Columbia Falls City Council Opts Out of Owner-Occupied Short-Term Rental Permit Restrictions

The Columbia Falls city council this week opted to pass on the planning commission’s pitch to limit future short-term rental license distribution to only property owners with primary residences within the city. 

After months of discussion among both the planning commission and city council about crafting a new short-term rental policy, councilors at their April 6 meeting agreed to proceed instead with city staff’s proposal, which would take a slower, more incremental approach to adjusting the city’s current structure. 

The policy framework proposed by city staff adjusts the city’s approach to regulating short-term rentals — which are defined as the rental of any portion of a dwelling unit for stays less than 30 days to transient guests or tourists — by shifting to a single process for all short-term rental permits, irrespective of zoning, and implementing stricter enforcement of permits, compliance standards and resort tax collection requirements.

The city staff policy framework selected on Monday was the less-restrictive approach of the two options put forth to the city council for its consideration last month. 

Although the planning commission largely supported the city’s proposed framework, members at the city council’s March 16 meeting highlighted one key point of disagreement: limiting permits to owner-occupied units. 

When the planning commission began discussing the short-term rental policy in February, several commissioners made it clear they want short-term rentals to be a tool for residents, but not overrun by outside investors or corporations. To combat this, Justin Ping, a planning commission member who spoke on the group’s behalf at the March meeting, urged councilors to pursue a more “aggressive model of short-term rental regulation.”

The commission asserted “primary homeowners” could be easily defined using the state’s new tax code, which defines primary homeownership as living at the residence for at least seven months of the year, Ping had said. Under the policy, those who are currently managing short-term rentals but may not fit the primary homeowner definition wouldn’t lose their ability to continue operations, saying current permits would be grandfathered in until ownership of the property is transferred. 

The planning commission’s tweaked framework was largely based on the city of Bozeman. Bozeman city commissioners in October 2023 banned new permits for “Type 3” short-term rentals — units where the owner doesn’t live on-site at the residence at all — and agreed to grandfather in currently permitted Type 3 short-term rental units.

After the March 16 meeting, City Manager Eric Hanks met with Bozeman’s community development director to discuss the city’s pathway to their current short-term rental policy, as well as the opportunities, challenges and ongoing results of the policy, he told councilors on Monday.

“They shared that it was an extensive one-year process of public meetings, and they did an economic analysis of the impacts of that before changing that policy,” Hanks said. “As with most city short-term rental programs, they continue to struggle with enforcement and the complexities of a very complex regulation of how to enforce that and follow up with individual property owners.”

Councilors at Monday night’s meeting were largely on the same page about moving forward with city staff’s policy framework proposal and nixing the owner-occupied requirement, at least for this first iteration of the policy. 

“I think we’re doing the right things; slow and steady,” Councilor John Piper said. “I think we’re on the right track.”

Councilor Kathy Price added that she didn’t feel comfortable “telling property owners what they can and can’t do with one property, two properties or three,” she said.

“If we permit them and they follow all the rules with fire inspection and everything according to putting everything on the [hosting] platform, then we don’t have the right to tell them they can’t get a permit,” Price said. “If we set our rules to be these, and they follow those rules, it’s my belief that they should be permitted within our city jurisdiction.

“I feel that people should have the right to do what they need to to make a living, but according to our rules.”

Like at last month’s meeting, Councilor Marijke Stob again voiced support for the planning commission’s proposal for limiting future short-term rental applications to property owners with primary residences in Columbia Falls. Stob urged other councilors to consider residents facing housing challenges due to the influx of short-term rentals as the council moves through the policy process over the course of the year. 

“We can look at other cities that are gateway towns to see how short-term rentals have made them ghost towns or just shells of towns or there’s nobody living in the neighborhood because they’re all short-term rentals,” Stob said. “I was talking to people who have short-term rentals and the economic benefit is great for them, but also, I hear from people who don’t have housing and get kicked out of their houses because they’re changed into short-term rentals. 

“If we don’t regulate it, it could make our town an empty town because we’ve seen it happen in other towns.”

Once the policy is formally adopted later in the year, Hanks told councilors the city plans to collect data and do analysis on its impacts, then revisit the discussion in about a year to have additional conversations about the policy.

The city this month contracted with Deckard Technologies for assistance with short-term rental compliance and data collection, with full implementation of the program expected to take effect in the next 45-60 days. The software helps cities identify short-term rental listings, track compliance, and collect extensive data on metrics such as occupancy rates, revenue generation and owner/non-owner occupied, according to city documents. 

Mayor Donald Barnhart said the software program will be a key resource for the city moving forward to nail down accurate data on short-term rentals, especially regarding the issue of owner-occupied units.

“I don’t think that at this time we have the right to fulfill that sort of a restriction,” Barnhart said.

With the go-ahead from the city council, the city staff will now work to implement the short-term rental framework with the city’s new land use plan and zoning map that will be developed through the Montana Land Use Planning Act (MLUPA) requirements. 

The short-term rental policy framework is set to formally come before the city council for approval when the MLUPA zoning code updates are presented in June, according to city documents. If approved, the new short-term rental permit system fees are expected to take effect in January 2027.

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