Saugatuck passes short-term rental cap, current STRs grandfathered in

In a 4-2 vote on Monday, the Saugatuck City Council passed a cap on short-term rentals in the city's R1 residential districts, restricting them to 20% of each area's housing supply.

For more than a year, the city has worked to tweak and tighten its short-term rental (STR) regulations, seeking to "strike a balance" between supporting its popular tourism industry and retaining a more permanent population.

"We welcome visitors. We want them to come," said City Manager Ryan Cummins. "We recognize that short-term rentals have a place in the community.”

Per city data, short-term rentals comprise 32% of the housing supply in Saugatuck's six R1 residential districts, a number determined from the number of STR permits issued to residents as of June 29.

The majority of these rentals are concentrated in the community residential zoning area — referred to as "The Hill" — comprising 37% of the housing supply. Given the 20% cap, there are 57 too many STRs in this particular portion of town.

"The cap limit that the city is interested in would put us back to the place that we were a few years ago," Cummins told FOX 17 on Tuesday.

In the city's five other R1 residential districts, the number of STRs are either a few above (Peninsula West, Maple Street, Peninsula North [Duneside]) or a few below (Peninsula South, Peninsula North [Riverside]) the cap. Other residential areas are not affected by the new regulation.

Notably, short-term rentals currently in operation are not affected by the cap, granted a grandfathered status by the city until the residence changes ownership.

Still, the new regulations come at too much of a cost for some, including Laura Durham and Tammy Kerr.

Both in the real estate business, they're "very concerned" for the city. "It's very sad here," Durham said.

At the forefront of the town's tourist history, the two recently formed a nonprofit — Saugatuck Neighbors — and plan to take legal action against the cap.

"We’re all good with rules. We like rules," Durham said.

“But they’ve never even given the rules a chance," Kerr added, referring to multiple STR-related regulations passed earlier this year.

In upcoming weeks, the city plans to amend both its zoning and police powers ordinances to enforce the cap. Cummins says the city can "certainly react" and change the cap as necessary but believes "the majority" of full-time residents support the regulations.

"Again, it's about finding that balance," Cummins said. "Similar to other communities across the state and the country, we're wrestling with that exact thing as well."

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