Some Montana cities are considering banning short-term rentals

Montana – Cities in Montana are feeling the effects of the state’s housing scarcity and are considering the possibility of outlawing short-term rentals like Airbnb’s and VRBOs.

Bozeman outlawed short-term rentals in which the owner does not reside on the property, and Missoula is thinking about following suit. The Governor’s Housing Task Force met again last week, and the state is still considering what steps it may take to improve housing availability.

Housing is a problem nationwide, and some localities have banned short-term rentals in a similar manner. New York City, for example, recently imposed a $5,000 fine on hosts who are not registered with the city, according to the New York Times.

Prior to the city commission’s 3-to-1 vote to prohibit short-term rentals with certain conditions and grandfather clauses, Bozemanites who opposed the ban—many of whom had invested their savings in them—expressed their dissatisfaction with the city’s proposal.

“Some are using the income as part of their retirement income. We can’t take away a source of income from people that are following the rules and have planned for this source of income for many years,” said resident Liz Nance, who said her daughter works in the “STR hospitality business.”

Like other commentators, Nance expressed her opinion that Bozeman’s economy is mostly driven by tourists and that the ordinance will not affect the availability of housing.

“The short-term rental occupancy contributes positively to our local service economy keeping businesses such as restaurants, fishing guide services, and retail shops busy throughout the year with a diversity of clientele,” she said. “We cannot take all of this way.”

Bozeman Tenants United supporters discussed how the housing crisis has affected local tenants.

“I have found myself homeless repeatedly since I moved here; this is not something I have experienced ever before,” said commenter Brianna with Bozeman Tenants United. “I believe this ordinance, while it may not solve all of the housing issues, will be a good start and not only providing more available housing for our community, but also it will protect future housing from being bought up by investors who don’t necessarily care about Bozeman or the people who live and work here.”

In order to reach a compromise with some of the worried parties regarding their rental property, commissioners decided to forbid “Type 3” short-term rentals where the owner does not reside on the property. However, they grandfathered in roughly 100 current homes.

A similar prohibition that was discussed at a recent meeting of the city council’s Land Use and Planning Committee is being considered in Missoula. A prospective proposal to remove “tourist homes” from the list of allowed uses in residential neighborhoods was brought up by Councilman Daniel Carlino. He took care to point out that this was just the beginning of the procedure that would lead to a public hearing before the municipal council.

“Basically, the essential question we need to answer is: Do we think that tourist homes are commercial pieces of property or residential pieces of property?” Carlino said.

In her talks with other towns in the state, Eran Pehan, director of Community Planning, Development & Innovation in Missoula, discovered that while Bozeman and Whitefish now have limits on short-term rentals, Great Falls, Kalispell, and Billings do not.

Pehan stated that although the data indicates only 1% of Missoula’s housing consists of short-term rentals, there has been noncompliance with the city’s requirements for rental property registration. Although Bozeman’s market is slightly larger—between two and three percent—the city has seen a twofold increase in short-term rentals in recent years.

At the end of the meeting last week, Missoula decided not to make any decisions, but they will keep talking about it before bringing it to the city council.

The Montana legislature debated prohibiting local governments from imposing restrictions on short-term rentals, but Sen. Jeremy Trebas, a Republican from Great Falls, was the bill’s sponsor, and it eventually died in the Senate. A bill introduced by Sen. Greg Hertz, a Republican from Pollson, would have created legal buffers against future municipal regulations. Some of the buffers included mandating a grandfather clause for rental properties that are already in existence and establishing the legal definition of short-term rentals as residential real estate. However, this measure was also defeated, dying on the House floor.

However, the governor’s Housing Task Force is getting back together to continue looking at ways to increase the supply and accessibility of housing as part of Montana’s statewide efforts to address the housing problem.

The Republican governor, Greg Gianforte, claimed that the housing projects that did reach his desk improve the supply of homes by allowing accessory apartments on properties and redeveloping existing land.

Gianforte blamed the housing scarcity on zoning limitations and a lack of building workers, mentioning short-term rentals neither in his remarks nor in the executive order extending the task committee.

In order to gather statistics, the housing task group suggested in its Phase I report that short-term rental sites and revenues be disclosed.

“We’ve gotten a lot of good things done. We’re creating an environment where we can increase housing supply, but as I said at the beginning, better is always possible,” he said.