Whitefish makes headway on shutting down illegal vacation rentals

Whitefish City Council at a work session last week received an update on the new short-term rental enforcement process and discussed potential changes to the Legacy Homes Program. 

Codi Evenson, Whitefish’s short-term rental specialist, was hired last spring to get a handle on the number of illegally operating vacation properties. 

A short-term rental is a property that allows stays of less than 30 days. A legally operating short-term rental must have a permit, be in a zoning district that allows short-term rentals, pay resort tax and have necessary inspections.  

Evenson said there are currently 380 short-term rental units operating in Whitefish, 313 of which are actively advertising online.  

Fifty-one of the short-term rentals in Whitefish are unpermitted and 19 of those are in zoning districts that do not allow vacation rentals. Evenson reported that 22 units that had been operating outside of allowed zones have been removed from the market or changed into monthly rentals. 

Before Evenson was hired in March, the city did not have a short-term rental enforcement process. Evenson has built the program from the ground up and is interested in networking with other cities that have short-term rental enforcement. 

“There are no other real enforcement arms in the state,” Evenson said. “Bozeman doesn’t have one. Kalispell has a permitting system, but they do not have a short-term rental compliance officer.” 

Evenson said the software the city obtained to help enforce short-term rental regulations, RentalScape, has been a great tool and has significantly improved her ability to identify properties and gather detailed information about them. 

“To prosecute illegal short-term rentals, you have to prove that they are advertising,” Evenson said, because an advertisement proves a financial transaction is occurring. 

Once an illegal rental property is identified, the owner receives a first notice of violation and has 15 days to comply. If they fail to do so, a second notification is given via certified mail and the owner has 10 days to comply before the property will have a red door hanger posted, at which time the owner has 48 hours for compliance. 

At this point, the city attorney would review the situation and legal action could ensue. 

“Cody has done an amazing job with being proactive and we’ve actually had pretty good responses from letters that we’ve sent,” Whitefish City Attorney Angela Jacobs said. 

Whitefish code requires short-term rentals to have an annual fire safety inspection and Evenson is currently working to earn Basic Fire Marshall level certification. 

“I have to go out to each one of these properties and inspect all of them throughout the calendar year,” Evenson said. “Taking that off the fire department was a huge relief off their shoulders.” 

So far this year, 34 new short-term rental properties were successfully permitted in appropriately zoned areas, but Evenson reported a 11.3% decrease in the number of short-term rentals in Whitefish from July 2023 until July 2024. 

TWO ASPECTS of the Legacy Homes Program, cash in lieu of units and incentives, were also discussed at the work session. 

Whitefish City Planner Dave Taylor explained that the Legacy Homes Program was amended in 2021 due to statewide legislative changes prohibiting inclusionary zoning. The new, voluntary program has incentives to encourage developers to deed restrict units. 

To participate in the Legacy Homes program, 10% of the proposed units need to be deed restricted for affordability or a fee paid in lieu of providing the units. In return, the applicant is entitled to incentives like increased density, increased building height and a reduction in the amount of required parking. 

“Within that program, we do encourage and want to have the units built, but we also allow for opportunities for alternate compliance, which would include building the units off site, paying cash-in-lieu or possibly donating land-in-lieu,” Taylor said.

Cash-in-lieu fees are set every year by the City Council based on a three-year average of sales in the Whitefish zip code. Currently the approved cash-in-lieu fee is $294,349 per unit, which is expected to increase to $375,443.

Developers who agree to the 10% donation of permanently deed restricted units or payment of the cash-in-lieu equivalent, allows them to choose any or all the following incentives: reduced parking, increased building height, reduced or increased lot coverage, increased density, reduction in minimum lot width.

“When it comes to incentives, one of the things we’ve talked about is providing some kind of incentives for on-site or off-site employee housing for businesses,” Taylor said. “To make it easier for them to create that.”

Taylor reported that 99 proposed deed-restricted units have development rights and are moving forward but have yet to obtain building permits. Twenty-seven additional deed-restricted units are in the permit stage but not fully constructed, including Depot Park Townhomes.

“All in all, that is pretty successful, seeing all those units come in,” Taylor said of the Legacy Homes Program.

Councilor Ben Davis expressed interest in finding ways to make the program work for ownership opportunities.

“I think the Legacy Homes Program seems to work in some circumstances with apartments, but it does not work with other types of projects,” Davis said. “How can we get this to work better for ownership opportunities, in particular subdivisions? I think it would need a different incentive structure.”