Saugatuck Council, Michigan Imposes 20% Cap on Short-Term Rentals amid Growing Debate

For years, Saugatuck has grappled with the question of how many short-term rentals should be permitted, a common issue for tourist destinations along the lakeshore and nationwide. The city’s planning commission narrowly voted 4-3 on June 19 for a 20% cap on short-term rentals.

The Rise in Vacation Rentals

Planning commission member Bobbie Gaunt highlighted the rapid increase in vacation rentals in recent years. In 2017, Saugatuck had 104 short-term rentals; today, there are 278, with nearly half located on the hill.

The Case for Limiting Short-Term Rentals

City council member Holly Anderson, who supported the cap, argued that the proliferation of vacation rentals has impacted the character and quality of neighborhoods.

Transitioning to a Lottery-Based Licensing System

"The rule will not be retroactive," Anderson explained, "meaning current short-term rental licenses will remain valid until the property is sold or changes ownership. Future licenses will be distributed via a lottery system."

Differing Opinions on the Cap

While proponents of the cap noted the extensive study by a task force, opponents, including council member Gardner, expressed concerns about the decision-making process.

The Opposition: Impact on Tourism and Property Values

Local real estate agent and property manager Ethan Barde, who has resided in Saugatuck for three decades, voiced strong opposition to the cap. "This is a tourist town, and tourism is all we have to survive," he stated, adding that appraisers warned property values would decline under the new regulations. Barde believes the restrictions will harm tourism and negatively impact local businesses.

Balancing Community Needs and Growth

Mayor Lauren Stanton, who voted in favor of the limits, cited the declining population in Saugatuck as a critical concern. "I just worry there’s a time when we’ll be down below 500 residents, and what does that look like for our community?" Stanton said. She emphasized the need to balance protecting residential areas while allowing short-term rentals to grow in other parts of the city.

What’s Next for Saugatuck?

The ballot initiative will enforce the 20% cap for two years, and any changes to this policy by the city council will require a supermajority vote.

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