East Lansing’s Rental-Restriction Overlay Districts Could Be Outlawed
Legislation moving quickly in the Michigan House and Senate would outlaw East Lansing’s rental-restriction overlay districts if enacted as law.
This could have big implications for neighborhoods throughout East Lansing, as hundreds of residential properties in East Lansing could suddenly become available to renters. The law, if passed, would also enable Airbnb-style short-term residential rentals where they are now illegal.
At last night’s City Council meeting, Mayor Aaron Stephens said the legislation is a “huge issue in our City and we need to be ready for it as soon as possible.”
Some East Lansing homeowners bristle at the thought of losing the rental-restriction overlay districts that surround their homes. But others in East Lansing – including some now on City Council – have suggested that the overlay districts discriminate in problematic ways and prevent families from being able to rent houses in East Lansing.
The City of East Lansing’s webpage currently lists 20 rental overlay districts. Overlay districts exist in Brookfield, Lantern Hill, Oakwood, Whitehills, Old Whitehills, Harrison Meadows, Bailey, Chesterfield Hills, Red Cedar and Ivanhoe, Southeast Marble, Walnut Heights, Farwood, Glencairn, Pinecrest, Hawk Nest, Hawthorn, and Shaw Estates.
How restrictive the overlay is depends on which type of overlay district was enacted for a given area, but in many of the overlay districts, whole-house rentals are entirely prohibited unless a property has a rental license that predates the overlay.
Now, a pair of almost identical bills, House Bill 4722 and Senate Bill 446, are moving through the legislative process in Lansing, aimed at stopping municipalities from outlawing short-term rentals like those that happen through Airbnb and VRBO. While the motivation is to protect property owners’ rights to make short-term rentals, the impact of the legislation would go beyond short-term rentals, prohibiting all local governments from stopping any owners of dwellings from renting those properties.
Property owners could still be required by local governments like the City of East Lansing to obtain and maintain rental licenses, for short-term as well as long-term rentals. And in areas zoned for no more than two unrelated people per housing unit, rental licenses in East Lansing could be restricted to that same household limit.
But the passage of this legislation could significantly change the real estate market in East Lansing and change day-to-day life in multiple residential neighborhoods. It could also make it legal throughout the City to rent out one’s home on Airbnb, VRBO, and similar services – for example, during big-game weekends – although the City would require rental licenses for that.
Historically, East Lansing homeowners have petitioned for rental-restriction overlays out of the fear that rental properties will attract partying students, bring noise, degrade properties, and reduce property values in the neighborhood. Rentals can also paradoxically drive up property values, particularly in near-campus neighborhoods, making it harder for people to purchase homes in those areas.
The Michigan Municipal League is fighting the legislation, arguing for municipalities to have local control on this issue. Meanwhile, the Michigan real estate industry has pushed the draft legislation because it wants residential property owners throughout the state to be allowed to rent their properties.
In the election that put him in office in November 2017, Aaron Stephens received a PAC contribution of almost $33,000 from the Greater Lansing Association of Realtors. The Realtors paid for mailers praising Stephens as being pro-property-rights. He accepted the donation and did not challenge the claims made about him by the PAC.
In June 2019, Council approved the most recent rental overlay restriction, in Shaw Estates, and the vote was close at 3 to 2. Ruth Beier, Mark Meadows, and Erik Altmann voted for, while Stephens voted against the new rental restriction overlay, along with Shanna Draheim. Stephens and Draheim expressed concerns about the impact of more rental overlays on people who need to rent, including families with children. (Stephens is himself a renter, which is rare if not a first for East Lansing mayors.)
Since being elected to City Council, Mayor Pro Tem Jessy Gregg has expressed concerns similar to Stephens’ and Draheim’s about rental-restriction overlays, and Council appointee Dana Watson (now running for election) has frequently said she wants to see more options for families looking to rent in the City.
On Monday night, Mayor Stephens told the Council of Neighborhood Presidents that the City wants to maintain local control of this issue. He said the City’s lobbyist had been weighing in at the Capitol, but he has not responded to questions about what the lobbyist is seeking on behalf of the City on this issue.
City Manager George Lahanas said at Council’s meeting last night that the lobbyist has standing instructions to defend policies and ordinances in place in the City, unless given different instructions. He did not say whether in this case the lobbyist has been given specific instructions.
Update: Find a follow-up to this article, including answers to reader questions and a statement from Mayor Stephens, here. Note also that on June 8, without discussion, Council unanimously passed a resolution opposing this state legislation.