South Haven is a small town on Lake Michigan in the western part of the state. It has long been a tourist destination, and short-term rental websites have made it easier for tourists to visit and for owners to rent their properties. But short-term rentals are divisive, with some residents fighting to ban them in many parts of the city.
In 2018, the city enacted a local ordinance that requires short-term rentals to be registered and subject to annual inspections. The ordinance also requires rental property owners to have a local property manager or live near the property themselves. Today, there are 550 registered short-term rentals in South Haven.
“The prescription works wonderfully. There are less than ten complaints a year, and if you actually read the complaints, they are about residents, not renters,” Ryan Servatius, a property manager, told Michigan Capitol Confidential. “It’s sad because the city has become very divided. Some buyers have decided not to buy a home in South Haven because they read our chat lines and don’t want to move to such a divided city.
Servatius manages 23 short-term rental units in South Haven, where he lives. Servais said short-term rentals allow tourism and its related industries, such as cleaning services, to thrive. According to rental platform Airbnb, Michigan property owners have collectively earned more than $660 million in rental income. State governments as well as business interests regularly promote Michigan as a place to welcome tourists.
During the Great Recession, Servatius saw people using short-term rentals as a way to stay afloat. They would use the rent to pay off mortgages and keep their homes.
“Short-term rentals don’t harm the neighborhood. In fact, they make it better,” Servatius said. “Otherwise these houses would remain empty for eleven months of the year, which leads to crime. But whether it’s a family or a couple staying there, these homes get used to being rented out.
The city mishandled the issue by allowing members of the group known as Neighborhoods Need Neighbors to hijack city council meetings, Servatius said. The group is vocal and has publicly insulted owners of short-term rentals.
“They say they’re not anti-rental, but want balance,” Servatius said. “The problem is that their balance is what they think is right, and we already have a cap on short-term rentals in the city of South Haven based on around 583, which we’ve never reached. We have less short-term rentals now than in 2018 when we launched the rental ordinance The idea of limiting property rights even further means placing a deed restriction on each owner’s property within the limits of the city, which hurts values and takes away the constitutional rights that property owners have worked hard to achieve in this country.
Neighborhoods Need Neighbors posted over 300 signs around South Haven, each bearing their name.
Todd Heinrich, a member of the group, said it was an activist organization whose aim was to limit the negative economic and social impacts of short-term rentals. The group hired an attorney to ask the city for an ordinance limiting short-term rentals. Heinrich says people have had trouble with parties at nearby rental units. Clubs and churches, he told CapCon, are experiencing a major loss of members, and short-term rentals have driven up house prices, which has kept new residents from moving to South Haven.
“My wife is a doctor and she can’t find a new doctor willing to move here for her practice, which has never been a problem before,” Heinrich said. “A house that used to cost $250,000 now costs $600,000. Even a family doctor cannot afford it.
David Veenstra, another member of Neighborhoods Need Neighbours, said he was not against short-term rentals but was concerned about their growing number.
“I am not opposed to short-term rentals, far from it. I think they can be positive by fixing the houses,” Veenstra said. “But they are competing with other buyers to raise house prices. When we have absentee owners who are unavailable or unresponsive to concerns, sometimes there are properties that turn into party houses.
The Michigan Legislature is considering bills that would prevent local governments from banning short-term rentals. This would still allow cities to enforce ordinances that serve to protect public health and safety and prevent nuisance.
Gary Walker was marketing and taking bookings for his short-term rental property. The city informed him in April that the housing inspection process had changed, which could jeopardize the renewal of his tenant certificate. He had already booked tenants for the summer.
“There is a housing shortage in South Haven. Small towns in Michigan lack the hotel infrastructure of other large coastal towns, and tourism is South Haven’s primary industry,” Walker said.
The city is enforcing new regulations on window sizes, Walker said, even though Michigan residential codes have many exceptions for older homes. Typically, people are only required to bring their home up to standard when renovating.
“They make their own rules which are not industry standards, which are not industry codes, and we are being fined for renting, even though we are already booked for the summer, until the window is fixed,” Walker said. Owning the property is part of his long-term retirement strategy, and he said changing city expectations are putting financial stress on his family. .
“The board doesn’t understand all of the long-term consequences of (restrictions) on short-term rentals,” Walker said.
The council commissioned a study on the effects of short-term rentals on the South Haven community. It is led by the Kercher Center for Social Research at Western Michigan University and the WE Upjohn Economic Institute.
Short-term rentals have existed in the city for more than 100 years, said South Haven City Manager Kate Hosier. At city council meetings, opponents of the lease claimed that the community would lose its character and that there would not be enough volunteers for the city government or enough children in the school system.
“Both sides are very passionate about their views, and some are very committed to making sure the regulations are followed to the letter,” Hosier said. “It can be a polarizing conversation.”