Bozeman to consider ban on Airbnb-style rentals

Debate remains whether the proposed ban on some short-term rentals will add affordable housing in the city.

By Matt Standal MONTANA FREE PRESS

San Francisco, Coeur d’Alene, Lake Tahoe … Bozeman? 

Among Montana’s fastest-growing cities, Bozeman is likely to be added to the list of western destinations that have limited various types of short-term rentals listed on Airbnb, Vrbo and other booking websites. 

But, just what that ban entails, and whether it will free up housing for residents, looks to be heavily debated at the city’s next commission meeting, set for Oct. 17. 

That’s when commissioners are scheduled to vote on a proposed ordinance that would eliminate a whole category of short-term rentals from the city. The new rules would mostly affect so-called “Type 3” units where the owner does not live on-site whatsoever.

As currently written, the ordinance would immediately stop the city from issuing Type 3 short-term rental licenses, while allowing those with current licenses to operate until the license expires, typically after one year.

The pending rules also include tightening occupancy requirements on so-called “Type 2” rentals where the owner actually lives on-site, along with subdividing that category to include a specific definition for accessory dwelling units (ADUs) built on a homeowner’s property.

At the core of the issue is helping local people find affordable homes, according to Bozeman Tenants United organizer Ben Finegan.

Finegan said getting the ban to this stage of the city’s legal process has been a year-long project for his organization, which includes 300 members who advocate for safe, affordable and dignified housing in Bozeman.

Although Bozeman Tenants United originally approached the city with a request for a much stricter ban, Finegan said the current focus on Type 3 short-term rentals represents a concession his organization is happy to accept and would celebrate as a victory if passed.

“If this passes as is, it would be an enormous victory for poor and working tenants in Bozeman who are struggling to afford to live in a place where they work,” Finegan said.

Described as “tourist homes” in some cities, Type 3 short-term rentals currently are only allowed in a narrow strip bordering downtown Bozeman, along part of Huffine Lane, and along portions of North Seventh Avenue, including Bozeman’s large commercial district near the I-90 interchange. 

Bozeman city statistics peg the number of Type 3 rentals at just 74 homes out of the city’s total of 306 licensed short-term rentals, although proponents of the ordinance say there are likely many more operating illegally.

However, the question some are now asking is how kicking tourists out of 74 rental properties, or essentially “pressing the reset button” on those properties, would meaningfully improve housing affordability in a city of roughly 57,000 residents.

Bozeman’s Paul House told Montana Free Press that he doesn’t believe the proposed ordinance will do much to get locals cheaper rent or more affordable mortgages, at least in the short term. 

House, who owns and operates a vacation rental company in the city, said about half of the 22 short-term rentals he manages are Type 3, with the rest falling under the Type 2 category. 

“The owners I work for would either just rent it for 30 days or longer [even for shorter actual stays], not rent it all, and a few of them might sell them,” House said, adding that he believes none of the property owners he represents would make their homes available to long-term local renters.

“You rent a house long-term, and it’s going to go downhill,” House said, referencing what he said is a simple economic choice rental owners must make when deciding between short-term and long-term rental markets in Bozeman.

Instead of targeting a small category of short-term rentals, House said the city should focus on what is generally believed to be hundreds of illegal short-term rentals that haven’t passed fire and health department inspections like the current legal code requires and don’t have licenses issued by the city.

“There is a general understanding that the city was never going to enforce this policy, so people just thumb their noses at the policy and do it anyway,” House said.

But how many of those illegal short-term rentals are out there?

A quick check on the website Inside Airbnb showed 578 Airbnb rentals listed in Bozeman as of Wednesday night, which means there are at least 272 unlicensed short-term rentals on that platform alone, according to that website’s statistics and those from the city. 

Another online resource for tracking short-term rentals is the data intelligence company AirDNA, which calculated 1,200 active short-term rentals on both the Airbnb and Vrbo platforms on Wednesday night in what it defines as the Bozeman market, made up of zip codes 59715 and 59718. 

Those statistics suggest the problem may be much greater, with roughly 800 unlicensed units taking up valuable housing in the city.

Back in August, Bozeman’s commission passed a separate set of rules to oust illegal rentals when it approved an ordinance requiring online platforms like Airbnb, Vrbo and Booking.com to ask for a license number before approving short-term rentals listed in Bozeman. 

City spokesperson Takami Clark said the recent crackdown has resulted in 51 previously unlicensed short-term rentals applying for legal status under the city’s rules.

“One of the platforms has already begun delisting non-compliant listings, and the other two are working together on a uniform delisting date this fall,” Clark wrote in an email to MTFP.

However, in past meetings, city officials have all but admitted they don’t have the resources to fine violators who operate illegal vacation rentals in Bozeman, instead hoping that they can be convinced to comply when an online platform notifies them of licensing requirements. 

Emails to Airbnb asking about this process were not returned.

Altogether, the recent steps taken by the city to squeeze affordable housing out of short-term vacation rentals are “part of a much bigger picture” for Commissioner Jennifer Madgic, who is seeking re-election.

Madgic, who also serves as liaison with the city’s community development board, told MTFP that she thinks a simple moratorium on issuing Type 3 short-term rental licenses is a better way forward, with those rentals already licensed being “grandfathered” in under the new rules.

In a recent meeting, Bozeman’s Community Development Board voted 6-1 to recommend the Type 3 moratorium over a complete ban, asking the city commission to amend the proposed ordinance before it votes on the set of rules.

“I have not heard testimony from a short-term rental operator who said, ‘If you ban these, I’m going to turn it into a long-term rental that’s affordable to members of our community,’” Madgic said. “If it looked like this could be a solution to our affordable housing issue, then absolutely I’d go for the hard ban.”

Yet, for community organizer Finegan, the idea that absentee homeowners would just sit on their hands while paying increasing property taxes just doesn’t make sense.

Finegan said any ban that passes the city commission next week will have a much greater impact as the city grows and even more working-class Bozemanites struggle to find homes.

“We’ve heard a lot of anecdotes, individuals saying they’re going to let their homes sit empty, and I think we’re going to call that bluff,” Finegan said.