Ordinance No. 250324-B: Short-Term Rental Licensing Ordinance Amendment

City Council Agenda Item Report FROM:

Ryan Cummins, City Manager Luke Thompson, Director of Planning and Zoning

MEETING DATE:

March 19, 2025

SUBJECT:

Short-Term Rental Licensing Ordinance Amendment

DESCRIPTION: At the March 5 workshop, staff presented on the status of implementing the Short-Term Rental (STR) Task Force recommendations and STR Enforcement Plan. Legal also presented a full report on transfers, late applications, and appeals. Based on the consensus feedback on March 5, legal has prepared draft changes to the STR licensing ordinance. The draft changes would: • • •

Provide a mechanism to process late applications. Late applications would be subject to a late fee. Require submittal of proof of corporate entity ownership each year. Allow transfers of ownership in limited circumstances, which include transfers that change the form of ownership but not the identity of the persons having an ownership in a STR. o This would be retroactive.

Full details of the draft amendment are redlined on the attached. LEGAL REVIEW: The City Attorney prepared the draft amendments and will be at your meeting for any questions. SAMPLE MOTION: N/A. Workshop item only at this time.

CITY OF SAUGATUCK ALLEGAN COUNTY, MICHIGAN SHORT-TERM RENTAL LICENSING ORDINANCE AMENDMENT ORDINANCE NO._____ At a meeting of the City Council of the City of Saugatuck, Allegan County, Michigan, held at the City of Saugatuck Hall on ___________________, 2025 at _____ p.m., City Council Member ______________________moved to adopt the following ordinance, which motion was seconded by City Council Member _______________________________. An ordinance to amend the City of Saugatuck’s Short-Term Rental Licensing Ordinance, Ordinance No. 240229-B, as amended, to provide for the imposition of late fees for late applications to renew Short-Term Rental Licenses, and to authorize certain types of transfers relating to Short-Term Rentals, to protect the public health, safety, and welfare. CITY OF SAUGATUCK, ALLEGAN COUNTY, ORDAINS: SECTION 1. AMENDMENT TO ORDINANCE NO. 240299-B, SECTION 99.58: City of Saugatuck Ordinance No. 240229-B, Section 99.58 shall be amended to read as follows: §99.58 DURATION OF LICENSE; RENEWAL. (A)

Except as otherwise provided herein, a license issued under this chapter shall remain in effect for a period of one (1) year from the date it was issued unless it is suspended or revoked by the City.

The license holder or local agent may apply for a renewed license by submitting a renewal application to the enforcing officer no later than thirty (30) days prior to the date that the license is set to expire, along with the license renewal fee established by the City’s fee schedule. Renewal applications may be submitted no later than five (5) days after this deadline, subject to a late fee established by resolution of the City Council. Renewal applications submitted after this five (5) day grace period by any amount of time shall be deemed untimely and shall not be processed by the City, and the short-term rental license shall be deemed expired.

All information submitted with the prior application(s) shall be deemed submitted with the application for renewal, except that each year a new completed and signed fire safety checklist must be submitted, a new fire inspection must be conducted, and an approved fire inspection certification must be issued before a license can be renewed In addition, short-term rentals owned by corporate entities must submit updated documentation each year showing that the interest in that corporation has not changed so as to constitute a transfer as defined in this Ordinance. Aside from

the renewed fire safety checklist, and fire inspection, and corporate ownership documentation, the license holder or local agent shall only be required to submit new information with the application for renewal when that application information has changed since the last application was filed with the City. (D)

A renewed license for a short-term rental shall be issued when all of the standards and regulations of this chapter are met.

If the short-term rental premises does not meet all the requirements of this chapter at the time of renewal, the City shall promptly notify the license holder. The license holder shall have thirty (30) calendar days from the date the notice of a deficiency was sent to cure any deficiencies. If the license holder cannot demonstrate full compliance with this chapter at the end of the cure period, the short-term rental license will not be renewed and will be deemed expired.

SECTION 2. AMENDMENT TO ORDINANCE NO. 240299-B, Section 99.59: City of Saugatuck Ordinance No. 240229-B, Section 99.59 shall be amended to read as follows: §99.59 EFFECT CERTIFICATES.

ON

PREVIOUSLY

ISSUED

SHORT-TERM

RENTAL

(A) It is the express intent of this chapter to “grandfather” short-term rental certificates that were issued under the City’s previous regulatory scheme until those certificates expire. Therefore, short-term rentals with certificates issued pursuant to the Saugatuck City Zoning Ordinance prior to the effective date of this chapter may continue to operate until the certificate expires, subject to the requirements in effect at the time the shortterm rental certificate was issued. (B) Once a previously issued short-term rental certificate expires, the certificate-holder must receive a short-term rental license under this chapter to continue operating a short-term rental at the premises. Applications for a short-term rental license may be submitted no later than five (5) days after the previously issued short-term rental certificate expires, subject to a late fee established by resolution of the City Council. Applications submitted after this five (5) day grace period by any amount of time shall be deemed untimely and shall not be processed by the City, and the short-term rental certificate shall be deemed expired. In addition, it is the intent of the City for this provision to apply retroactively to applications for short-term rental licenses that were submitted before the effective date of this Ordinance but after August 26, 2024. Such applications may be processed and a short-term rental license issued, subject to the payment of the late fee and satisfaction of all other requirements of the City Code. (C) No short-term rental certificates issued pursuant to the Saugatuck City Zoning Ordinance may be renewed after the effective date of this chapter.

SECTION 3. AMENDMENT TO ORDINANCE NO. 240299-B, Section 99.63: City of Saugatuck Ordinance No. 240229-B, Section 99.63 shall be amended to read as follows: §99.63 TRANSFER OF OWNERSHIP. (A) Transfers prohibited. Short-term rental licenses are non-transferable, and a short-term rental license issued under this chapter shall become void upon the attempted transfer of a license or transfer of ownership of the dwelling unit for which the license is issued. In the event of an unauthorized transfer, a new short-term rental license must be obtained by the new owner of the dwelling unit from the City before short-term rentals may be resumed in the dwelling unit. (B) Transfer defined. As used in this chapter, a “transfer” of a short-term rental license shall include the following: (1) Any transfer, sale, change in ownership, or other conveyance of a short-term rental license to a person or entity other than the owner or license holder; (2) Any transfer, sale, change in ownership, or other conveyance of the premises; (3) Any transfer, sale, change in ownership, or other conveyance of an interest or membership in the corporate entity which is the owner of the premises or the short-term rental license; or (4) Any change in the trustee(s), beneficiary, or beneficiaries of the trust which is the owner of the premises or the short-term rental license. (C) Permitted transfers. Notwithstanding the above, the City recognizes that as a matter of public policy it is equitable and consistent with the intent of this ordinance to enable transfers of short-term rental licenses in certain limited circumstances, which include transfers that change the form of ownership but not the identity of the persons having an ownership in a short-term rental. Consistent with these policy goals, short-term rental licenses may be transferred under the following circumstances, provided that a transfer application conforming to the requirements and regulations set forth in this ordinance and indicating the relationship of the transferor to the transferee is first submitted to and approved by the enforcing officer: (1) Short-term rental licenses or premises may be transferred to a corporate entity from individuals, trusts, or other corporate entities, provided that the transferee corporate entity is solely owned and controlled by all of the current owners of the short-term rental license or premises, and that no third parties (meaning individuals or entities who do not currently have an interest in the short-term rental licenses or premises) will hold any interest or membership in said corporate entity. (2) Short-term rental licenses or premises may be transferred to a trust from individuals, corporate entities, or other trusts, provided that the transferee trust

is solely owned, controlled by, and benefits all of the current owners of the shortterm rental license or premises, and that no third parties will be designated as settlors, trustees, or beneficiaries of said trust. (3) Short-term rental licenses or premises may be transferred to an individual or individuals from a corporate entity or trust, provided that the individual or individuals are the current owners, members, settlors, trustees, or beneficiaries of the corporate entity or trust that currently owns the short-term rental license or premises. (4) No transfer will be permitted that has the effect of changing the composition of the individuals, owners, or members, that own the short-term rental license or premises, including any transfer that attempts to add or remove individuals or entities owning, controlling, or having any interest in a short-term rental license or premises. (D) Waiver. For transfers not expressly authorized herein, a license holder may make a written application to the enforcing officer for a waiver from this ordinance’s prohibition on transfers. Such application must demonstrate that the proposed transfer is only a change of the form of ownership without changing the identity of the owner or owners and is otherwise consistent with the purpose and objectives of this ordinance on good cause shown to the enforcing officer. The enforcing officer shall approve or deny such applications, and his or her decision shall be final. (C)(E) Retroactive effect. It is the intent of the City for the permitted transfers enumerated herein to apply retroactively to transfers of short-term licenses or certificates that occurred during the time period between August 26, 2021, and the effective date of this Ordinance, provided such transfers would have been permissible under this Section. Notwithstanding prior City regulations to the contrary, the City may process and approve applications for short-term rental licenses from short-term rental certificate holders and renewal applications for short-term rental licenses that were subject to a permitted transfer set forth in this Section in the timeframe identified above, provided such applications otherwise satisfy all of the applicable requirements of the City Code.

Commented [JW1]: Ryan: I think it may be prudent to add this language as a catchall given the myriad of different ownership arrangements that may be encountered.

SECTION 4. SEVERABILITY: Should a court of competent jurisdiction find any provision, clause, or portion of this ordinance amendment to be invalid or unconstitutional, the balance or remainder of this ordinance amendment shall remain valid and in full force and effect and shall be deemed “severable” from the portion, clause, or provision deemed to be invalid or unconstitutional by the court. SECTION 5. REPEAL: All Ordinances or parts of Ordinances in conflict herewith are hereby repealed. SECTION 6. EFFECTIVE DATE: This Ordinance shall become effective immediately upon the date of this Ordinance’s publication as required by law. YEAS: ___________________________________________________________________

NAYS: ___________________________________________________________________ ABSENT/ABSTAIN: _______________________________________________________ ORDINANCE DECLARED ADOPTED. ____________________________________________ Holly Anderson City of Saugatuck, Mayor

CERTIFICATION I hereby certify that: 1.

The above is a true copy of an ordinance adopted by the City of Saugatuck at a duly scheduled and noticed meeting of the City Council held on __________, _____ 2024, pursuant to the required statutory procedures.

A summary of the above ordinance was duly published in the ______________________ newspaper, a newspaper that circulates within the City of Saugatuck, on ___________, 2024.

Within 1 week after such publication, I recorded the above ordinance in a book of ordinances kept by me for that purpose, including the date of passage of the ordinance, the names of the members of the City Council voting, and how each member voted.

I filed an attested copy of the above ordinance with the Allegan County Clerk on _____________, 2024.

ATTESTED: ___________________________________ Jamie Wolters City of Saugatuck, Clerk

CITY OF SAUGATUCK ALLEGAN COUNTY, MICHIGAN NOTICE OF ADOPTION SHORT-TERM RENTAL LICENSING ORDINANCE AMENDMENT ORDINANCE NO. ___ Please take notice that on ____________, 2024, the City Council of City of Saugatuck adopted Ordinance No. ___, which, among other things, amends the City of Saugatuck’s Short-Term Rental Licensing Ordinance, Ordinance No. 240229-B, to impose maximum limits on the number of short-term rental licenses in specific zoning districts, establish the effect of such limits on existing licenses, establish how available licenses will be issued, and provide a mechanism for the City Council to adjust such maximum limits. Copies of the ordinance may be obtained from Jamie Wolters, City of Saugatuck Clerk, at 102 Butler Street, P.O. Box 86, Saugatuck, Michigan 49453 during regular business hours. The Zoning Ordinance Amendment has the following sections, which are summarized below: Section 1: Amendment to Ordinance No. 240299-B, Section 99.55; Section 2: Severability; Section 3: Repeal; and Section 4: Effective Date. Jamie Wolters City of Saugatuck, Clerk (269) 857-2603 JWolters@saugatuckcity.com Publication Date: ____________, 2024