City may look to add further regulation to short-term rentals

Whitefish may not be finished with tightening up its regulations for short-term rentals.

Council in February adopted an update to its short-term rental rules limiting the zoning districts where they are allowed and requiring a permit for each unit.

In addition, the city began this spring using STR Helper, a software company that tracks vacation rentals to ensure compliance with its regulations. Through using the software, the city’s Planning Department found that there are 130 vacation rental units being advertised in the city and of that about 80 are already permitted with the city.

The city is still working to identify short-term rentals in the city, but has already sent out 10 letters telling owners they are not allowed to operate a short-term rental and must stop. The city in May received about 20 permits from short-term rentals and expects around another 30 to submit permits before the end of June after owners were notified of being required to register.

Council held a work session last week to take a look again at the issue, and what options might be available for further regulation.

City Attorney Angela Jacobs noted that there is a total limit on the number of short-term rentals that could operate in Whitefish because they are limited to certain zones.

“Do we have a problem in Whitefish?” she asked Council. “You have to decide that before we move forward with trying to solve a problem we don’t have.”

Mayor John Muhlfeld said it might be in the city’s best interest to implement some kind of cap on the total number of short-term rentals allowed in the city.

“The problem is greater than the numbers are reflecting,” Muhlfeld said. “It seems like we’re saturated. Are we comfortable with that?”

Early estimates put the total number of short-term rentals at about 300 in Whitefish. However, city staff notes, that several short-term rentals are likely operating on Big Mountain outside city limits and not counted in the updated total, but still could have an impact on Whitefish.

Councilor Katie Williams said she’d like a map showing the number and location of current short-term rentals, along with a total number of properties in the city that could be allowed to operate vacation rentals based upon zoning.

Short-term rentals are only allowed in the resort zoning districts and in the WB-3 commercial zones of the city. Changes to the short-term rental code expanded the definition of short-term rentals to include a bedroom within a home rented for less than 30 days.

Councilor Richard Hildner expressed concern over rentals that advertise as being for more than 30 days for rental, but actually rent for shorter periods of time.

“I would like to try to get a handle on those who try to game the system by saying they only rent for 30 days, but then when you call they say they can work with you for shorter time,” he said. “A good portion of what I have is angst about that.”

Jacobs outlined multiple regulations in cities across the U.S. noting that most place restrictions on where short-term rentals are allowed and some cap the total number. Many cities require licensing of such rentals, and some require that an owner be on site. Some cities regulate the total number of rentals that can be owned by one person or corporation.

Jacobs said there are pros and cons to short-term rentals operating in Whitefish.

“Visitors are known to stay longer in short-term rentals, which can have economic benefit through spending at other businesses,” she said. “They also may not be collecting bed taxes like they are required to do, and they can have an impact on neighborhood character with traffic and noise.”

She said short-term rentals could likely be having an impact by removing housing units from the total number available in the city for long-term rental, but it’s too early to “really draw conclusions on that yet.”

Some states have gone so far as to pass laws that prohibit cities from regulating short-term rentals, but Jacobs, noted that is unlikely to happen in Montana.

Rhonda Fitzgerald, who owns the Garden Wall Inn, encouraged Council to keep looking at options to keep short-term rentals under control.

“There is a lot happening fast,” she said. “This is like a gold rush. We may not see a problem now, but this will happen, and we need to be proactive.”