There are 263 tourist home short-term rentals operating in Missoula that are not registered and not in compliance with Missoula’s Tourist Home Ordinance, according to Eran Pehan, the city’s director of Community Planning, Development and Innovation. That’s to go along with about 125 more that are in compliance and another 50 that are a room in a housing unit that’s lived in, meaning they’re not required to register. She said there may be others that the city hasn’t accounted for. There are 14 that are out of compliance yet are still operating.
That insight was just one nugget of interesting information that came out of a recent Missoula City Council debate over tourist homes.
A slide presented to the Missoula City Council on short-term rentals.
For several years, the city council has been looking at ways to deal with the rising number of tourist homes and study how big a role they play in the city’s drastically escalating rent and housing prices, but they haven’t been able to agree on the best path forward other than creating an ordinance that, among other provisions, requires people to pay a fee to get their rental registered and inspected for safety.
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On Monday, the city council voted 10-2 to shoot down a proposal from council member Daniel Carlino to ban tourist homes in residentially zoned neighborhoods. The existing ones would have been grandfathered in, and tourist homes would still have been allowed in commercially zoned business districts. Pehan said about 54% of the 125 registered tourist homes in Missoula are in residential neighborhoods.
“Missoula’s rental and home prices have skyrocketed over the past few years, in part because of our lack of housing supply,” Carlino told the council. “Simultaneously, Missoula’s supply of tourist homes has increased at unprecedented rates, which has changed the use of hundreds of residential properties in Missoula from homes for Missoulians to tourist homes for people on vacation.”
In 2022, a city study identified 445 short-term rental units in the city, which accounted for less than 2% of the city’s housing stock. But the number of short-term rentals had risen 25% since the start of the pandemic in early 2020.
The Missoula Organization of Realtors issued a statement regarding the matter to the council saying that short-term rentals “allow property owners flexibility in changing circumstances” and that “the ability for a property owner to offer a short-term rental also actively contributes to community growth, vibrancy and fosters economic development.”
The organization said that as of October 2023, its data showed that there are about 587 short-term rentals in Missoula, which is around 1.5% of the total housing stock in the city.
“It is noteworthy that this percentage has remained relatively stable since the initial tracking began in 2021,” wrote Brint Wahlberg, the organization’s board president. “A percentage of less than 2% of housing stock seems to be very insignificant in contrast to some other Montana communities. A more impactful data point is the changes that have occurred in the rental vacancy rate. Measured at 4.4% in Q3 of 2023 compared with 1% in Q3 of 2022, this higher rate could directly be attributed to the number of multi-family projects permitted in 2021 and 2022, resulting in approximately 1,750 new units beginning to enter the market.”
Carlino only got one other city council member, Kristen Jordan, to vote for his proposal.
The rest of the city council members were lukewarm to the idea, with many saying that the city’s ongoing code-reform process is the best way to address the issue.
“We’re doing comprehensive code reform right now, which offers a lot and we need to spend time and intention on it,” said city council member Gwen Jones. “And we have a limited runway with our consultants, so I really don’t agree with bringing one-off items when you’re in the middle of a holistic process. And I hope that we don’t see anymore (one-off items) because the focus is on code reform and doing that well to get the intended results of more housing accepted by the community as inexpensively as possible. So I’m not in support of what this referral wants.”
Pehan said her staff are turning their attention to getting all those non-compliant tourist homes permitted.
“As our compliance team has gained back not a lot but a little bit of capacity dedicated to addressing the impacts of urban camping that we were expending through the summer and fall, they’ve been working to assess the landscape and identify barriers to compliance with our tourist home ordinance,” she said.
Carlino said he hopes the council moves fast to allow more housing to be built in Missoula.
“If we’re not going to regulate the number of short-term rentals in Missoula we must be changing our zoning and land use codes to allow housing to be built right now,” he said. “You can build a short-term rental in Missoula more places than you can build a duplex, more places than almost any other type of business. Right now our land use codes are blocking housing all over town so if you all want to leave this up to the free market, then we must allow more housing to be built by changing our zoning map and land use codes exponentially.”
David Erickson is the business reporter for the Missoulian.
