out and about on the lakeshore.”
STR owner Roberto Villate spoke at Tuesday’s meeting, saying that in his experience the property has served a “dual purpose.”
“I do summer rentals for people who want to come here during the summer,” Villate said. “In the off season, I almost always have somebody that‘s staying there as transitional housing or emergency housing ... so when we’re trying to solve the housing problem, I think the short-term rentals actually have a very important purpose here.”
Villate and some other STR owners have continually expressed their concerns with the caps and the issue of transferability.
“The changes being voted on today may destroy all of my efforts, literally 40 years of work,” Villate said, who owns several short- and long-term rentals, including the historic former Bluffton Church. “I’ve been a good neighbor, a good landlord, a good host. Not once has a neighbor voiced any complaints to me ... I truly believe that a few angry people have turned a mole hill into a mountain.”
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