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Lawmakers consider additional 6% tax on short-term rentals

As Northern Michigan continues to grapple with year-round housing and worker shortages, lawmakers in Lansing are considering legislation they say would allow local communities to better regulate short-term rentals and collect more revenue.

Housing advocates say year-round residents have fewer housing options and can often be priced out of home ownership entirely in areas with high numbers of short-term rentals.

“As those folks have less and less ability to live in our communities, we’re seeing our restaurants and businesses become increasingly seasonal, which then increasingly makes it a less desirable place for permanent residents to live,” said Rep. Joey Andrews, D-St. Joseph.


The legislation considered in a House committee this week would establish an additional 6% tax on the booking price of a rental that goes almost entirely to local governments. Rental owners would be allowed to pass this cost onto renters if they disclose it clearly in the property’s pricing.

Officials from tourist-heavy Michigan towns also spoke in support of the package. Helen Baldwin, mayor pro-tem of Saugatuck, said the additional revenue would help support local government operations.

“An excise tax on short-term rental bookings will provide a much needed revenue source to allow the city to create, maintain, and improve the very features that tourists come to Saugatuck to enjoy,” she said.

The tax would be imposed in addition to the state’s current 6% lodging tax and would not apply to properties rented out for less than 15 days a year, or to the same tenant continuously for more than a month.


“The creation of a 6% excise tax on this legislation is representative of our communities needing some ability to recover from this tourism activity, and reinvest in our communities,” Andrews added. “For a lot of our communities, this is going to be money that’s going to go into infrastructure and public safety.

The package would also establish additional regulations on the obligations rental owners have to their properties. Owners would have to provide renters with their emergency contact, fire escape plans and working smoke and carbon monoxide detectors.

Owners would have to verify with the state that an emergency contact lives within 30 miles of the property and that they have a liability insurance plan of at least $1 million.

The legislation would also prohibit local communities from banning short-term rentals outright, but they would still be able to regulate the number of units allowed to serve as short-term rentals and impose other zoning restrictions.


Jaclyn Terway, the government affairs manager for Expedia and VRBO, spoke against the legislation.

“The policies proposed by [the package] would be amongst the most onerous and complex in the nation, setting unduly burdensome standards for compliance, while requiring state and local governments to build and maintain expensive, complicated regulatory structures across the state,” she said. “It’s the state level response to an intensely local set of issues.”

The bills were not advanced, meaning additional testimony and changes could be made before being voted on.

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