SENATE BILL NO. 880
A bill to provide for registry, promotion, and regulation of certain short-term rentals and hosting platforms; to create certain databases; to provide for imposition and collection of a statewide excise tax; to provide for the disbursement of the excise tax; to establish the functions and duties of certain state departments and employees and certain local units of government; and to prescribe penalties and remedies.
the people of the state of michigan enact:
Sec. 1. This act may be cited as the "short-term rental regulation act".
(a) "Booking transaction" means when a hosting platform, in exchange for compensation, facilitates a short-term rental transaction by directly or indirectly enabling the reservation of a short-term rental or collecting or processing occupancy charges.
(b) "Carbon monoxide detector" means a device that detects carbon monoxide and alerts occupants via a distinct and audible signal that is either self-contained in the unit or activated via a system connection.
(c) "Department" means the department of licensing and regulatory affairs.
(d) "Director" means the director of the department.
(e) "Hosting platform" means service through a digital platform, third-party website, software, online-enabled application, mobile phone application, or some other similar electronic process that allows all of the following for a short-term rental located in this state:
(i) Advertisement, listing, or offer of the short-term rental as available.
(ii) Collection of occupancy fees.
(iii) Arranging, booking, reserving, or renting of the short-term rental by a person.
(f) "Local unit of government" means a city, township, or village.
(g) "Occupancy charge" means the charge imposed for the use or occupancy of a short-term rental, excluding charges for food, beverages, state use tax, telephone service, cleaning fees, service fees, damage deposit or insurance, or like services paid in connection with the charge, and reimbursement of the excise tax imposed by this act.
(h) "Owner" means the owner of a short-term rental located within this state.
(i) "Short-term rental" means the rental of a single-family residence, a dwelling unit in a 1-to-4–family house, or any unit or group of units in a condominium unit, for terms of not more than 30 consecutive days.
(j) "Short-term rental database" means the short-term rental database created in section 3.
(k) "Short-term rental excise tax" or "excise tax" means the short-term rental excise tax assessed on each short-term rental occupancy charge under section 6.
(l) "Smoke detector" means a device, either battery operated or electrical, that detects visible or invisible particles of combustion.
(m) "Use tax" means the tax imposed under the use tax act, 1937 PA 94, MCL 205.91 to 205.111.
Sec. 3. (1) The department shall create and operate a short-term rental database, updated each year, with the information provided in subsection (2).
(2) Each year in which a dwelling is offered for short-term rental, the owner shall file with the department a certificate that provides all of the following:
(a) Name and address of the owner of the short-term rental.
(b) Address of the short-term rental.
(c) Certification that the owner has $1,000,000.00 or more liability insurance on the short-term rental.
(3) The director shall prescribe forms necessary for the administration of the short-term rental database.
(4) Upon lawful request, the department shall share the information provided under subsection (2) with the local unit of government where the short-term rental is located. If the department shares that information provided under subsection (2) pursuant to this subsection, the department shall also report the number of complaints received by the department against an owner for a violation of this act and the action taken in response to the complaint, including any investigation to verify the complaint.
Sec. 4. An owner of a short-term rental shall maintain liability insurance of $1,000,000.00 or more on each short-term rental while it is being offered for rent unless that short-term rental is offered through a hosting platform that maintains equal or greater insurance coverage. Insurance coverage described in this section must defend and indemnify the owners and any tenants in the short-term rental for bodily injury and property damage.
Sec. 5. An owner of a short-term rental shall not offer a dwelling for short-term rental unless the dwelling is equipped with all of the following functional equipment:
(a) Carbon monoxide detector that may be battery-powered, plug-in with or without battery backup, wired into the property's AC power line with secondary battery backup, or connected to a system by means of a control panel.
(b) Smoke detector.
(c) Fire extinguisher.
Sec. 6. (1) A statewide excise tax known as the short-term rental excise tax is levied on the charge for use or occupancy of a short-term rental in this state. The rate of the short-term rental excise tax is 5% of the occupancy charge.
(2) The excise tax imposed under this act must be collected at the same time and in the same manner as the tax imposed by the use tax act, 1937 PA 94, MCL 205.91 to 205.111.
Sec. 7. (1) The excise tax imposed under this act must be administered by the state treasurer under 1941 PA 122, MCL 205.1 to 205.31.
(2) The state treasurer shall prescribe the forms necessary for the administration of this act and may promulgate necessary rules under the administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to 24.328.
(3) The excise tax imposed under this act is in addition to any other tax, fee, or assessment imposed by law.
(4) Proceeds from the collection of the excise tax imposed under this act must be deposited into the general fund.
Sec. 8. An owner of a short-term rental may reimburse himself or herself by adding the amount of the excise tax to the occupancy charge charged to short-term rental guests only if the owner discloses it on the bill or receipt provided to the short-term rental guest.
Sec. 9. (1) An owner of a short-term rental that violates this act is responsible for a civil fine and may be ordered by the department to pay a civil fine of not more than $1,000.00 for each violation.
(2) A hosting platform that violates this act is responsible for a civil fine and may be ordered by the department to pay a civil fine of not more than $5,000.00 for each violation.
Sec. 10. (1) A hosting platform shall not facilitate booking transactions for a short-term rental located in this state unless the hosting platform is currently and validly registered with the department under this section. The department may issue a registration number to each hosting platform that does all of the following:
(a) Meets the requirements of this act and its related rules.
(b) Pays an annual registration fee to be determined by the director. The annual registration fee must be an amount equal to $100.00 per listing, not to exceed $50,000.00 per year as determined by the department.
(c) Agrees in writing to obtain written consent from all owners of a short-term rental located in this state for the disclosure of the records required under subsection (4) to the state treasurer.
(2) A hosting platform shall not facilitate booking transactions for a short-term rental located in this state unless the owner of the short-term rental has filed with the department the certificate required under section 3(2).
(3) The department shall adopt by rule, and enforce, standards for the issuance, renewal, suspension, revocation, and appeal of hosting platform registration, as well as standards for service of process, notice, and demand.
(4) Notwithstanding any other provision of law or administrative action to the contrary, a hosting platform shall do all of the following:
(a) Develop and maintain a report, in a manner and form established by the state treasurer, of short-term rental booking transactions facilitated by the hosting platform in connection with short-term rentals located in this state. The report required under this subdivision must include the following records itemized for each individual short-term rental booking transaction:
(i) Address, including any unit designation, of the short-term rental.
(ii) The full legal name of the owner.
(iii) The calendar dates that the short-term rental was rented, along with the nightly rate and any taxes or assessments collected.
(iv) The amount of the hosting platform's compensation for facilitating the booking transaction.
(v) Any additional records as the state treasurer may require by rule to enforce the payment of the excise tax.
(b) Subject to applicable laws, provide the state treasurer monthly with the report's itemized records for all booking transactions facilitated in the preceding month.
(c) Subject to applicable laws and except as provided under this subdivision, make the full report described under subdivision (a) available to the state treasurer when requested by the treasurer. A report version made available to the treasurer must not include copies of specific message exchanges between any of the following:
(i) Hosting platform.
(ii) Owner.
(iii) Guest.
(iv) Other person that booked a short-term rental.
(d) Maintain itemized records within the report for a period of 3 years following the end of the calendar year in which the individual short-term rental booking transaction occurred.
(5) The state treasurer may audit a hosting platform's report and its itemized records as necessary.
Sec. 11. (1) A local unit of government may enact reasonable regulations regarding 1 or more of the following for short-term rentals to safeguard the public health and safety:
(a) Noise.
(b) The number of individuals who may occupy a short-term rental at a specific time.
(c) Property maintenance.
(d) Health and sanitation.
(e) Traffic control.
(f) Solid and hazardous waste and pollution control.
(g) Designation of an emergency contact for the short-term rental and availability of the owner or owner-agent within a specified distance of the short-term rental. As used in this subdivision, "owner-agent" means a person who operates or manages property offered for short-term rental.
(h) Registration and inspection to determine health and safety compliance.
(i) A fee, not to exceed the actual direct expense for administration of registration and inspection.
(2) A regulation enacted pursuant to subsection (1) must not do either of the following:
(a) Restrict the use of short-term rentals.
(b) Conflict with a zoning ordinance or the Michigan zoning enabling act, 2006 PA 110, MCL 125.3101 to 125.3702.
Enacting section 1. This act does not take effect unless House Bill No. 4722 of the 101st Legislature is enacted into law.