Detroit’s proposed Airbnb ordinance, explained

For nearly three years, Councilmember Janeé Ayers has wanted to pass an ordinance that regulates short-term rentals—rooms or homes rented generally for a few days through platforms like Airbnb.

During public comment periods of Detroit City Council meetings, Ayers says she heard complaints from residents about disrespectful guests at neighbors’ homes who were using Airbnb.

“From noise to blight to trash—the guests were disrupting the fiber of the neighborhood,” Ayers says. “[Residents] asked me, ‘What are you going to do about it?’”

What she’s been doing is spearheading an ordinance that would place restrictions on short-term rental operators with the goal of increasing safety at the rentals and reducing nuisance in the neighborhood.

Ayers also feels that short-term rentals artificially inflate property values and rent prices by restricting the amount of available housing stock. “I don’t think it’s the be-all end-all solution to affordability, but it’s one of the tools that we have to utilize.”

The city’s Legislative Policy Division presented a draft of the ordinance to the City Planning Commission on June 6 this year. An updated draft is currently making its way through City Council.

Here’s everything you need to know about the short-term rental ordinance.

What the ordinance does

The ordinance would be the first time the city defines and regulates short-term rentals by adding a subdivision to the Detroit City Code’s section on “Requirements for Rental Property.”

It would severely restrict the number of Airbnbs that can operate in the city. Here’s a summary of what it entails.

For starters, in order to use a property as a short-term rental, it has to be the owner’s primary residence. This would prevent people from owning multiple properties and renting them all out simultaneously.

Another restriction is the “1,000-foot rule.” The current draft reads,

A short term rental property shall not be on a lot that is within 1,000 feet, measured linearly, of a lot on which another short term rental is located, unless permission is given by the Department. [italics added]

If applied to the letter, that would limit the number of short-term rentals to only a handful in certain neighborhoods. Though the department can give additional permission for up to 10 percent of total properties within the 1,000-foot radius.

Property owners must apply, during a half-month window in January, to be a short-term rental operator, and provide proof of residency and other information about the home. They have to also submit an affidavit certifying compliance with a number of requirements, like the existence of smoke alarms and fire extinguishers.

The host must will have to pay an annual fee. The amount will eventually be determined by the Buildings, Safety Engineering and Environmental Department (BSEED), the city arm enforcing the ordinance.

Once the property is approved, it will be placed in an online registry of all short-term rentals. The owner must then inform all neighbors within 300 feet that it’s registered as a short-term rental.

Even after all this, operators would not have unfettered use of the home—they could only rent it out for 90 cumulative days per year. The ordinance also stipulates rules about guest behavior, having a local contact in case the host is away, and requirements of the platform.

Importantly, an item was added to the most recent draft which says that the ordinance doesn’t apply to hosts who remain on the premises. So it seems that it’s mostly intended for absent Airbnb hosts.

Arguments against the ordinance

The ordinance has some passionate opposition. During public comment on the June 6 meeting, several people spoke about how it was far too restrictive. A group of short-term rental operators, Sharing Detroit, has been organizing against it.

Sharing Detroit says that it’s not opposed to regulating the industry—they understand the concerns about nuisance and safety. They’ve even proposed taxing operators to help pay for oversight. Currently, Michigan taxes Airbnb 6 percent, which netted the state $4.2 million in 2017.

But they say the ordinance will eliminate most short-term rentals in the city. There’s less than 1,000 currently operating, and, by their calculations, the ordinance would restrict over 90 percent of them. (Though, again, BSEED does have the discretion to allow multiple short-term rentals within 1,000 feet of each other.)

They also say it’s hard to profitably run an Airbnb when you can only rent it out for 90 days a year.

One of Sharing Detroit’s members, Angela Vincent, worries that the ordinance will hurt neighborhood business. A bar owner who rents out an Airbnb in her University District home, she says her guests shop at businesses on the Avenue of Fashion—places they likely wouldn’t visit had they rented a downtown hotel room.

“I’m a firsthand witness to the economic strength that Airbnbs brings to community,” Vincent says. “I recommend my guests to frequent neighborhood businesses—restaurants, book stores, clothing stores—which need support.”

She also says the ordinance would make it much harder to visit Detroit affordably. Depending on the day of the week, a room in her house rents for $30-$60, and the whole house $125-$200. According to AirDNA, the average daily rate between January and May 2019 for a short-term rental in Detroit was $132. A majority of them were full homes.

A single hotel room at the Shinola Hotel starts at $317 per night. Trumbull & Porter Hotel, which is on the more affordable end, starts at $149 per night.

Ayers thinks there will still be plenty of short-term rentals available. “We didn’t ban Airbnb, so the option for someone to utilize it is still there,” she says.

Sharing Detroit also says the rentals help other small businesses, like cleaning services and contractors, because guests expect an immaculate place to stay. Ayers acknowledges that short-term rentals do create some extra jobs, but also that “they’re not employing the masses.”

Sharing Detroit expressed some of their concerts during a community meeting on the matter this year. Ayers’s office said it reached out to the group for more input but hasn’t heard back yet.

Will it pass?

The ordinance is set to go through the Public Health and Safety Standing Committee on Monday, September 16. Ayers won’t estimate when it could get out of the committee for a full vote by City Council.

“I’m not trying to rush it. We want to have robust and fruitful conversation,” she says. “If I were trying to rush it, we could have gotten it done by the end of summer.”

She also says that she’s spoken to all her colleagues about it and many feel similarly to her. If it’s passed by City Council, it will go into effect no less than 30 days after the vote.