Changes set to beef up short term rental regs

Whitefish is looking to strengthen its short term rental regulations and at the same time make sure that those operating Airbnb-type rentals are complying with standards.

About 50 short-term rental properties are currently registered with the city, but estimates place the total number of such rentals at about 300, notes City Manager Adam Hammatt.

“There is a blossoming market for short term rentals,” Hammatt said. “Whitefish is the fastest growing market for short term rentals.”

Hammatt said industry experts have noted that Whitefish’s vacation rental market is growing at the highest rate in the country.

“It’s just really growing and compliance has been difficult,” he said.

The city is taking a two-pronged approach to deal with short term rentals. It’s looking to make changes to its zoning code regarding short term rentals and is also considering contracting with a short-term rental compliance company that would track such rentals in the city to ensure compliance.

Under current city regulations, a short term rental is any privately owned house, townhouse unit, condominium unit, apartment or other residence that is rented for less than 30 days. Short term rentals are only allowed in the resort zoning districts and in the WB-2 and WB-3 commercial zones. Proposed amendments to the short term rental code are set to go before the Planning Board for public hearing on Jan. 18 at 6 p.m. at City Hall, and then set to go before City Council on Feb. 20.

While the zones where rentals are allowed won’t change, proposed changes do look to expand the definition of short-term rentals to include a bedroom within a home rented for less than 30 days. Previously, the definition required the entire dwelling being rented to be considered a short-term rental.

A short-term rental permit would now be required for each unit. In the past if a property manager managed more than one unit, the city did not require a permit for each unit.

The city plans to restructure its permitting process to have a joint short-term rental permit and business license, and increase its related fees. Currently, short-term rental application fee is $25 and short-term rental business license fees are based on square footage. Under the new structure, the short-term rental one-time application fee would be increased to $100, and the annual business license fee would be $100 plus $75 per each short-term rental unit. Other changes to the regulations include a requirement that an application be checked to ensure that the rental is in the proper zone before it is inspected by the Fire Marshall and before the Flathead City-County Health Department issues a tourist home permit.

In addition to the regulatory changes, the city is also considering contracting with a short-term rental compliance company to track such rentals.

By using the software, the city is looking to ensure compliance including that a short-term rental is licensed, operating in the correct zone, has been inspected and is collecting resort tax as required.

Hammatt has recommended that the city contract with STR Helper, a software company that works with local governments to manage compliance and registration of short-term rentals. A contract with the company has an annual cost of $17,500.

The company would use information provided by the city along with searches of short-term rental sites to determine which rentals are not complying with standards. A list of those not complying will be forwarded to the city for it to contact the owner.

An owner operating an illegal short term rental can be charged with a misdemeanor under city law. If convicted, can face a fine of $500 for each day the violation continues or up to six months in jail.

Those failing to report resort taxes or paying resort taxes to the city, can face a criminal penalty of up $1,000 or six months in jail or the city can collect civil penalties to collect the resort taxes or require the person convicted to pay a fine.

Hammatt said it’s currently unknown how many of the short-term rental units may be operating in zones where they’re not allowed. He said if it was half of the total rentals — or about 150 — that could mean 15,000 rentals nights that would get moved back to hotels or bed-and-breakfasts.

“We’re looking to level the playing field,” he said for those who are operating legally.

In addition, greater enforcement of the city’s short-term rental regulations has been noted as a way to assist with the city’s shortage of affordable housing since short-term rentals can take away from the housing stock for long-term rentals.

The city expects to have the new regulations in place and compliance efforts beginning in April. Hammatt said this gives the city time to advertise the changes and allows for voluntary compliance before enforcement action begins.

“We want to have this up and running before the summer season,” he said. “We want to give people time to catch-up.”