This week on the GAD Top Three, we'll review the recent Grand Traverse County Commission study session in which they discussed the maximum income level for a tax abatement ahead of a Payment-in-Lieu of Taxes policy vote on January 17th. Second, Michigan REALTORS® seeks six items in a Michigan Statewide Septic Code as conversations on septic bills move forward. Lastly, we'll look at Wisconsin’s right-to-rent law for short-term rentals; could this be a potential model for statewide short-term rental policy in Michigan?
1. Grand Traverse County Discusses PILOT for Potential Enactment on Jan. 17th
The Grand Traverse County Commission Study Session held on Wednesday, January 10th has set the stage for the Grand Traverse County Commission to approve a PILOT (payment-in-lieu of taxes) policy to provide tax abatements for housing developments in Grand Traverse County. As outlined in the Traverse City Ticker this past Thursday, there seems to be consensus of County Commissioners on all but one requirement for a tax abatement, whether to set the maximum income level for tenants in a housing project at 100% of Area Median Income (AMI) or 120% of AMI. The majority of commissioners who spoke on this issue appeared to support the PILOT Policy (pages 4 and 5) increasing to a 120% maximum AMI to foster as much housing development as they can. The Grand Traverse County Commission requested that the PILOT Policy be drafted for their consideration and potential enactment to reflect both the 100% AMI maximum and the 120% AMI maximum for their next regular board of commissioners meeting, which will be held on Wednesday, January 17th at 9 am at the Grand Traverse Governmental Center, 2nd Floor Commission Chambers (400 Boardman Avenue, Traverse City, MI).
2. Statewide Septic Code Conversations Continuing to Move Forward Into 2024
Michigan REALTORS® has been working to support the formation of a statewide septic code since at least 2018 when they introduced Michigan House Bills 5752 and 5753 to make Michigan the 50th and final state to have uniform standards governing the design, construction, installation, and maintenance of septic systems. Currently, Michigan REALTORS® is taking part in a workgroup on the formation of a statewide septic code based on the statewide septic legislation introduced this past April (Michigan House Bills 4479 and 4480), which would require inspection of residential septic wastewater systems every five (5) years. Michigan REALTORS® is seeking in this legislation the following:
- Move us away from a patchwork of regulation and towards uniform standards for inspections and maintenance;
- Create exclusive jurisdiction for enforcement with the DEQ and Local Health Departments;
- Provide consistent determinations of when an onsite system has failed;
- Create a system to preserve data from septic system installations and inspections;
- Introduce a process for testing and approval of alternative systems into the marketplace;
- Provide a statewide system for inspection at reasonable and regular intervals.
Michigan REALTORS® is in opposition to point-of-sale inspection ordinances that encumber the rightful transfer of property pursuant to an agreement between buyer and seller. They believe that the duty of repair should be negotiated and decided between the parties without a mandate by local government as a condition of the transfer. Michigan REALTORS® has been working within their workgroup over this winter to ensure these items are included in the formation of a statewide septic code, the majority of which are a part of the current draft statewide septic code. If you have any questions or would like to include your input in these efforts as they move forward, reach out locally to me (email@example.com) or to our region’s Michigan REALTORS® Public Policy Field Director, Ryan Knight (firstname.lastname@example.org).
3. A Look at Wisconsin’s Right-to-Rent Law for Short-Term Rentals, A Good Fit for Michigan?
Back in 2017, as complaints rose in neighborhoods across Wisconsin, a growing number of communities sought to ban the rental of residential dwellings for any period of less than 30 days. In response to this, Wisconsin’s state legislature—by way of a budget bill (66.1014 - Limits on Residential Dwelling Rental Prohibited) took action to try to strike a balance between homeowners' rights to the quiet enjoyment of their property and their rights to buy, sell, or rent their private property. Wisconsin’s budget bill is currently under consideration in Michigan, so let’s take a look at it.
According to the Wisconsin REALTORS® Association, here are the top five things to know about their right-to-rent law:
- Local governments can regulate but not prohibit short-term rentals seven days or longer
Local governments—which include counties, cities, villages, and towns—cannot ban the rental of a residential dwelling for a period of time of seven consecutive days or more. Homeowners’ associations and condominiums fall outside of the law.
- Local permits are allowed
The local permit, cannot be overly restrictive, resulting in a de facto prohibition on a short-term rental. Such local permits should be more administrative in nature and contain objective and reasonable standards
- There is a six-month cap
Under the law, local governments are allowed to place a six-month/180-day cap on the amount of time property owners can rent out their homes during any 365-day period. Moreover, the law allows but does not require local governments to require the 180 days to be continuous. In communities that have adopted a six-month cap, property owners are allowed to choose which six-month period the dwelling is rented.
- State licensing and inspection requirements
While not a new requirement, most short-term rentals are required to obtain a “tourist rooming house” license from the Wisconsin Department of Agriculture, Trade and Consumer Protection (DATCP). Such a license is required for vacation homes, cabins, and cottages that are rented out to tourists and transients for more than 10 nights in a 12-month period.
- Collection of state sales and local room taxes
The law requires owners of short-term rentals and lodging marketplaces to collect state sales and use tax, which are 5%, and any room tax owed from the person renting the residential dwelling.
Is this a good compromise between short-term rental operations, neighbors' quiet enjoyment of their properties, and the local government’s ability to regulate short-term rental activity fairly and reasonably? Share your feedback with us at email@example.com.