While many might consider Montana the land of big skies and open spaces, Missoula, the state’s second largest metropolitan area, features a population of over 73,000, is considered the state’s cultural center, and is home to the University of Montana. A recent study showed that Missoula creates over $5 billion gross metropolitan product. Missoula is no small town.
Like other burgeoning metropolises, the last decade has found Missoula dealing with the growth of the short-term rental (STR) market, as many of those who call the Missoula valley home look to reap the benefits of the natural tourism the area offers.
“We’re not a resort community, but we do see a lot of tourism and our housing market is incredibly challenged and constrained,” said Montana James, Deputy Director, Community Development Division, Community Planning, Development & Innovation for the City of Missoula, MT
As with many communities, Missoula took an approach to dealing with STRs that seemed reasonable in the early stages. Starting in 2014, James said, the first local ordinances regarding STRs, were “pretty basic,” requiring any potential rental merely register with the city, pay a licensing fee, and comply with building and fire codes.
“Our registration fee, until the beginning of this year, was really low,” said James of the ordinances. “It hadn’t changed since that original 2016 ordinance, and it was set really low at that point, with the hopes of encouraging high compliance. I would say that the compliance had been pretty stagnant since then.”
Despite the efforts to create policies that encouraged self-compliance, James said that of the routinely 400 to 600 properties that she would see advertised as whole-unit rentals, only “about 100 or 110” would register with the city. As STRs rose in popularity, so too did the discussions around how these rentals were impacting housing policy. Over the last two years, James said that increased concerns from community members and elected officials regarding the impacts of short-term rentals on the housing market dictated a new strategy not only for compliance but for better engagement with STR operators.
“We don’t do active compliance, really, on any of the ordinances that our department oversees,” she said. “Our code compliance officers would just respond as they saw complaints come in about properties. I think they were actually manually combing through different platforms to try to find if that property was listed, and then contacting the property owner that way.”
With what she called a “really tight rental and home ownership market” in the community, James knew that the city had a primary concern to create a system that would provide reliable data on properties operating as STRs, but also to help lay the groundwork for long-term policies that would meet any future ordinance shifts regarding compliance.