Traverse CityTraverse City DevelopmentTraverse City Real Estate February 21, 2024

City Officials to Talk Vacation Rentals, Safe Harbor, Master Plan at Joint Meeting

City Officials to Talk Vacation Rentals, Safe Harbor, Master Plan at Joint Meeting

By Beth Milligan | Feb. 20, 2024

Traverse City commissioners and planning commissioners will hold a study session Wednesday at 6pm at the Governmental Center to jointly discuss several key issues facing the city, including possible changes to vacation rental rules, the potential expansion of Safe Harbor to year-round operations, and the process and timeline for approving the city’s new master plan this year.

Vacation Rentals
As part of an ongoing effort to look at possible changes to city zoning rules to alleviate the housing crisis, planning commissioners will seek input from the city commission Wednesday on whether there’s an appetite to cap or limit short-term rentals (STRs) in the city.

According to a memo from City Planning Director Shawn Winter, there are two types of allowable STRs in Traverse City: tourist homes, which are hosted owner-occupied rentals, and vacation home rentals, which do not need to be owner-occupied. “Vacation home rentals are likely what most people think of when a term such as ‘Airbnb’ is used,” Winter explained. While tourist homes are allowed in residential districts, vacation home rentals are not.

However, vacation home rentals are proliferating in commercial and other city districts that have varying degrees of restrictions on how many such units are allowed within buildings. In 2020, planning commissioners supported changes that would have banned STRs in Traverse City’s C-1 (office service) and C-2 (neighborhood center) districts. Those districts are typically located in neighborhood areas just outside the city core, such as along Woodmere Avenue, parts of Garfield Avenue, south Union Street, Fourteenth Street, north Eighth Street, the far ends of East and West Front Street, and Randolph Street.

When the changes reached the city commission, city commissioners modified the proposal to allow developers with two or more units on a property to use either one unit or 25 percent of units – whichever is greater, depending on the building size – as vacation rentals so long as the remaining units are long-term rentals. Today in Traverse City, STRs are capped at 25 percent in the C-1 and C-2 districts, as well as D-2 (development) and I (industrial). Several other districts – including C-3 (community center), C-4 (regional center), D-1 (development), D-3 (development), GTC (Grand Traverse Commons), HR (hotel resort), and T (transportation) – allow unlimited vacation rentals in buildings. STRs have flourished in many of those districts. For example, Trailside45 – a once year-round apartment building converted in 2021 to for-sale condos, many used as STRs – is in the C-3 district, which has no cap on vacation rentals.

“Now in 2024, the region’s housing crisis has only grown with many dwellings either out of reach financially, or unavailable as year-round housing,” Winter wrote in his memo. “Local governments have begun exploring factors causing the issues, as well as ways to alleviate some of the stress. While there is no single cause to the problem – and certainly no single solution – the city may be able to make changes that can help.”

Winter tells The Ticker there are multiple options the city could consider, including capping STRs in districts that have no restrictions, tightening caps in districts that already have them, or implementing caps on a district-wide basis instead of a per-building basis. Winter says the STR discussion is the next step following recent work by the planning commission to loosen city zoning rules to allow more housing density and diversity. “It’s all part of the of the overall housing conversation,” he says. “The rezoning that was explored was one aspect to address housing. The planning commission is staying good to their word by looking at others.”

Safe Harbor
Planning and city commissioners Wednesday will discuss the process by which Safe Harbor could apply to become a year-round shelter – a recent topic of discussion as one possible solution to addressing homelessness in Traverse City. Under its special land use permit (SLUP) with the city, Safe Harbor is authorized now to operate its shelter on Wellington Street from October 15 to April. For Safe Harbor to transition to a year-round operation, “a new SLUP application would be required,” according to Winter.

Approving a new SLUP application is typically a three-month process, Winter notes, as it requires introductory meetings and public hearings at both the planning commission and city commission. If Safe Harbor applied for a new SLUP today (Tuesday), the request could potentially appear on the planning commission’s March 5 agenda. Otherwise, if the organization waits – say, to see the outcome of Wednesday’s joint meeting discussion – it would likely go to the April meeting, unless the planning commission held a special meeting later in March, Winter says. That timeline could put the SLUP on track for approval by late spring or early summer.

“I want to emphasize that the submission of a SLUP application does not signal a predetermined outcome,” Winter wrote to city officials. “Rather it would create an opportunity for a parallel path of review, consideration, and public input on the potential for a year-round shelter…there are off-ramps available throughout the process. What it would do is position Safe Harbor to make that transition, if it is supported by the city commission.”

Master Plan
Finally, city and planning commissioners Wednesday will review the timeline for finalizing and approving the city’s new master plan this year. A new city mobility action plan – the “first-ever comprehensive plan towards building a non-motorized network throughout the community,” according to a city description – will also be included in the master plan and on the same approval timeline.

According to the schedule, the planning commission will review the master and mobility action plans at multiple meetings in April, while the city commission will review them between May and July. There will be a 63-day public review period during that time, with a public open house to be held in June to gather input. The process will wrap up with the planning commission holding a public hearing and voting on adopting the plans on August 7, with the city commission public hearing and adoption vote to occur September 3. The master plan must be adopted by at least two-thirds of planning commissioners and a simple majority of city commissioners, according to Winter.