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To Airbnb or not to be? Committee discusses amending short-term rental restrictions

March 1, 2019 GMT

Short-term rentals have gained popularity in many vacation communities through websites like Airbnb, VRBO and HomeAway, which collect fees for connecting property owners with renters. These let homeowners rent out rooms in their houses — or their entire houses — to vacationers looking to stay somewhere other than in a hotel or other traditional rental units.

Officially, Ludington’s City Code, which applies everywhere within city limits, restricts rental stays of less than 28 days to only be allowed in hotels, motels, bed and breakfasts, boutique hotels and condos.

Landlord Ryan Reed is asking the city to amend the existing ordinance in order to make the Downtown Development Authority district exempt from it, so that downtown property owners could short-term rent their spaces without those restrictions.

Reed owns the historic, former Odd Fellows Lodge at 115 W. Ludington Ave. The building houses My Sister’s Closet in the ground floor retail space, and two studio apartments on the upper floor. Reed lives in one of the apartments, and in recent years he has rented the other to a long-term tenant, although she isn’t renting currently. When he doesn’t have a tenant there, he wants to be able to rent that spare apartment on a short-term basis using Airbnb.

Reed’s property is ineligible to become a boutique hotel because he doesn’t have the minimum amount of rental units required — four — and converting his property into a condo isn’t financially feasible for him.

“All I’m asking as a member of our community is an equal opportunity to participate in the vacation rental economy in town,” Reed told the Daily News.

Reed has been in conversations with city officials since August about the short-term rentals issue, and most recently, he presented his case during the Ludington Building and Licenses Committee meeting Thursday.

In preparation for the meeting, Reed had gathered 41 signatures for a petition to amend the ordinance to allow for short-term rentals. Most of the signers were business owners or managers and property owners downtown, he said. The petition they signed stated that the restrictions on short-term rentals are preventing their businesses from reaching full economic potential.

“It seems wildly preposterous that this ordinance, the way that it exists, is in any way, shape or form ... serving the interests of all of these businesses,” Reed told the committee. “The more people that we can attract to our town, that we can lay out the welcome mat for, the better.”

Traditional rentals are typically booked to full occupancy anyway during the busy summer season and holidays, Reed said, so permitting Airbnb-style rentals would only allow more tourists to visit the city.

“The vast majority of our traditional hotels and bed and breakfasts are doing such great business that there are ‘No Vacancy’ signs lit up all up and down the avenue, down Lake Shore Drive and everywhere else,” Reed said.

Councilor Angela Serna said that allowing short-term rentals downtown, such as through Airbnb, could bring more visitors to the city, she reasoned, since they’d be centrally located and would have more of a “home-away-from-home” feel than a “tiny hotel” room would.

“If I didn’t live here and wanted to come visit Ludington, I would want an Airbnb apartment in the downtown area,” she said.

Councilor Kathy Winczewski, who chairs Building and Licenses and is also a landlord herself in Ludington, said she’s open to the idea of allowing short-term rentals, so long as the rental owners are also residents at the same property.

“Personally, I’ve been studying this for awhile. I think the home-sharing idea is good, when the homeowner is in the area,” she said.

Winczewski said committees had previously been thinking about the short-term rental issue in regard to how it could impact residential areas, but now they should evaluate it as a separate issue in the downtown.

“That seems more reasonable to me, to split the downtown and look at neighborhoods as a separate identity,” she said.

After much discussion, the Building and Licenses members eventually advanced the issue to the next step in the review process by recommending the Planning Commission on March 6 evaluate two separate possibilities — allowing short-term rentals only in the downtown, or allowing them in residential areas.

After the meeting, Councilor Joe Lenius told the Daily News the city needs to address the issue of short-term rentals, since it will only grow in the future. He said he doesn’t want “party house” short-term rentals next to residences.

“I’m concerned about opening this up for anybody to do this,” he said. “I want it controlled.”

Speaking as the former owner of Nader’s Motel & Suites for 29 years, Lenius acknowledged that short-term rentals, like through Airbnb, would create more competition for traditional vacation rentals, including Nader’s, which his daughter now owns. Lenius added that he’d want short-term rentals to be members of the Ludington Area Convention & Visitors Bureau, so they’d have to pay the same 5 percent dues that member businesses pay for promotion of the Ludington area.

“The motels are paying their 5 percent into the convention and visitors bureau, while the Airbnbs are getting a free ride,” Lenius said.