Michigan Democrats want to tax short term rentals up to 12%, require owners to register with the state, and impose numerous other regulations on both owners and the hosting platforms on which they rely.

Just days after regaining a majority, Michigan House Democrats took up a nine-bill package that would impose a 6% excise tax on occupancy charges for homes, apartments and condos rented for more than 14 days a year and likely threaten the tourism economy.

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The bills, vetted in the first of what’s expected to be several hearings in the Committee on Local Government and Municipal Finance, would allow municipalities to impose “reasonable” regulations and zoning ordinances, including geographical and other restrictions, but would prevent outright bans, Crain’s Detroit Business reports.

The excise tax is estimated to generate $35 to $70 million, all of which except $1 million for “administrative costs” would go to local governments where properties are located, according to a House Fiscal Analysis. But other bills in the package would also extend hotel taxes of 1%-5% currently used to fund stadiums and convention centers to short-term rentals, as well.

Other aspects of the legislation would mandate $1 million in liability insurance, carbon monoxide detectors, smoke detectors, fire extinguishers, certification with the state for a new government database, and emergency contact requirements. Airbnb and other similar hosting platforms would be taxed $100 per listing up to $50,000, and be required to disclose booking transactions.

St. Joseph Democratic Rep. Joey Andrews, lead sponsor of the bill package, told the committee the aim is “to find a good compromise here that lets our local governments function, allows the tourism activity to continue, lets short-rentals continue to exist in properly zoned places and ideally takes a lot of the tension out of this argument.”

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Short-term rentals have created issues in some Michigan tourism communities that are struggling with a balance between affordable housing and private property rights. Locals have pointed to short-term rentals as a leading cause of rising rents, prompting some communities to impose bans or limit the number of rentals.

Nathan Rotman, spokesman for Airbnb, pointed to a voluntary 2017 tax agreement with the state that generated $24.5 million last year through a 6% use tax – $85 million in total – when he testified against the legislation on Wednesday.

Rotman contends the proposal goes “too far” and is “bad for Michigan” as it will “bring serious legal and economic concerns,” The Detroit News reports.

“First, the bill introduces new, anti-competitive short-term rental-only tax, doubling the tax rate for short-term rental guests to 12% while hotel guests would continue to enjoy a 6% rate,” he said, according to Crain’s. “This increased tax burden on Michiganders will make holidays, moves, medical stays more expensive.

“Further, the bill creates a complex, costly and duplicative state registration system. Many Airbnb hosts are already required to register at the local level, and this legislation would burden them with a second registration system with a second set of reporting obligations.”

Traverse City Tourism CEO Trevor Tkach agreed the legislation is too much, though he supports aspects of the proposal, such as the statewide registry and local control.

“It leans too far in the opposite direction and penalizes those doing short-term rental business. We are fighting for parity,” Tkach said.

Brad Ward, Michigan Realtors’ vice president of public policy and legal affairs, described the bill package as “heavy-handed,” the News reports.

“Even if your local government has been welcoming of short term rentals or, like most communities in Michigan, completely indifferent towards them in terms of their regulation, this bill sets an unreasonably high bar that could dissuade a homeowner from even renting,” Ward said.

Others opposed include the Michigan Restaurant & Lodging Association, Expedia, the Rental Property Owners Association of Kent County, the Michigan Short Term Rental Association, and others.

City leaders from lake towns of Saugatuck, New Buffalo, and Traverse City testified in favor of the legislation, pointing to nuisance issues from short-term rentals and the cash they would collect.

“While we have that regulation at the local level, solidifying it at the state level would make a huge impact on us,” said Traverse City’s Mayor Amy Shamroe.

“Obviously, I’m making the case here for the urgent need of the excise tax presented in this bill,” New Buffalo Mayor John Humphrey said. “We’re at a precipice and without the proper use of taxes being levied where tourism thrives, we endanger not only our lakeshore communities but our ability to protect our natural resources as well.”

Grand Rapids Democratic Rep. John Fitzgerald, chairman of the House local government committee, said Wednesday he expects to hold additional hearings on the bill package this month, but did not commit to a vote, Crain’s reports.

“We do need to understand that the landscape of lodging has evolved. I think these bills seek to address that,” he said. “I’ll be looking forward to seeing the product as it evolves and continues to be brought forward by the sponsors.”