With the arrival of warmer weather and daylight saving time, it becomes evident that tourist season is drawing near in Bozeman. The impact of tourist lodging on the city and the appropriate response from the city have become highly debated topics in the valley.
Last month, Bozeman Tenants United held a town hall meeting attended by about 300 people and some city commissioners. The new tenant union’s first major initiative is advocating for a ban on certain types of short-term rentals (like Airbnbs and VRBOs) in Bozeman, with the idea that those homes would be converted into long-term housing. The city’s current ordinance limiting short-term rentals, the group maintains, doesn’t go far enough.
Determining the extent to which prohibiting short-term rentals would alleviate the exorbitant housing expenses in Bozeman is a complex matter.
According to Takami Clark, a spokesperson for the city, Bozeman currently has a total of 760 registered short-term rentals. This figure represents approximately 3% of the overall households in the city.
Bozeman Deputy Mayor Terry Cunningham expressed his concern about the increasing preference for short-term rentals over contributing to the actual residential supply, stating, “Although it may appear insignificant, this shift in new developments towards short-term rentals is worrisome to me.”
Bozeman Tenants United, established during the summer of 2022, aims to address what it perceives as Bozeman’s “predatory housing market”. Their objective is not to ban all short-term rentals, but specifically target “type-two” and “type-three” rentals.
Type three refers to a rental property that is not currently inhabited by the owner. Type two encompasses a wide range of short-term rentals, including entire units, accessory dwelling units (ADUs) attached to the primary residence, or duplexes where the owner is absent for the duration of the rental period.
According to Benjamin Finnegan, an organizer for the tenants union, renting a room in someone’s home falls under the category of a type-one short-term rental and would remain unaffected by the ban being proposed, as reported by Montana Free Press.
However, it is currently difficult to determine the exact number of units that would be added to the city’s long-term housing stock if type two and type rentals were banned.
Data on how many of each type of short-term rental exists in Bozeman is currently unavailable, according to the city. But there are some important numbers the city does know. The city estimates it will need between 5,405 and 6,340 new housing units by 2025 to meet projected demand, according to a 2019 community housing needs assessment. That’s about 770 to 905 new units per year. From January 2019 until mid-March of this year, the city’s “best estimate” of new dwelling units is 3,378, with another 1,000 or so in the pipeline. But a “significant” portion of those appear poised to become short-term rentals, Cunningham said.
Bill Goold and Elle Magana, authors of an op-ed in the March 22 edition of the Bozeman Daily Chronicle, stated that Gallatin County is home to over 1,600 Airbnbs, with 500 of them located within the city limits of Bozeman. The op-ed also revealed that the ten most prominent Airbnb owners in Bozeman collectively possess a minimum of 100 entire homes.
Mark Egge, a Bozeman-area affordable housing advocate and member of Gov. Greg Gianforte’s housing task force, pointed out that despite acknowledging the statistics, implementing a ban on short-term rentals could present its own set of problems.
Egge stated that while every extra unit is beneficial in times of housing shortage, the decision to prohibit short-term rentals should be carefully considered in light of its potential impact on the economy.
Egge pointed out that if short-term rentals become less available, it could discourage potential tourists from visiting Bozeman.
In Big Sky, the initiative to transform short-term vacation rentals into long-term rentals has already been put into action.
A program in the resort town offers landlords money to change their vacation rentals into long-term rentals for locals. The program doles out anywhere from $5,400 to $17,820 to individual landlords, depending on the time commitment and number of bedrooms in a rental. Ninety-seven properties housing 231 local residents have come under the program since its advent in 2021, according to Becky Brockie, program director for the Big Sky Community Housing Trust.
Zoning sets Bozeman apart from destinations like Big Sky in one critical aspect.
The Bozeman City Commission passed an ordinance in 2017 that implemented zoning requirements for various types of short-term rentals. The ordinance bans short-term rentals that are not owner-occupied in nearly every residential area. In other words, if an out-of-state investor wanted to legally set up an Airbnb in Bozeman, they’d be mostly limited to Main Street, Seventh Avenue and other business districts.
According to Egge, “Bozeman’s short-term rental ordinance is highly effective. It serves as an exemplary model that should be implemented statewide.”
Egge mentioned that locations like Big Sky, Ennis, West Yellowstone, and Gardiner, which are flooded with short-term rentals, lack zoning regulations.
On a nightly basis, Ennis offers just fewer than 15 short-term rentals per 100 residents on a given night, the highest rate in the state, according to a report from the governor’s housing task force.
In contrast, Bozeman has a ratio of less than one short-term rental per 100 residents. Bozeman is part of a group that includes Whitefish, Billings, Missoula, and Hamilton, which have implemented similar regulations for short-term rentals. According to the report, all these cities have a lower number of short-term rentals per 100 residents compared to Ennis, Big Sky, Livingston, and Bigfork.
However, according to Joey Morrison, a member of Bozeman Tenants United, the group is not pleased with the effectiveness of the Bozeman ordinance. Despite being restricted to specific areas, there are still numerous vacation rentals available, which could have been utilized as long-term housing options.
It’s also possible that the city is undercounting. For example, a Montana PBS investigation in 2018 found that some Montana homeowners don’t register their short-term rentals as Bozeman requires.
“The zoning ordinance is not good,” Morrison stated. “It lacks sufficiency.”
The prohibition of specific short-term rentals could potentially have adverse effects on certain members of the local community.
According to Egge, implementing a ban on certain vacation rentals could potentially benefit a few individuals in finding permanent housing, but it would also adversely affect those who are already facing difficulties in meeting their mortgage payments and depend on income from short-term rentals. This is particularly significant considering the high median price of a single-family home in Bozeman, which stands at approximately $800,000, as reported by the Gallatin Association of Realtors.
Morrison and Tenants United have stated that they have a plan in place to prevent that outcome.
The group aims to transition into long-term housing for rentals that involve residents living on the property, such as an ADU. They plan to achieve this by utilizing a model similar to the Rent Local program in Big Sky, where they will continue paying the current landlords.
According to Finnegan, the organizers are hopeful that the city will utilize funds from its community housing fund. However, he also mentioned that it remains uncertain whether this source of funding is suitable and subject to potential changes.
House Bill 430, sponsored by Rep. Jane Gillette, R-Bozeman, and modeled after Big Sky’s rental local program, would allow local governments to increase state taxes on short-term rentals by 0.25%, with the money funding programs that pay landlords to rent their units long-term.
There was also an attempt in the current legislative session by Sen. Jeremy Trebas, R-Great Falls, to outlaw the banning and regulation of short-term rentals, defined as rentals that last for less than 30 days.
In a text message to MTFP, Trebas expressed his desire to ensure that individuals can generate income from their investments, including their personal belongings and homes, particularly.
That bill failed, so for now short-term rental bans can be implemented by Montana’s municipalities.
South Lake Tahoe, a resort city in California, has already prohibited vacation home rentals in residential areas, making Bozeman not the first tourist town to consider a ban on short-term rentals.
The ordinance stripped permits from roughly 1,000 short-term rentals, which did not seem to negatively impact tourism, according to the Tahoe Daily Tribune. What’s more, the city manager told the Tribune that about 30% of those homes transitioned to rentals that last longer than 30 days.
That measure, however, is currently being litigated after the South Lake Tahoe Property Owners Group filed a lawsuit alleging that the ban is “unconstitutional and unenforceable,” according to the Tribune.
According to city spokesperson Clark, the commission in Bozeman is currently investigating the possibility of implementing a ban on type three short-term rentals. Additionally, they are considering scheduling another work session on this topic during the summer.
In addition to considering a complete prohibition, the commission is exploring alternative measures such as imposing restrictions, reclassifying short-term rentals, implementing fee hikes, and exploring other potential solutions.
Cunningham explained that the purpose of the work session is to gather information and it is still too early to determine the best solution.
In-depth, independent reporting on the stories impacting your community from reporters who know your town.
