New Buffalo Consider Banning Short-Term Rentals

“Let me be very clear, I am against short-term rentals,” said John Humphrey, who was elected mayor of New Buffalo in November 2020, a town of 1,800 permanent residents 70 miles from downtown Chicago on the shores of Lake Michigan. Short-term rentals are generally understood to be anything that is shorter than a month and usually for a few days.

Humphrey, a former Chicago resident who has lived full time in New Buffalo since 2014, said that short-term rents for a fee are the same as the commercial use of a property, and if that property is in a residential zone, “do it illegally.” . No residential zones in New Buffalo allow commercial use. “

The current development does not emphasize short-term rents as commercial use. The proposal before the planning committee would change that by stating that “like a restaurant or bookstore,” Humphrey said, short-term rental in a residential area is not allowed.

Existing permits would likely continue to exist, but they would not transfer to a new owner when the property is sold. Humphrey said there are about 100 existing permits in these zones and another 40 in commercial areas. He estimates that there could be about as many short-term rentals that are operated without a permit.

The elimination of short-term rentals “is absolutely insane and not in the best interests of anyone in New Buffalo,” said Laura Murray, a CPA at Downers Grove who has had a second home in New Buffalo for about 14 years. She did not use it as a short-term rental, but applied for a permit in 2019. This was refused due to a then new moratorium on new permits, which has since been extended to November.

Murray and other second home owners, including Skokie’s Edan Gelt, estimate that short-term renters pump more than $ 4.5 million annually into the New Buffalo economy through restaurants, grocery stores, and other expenses.

“When these houses are empty, nobody goes to Barney’s [grocery store] or the stray dog [bar and grill,]”, Said Gelt, who works in marketing. “Tourists spend a lot of money in New Buffalo. Are you sure you want to keep her from coming? “

Gelt’s main residence is in the Palatinate, and she and her husband, Gene Khalminsky, have owned a three-bedroom house in New Buffalo since 2013. When their children were younger, they did not rent out the house for short-term rent, but in recent years, when the children in the Palatinate were more busy, they rented it out. With the rental income, she said, “the house pays for itself, but we don’t make a big profit.”

One of Humphrey’s arguments against short-term rentals is that their proliferation has helped drive home prices in the city to the point where full-time residents are priced out. Thanks to that, as well as low interest rates and COVID-driven demand for homes outside of the city, “our properties are overvalued,” Humphrey said.

The average price of homes sold in the New Buffalo area, a 15-mile stretch of Lake Michigan from New Buffalo to Bridgman, the average home selling price has increased 25% since the same period in 2020 and 37% since 2019, so Data from the Southwest Michigan Association of Realtors. It is larger than the increases in other areas of southwest Michigan, although some of them are inland rather than on the coast.

The average sales price in the New Buffalo area this year, just over $ 549,000, is well above the other lakefront stretches the Southwest Michigan real estate group tracks. The median price was $ 352,000 in St. Joseph and about $ 344,000 in South Haven. Inland locations are typically under $ 200,000.

New Buffalo, like many traditional second homes, has been inundated with “second home” sales to people disconnected from Chicago work and school locations.

A home with the potential for a source of income is clearly being sold for more than one without it.

Jessica Lee and her husband, whom she did not want to identify, bought a house in New Buffalo for about $ 300,000 in 2020 and moved full-time from Chicago. Lee said her real estate agent said the house would get $ 100,000 more if it had short-term rental permits.

“The reality is that if the people who lived here in New Buffalo went away, they couldn’t afford to come back,” said Darwin Watson, New Buffalo city manager.

Kimberlee Wendt, Executive Director of the Harbor Country Chamber of Commerce, emailed Crain a statement stating, “Although we recognize tourism as the main economic engine here, the Chamber also supports a balanced business-community effort to build a thriving community every year – a round life and one that can maintain the workforce. ”

The Chamber’s new Economic Committee is addressing the issue of affordable housing “and other vital needs such as childcare in this tourism-based economy,” the statement said.

Efforts to stop short-term rentals “are closing the gap between locals and second home owners they call Fips,” Murray said. Fips is a long-time Michigan reference to “damn Illinois people”.

In March, a group of Chicago area people with homes in New Buffalo sued the city in federal court over its moratorium on short-term rents. Another lawsuit has been filed in a Michigan state court. Both lawsuits have not yet been decided.

The lawsuits allege, in part, that New Buffalo officials are violating property rights with their extended moratorium, which has cooled the short-term rental market and home values.

“It’s an excess of personal property rights,” said Murray. “If I want to rent my property for a few days, I should be able to.”

In recent years, New Buffalo officials have taken steps to reduce the disruptive effects of short-term rentals on the city. In May 2019, they introduced a permit requirement for the first time, and later tightened the parking and garbage regulations.

Nonetheless, short-term rentals and the associated traffic, noise and partying are “destructive to the quality of life in our neighborhoods,” said Humphrey.

Murray, who has owned her New Buffalo home for about 14 years, said she hadn’t remembered more than a few short-term tenant problems on the property during that time. City officials, she said, “try to deal with the one to five percent who break the rules by punishing the other 95 to 99 percent of the people. Do not throw the baby out with the bath. “

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