Bill would let cities tax Airbnbs to subsidize long-term rentals

A bill under consideration at the Montana Legislature would give cities, counties and resort districts the option of levying a tax on Airbnb-style, short-term rentals if they use the money to give rebates to landlords who rent to local workers on a long-term basis.

Sponsored by Rep. Jane Gillette, R-Bozeman, House Bill 430 would let local governments add a quarter-percentage-point on short-term rentals on top of the state’s existing 8% lodging tax. That money, $0.25 per hundred dollars of revenue, would go to “rent local” programs that sweeten the deal for landlords who choose to rent their properties to employees of local businesses at specified rents.

At its initial hearing before the House Taxation Committee Friday, Gillette said she sees the measure as a partial response to Montana’s housing crunch, alongside building more housing so there are enough rentals available for both workers and tourists.

“I see it as at least a bandaid on the situation until we can get more inventory out in our markets,” she said.

At its Friday hearing, the rent local tax bill drew support from the Montana League of Cities and Towns, the Montana Lodging and Hospitality Association, Lone Mountain Land Company, the Yellowstone Club, Gallatin County, the City of Bozeman and the Town of West Yellowstone, among others. No opponents testified, though some conservative lawmakers on the committee asked questions indicating they may be skeptical of the proposal.

Proponents argued that short-term rentals have proliferated in many Montana resort communities in recent years as property owners find them more lucrative than long-term rentals that can house year-round residents. That squeezes out workers like hotel staff, teachers and EMTs, forcing them to commute long distances and also making hiring a challenge for employers.

“Long-term solutions to the housing woes experienced by Montana communities are slow, complex and expensive,” said David O’Connor, the executive director of the Big Sky Community Housing Trust. “The rent local bill puts communities in the driver’s seat with an immediate tool to address the loss of their long-term housing to the vacation rental industry.”

An existing Rent Local program in Big Sky converted 21 homes to house 58 workers in its first three months of operation, according to the Bozeman Daily Chronicle, which also reported the effort was initially funded with donations. That program currently offers an $11,880 incentive to property owners who commit to enrolling a one-bedroom unit in the program for two years. 

Data from the Montana Department of Revenue included in a report produced by Gov. Greg Gianforte’s housing task force estimates that towns like West Yellowstone and Ennis have more than 10 short-term rental units rented a night per 100 residents, an indication that Airbnb-style rentals have consumed a significant portion of their housing stock. Big Sky, Gardiner, Kalispell, Livingston and Red Lodge also have relatively high short-term rental rates, that data indicates.

This story is published by Montana Free Press as part of the Long Streets Project, which explores Montana’s economy with in-depth reporting. This work is supported in part by a grant from the Greater Montana Foundation, which encourages communication on issues, trends, and values of importance to Montanans. Discuss MTFP’s Long Streets work with Lead Reporter Eric Dietrich at [email protected].