With the number of vaccines distributed steadily increasing in Michigan, Athletic Director Wade Manuel announced March 9 he was hopeful University of Michigan fans would once again be allowed in the Big House this fall. And with all football games come tailgates, a sense of camaraderie and an influx of people into Ann Arbor.
Last season’s Notre Dame-Michigan game brought in a record number of 2,390 Airbnb guests for Ann Arbor hosts, earning a whopping $735,000 in supplemental income for Airbnb hosts. Airbnb data also suggested Airbnb guests provided an economic boost to the city, as guests on average spent $110 per day at local restaurants and stores.
By the start of this upcoming football season, however, these short-term Airbnbs may be a thing of the past.
In an effort to improve house accessibility and affordability in Ann Arbor, Ann Arbor City Council passed an ordinance Sept. 8, 2020 that banned short-term rentals in Ann Arbor’s residential districts, which included many Airbnbs. However, the ordinance, which was approved in a 7-4 vote, still permitted Airbnbs and other short-term rentals in mixed-use — meaning both commercial and residential — zoning districts, as well as in residential districts as long as the property was owner-occupied while being rented.
In 2018, the University of Michigan Poverty Report on Evictions reported that one in nine Washtenaw County residents faced eviction, with only 2% being able to afford representation by a lawyer in court. In 2015, the urban planning firm CZB reported that Ann Arbor needs to create approximately 140 new units of affordable housing per year until 2035 to prevent permanent economic division and stratification.
Councilmember Elizabeth Nelson, D-Ward 4, voted in favor of the ordinance and said the restrictions were meant to increase housing accessibility for University students and Ann Arbor residents. Nelson said short-term rentals tend to fall in neighborhoods close to downtown and by banning them, permanent Ann Arbor residents will have the opportunity to live closer to those locations.
“Airbnbs have a profit opportunity for locations that are near the city center,” Nelson said. “We want (residents) to be able to walk and bike to the places where they work or where they go to school.”
The Sept. ordinance, which took effect March 1, did not affect long-term rentals. This was fortunate for LSA freshman Aishani Agrawal, who moved into a long-term Airbnb after the University announced in November there would be reduced occupancy in residence halls for the Winter 2021 semester. Agrawal said the Airbnb was cheaper than the residence halls or an off-campus apartment, and said her experience with the host was incredibly positive.
“It hasn’t been a stressful experience, the host has been very nice and accommodating,” Agrawal said. “We don’t have to pay for utilities and the prices are cheaper living in an Airbnb, there haven’t been any negatives.”
Carol Skala owns and operates an Airbnb property in an Ann Arbor residential district in addition to her own personal residence. Over the course of the pandemic, Skala said she has seen an increase in the amount of medical patients staying at her property, as many of them have had to quarantine for 14 days prior to being admitted to Michigan Medicine. With the short-term rental ban, Skala said she is not sure if these individuals will have that option in the future.
“We’re a housing option for visitors to the city of Ann Arbor, and those visitors deserve to have these options available to them,” Skala said. “Being a medical community, over the last year we’ve had several families who’ve had to come to the University (hospital) and have had to quarantine before being admitted, and you can’t do that in a hotel.”
Similarly for some students, short-term rentals provided a place to quarantine outside of University facilities during the spikes of COVID-19 cases on campus.
LSA freshman Grace Martin stayed in an Ann Arbor Airbnb with her parents after being exposed to COVID-19 in U-M residence halls. Martin said the Airbnb experience was beneficial to her mental health and productivity levels as she navigated the end of her 14-day isolation.
“Being able to have a whole house versus just a single room, especially when you’re doing everything remotely, is pretty important,” Martin said. “Everyone has their own space.”
Martin, who is originally from Maryland, said she would stay in an Airbnb again because of the relatively cheap space that it provided. Martin’s parents have already been searching for accommodations for Parent’s Weekend next fall and found that many of the hotels were charging high prices.
“My parents were already looking at hotel rooms, and they were (very expensive),” Martin said. “Airbnb was the cheaper option for more space.”
But Amir Fleischmann, Rackham student and Graduate Employees’ Organization secretary, said the bans on short-term rentals and Airbnbs are necessary to solve the current housing problems Ann Arbor is facing. Fleischmann said graduate students are sometimes spending up to 50% of their paychecks on rent, and banning short-term rentals so they could be sold into affordable housing could help bring that percentage down as well reduce overall homelessness in Ann Arbor.
“It’s a total fiction that the market is capable of provisioning housing for the amount of people living in this town, so the government really needs to step in,” Fleischmann said. “Right now the situation is so bad that we need every rental unit that’s possible, and having potentially hundreds of… units taken off the (permanent housing) market to make money for Airbnb owners is completely unacceptable.”
Skala, however, said she does not think selling her property or converting it into a long-term rental would contribute to housing accessibility. Skala said she has invested almost $100,000 since purchasing her property two years ago, and the price she would have to sell or rent her house to break even wouldn’t be considered affordable.
“They haven’t been able to put forth a visionary development plan for affordable housing in Ann Arbor, and that’s what council needs to do,” Skala said. “If they think forcing us to sell our home or renting it long-term (is going to create affordable housing) … it’s not going to be an affordable rent because we’ve spent so much money fixing these homes up.”
Nelson, on the other hand, said the ability to rent out your home increases property values in Ann Arbor’s residential zones, which makes it more expensive for a prospective Ann Arbor resident to purchase a home. Nelson said while the houses sold and rented out due to the ban likely wouldn’t create affordable housing, the ban would decrease overall housing prices in residential zones, therefore increasing accessibility.
“I’ve heard Airbnb investors say… ‘Oh well, my house is so valuable anyways,’ but that’s not the point,” Nelson said. “The point is that housing prices are escalating, and (short-term rentals) are part of the reason they are escalating.”
John Cameron, adjunct professor of real estate, construction and business law at the University, said restrictions similar to City Council’s are also being implemented in states such as Texas and California. Cameron also said bylaws in some homeowner associations make it harder for short-term rentals and Airbnbs to operate, regardless of zoning and ordinances.
“This is not something that is unique to Ann Arbor, or unique to Michigan,” Cameron said. “the problem is further complicated by restrictive covenants that various homeowners associations have in their declarations and in their bylaws that prohibit short term rentals, regardless of what the zoning might be.”
Though some calls have been made for Airbnb investors to legally challenge these new restrictions, Cameron said he was not confident these claims would be successful.
“A person’s property is not allowed to be taken without due process of law, an argument could be made that this … eliminates one type of use that a person could put their property to,” Cameron said. “It’s not beyond possibility that a taking claim could be asserted … (but) I wouldn’t be wildly optimistic about that claim succeeding.”
Amendments to the ordinance, which are still being considered by City Council, would allow for Airbnbs established before the restrictions to continue to operate as short-term rentals.
“There is a potential challenge out there for the prospect of grandfathering, and I wouldn’t simply reject that out of hand,” Cameron said. “It might not succeed, but I think there is a claim to be asserted there.”
For owners like Skala, these amendments may be their last chance to continue operating their Airbnbs as short-term rentals.
“The mayor has come back and requested an amendment of which language that would provide those of us who got caught in this zoning restriction legal non-conforming status to continue doing what we do,” Skala said. “If the amending language is not passed we will either have to rent only on a month-to-month basis … or we could possibly have to consider selling the house.”
In an email to The Daily, Airbnb representative Sam Randall wrote that Airbnb was thankful that City Council was considering amendments that took into account hosts like Skala who invested in Ann Arbor properties. Randall wrote Airbnbs considerably help tourism in Ann Arbor and contributed positively to the Ann Arbor economy.
“Airbnb has been an important driver of tourism to Ann Arbor,” Randall said. “Allowing expanded travel options for families visiting students, graduation and home-game weekends while putting valuable additional income into the pockets of Ann Arborites.”
Ann Arbor has postponed the enforcement of the new restrictions on short-term rentals that submitted proof of operation prior to March 1 until City Council makes its final decision regarding the proposed amendments. Current short-term airbnb owners and other short-term rental owners have until March 31 to apply for temporary legal status to continue renting.