Montana lawmakers consider legislation on short-term rentals
HELENA (KPAX) — As Montana lawmakers have debated housing policy this session, one topic of discussion has been the impact of short-term rentals – spaces rented for 30 days or less, including through services like Airbnb and Vrbo.
On Wednesday, about 20 short-term rental hosts came to the State Capitol to meet with lawmakers and share their perspective on that growing market.
“I'm really happy to be here today because it's really important to our family to have our short-term rental,” said Sarah Rollins. “And so it's an opportunity for me to be able to stand up for our rights as homeowners to continue to do that.”
Rollins and her husband have been hosting a home in Great Falls on Airbnb for about a year.
“We travel with our families, and it's always been really difficult for us to find a place in a hotel where our kids aren't several doors down and I have to go down that hallway in my nightgown to check on my little one,” she said. “So we wanted to provide a place where families would be able to stay, and our short-term rental is geared towards that.”
An analysis from the governor’s budget office says there were more than 12,000 short-term rental units in Montana in 2020, and they expect 15,000 by 2024. House Bill 943, sponsored by Rep. Dave Fern, D-Whitefish, would raise the property tax rate on those units from 1.35% to 1.89%, by classifying them as commercial property instead of residential.
“Now a very well-established portion of the hospitality industry – meaning exclusive overnight rental – getting what I would call a discounted rate,” Fern said. “I wanted to address that.”
Fern said the bill would not only raise revenue, but also increase the tax base in areas with a lot of short-term rentals – allowing local governments to lower their overall property taxes. He said the state doesn’t yet have a clear way to identify short-term rentals, so it may take two to three years for all applicable properties to be included.
“There is an obligation that short term rentals pay the lodging tax, the 8%, and that is being done, but it's being done secondhand through various companies that do short-term rentals,” he said.
HB 943 passed the House 73-26 Tuesday, with support from Republicans and Democrats.
The bill includes an exception to the higher tax rate if the short-term rental is in the building where the owner lives at least seven months a year.
“We recognize that oftentimes folks are doing this to help pay the property taxes, help pay for a college education, that sort of thing – and that's not what I'm trying to address,” said Fern.
But that wouldn’t apply to Rollins, who’s renting a separate house. She said she’s concerned about the possibility of increased taxes.
“They would definitely greatly affect our income and our livelihood,” she said. “It helps us with all of the different activities that our kids are involved in, and actually the idea of being taxed more on it kind of shocked me.”
Rollins and other hosts said they felt short-term rentals have been treated as a “scapegoat” for bigger issues with housing in Montana.
“I feel like it's very one-sided, and not really getting the whole picture,” said Rollins. “For us, this has been local Montanans renting to other local Montanans. I think I've had two out-of-staters rent from us in the year that we've been doing this.”
Airbnb communications staff shared statistics, stating that about 77% of their hosts in Montana are listing only one home. They said hosts had brought in a total of $168 million in earnings from October 2021 through September 2022, with the median host earning $13,400. They reported 42% of hosts surveyed said having a short-term rental was helping them meet the rising cost of living.
One other bill on short-term rentals is still alive at the Legislature. Senate Bill 268, sponsored by Sen. Greg Hertz, R-Polson, would generally allow short-term rentals as a residential use for zoning purposes and limit how local governments can restrict those rentals.
That bill passed the Senate 31-19 last month. It had a hearing in the House Judiciary Committee, but the committee has not taken any action yet.
Several other bills have failed to make it through the process this session, including one that would have prohibited cities and counties from banning short-term rentals and another that would have put an additional fee on those rentals and used it to fund grants for affordable housing projects.