By Scott Sullivan
Editor
Saugatuck short-term rental discussions may come to a head Thursday, Feb. 29, when city council weighs placing a 6-month moratorium on new rental licenses in the R-1 Residential district.
Council’s workshop last Wednesday brought a spirited crowd to debate the planning commission’s Feb. 15 recommendations.
What might change? Per the city:
• Instead of 3-year certificates, STRs will need an annual license with inspections.
• Regulations for accessory dwelling units (ADUs) are being updated for clarity.
• Occupancy limits: Each bedroom can have two occupants, with the potential for an additional two per floor (maximum 12).
• Visitor limits: Up to 1.5 times the maximum occupancy, allowed between 7 a.m. and 11 p.m.
• Advertising: All ads must include the license number.
• Noise Ordinance: Updated to provide clarity for the general public.
• Good Neighbor Guide: Coming soon, outlining expectations for noise, trash, parking, etc.
• Trash disposal: Specific requirements for garbage cans and recycling bins.
• Fireworks: STR owners must prohibit use by occupants and visitors.
• Rental insurance: Required for all STRs.
• Public registry: Includes owner info, contact details, address and occupancy limits.
• Existing certificates: Valid until expiration date, and subject to renewal under the new license requirements.
• Faster response: License holder/agent must address violations within two hours.
• False reporting: False reports about STRs will be a violation.
• Enforcement: More tools to identify violations and handle after-hour complaints.
Although no commercial district caps are proposed, others are in specific R-1 neighborhoods. Two 6-month moratorium options have been presented to council.
The first temporarily prohibits new STRs in R-1 districts, with exceptions for existing applications filed by a specified date.
Option two is similar, with additional provisions for properties actively listed for sale before a specified date.
Council may choose to adopt, modify or not act on either one.
Build Up
The city’s 2023 community survey identified STRs’ rapid growth as council’s top priority to address that year.
Saugatuck is not alone. Other communities — especially resort ones — across Lake Michigan and nationwide have recently weighed and/or instituted temporary permitting moratoriums while they eye retooling codes to address the increase.
Outcomes to date have been controversial, mixed and lie in beholders’ eyes.
Council appointed a 9-member STR task force last spring to assess community impacts, both positive and negative, then provide recommend how to revise Saugatuck’s STR regulations. McKenna, a statewide regional planning firm, was hired to consult with and assist them.
The city recognizes, said the group’s mission statement, that STRs can promote tourism and visitors, plus provide property owners valuable business opportunities; but, without appropriate regulation and enforcement, can create conflicts with adjacent properties, degrade neighborhoods’ residential character, impact long-term housing availability and create nuisance conditions.
The task force’s final report, released Sept. 27 last year, found:
• The city currently processes more 100 requests for STR certificates each year. Before 2020, the number was generally under 50.
• The rise in STR interest has coincided with the median sale price for homes in the city nearly doubling.
• The STR increase has been accompanied by a decrease in conventional rentals available in the city, whose median rent has nevertheless decreased.
• Revenues from short-term rentals here easily cover mortgage payments, despite increasing home values and interest rates. However, the gap is decreasing. See nearby graphic.
• Some evidence suggests that property owners are listing their homes as STRs instead of selling them when they leave Saugatuck.
• Owning a short-term rental in Saugatuck is far more lucrative than owning a conventional rental.
The planning commission went over it at sessions Oct. 19, Nov. 16 and Dec. 21, with members reaching consensus on several report suggestions.
For items identified as needing further clarity, a draft police-powers ordinance plus zoning and noise ordinance amendments were drawn up.
Reactions
Thursday’s agenda packet, released last Friday, includes 15 letters voicing views on the possible freeze. A sampling:
“To place a moratorium,” wrote Quaint Cottages owner Ethan Barde, “after all this work has been done so that you can look neighborhood by neighborhood and pick winners and losers is ridiculous and discriminatory.
“I am sure we will be able to tell what neighborhoods will be picked to not allow STRs or limit them by just correlating who is on zoning and council as we know this started with personal agendas and NOT what is best for the town of Saugatuck,” Barde said.
Tom Brown, who owns and manages an STR in a city neighborhood, supported a 6-month freeze. “I understand and agree with the need to ensure we don’t ruin the feeling of our neighborhoods with too many STRs,” Brown said.
Property-owning taxpayer Brian Elmore “vehemently” opposes imposing a moratorium absent an economic impact study of its potential outcomes and consequences.
“Without concrete data on the economic ramifications, proceeding with these measures would be reckless and irresponsible,” Elmore said.
Brett Locascio echoed that, adding, “I support having safe capacities by bedroom (including the additonal capacity by finished level) but having a max cap to the equation is unfair.”
Veteran local Realtor Liz Engel wrote, “I agree that a moratorium may be necessary to make sure all aspects of the city’s STR policies have been researched.
“At this time, we are still experiencing a shortage of residential homes in Saugatuck, so I do not feel a short moratorium would negatively impact home values,” Engel said.
“If you throw up the flare and enact the moratorium (which is a brilliant stroke to define a limited territory), the country will take notice,” advised resident Laura Godfrey. “You will activate a new set of constituents that will take another look and realize that Saugatuck has come to its senses.
“If you can’t, then let’s take the Saugatuck sign down, put up a beer can and slot machine, and throw in the towel.”
“We purchased a very-inflated value home,” wrote James Hannan, “in order to produce income and allow us to possibly purchase another home in Saugatuck in order to retire in Saugatuck.
“With the proposals in place, the value of our real estate and that of every homeowner will plummet — forcing properties into disrepair or foreclosure. This is not the vision we had for investing in real estate in this beautiful vacation community,” he said.
“There’s no true need for a moratorium,” wrote resident and Realtor Nico Leo, “unless your goal is to deprive homeowners of their private property rights.
“Implementing one would deprive full-time residents of the option to rent out their homes when needed, especially considering the recent 10-percent increase in property taxes over the last two years, which has particularly impacted retired residents.
“I urge you,” Leo went on, “to adopt sensible suggestions from the task force, as outlined in tonight’s packet, but refrain from imposing any form of moratorium or caps.”
Thirty-plus-year resident Philippe Maraval wrote he and his wife have friends in Charlevoix and Charleston who have claimed strict STR regulations have improved their communities.
“I completely agree with the recommendation to institute a residential STR license moratorium for 6 months until residential caps are agreed upon,” he said.
Resident Gary Medler wrote he supports the proposed moratorium and praised city efforts to study and articulate means to better manage STRs.
“As things stand today,” wrote resident and STR owner Brian Schipper, “I support the proposed 6-month moratorium.
“I believe that achieving the best outcome for the city requires residents to acknowledge that STRs are a source of economic vitality. It also requires STR owners, property managers and those who market these homes as prospective businesses appreciate the impact STRs have on the lives of residents who live nearby.
“I am happy to comply with the regulations expected of me as an STR owner. I would gladly comply with additional regulations that would ensure that those who stay in that STR are not negatively impacting my neighbors’ quality of life,” Schipper said.
“I am not opposed,” wrote resident John Thomas, “to STRs. I am opposed to letting them decide what life will be like for many of us going forward.
“I think that imposing a moratorium, and eventually a cap, are important steps we must take to ensure the qualities we have all valued most about Saugatuck over the years are not lost.”
Most letters, pro and con, voiced appreciation for the city’s diligence studying an important-but knotty issue. “Public input is encouraged,” the city emailed residents Friday. “Stay informed and participate in the process.”
Full documents are available online at saugatuckcity.com.
Will you report on what decisions were made at the City Council meeting?