Real Estate

Whitefish at Odds with Bill to Loosen ADU Restrictions

Senate Bill 528 is sponsored by Sen. Greg Hertz, R-Polson, and would further deregulate the accessory dwelling units

By Mike Kordenbrock
Whitefish on June 30, 2022. Hunter D’Antuono | Flathead Beacon

After passing a new accessory dwelling unit (ADU) ordinance last spring to allow for ADUs in residential areas, and offering incentives for renting the small residences to local residents, the city of Whitefish last week opposed a bill brought forward by Sen. Greg Hertz, R-Polson, that would further deregulate ADUs.

Senate Bill 528 was one of two bills sponsored by Hertz that city officials discussed with concern during a special city council work session on April 10. The other, Senate Bill 268, generally raised much greater concerns among members of the city council during their discussion.

Senate Bill 268 died on the House floor last Wednesday, with 73 votes in opposition and 27 in support. The bill would have revised short-term rental laws in the state to make them more permissible for short-term rentals. The bill would have made short-term rentals a residential use of property allowable in areas zoned for residential use unless expressly prohibited by a zoning district. The bill also included language that would forbid precluding a property owner from using their primary residence as a short-term rental property, with a primary residence defined as a dwelling in which the property owner could demonstrate owner occupancy for at least seven months out of the year.

The bill was written to go into effect immediately and would have grandfathered in existing short-term rentals and protected them from additional regulations.

Last Thursday, the House Local Government Committee held a hearing on Senate Bill 528 which pertains to ADUs. For the purposes of the bill, ADUs are defined as “a self-contained living unit on the same parcel as a single-family dwelling of greater square footage that includes its own cooking, sleeping, and sanitation faculties.” ADUs currently can be built in Whitefish in residential zoning districts.

Senate Bill 528 would allow ADUs on lots with single-family dwellings, and prohibit cities from imposing certain requirements for ADUs, including requiring parking, owner occupancy of the main residence with which the ADU shares property, and that the design conform to the primary residence.

The bill would also prevent cities from imposing stricter zoning regulations for ADUs, or requiring a restrictive covenant for an ADU on a parcel zoned for single-family residential use.

“What I think is the biggest issue in this bill is I think It will prohibit us from putting any short-term rental restrictions on the ADU. That’s a huge issue for us,” said Montana League of Cities and Towns Executive Director Kelly Lynch, who spoke against the bill.

Hertz later said his bill was not intended to apply to short-term rentals, and indicated he is open to amendments to prevent short-term rentals from being included in the bill.

Senate Bill 528 would also prevent cities from imposing impact fees on ADUs and allow a maximum floor area size that is the lesser of the gross floor area of the primary residence, or 1,000 square feet. The square footage maximum is an increase of 400 square feet from what Whitefish made allowable under its ordinance. It would also do away with Whitefish’s parking requirements, and impact fee collection for ADUs, and in effect undercut the city’s program to incentivize ADUs being rented to local residents, since the bill has language stating that it would void noncompliant regulations.

The Whitefish city ordinance has a rent local program included, which allows for owners to be eligible for an increased maximum floor area of up to 800 square feet, to have their off-street parking requirements waived and to be reimbursed for impact fees and building permit fees if they deed-restrict their ADU for at least five years for 12-month leases to local residents.

In a letter of opposition submitted to the committee, Whitefish City Manager Dana Smith highlighted the work the city has done to revise its ADU laws, and wrote that while the city agrees that ADUs are a good way to provide more affordable housing, the city could not support such a “one-size-fits-all top-down approach, especially when there is the possibility these newly added units would become short-term rentals.” Smith also focused on the city’s concern about the potential to raise gross floor area for ADUs, writing that there are many historic homes in Whitefish at around 1,000 square feet, which could result in properties in which the addition of an ADU would “essentially” leave two single family homes, with no clear accessory role for one of the dwellings.

Nathan Dugan, the president of Shelter WF and a member of the Governor’s Housing Task Force, said that his group had organized support of Whitefish’s ADU ordinance, and that Shelter WF supported Hertz’s bill, saying that it follows many of the best practices implemented in Whitefish with key improvements, particularly to ADU size. Other supporters included the Montana Association of Realtors, the Frontier Institute and Americans For Prosperity.

Opponents of the bill, in addition to the City of Whitefish, included the cities of Missoula, Polson, Billings and Bozeman, Citizens For A Better Flathead, and the Montana League of Cities and Towns.

Whitefish Mayor John Muhlfeld spoke as an opponent of the bill during its committee hearing, saying “these provisions will do nothing but drive up housing costs and give out-of-state corporations a free pass to buying out and renting our neighborhoods.”

In his closing statement during the hearing, Hertz presented the bill as something that won’t fix housing problems entirely, but would nevertheless be a positive course of action.

On the concerns about the parking requirement, he said he views that as self-regulating, saying hypothetically that if he were to be looking for a rental and the parking situation wasn’t acceptable, he would probably look elsewhere to rent. He also was skeptical that people investing in ADUs would put something on a lot that from a design standpoint would devalue the property through its inconsistency. He also said he was open to amending the bill to require maximum height and setbacks to match the primary dwelling on the property.

“We need more housing units no matter what we do. We need to accelerate the development of housing units,” he said.

He called out what he labeled “scare tactics,” suggesting that opponents during the session were catastrophizing the impact of housing bills.

“I guess if we leave the session here and local governments kill all our housing bills that we want to kind of help move things along, so be it,” Hertz said. “They better not be coming back here next session begging us to do something, fix something, give them more money. I’d be done with them.”

The senator said he wasn’t blaming local governments for the entirety of the state’s housing woes, but characterized them as being too slow to act in some cases.

“If the city of Missoula, the city of Bozeman, some of these other cities would jump to the plate like maybe Whitefish has done, I don’t think legislation would be being brought forward, but they’re moving at a snail’s pace and we can’t afford to wait any longer,” he said.