A Fight Over Short-Term Rentals Makes South Haven Contemplate Its Future

Dec 16, 2015

South Haven's downtown
Credit "SouthHavenMichiganDowntown" by Dave Parker - Own work. Licensed under CC BY 3.0 via Wikimedia Commons

While many cities across Michigan saw property values plummet during the recession, those along Lake Michigan weathered the storm better than most. One reason for that is short-term rentals – people renting out rooms, or whole houses -- for days or weeks at a time using websites like HomeAway and Airbnb. The rentals have turned lakefront homes in towns like St. Joseph and Saugatuck into sources of income. But in South Haven, the size and location of those rentals is turning into a problem.


If you’ve been to any city council meeting in South Haven over the past three months, you’ve probably seen the same group of women there. There's about a half-dozen of them, each stepping to the podium, one after another, to complain about one issue: short-term rental properties, and specifically, their size.

“I happen to be one of the unlucky people who has two big houses away from me," complained one resident at a recent council meeting. "A house was torn down and two were put in their place, and they don’t belong in the character of our neighborhood. ”  

These women are all here to talk about one issue: short-term rental properties. Like a lot of cities along Lake Michigan, summer rentals make up a huge portion of South Haven’s housing stock. And they’ve long been an issue in the city, mostly for the reasons you’d expect in any vacation town. Noise from tourists, lack of parking, general nuisance problems.

But unlike other cities along Lake Michigan, South Haven doesn’t have any real regulations on these rentals. In 2009, the city passed a rental registration ordinance, but even that was repealed a few months later. David Paull, a former mayor and the current chair of the city’s planning commission, says that’s led to new problems.

"That there are homes being built that are huge," Paull says. "That are multi-bedroom, multi-bathroom, essentially hotels. Being built in residential areas. And being called single-family homes."

Paull says over the past few years, these giant short-term rental properties have started popping up across the city. In fact, it was one of these properties – currently being built in a residential neighborhood on the city’s south end – that has that group of women both speaking out and protesting almost every day.

"I would like to see us have a more diverse economy, have more kids in schools. But we don't achieve that by throwing out our one industry we have and then crossing our fingers and hoping that something good happens."

  Susan Ryan, who lives close to the new property, says the new people, and cars and noise, will transform her quiet community.

"So it would double our density," Ryan says. "The summer, it is so crazy. And it’ll be worse if this continues with these commercial properties in these residential neighborhoods."

City administrators and elected officials acknowledge the problem. And they’re currently working on a new rental ordinance to address it. But regulating rentals in South Haven isn’t easy.

 Tourism is the bread and butter of South Haven’s economy, and many in the town’s business community say new regulations might scare tourists away. Gerald Webb owns the vacation rental company Beachwalk Properties with his wife. He says some changes do need to be made, but the city can’t go overboard.

"I would like to see us have a more diverse economy, have more kids in schools," Webb says. "But we don’t achieve that by throwing out our one industry we have and then crossing our fingers and hoping that something good happens, and those homes that are vacation rentals before magically get filled with full time residents."

This problem isn’t totally unique to South Haven. Other cities along Lake Michigan have dealt with it in past years, and South Haven planning and zoning administrator Linda Anderson says she’s looking at what they did to help shape a potential South Haven ordinance.

A few miles south, St. Joseph city manager John Hodgson says his city’s rules, implemented nearly a decade ago, are strict. Short term rentals are only allowed in the city’s multiple family district and along the lakefront.

"Any place else, they're simply not allowed," he says.

Hodgson says by acting so early, his city has kept complaints about noise and tourists in check. But in another lakeshore city, Saugatuck, there's only a rental registration process. And city manager Kirk Harrier says adding anything else besides that, like an occupancy cap in rentals, would be nearly impossible to enforce.

"I mean we’re a small city, what are we going to do? Covert operations?" Harrier says. "The city manager is going to be in a camouflage suit, up in the trees, seeing if someone is staying somewhere? That’s impossible." 

"[Rentals are] probably our biggest economy right now. And while we want to encourage that and want to have people come and enjoy the city, we still need to keep in mind that the neighborhoods have to be protected."

Despite those challenges, South Haven took its first step towards changing rental rules last month, when it instituted a six-month moratorium on issuing permits to build large houses in the city. And the city planning commission recently introduced a few rules, as well, including limits on the heights of buildings and requirements for more parking for larger homes.

But the big changes will likely come next month. That’s when administrator Linda Anderson says that she expects a draft of a rental ordinance to be introduced to the city’s planning commission.

"We're looking at protecting the neighborhoods but also realizing the summer rentals and the tourists are very important to the economy of the city," she says. "They're probably our biggest economy right now. And while we want to encourage that and want to have people come and enjoy the city, we still need to keep in mind that the neighborhoods have to be protected."

It’s still early, but Anderson says she does have some expectations for what will be included in a rental ordinance. She says she expects the ordinance to include both a rental registration requirement and a cap on occupancy. As for ways to regulate the larger homes, Anderson adds that all single-family homes over a certain size will likely require both review and approval by the planning commission, and some will potentially be required to be built to commercial codes, as well.

More details will emerge next month. Anderson acknowledges that no plan will satisfy everyone in South Haven. But she feels there’s a way to help neighborhoods while still preserving South Haven’s tourism industry.