NEW BUFFALO — The New Buffalo City Council during its May 17 meeting approved a second reading of a draft “Ordinance to amend Chapter 11 of the New Buffalo City Code of Ordinances to provide an efficient procedure for revoking rental permits and make other modifications allowing more effective regulation of short-term rental units.”

The ordinance amendment (Number 248) covers the regulatory aspect of everything from the requirements, review procedure and grounds for revocation pertaining to permits and the responsibilities of short-term rental occupants and guests to safety equipment requirements, information on inspections, and the way maximum occupancy is calculated.

Mayor John Humphrey said the city needs to get an enforcement program in place before it can lift the current moratorium on issuing new short-term rental licenses. He said the current ordinance “was not enforceable,” adding that there is one property with 20 ordinance violations that is still operating.

Two issues contained in the draft ordinance that have been raised by council members in the past – the single hearing officer and the collection of data from people staying in short-term rentals – were discussed.

“I think we’re over-reaching, I really do,” said council member Brian Flanagan. “I’m all for enforcement … I don’t want too much regulation.”

Humphrey said the draft ordinance was written by the city attorney to find the most reasonable way to account for the people who are on a property at a given time.

“Perhaps in the future if this works, this can be relaxed,” he said.

Council member Mark Robertson said would like to see the city “get started with our enforcement” after the second reading and deal with issues like the hearing officer and data collection later when more stat has been collected.

“We can tweak some stuff as we move along,” he said.

Ultimately the “regulatory” aspect of proposed new short-term rental regulations received a 4-0 “yes” vote to advance past its second reading. Iit is scheduled to take effect on June 14, 2021.

The short-term rental issue came up during the public comment period earlier in the May 17 meeting, which included the following:

• Ron Watson, who said he lives in R-1 residential zoned Sunset Shores, said he thinks the proposed short-term rental ordinance “will go a long way to allow the city to control and enforce rules concerning short-term rentals, especially needed in an R-1 zoned area. It’s particularly important to control the operation of the bad actors and other short-term rental owners who don’t follow the current rules.” He later said said without limits on numbers or tight controls on operations, the number of people and cars related to short-term rentals in Sunset Shores could “explode.”

• John Natsis asked the council to keep the current rental ordinance created two years ago as is; focus the city’s energies on enforcement of that ordinance for the next 10 months while creating a mechanism for specific and transparent data collection; and lift the current moratorium on rental permits and give up the pursuit of further restraint rentals through zoning.

• Art Goldberg said the short-term rental reservation form proposed in the draft ordinance requires names and dates of birth for all occupants, which he said is overly burdensome. “But beyond that it’s an unreasonable invasion of privacy.”

• Jason Milovich said he feels “we’re going too fast into this,” adding that people doing the right things and getting their homes registered are feeling the repercussions. “The people that continue to do it underground will continue to do it underground.” He added that short-term rentals are the conduit from which tourism flows in New Buffalo.

• Sharon Kelly said she wants to see better enforcement of the present laws. She noted that New Buffalo was recently named fourth-best home rental area in the country.

• Heather Gradowski urged the council to consider short-term rentals as an opportunity to figure out how to make New Buffalo a great place instead of as a problem to regulate and get rid of.

In a related May 17 vote, the council OK’d contracting with Granicus Host Compliance in the amount of $14,723.10 for the first year and $16,856.48 thereafter (on yearly contracts) to assist with management of the city’s Short-Term Rental program.

City Manager Darwin Watson said Granicus will assist city staff to gather real-time data on rental properties and provide a specific phone number and complaint follow up for issues that arise day and night. The firm also will supply the code enforcement department with the data collected. Granicus monitors internet rental sites to keep current on all properties being advertised as rentals, a solution employed in several municipalities and recently deployed in Chikaming Township.

In another May 17 matter, the City Council approved projected budgets for the 2021-22 fiscal year after holding a public hearing on the matter.

The approved budget includes total projected General Fund revenues of $3,462,608 and appropriations of $3,561,300. The beginning fund balance is $2,308,397 and the projected end fund balance is $2,209,705.

Treasurer Kate Vyskocil provided the following information on the 2021-22 budget projections:

The funds expected to be impacted by the pandemic last fiscal year were the Major and Local Street funds (which are funded by the state gas tax), and the LRSB Fund (funded by revenue sharing from the casino). The changes in the Major and Local funds were not significant. However, the LRSB fund disbursement was almost $70,000 less than previous years.

Major/Local Street Funds: Since the City’s budget for the Major and Local street funds already estimated lower, conservative revenues, the revised distributions did not negatively affect the budget last year. This year, the amounts are once again conservative, yet more aligned with amounts received in past years. The City will closely monitor changes in the distributions and make budget/project adjustments as necessary.

Both street funds have healthy fund balances, which are essentially savings accounts in that fund balance money is not allocated as part of the annual budget. The Major Street fund has a current fund balance of $310,930; the Local Street fund has a fund balance of $319,177. These “savings accounts” were intended to mitigate the effects of reduced state revenues.

Local Revenue Sharing Board Fund (LRSB), also known as the “Casino Fund”: The LRSB fund revenue sharing disbursements in previous years ranged between $275,000 and $300,000. Due to COVID-19, last year the City received a reduced payment of $220,880. For the 2021-22 budget year, the disbursement is expected to be on par with previous years.

The LRSB fund has historically been used, and continues to be used, as a special projects fund for the city. It does not fund the general operations of the city. The current fund balance of the LRSB account is $491,247.

General Fund: The General Fund is the main operating fund of the City and is primarily funded by property taxes. As noted in last year’s budget comments, an increase in unpaid property taxes due to economic hardships brought on by the pandemic could result in less taxes being collected up front by the City. However, delinquent property taxes are sent to the County annually after the final tax collection date. Berrien County sends a check to the City in the amount of delinquent taxes outstanding, and then assumes the role of collecting delinquent taxes.

A noticeable change to the General Fund revenues for the 2021-22 fiscal year is the budgeted short term rental fee revenue, which due to fee increases is anticipated to be $150,000.

A deficit of approximately $105,000 is budgeted in the General Fund for the 2021-22 fiscal year. It is a “planned deficit” that allows the City to cover expenses by using money available in the fund balance.

At the end of last fiscal year, General Fund had a fund balance of $1,986,363 of which $1,872.953 was unassigned or unrestricted.

Vyskocil wrote that the Downtown Development Authority (DDA) ill not receive funds again this year due to a negative tax capture in the district. The DDA has not received funds since the 2016-17 fiscal year, when fund received $1,193.00 in tax revenue. The DDA currently has approximately $200 in operating funds.

In response to a public hearing question from Bill Lenga, she said hopefully the DDA will see some money from the Barton Street project next year.

In response to a DNR requirement, Vyskocil reported that marina and harbor operations were taken out of the Parks Fund and put into a newly created Harbor Operations Fund.

“Historically the revenues and expenses were not separated; this fund may need to be amended during the upcoming fiscal year to classify the financials correctly.”

Budgeted expenses as listed by Vyskocil include:

An increase in annual General Fund expenses of approximately $200,000 as a result of hiring a full-time code enforcement officer, a full-time police officer, and enrollment in a vehicle leasing program through Enterprise.

Vehicle leases for six cars including upfront costs to equip trucks for plowing, total $54,202. This will be an annual cost going forward, although lease amounts may fluctuate over time. Vehicle maintenance costs have been approximately $35,000 per year; these costs should eventually be reduced due to newer vehicles being leased.

Storm sewer repairs of approximately $130,000.

The transfer from the General Fund to the Parks Fund to support operating expenses was increased to $100,000.

Lifeguard costs were increased to $60,000 for salaries, $2,200 for lifeguard and equipment, and $4,250 for lifeguard recruitment and training. The total program budget is $66,450, an increase of $18,546 from last year’s lifeguard program budget (City Council members agreed to possibly amend this portion of the budget in the near future after more information is gathered).• Health insurance is expected to incur an annual increase mid-way through the fiscal year. A 7-percent increase is budgeted. Increases in past years have ranged from 5-8 percent. Beginning with 2019-20 fiscal year, the employee contribution rate was doubled to offset the costs to the city.

A 3 percent salary increase for both union and non-union employees.

Notable special projects for the upcoming fiscal year remain to be finalized. However, projects budgeted to date include: Completion of the renovation of the dune walk at the beach; Marquette Greenway trailhead, partially funded bya Recreation Passport Grant; Water main extension on North Drive; Repair storm sewers, address drainage issues and expand sewer service on several city streets.

Potential projects to be determined by the council include: Galien River Seawall/Shoreline Stabilization (possibly utilizing fund balance of General Fund); Road repair and maintenance plan funded by the recently approved millage.

In her monthly report, Parks Director Kristen D’Amico wrote that lifeguard hiring and training has been completed.

“This season we will have 7 guards, 6 full time and 1 part time. The guards will be led by Gavin Ales with Alex Tellez as captain. Both of these guys have done an amazing job the last three seasons and I have complete confidence they will continue to make the city proud.”

D’Amico reported that the boat launch seal coating and striping project was completed on April 30, “and it looks great.”

“The kayak areas have been re-striped to indicate kayak parking only, and the lines have been shortened to a standard parking space. Hopefully the changes will allow for less confusion.”

In other May 17 business the New Buffalo City Council:

• Tabled approval of the New Buffalo Area Recreation Authority Articles of Incorporation under which Authority members the City of New Buffalo, New Buffalo Township and the New Buffalo Area Schools stand to benefit by potentially acquiring, constructing, operating, maintaining and improving public swimming pools, public recreation centers, public auditoriums, and public parks within the jurisdictional limits of the participants.

• Approved a Site Plan to expand the outdoor seating area at the Beer Church, 36 S. Whittaker St.,by constructing a raised deck at the existing patio to include an outdoor pizza oven and pizza bar area. The matter had been tabled at an earlier meeting due to parking concerns. Humphrey said there is more available parking than is required near the site.

• Gave support to an on-premise tasting room permit request to the State Liquor Control Commission from Black Dragon, LLC, at 910 W. Buffalo St.

• OK’d an amendment to the beach concession agreement with New Buffalo Beach Club, LLC, to reflect the name of the new owner, Dan Leung.

• Approved (by a 3-1 vote) a concession license agreement for $2,250 for The Hot Dog Cart to sell at the transient marina (a location which may change).

• Re-appointed Paul Billingslea, Don Stoneburner and Roxanne Lauer to the Planning Commission; re-appointed Richard Cooper and Wayne Borg to the Zoning Board of Appeals; and appointed Jennifer Parello to fill a vacant position on the Zoning Board of Appeals with a term expiring May 2022.

• Awarded payment of $14,650 for a fire hydrant installation and deactivation of the water main on North Berrien Street to Pajay, Inc.

• Authorized the purchase of a Gravely Pro-Stance Mower from Frontier Lawn Services in the amount of $6,500 to be used by city staff.

• Approved partial payments to Mead & White and City Plumbing & Heating in the amounts of $10,426.50 and $23,048.20, respectively, for work at the municipal marina building which was damaged by a fire last summer. Insurance is expected to reimburse the city for costs.

• Agreed to a dispute resolution with the owner of a property where it was confirmed that the city’s storm system was contributing to an environmental matter affecting a boat slip.

• During a discussion on an inquiry about selling three city-owned properties between the city’s public works garage and Walden Way to Steven Cimino (all are located near his home) for $2,500 for each lot. Humphrey said any such sale would have to be at fair market value, an opinion Flanagan said he shares.

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