LANSING, Mich., May 12, 2022– Representative Sara Cambensy(D-Marquette) and Representative Greg Markkanen (R-Hancock) sent a letter to Commerce and Tourism Chair Pauline Wendzel this week urging her to take up HB 5521for a hearing that would allow Michigan Upper Peninsula Counties to capture a 6% excise tax on short – term rentals. Currently, only designated hotels are allowed to charge up to a 6% room assessment fee as part of their County Convention and Visitor’s Bureau.
The bill, sponsored by Representative Cambensy, came after U.P. counties have seen exponential growth in tourism numbers over the last 10 years, and a strain on public safety services, trails, and local housing by non-local residents. Alger County, which has Pictured Rocks National Lakeshore, and Keweenaw County have been particularly busy, seeing a record number of visitors to their small communities . While the increase in visitor spending is a boon to local businesses, it’s beginning to put major strains on local taxpayer resources that can leave public safety officials stretched way too thin.
Representative Cambensy had the following to say about the bill:
“Tourism is a great economic driver for our small businesses and restaurants. My bill doesn’t take a penny away from the marketing and promotion, things that our Convention and Visitors Bureaus and the Pure Michigan campaign help our U.P. communities through their hotel assessment fee. My bill simply looks to apply a similar tax on short-term rentals in order to help
our local communitie manage the increased number of visitors. When counties like Alger (population: 9,098) and Keweenaw (population: 2,102) see 1.2 million to 1.4 million visitors come through it to recreate mostly during our summer months, you can imagine the strain that places on local officials to make sure they have the services and manpower necessary to keep people safe. The last thing we want is for our visitors to call 911 for help-only to find there is no search team, no patrol officer, no DNR conservation officer, and no ambulance coming to get them. The same is true for our local taxpayers who live here year-round. Locals expect their taxes to cover their needs, and they don’t want to have their services jeopardized by visitors when they need them.”
Representative Markkanen agreed, and had the following to add:
“Tourism is the lifeblood for many communities in the Western U.P. We have counties with only a few thousand residents that have to be able to accommodate for hundreds of thousands of visitors every year. We’re seeing an uptick in situations in the Keweenaw Peninsula where search and rescue is needed but lacks important resources and is severely underfunded. Our public safety departments need a boost in funding to be able to keep both residents and visitors safe.”
Local Convention and Visitors Bureaus are allowed to use a room assessment fee to pay for the bureaus operations and the marketing and promotion of tourism to Michigan. These room assessment fees are prohibited from being used for government purposes and
restrict their ability to help our local communities manage tourists, pay for infrastructure or invest in our trail network.
HB 5521 would allow local counties to bring the question to their residents and ask them for the ability to levy a 6% excise tax on short-term rentals, with the local counties being able to use it for the following purposes: 3% for public safety services and infrastructure, 1% for trail emergencies, upgrades or maintenance, .5% for Michigan State Police for additional highway road patrol, .5% for additional DNR conservation officers, and 1% for local housing needs.
Due to each county having unique differences in who offers public safety services, every county
is expected to work with their cities, townships and villages to determine ballot language on how the 3% revenue will be shared.
Similarly, each county will have the ability to create a trail committee with representation from both motorized and non – motorized sports organizations to determine where that funding goes.
Currently, the 6% room assessment fee brings in almost $8 million annually to U.P. Convention and Visitor Bureaus.
Cambensy expects the annual amount to be similar for short term rentals
in each county.
“There is competing legislation out there that looks to take the additional 6% currently not being collected on short- term rentals and allow local Convention and Visitors Bureaus (CVB’s) state- wide to collect it as a room assessment fee, having it go towards more marketing and promotion
of tourism. When my office did the research on how much revenue was already being collected just from our U.P. CVB’s room assessment, we were shocked that it was almost $8 M annually. I don’t think you will find many local residents who think we need to double our promotion and marketing of the U.P. right now. From the feedback I’m getting, locals want to see tourism managed better, their public safety services protected, a local housing fund created to help build
more affordable houses or apartments that short – term rentals are taking off the market, and their trails maintained better from having more users on them. Everyone from snowmobilers to ATV riders to mountain bikers to horseback riders to local officials have brought either complaints or requests for additional funding to our offices , and we drafted HB 5521 to reflect and address those concerns.”
Cambensy also stressed the importance of working together with the Pure Michigan campaign and our local CVB’s on solving tourism management issues.
“Michigan has one of the most envied state travel agencies in the country and we want to protect and help grow Pure Michigan’s success that our local CVB’s work so hard at promoting. We just need to sit down and increase communication between our CVB’s, the MEDC where Pure Michigan is housed, and our local officials more to create better partnerships.
If we can resolve the issues our locals are facing in managing tourism and help our residents feel that the increase in tourism isn’t taking anything away from their communities, the level
of success both sides want to see can absolutely be achieved. I think the sky is the limit if we can work together to make the U.P.’s tourism economy be second to none in the nation, while residents have the quality of life and community services protected that they desire.”
Cambensy and Markkanen hope to get a hearing on HB 5521 this spring. They are also working with Senator McBroom to see if senators are open to exploring a regional approach to the short –
term rental excise taxes, allowing each region to use the 6% tax in ways that allow their locals to best manage the tourists to their areas.