Short-term rentals are on the chopping block in some Montana cities

By: - October 26, 2023 4:56 pm

Affordable housing illustration (Flickr/CC-BY-SA 2.0).

Montana cities have been feeling the housing shortage in the state and are looking to what could be a solution: Banning short term rentals, like Airbnbs and VRBOs.

The city of Bozeman banned short-term rentals where the owner doesn’t live on the property, and Missoula is considering taking similar action. The state is still looking at actions it can take to increase access to housing, as the Governor’s Housing Task Force reassembled last week.

Housing is an issue across the country, and other municipalities have taken similar measures to ban short-term rentals, like New York City, which recently implemented an up-to $5,000 fine for hosts who aren’t registered with the city, the New York Times reported.

Bozemanites opposed to the ban, many of whom invested their savings into short-term rentals, expressed frustration with the city’s proposal before the city commission voted 3-to-1 to restrict them — with some conditions and grandfather clauses.

“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.”

Nance, like other commenters, said she didn’t feel the ordinance would impact housing supply and that people needed to accept Bozeman as a tourist economy.

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

Proponents from Bozeman Tenants United spoke to the housing crunch’s impact on renters in the community.

“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.”

Commissioners voted to ban “Type 3” short-term rentals where the owner doesn’t live on the premises, but allowed around 100 existing properties to be grandfathered in to meet in the middle with some of the concerned folks worried about their rental property.

Missoula is considering a similar ban that was discussed during a recent city council Land Use and Planning Committee meeting. Councilman Daniel Carlino broached a potential ordinance to eliminate “tourist homes” from a permitted use in residential districts. He made sure to note this was only the first step in the process that would ultimately get a public hearing before the city 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.

Eran Pehan, director of Community Planning, Development & Innovation in Missoula, said in her conversations with other communities in the state, she found Great Falls, Kalispell and Billings all did not have any current restrictions on short-term rentals, and Bozeman and Whitefish do.

Pehan said that while the data shows short-term rentals make up 1% of the housing in Missoula, there’s been a lack of compliance with registering rental properties with the city. Bozeman’s market is slightly higher, at 2 or 3%, but the number of short-term rentals in Bozeman have doubled in recent years.

Missoula ultimately did not make any decisions during the meeting last week, but will continue to discuss the topic before bringing it to the city council.

Montana’s legislature considered banning local governments’ ability to restrict short-term rentals, but the bill sponsored by Sen. Jeremy Trebas, R-Great Falls, ultimately failed to get out of the Senate. Sen. Greg Hertz, R-Polson, sponsored a bill that would have provided sideboards to potential local restrictions, like requiring a grandfather clause for already-existing rental property and making it law that short term rentals would be considered residential pieces of property. But this bill failed as well, dying on the House floor.

However, Montana is still looking at statewide solutions to the housing crisis, with the governor’s Housing Task Force assembling again to continue to look at solutions to increasing housing supply and accessibility.

Gov. Greg Gianforte, a Republican, said the housing initiatives that did make it across his desk increase housing supply through development and zoning reforms, like allowing accessory units on a property.

Neither in the executive order continuing the task force, nor in his remarks, did Gianforte mention short-term rentals, attributing the housing shortage to lack of construction labor and zoning restrictions.

The housing task force in its Phase I report recommended short-term rental locations and revenues be reported for data collection.

“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.

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Nicole Girten
Nicole Girten

Nicole Girten is a reporter for the Daily Montanan. She previously worked at the Great Falls Tribune as a government watchdog reporter. She holds a degree from Florida State University and a Master of Science from the Medill School of Journalism at Northwestern University.