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Bozeman may tackle vacation rental regulation |

The City of Bozeman has been dealing with vacation rentals by not dealing with vacation rentals.  Now the City Commission wants to make it cumbersome and difficult for property owners to rent their properties on sites like VRBO and AirBnB.  I think it makes more sense to create a licensing option through application and license fee to the City.  It would create a revenue source and allow property owners to go through a defined legal channel if they’d like to rent the property that they own. They’ll be discussing a moratorium on approving new permits for vacation rental at a June 27th commission meeting.  Curious thing here is that there is no guidance on vacation rentals for property owners – there are only a couple of permits that have ever been issued.  In my opinion, there isn’t anything in the zoning regulation that prohibits short term rentals and if there isn’t verbiage in covenants that disallows short term rentals, I think the city will be hard pressed to suddenly about face with hundreds of homes being used for vacation rentals.

Bozeman may tackle vacation rental regulation

By Eric Dietrich Chronicle Staff Writer  |

Visit any vacation rental website — services like VRBO, HomeAway and Airbnb — and you’ll see hundreds of properties listed in Bozeman, beckoning visitors to the city.

“Elegant Bozeman Home in a Family Friendly Neighborhood Close to Everything!” reads one VRBO listing, advertised at $216 a night.

Another, a four-bedroom home a block away from Cooper Park, is listed for $250 on Airbnb, pitching a “Great location on a residential street … only a short walk from downtown shops and restaurants.”

And a third, a three-bedroom on Bozeman’s north side, is billed as “one of Bozeman’s finest vacation rentals,” pitching its history and “high-end comforts” at $331 a night.

While the booming short-term rental market is a boon for property owners and their guests, it comes with concerns aplenty as permanent residents worry about the commercialization of their neighborhoods and spillover effects like noise from late-night parties.

And — in a community that has seen the vacancy rate for traditional monthly rentals hover near zero for years — short-term rentals may also be taking a toll on housing affordability.“

I do think we’re getting to the point where we’re sacrificing housing,” said Paul House, a longtime vacation home business owner.

House, who’s worked in the field since there were only a handful of vacation homes in Bozeman in the late ’90s, said web services have made it much easier for property owners to open up their homes.“

In five minutes on AirBnB, you can be visible to the whole world,” he said.In reasonable numbers, he said, short-term rentals have their upsides, providing flexibility to owners who spend lengths of time traveling for their careers. And, he said, they give visitors an opportunity to feel more like a local than a tourist staying in a hotel.“

It’s just a whole different experience,” he said. “That’s nice, until there are no more residents left in town.”

Not a city priority

The vacation rental debate has come before Bozeman’s City Commission a handful of times, generally on the rare occasions property owners bother to apply for the permit technically required to operate a short-term rental in most residential neighborhoods. But, at least to date, the city’s elected leaders haven’t made tackling the issue a priority.

Back in 2013, commissioners considered a permit application by a homeowner whose neighbors had complained about him renting out his property. Commissioners, many still in office, granted the permit on a limited-term basis, adding that city hall needed to get on top of the issue.

This week, commissioners granted similar permission to a Bozeman man wanting to use his Cleveland Street property for short-term rentals while he works in California, despite spirited opposition from several neighbors. As the conversation veered into the broader issue, several commissioners acknowledged, as Deputy Mayor Cyndy Andrus put it, that they had “kicked the can down the road.”

“We have no idea how many are out there and who’s doing what,” she said.“There is, I think, the nature of an emergency,” said Commissioner Jeff Krauss, saying he worries about people buying up homes for the express purpose of renting them out on a short-term basis.

“I want an emergency zoning ordinance that says ‘Stop,’” Krauss also said. “Because they’re coming, the LLCs and the investors.”

Mayor Carson Taylor said Thursday that commissioners will consider a moratorium on approving new permits for vacation rentals at their June 27 meeting, and they will also direct city staff to start working on a plan to provide a “clearer standard of regulation.

”Despite its past discussions, the commission hadn’t named tackling vacation rentals a formal goal, Taylor said, meaning city staff have focused their efforts on other projects.“It’s been on our radar,” he said. “You can lay that on the commission for not forcing the issue.

”Hundreds on the market

The commission’s top adopted goal for the coming year is selling voters on a ballot measure to fund a law and justice center in collaboration with Gallatin County. Other formal priorities include ongoing post-closure work at the Story Mill Landfill, rewriting the city’s building code and developing a high-level strategic plan.

Last year, the commission also approved a major initiative aimed at fostering housing affordability in the for-sale market, initially trying to encourage the construction of affordable homes by offering incentives to builders and developers. That program has a goal of seeing 54 modestly priced homes come to market in the city by the end of next year.

A separate affordable housing plan adopted by the commission in 2012 set a goal of building 240 affordable rental units, noting that half of the city’s renters were then living in housing considered unaffordable

.In comparison, for the Bozeman area this week, 280 vacation rentals were listed on VRBO’s service and 211 entire home listings were active on Airbnb.

While some of those properties are outside city limits or in zoning districts where city limits or in zoning districts where conditional use permits aren’t required, the city planning office says it has issued permits for a total of six of those vacation rentals.

At $250 a night, a vacation rental would bring in $45,625 in revenue annually if the home is booked half-time. Leasing the same house to a full-time resident at $2,500 a month, in comparison, would earn a landlord $30,000 a year.

House, however, said his experience is that vacation homes in Bozeman earn amounts within 10 to 15 percent of what’s achievable with traditional rentals, factoring in expenses like utilities, cleaning and the upkeep necessary to keep a vacation home marketable.

Between 2010 and 2015, the median sale price for single-family homes in Bozeman rose by $100,000 to $362,000, according to the Gallatin Association of Realtors.

Comprehensive data on Bozeman-area rental rates isn’t collected, but the city’s last survey of its residential rental market in 2014 put the median rate for two bedroom units at $740 a month. It also found the city’s vacancy rate to be “effectively zero.”
Options for action

Bozeman is far from the only community that has grappled with the short-term rental issue.

Durango, Colorado, for instance, has capped the total number of vacation rentals in some of its neighborhoods, also generally limiting the number of short-term rentals to one per block.

Additionally, Boulder, Colorado, has enacted licensing requirements and restricted short-term rentals to primary residences owned by individuals, banning the practice with properties owned by legal entities like corporations or partnerships.

House, for his part, said he’d like to see the city implement a reasonable permit process for vacation rentals — something other than the current system, where owners in residential neighborhoods have to seek permission for their short-term rentals through a cumbersome conditional use permit process culminating in a full-fledged City Commission hearing.

As part of that, he said, he’d like to see requirements for fire and health inspections for short-term rentals, and also a way to make sure vacation rentals are paying state bed taxes.

“There needs to be some sort of deterrent to people skipping out of the whole system,” House said.

At the moment, it’s unclear what policy approaches would be palatable for Bozeman’s leaders — though several have voiced a desire to act.

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