Columbia Falls Proposes Short-Term Rental Permits, Stricter Resort Tax Enforcement

Columbia Falls city councilors this week got their first look at a proposed short-term rental policy and program that, if approved next month, would take effect at the start of the new year. 

The program — which aims to respect the economic importance of short-term rentals to the city and its residents while also recognizing the need for stricter monitoring and regulation enforcement — will introduce a new permit process for all short-term rental operators, in addition to mechanisms to increase resort tax compliance. 

“Spring of 2027, the intent is to have another conversation once we have better data and understanding of what our current situation is within the city on short-term rentals. We would have another conversation working on policy and long-term planning,” City Manager Eric Hanks told councilors at their regular meeting Monday night. “But this first step is important to bring regulatory compliance, but also to ensure consistent, transparent, and fair framework for short-term rental businesses to improve public safety, and then reduce neighborhood conflicts and try to help protect the neighborhoods from some impact from short-term rentals.”

Monday night’s meeting also kicked off the roughly month-long period the community has to provide feedback on the new program and the short-term rental resolution the city council will be considering for final approval in December.

Councilors will review public comment on the program at their next meeting on Nov. 16, which will feature a discussion on the proposed policy. Short-term rental owners, property managers, residents and other interested parties will have an opportunity to provide comments before final consideration. 

On Dec. 7, city staff will present the final proposed policy — including any recommended revisions resulting from council direction and public comment — followed by a vote on the program and resolution. To view the proposed resolution and provide public comment, click here.

As the city made its way through updating its land use plan and zoning to meet new state requirements under the Montana Land Use Act (MLUPA), developing a short-term rental policy and tightening regulations became a top priority, with the planning commission beginning extensive discussions on the matter at the beginning of the year. 

Short-term rentals — which is the rental of any portion of a dwelling unit for stays less than 30 days to transient guests or tourists — have been a housing issue top of mind for many communities across the state and country, especially for those with tourism-heavy economies. 

The program proposed to city council on Monday night closely aligns with a framework approved in March, which adjusts the city’s approach to regulating short-term rentals 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. 

If the program is approved by councilors next month, each eligible short-term rental within city limits will need a “Short-Term Rental Special Provisions Permit” beginning in January 2027. The proposed initial property permit fee is $400, with an annual renewal fee of $250 and a $100 fee for each additional short-term rental unit. These fees are designed to more closely recover the city’s cost of administering the program rather than shifting those costs to the general taxpayer, the city said.

Resort tax compliance will be a major focus of the proposed updated program. In June 2020, Columbia Falls voters approved the 3% tax on non-essential “luxury” goods and services sold by businesses within city limits.

Hanks said the city plans to “take a very hard line on that enforcement” to ensure all short-term rentals in the city are registered and paying their fair share, noting that resort tax revenue is essential to supporting city operations and maintaining infrastructure for a community increasingly experiencing the impacts of tourism. 

Under the proposed program, the city will use third-party short-term rental monitoring software to assist in identifying active rental listings, monitoring permit status and compliance, and estimating projected resort tax obligations. Estimated resort tax projections may prompt additional review or an audit, but an estimate alone will not establish a violation or final tax liability. Owners may be required to provide records verifying rental activity, gross lodging revenue, and resort tax reporting, according to the city.

Existing short-term rentals with delinquent resort tax reporting or payments may still be eligible for a 2027 permit if the owner has intent to pay all past-due resort tax in full, or the owner enters into a city-approved payment plan, no later than June 1, 2027. 

“Going into 2027, we plan to do that a little bit more aggressively to understand where our past due taxes haven’t been collected and what to do, and then holding people accountable from there,” Hanks said. “If, for example, somebody has a larger resort tax unpaid balance, the city will enter into payment plans and things like that as long as it’s reasonable. But if there’s no attempt to pay it in full or to enter into a payment plan, then we will cancel any 2027 permits on June 1, and then we will notify the hosting platforms of non-compliance, and the hosting platforms will do their own independent research, and then decide if they want to take them off the listings right before the summer.” 

“If the party continues to advertise, we will pursue any administrative and civil remedies, including general penalties up to $500 a day for anybody that continues to do business outside a permit that’s been revoked.”

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