Tenants union wants Bozeman to ban short-term rentals 

As the weather warms and the clocks spring forward, it’s clear that tourist season is approaching in Bozeman. How the amount of tourist lodging affects the city — and how the city should respond — is a hot issue in the valley. 

Last month, Bozeman Tenants United held a town hall meeting attended by about 300 people and some city commissioners. The new tenant union’s first major initiative is advocating for a ban on certain types of short-term rentals (like Airbnbs and VRBOs) in Bozeman, with the idea that those homes would be converted into long-term housing. The city’s current ordinance limiting short-term rentals, the group maintains, doesn’t go far enough.

How much banning short-term rentals would alleviate the staggering cost of housing in Bozeman is not straightforward, however.

Bozeman is home to 760 registered short-term rentals, according to city spokesperson Takami Clark. That number accounts for about 3% of the total households in Bozeman.

“That may seem like a small number, but to me it’s the trend in new developments going toward short-term rentals rather than adding to true residential supply,” said Bozeman Deputy Mayor Terry Cunningham.

Bozeman Tenants United, which formed in the summer of 2022 in response to what it views as Bozeman’s “predatory housing market,” does not want to outlaw every type of short-term rental, only what are referred to as “type-two” and “type-three” rentals.

Type three is a rental that is not occupied by the owner. Type two is the broadest category of short-term rental. It can be an entire unit, an accessory dwelling unit (ADU) to the main residence or a duplex in which the owner is not in residence during the entire period that someone is renting it.  

Renting a room in someone’s home is considered a type-one short-term rental, and would not be affected by the proposed ban, tenants union organizer Benjamin Finnegan told Montana Free Press. 

That said, it’s currently hard to know how many units a ban of  type two and type rentals would add to the city’s long-term housing stock. 

Data on how many of each type of short-term rental exists in Bozeman is currently unavailable, according to the city. But there are some important numbers the city does know. The city estimates it will need between 5,405 and 6,340 new housing units by 2025 to meet projected demand, according to a 2019 community housing needs assessment. That’s about 770 to 905 new units per year. From January 2019 until mid-March of this year, the city’s “best estimate” of new dwelling units is 3,378, with another 1,000 or so in the pipeline. But a “significant” portion of those appear poised to become short-term rentals, Cunningham said.

In an op-ed published in the March 22 Bozeman Daily Chronicle, leaders of the tenants union wrote that there are more than 1,600 Airbnbs — one brand of short-term rental — in Gallatin County, including 500 within Bozeman city limits. The top-10 Airbnb owners in Bozeman control at least 100 entire homes, according to the op-ed by Bill Goold and Elle Magana.

Even considering such numbers, a ban on short-term rentals could come with its own issues, said Mark Egge, a member of Gov. Greg Gianforte’s housing task force and a Bozeman-area affordable housing advocate. 

“When there’s a shortage of housing, every additional unit helps, [but the decision to ban short-term rentals] would need to be weighed against the cost to the economy,” Egge said.

For instance, Egge said, less availability of short-term rentals could sour potential tourists on visits to Bozeman.

An effort to convert short-term vacation rentals into long-term rentals has already been implemented in Big Sky.

A program in the resort town offers landlords money to change their vacation rentals into long-term rentals for locals. The program doles out anywhere from $5,400 to $17,820 to individual landlords, depending on the time commitment and number of bedrooms in a rental. Ninety-seven properties housing 231 local residents have come under the program since its advent in 2021, according to Becky Brockie, program director for the Big Sky Community Housing Trust. 

But there’s a key difference between Bozeman and places like Big Sky: zoning.

The Bozeman City Commission passed an ordinance in 2017 that implemented zoning requirements for various types of short-term rentals. The ordinance bans short-term rentals that are not owner-occupied in nearly every residential area. In other words, if an out-of-state investor wanted to legally set up an Airbnb in Bozeman, they’d be mostly limited to Main Street, Seventh Avenue and other business districts.

“I think Bozeman’s short-term rental ordinance works really well,” Egge said. “I think it’s a model that should be transported around the state.”

Places that are “overrun” with short-term rentals — Big Sky, Ennis, West Yellowstone, Gardiner — don’t have such zoning rules, Egge added.

On a nightly basis, Ennis offers just fewer than 15 short-term rentals per 100 residents on a given night, the highest rate in the state, according to a report from the governor’s housing task force. 

Bozeman, on the other hand, has less than one nightly short-term rental per 100 residents. Bozeman is joined by Whitefish, Billings, Missoula and Hamilton with similar short-term rental zoning ordinances. All those municipalities, plus Bozeman, have fewer nightly short-term rentals per 100 residents than Ennis, Big Sky, Livingston and Bigfork, according to the report.

But Joey Morrison, an organizer with Bozeman Tenants United, said the group is dissatisfied with the efficacy of the Bozeman ordinance because there are still hundreds of vacation rentals — potential long-term housing options — even if they’re confined to certain areas. 

It’s also possible that the city is undercounting. For example, a Montana PBS investigation in 2018 found that some Montana homeowners don’t register their short-term rentals as Bozeman requires.

“The zoning ordinance is bad,” Morrison said. “It’s inadequate.” 

Banning certain short-term rentals could harm some locals.

Banning some vacation rentals “might help a few more people get into long-term housing, but it would also hurt some people who are struggling to pay their mortgages” and rely on income from short-term rentals, Egge said. That’s especially true as the median price of a single-family home in Bozeman, according to the Gallatin Association of Realtors, hovers around $800,000. 

That said, Morrison and Tenants United said the group has a plan to prevent that outcome. 

For the kind of rentals where the residents live on the property (like an ADU), the group hopes to phase into long-term housing while paying pre-existing landlords through a model like the Rent Local program in Big Sky. 

The organizers hope the city will use money from its community housing fund to do so, but “it’s subject to change whether that’s the appropriate source,” Finnegan said.

House Bill 430, sponsored by Rep. Jane Gillette, R-Bozeman, and modeled after Big Sky’s rental local program, would allow local governments to increase state taxes on short-term rentals by 0.25%, with the money funding programs that pay landlords to rent their units long-term.

There was also an attempt in the current legislative session by Sen. Jeremy Trebas, R-Great Falls, to outlaw the banning and regulation of short-term rentals, defined as rentals that last for less than 30 days.

“I want to make sure people can make an income with their investments, up to and especially including their personal property and residences,” Trebas told MTFP in a text message.

That bill failed, so for now short-term rental bans can be implemented by Montana’s municipalities.

Bozeman is not the first tourist town to weigh a short-term rental ban. South Lake Tahoe, a California resort city, passed an ordinance that outlawed vacation home rentals in residential areas. 

The ordinance stripped permits from roughly 1,000 short-term rentals, which did not seem to negatively impact tourism, according to the Tahoe Daily Tribune. What’s more, the city manager told the Tribune that about 30% of those homes transitioned to rentals that last longer than 30 days.

That measure, however, is currently being litigated after the South Lake Tahoe Property Owners Group filed a lawsuit alleging that the ban is “unconstitutional and unenforceable,” according to the Tribune. 

In Bozeman, according to city spokesperson Clark, the commission “is looking into a potential ban on type three short-term rentals” and “looking at having another work session on this topic this summer.” 

Other than an outright ban, the commission is also looking into limits, changes in how short-term rentals are classified, fee increases and other solutions.

“It’s too early to say [what the best solution is], and that’s the purpose of the work session — for us to gather this information,” Cunningham said.  

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