One would have to be comatose not to notice two obvious problems in western Montana, i.e., available, affordable housing and rising property tax assessments. The seasonal rental market where an owner can make more money in three months than with a long-term rental in a year has created a new Gold Rush and is a contributor to both problems. Gaps in state law and insufficient funding of infrastructure planning, inspection, enforcement, and tax reporting and collection are allowing and even incenting this to happen.
Here are some of the prescriptions which are being used:
Formation of a corporation or partnership in a no-income-tax state.
Buy or build a house, cabin or yurt (or several). If several, use “Family Transfer” or name it a resort or campground to avoid subdivision review, approval and regulations.
Advertise on Airbnb or social media or even with the state tourist listings.
Ignore state and local regulations, approvals, inspections, licensure or even county septic approval.
Ignore the daily 7% bed tax payment or collect and keep it. In Flathead County our incorporated municipalities (three) may or may not notice, but the county and state are not looking. In fact, the Montana Department of Revenue protects business filers from inquiries regarding payment of taxes!
In our Teakettle Mountain neighborhood there are at least 18 homes used for seasonal rentals! At least seven are owned by out-of-state corporations. Four of the seven went into business without a county-approved septic system and avoided subdivision review with a series of Family Transfers. Most of the 18 are operating without licensure, inspections, insurance, or county health approvals. As for paying the bed tax … Who knows? Certainly not the State of Montana or Flathead County.
This Gold Rush industry and lax or no tax collection diverts resources from state and local governments, takes available housing out of the long-term rental and owner-occupied market, and adds to the local assessments which increase our property taxes.
Here are some suggestions for needed change:
Require out-of-state businesses doing business in Montana to register with the Departments of State and Revenue. Require the Department of Revenue to make bed tax payment public information (as is property tax). Raise the bed tax to 10-20% to slow the Gold Rush and use the money to fund enforcement of all statutes (including bed tax collection) and especially sanitation (septic).
This wild, wild-west Gold Rush has led to invasions of our neighborhoods, rural traffic and road dust, loss of long-term rental and owner-occupied housing, raises our property taxes and diverts tax dollars to people in other states. It’s election season and there is serious work to be done by our elected officials. Talk to them!
Dan Diamond lives on Teakettle Mountain.