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Lawsuit Prompts Changes to City’s Short-Term Rental Rules

Facing the potential of a lawsuit from the Wisconsin Realtors Association (WRA), Sturgeon Bay’s Plan Commission recommended Nov. 14 that changes be made to the city’s short-term rental (STR) rules.

The law firm representing the WRA, Zimmer & Rens, filed a notice of claim back in September demanding that the city, by Jan. 10, repeal a section of the municipal code related to who may be permitted to operate an STR, also referred to as a tourist rooming house.

Sturgeon Bay began licensing STRs in 2016, after the biennial state budget approved in 2015 included a provision that made it possible for property owners in Wisconsin to rent out their homes on a short-term basis – 30 days or less – while limiting a municipality’s ability to restrict those rentals. 

Under the current city code, STR owners/operators must reside “within Door, Kewaunee, or Brown Counties during periods in which the tourist rooming house is rented.” However, the code states that provision “may be waived” if the STR owner/operator enters into a “valid management contract with a management company located within Door County.”

In response to the WRA claiming that “the waiver of the unlawful residency requirement is not mandatory or guaranteed upon compliance, but rather a mere possibility,” the commission favored changing that wording so that the city code would allow STR owners/operators or the management companies contracted with to be located within a 90-minute drive of the STR.

Community development director Marty Olejniczak said someone residing just out of the three-county region would be able to drive to Sturgeon Bay within that time period and not be prohibited from owning or operating an STR in the city.

“The purpose of that rule is if there’s issues, that they can be quickly addressed, not somebody from Florida [who is] not able to deal with it,” he said.

Olejniczak said only about 20 of the more than 100 licensed STRs in Sturgeon Bay are owned by someone who doesn’t live in the three-county region, so the change wouldn’t apply to most of them.

The commission also favored a change in the code so that current residential properties with less than two off-street parking spaces will not be prohibited from operating an STR.

Because municipalities under state law cannot outright prohibit STRs of seven or more days, Olejniczak said requiring a minimum of two off-street parking spaces for residences which don’t already have them could be seen as an illegal prohibition of an STR for that length of time.

The City of Sturgeon Bay’s STR license fee is currently one of the least expensive in Door County at $100 per unit for a new or renewed permit, with a renewal occurring one year after the original application and then every two years after that.

State law requires the fees charged relate to the actual costs of administering and enforcing the code for STRs, and municipalities may not charge excessive fees for licensing STRs.

Because of concern about the city not covering its costs by renewing an STR license every two years, the commission favored another change calling for the licenses to be renewed annually.

Olejniczak said the commission’s recommended changes to the STR rules will be forwarded to the Community Protection and Services Committee for review before being considered for final approval by the Common Council.