The Montana Legislature is currently deliberating on a proposed bill that would grant cities, counties, and resort districts the choice to impose a tax on short-term rentals, similar to those offered by Airbnb. However, this tax would only apply if the generated revenue is utilized to provide rebates to landlords who offer long-term rentals to local workers.
Sponsored by Rep. Jane Gillette, R-Bozeman, House Bill 430 would let local governments add a quarter-percentage-point on short-term rentals on top of the state’s existing 8% lodging tax. That money, $0.25 per hundred dollars of revenue, would go to “rent local” programs that sweeten the deal for landlords who choose to rent their properties to employees of local businesses at specified rents.
During the House Taxation Committee’s initial hearing on Friday, Gillette expressed her view that the measure serves as a partial solution to Montana’s housing shortage. She emphasized the importance of constructing additional housing options to meet the needs of both workers and tourists, thereby addressing the ongoing housing crisis.
She stated that she views it as a temporary solution until we are able to increase the availability of products in our markets.
During the Friday hearing, the rent local tax bill received backing from various organizations including the Montana League of Cities and Towns, the Montana Lodging and Hospitality Association, Lone Mountain Land Company, the Yellowstone Club, Gallatin County, the City of Bozeman, and the Town of West Yellowstone. While no opponents presented their testimony, a few conservative lawmakers on the committee expressed skepticism through their questioning.
Supporters claim that over the past few years, the prevalence of short-term rentals has significantly increased in various resort communities in Montana due to property owners finding them to be more profitable than long-term rentals, which are capable of accommodating residents throughout the year. As a result, individuals employed in industries such as hospitality, education, and emergency services are finding it difficult to secure housing and are forced to endure lengthy commutes. Additionally, this situation poses a hiring challenge for employers in these communities.
“The housing challenges faced by Montana communities are intricate, costly, and require long-term solutions,” explained David O’Connor, the executive director of the Big Sky Community Housing Trust. He added, “By introducing the rent local bill, communities regain control and gain an immediate mechanism to combat the erosion of their permanent housing caused by the vacation rental industry.”
An existing Rent Local program in Big Sky converted 21 homes to house 58 workers in its first three months of operation, according to the Bozeman Daily Chronicle, which also reported the effort was initially funded with donations. That program currently offers an $11,880 incentive to property owners who commit to enrolling a one-bedroom unit in the program for two years.
Data from the Montana Department of Revenue included in a report produced by Gov. Greg Gianforte’s housing task force estimates that towns like West Yellowstone and Ennis have more than 10 short-term rental units rented a night per 100 residents, an indication that Airbnb-style rentals have consumed a significant portion of their housing stock. Big Sky, Gardiner, Kalispell, Livingston and Red Lodge also have relatively high short-term rental rates, that data indicates.
This story is published by Montana Free Press as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at [email protected].
