Missoula City Council to consider large fee increase for tourist homes

Martin Kidston

(Missoula Current) The City of Missoula plans to dig deeper into the pockets of property owners looking to offer their residence as a short-term rental or tourist home, including a new $554 registration fee and an annual renewal fee of $205.

Those costs don't include separate fees for a health department inspection and business licensing, those in the industry noted.

City officials on Wednesday defended the fee increase, saying it was needed to permit and inspect new tourist homes and to ensure compliance with city regulations. It was the responsibility of the business owner, not the taxpayer, to fund those costs, they added.

“Staff from our permits team, and planning and business licensing, have to review the compliance with city ordinance and with zoning, and to ensure neighbors are properly noticed,” said Montana James, deputy director of community planning. “For new tourist home registration and renewals, the city incurs a cost to monitor the tourist home.”

Any new property seeking registration must follow a process that currently takes months to complete. Among them, they require an inspection by the building division to ensure the property meets code and safety requirements.

James said they also require an inspection by the City-County Health Department.

“Our permits and licensing staff review the whole package to ensure all requirements have been met and issue the final approval and registration,” James said. “By our conservative estimates, this costs the city $555 for new registrations.”

Under the proposal, registered properties will pay an additional $205 for each annual renewal with the city. Under state law, a tourist home is one that doesn't serve as a primary residence, James said.

“At this time, the interpretation of the state definition of a tourist home is that it's not a primary residence,” she said. “If it's used a portion of the year as the primary residence, it would not be subject to our ordinance as it stands, based on that interpretation.”

Some members of City Council may seek to change that standard, and most voiced support for the fee increase, including council member Jennifer Savage, who owns and operates a tourist home as a source of income.

But as it stands, she said, the city's communication efforts are less than satisfactory and if the fee increase is approved, the city must do more to keep business owners abreast of their application packet.

“I really want to make a clear call for communication and streamlining. I have not received word one from the city about my application and it's been seven months,” she said. “With the increase, the processes have to get streamlined, and that includes the City-County Health Department inspections as well.”

Savage said the fee increase considered by the city doesn't include a separate $250 health department fee and a business license from the city, which costs another $60. Added up and new tourist homes will pay around $800 to get registered and open for business, she said.

Council member Daniel Carlino supported the fee increase and suggested it should be more.

“A lot of renters are upset about watching what was once a home get turned into vacation rentals,” he said. “City tax payers are paying for the study and the staff time to pay for this instead of the vacation rental owners paying a higher fee to pay for those costs.”

To settle what had been speculation by some that tourist homes were consuming vast quantities of housing in Missoula, the city launched a study that found the opposite. According to the results, tourist homes currently represent around 1.5% of Missoula's housing stock.

But the study also found that of the 541 unduplicated listings, only 112 had registered with the city. James said the fee increase will enable her department to track current trends in the industry and ensure unregistered tourist homes come into compliance with city regulations.

But the measure hasn't been greeted by all with praise, including many who operate a tourist home or short-term rental in order to make ends meet. Some have called the increase “radical” and “shocking.” Others said it represents overreach by the city and government “meddling” into private property rights.

“These kind of initiatives and oversight make it a question mark as to whether I or other people can continue,” said Lynn Redding of Missoula, who operates a tourist home. “We already are paying the business fee, etc. It feels like there are other parts of the conversation you haven't been looking at, and this isn't needed because the industry itself is well regulated.”

Council members on Wednesday voted to set a public hearing on the fee increase for Feb. 6.