Homes or hotels? Legislature looks for clarity on vacation rentals. 

During the past year or so, Montana communities have increasingly tried to gain some semblance of control over the booming vacation rental market. Bozeman city commissioners approved a six-month ban on new permits for vacation rentals last August. In October, the Missoula City Council passed an ordinance tacking registration fees onto such properties. And in December, Kalispell capped the ratio of short-term rentals to housing stock at 2 percent within the city.

Despite that flurry of activity, however, lodgings listed through popular websites like Airbnb and VRBO still occupy a murky area under state law. Technically speaking, says Sen. Tom Facey, D-Missoula, vacation rentals fall under the auspices of the Landlord Tenant Act, but are typically treated more like hotels or motels. The question of how to regulate this emerging industry—and who should do the regulating—is big enough that it's now hit the Montana Legislature. One bill, from Sen. Dee Brown, R-Hungry Horse, would require short-term rental owners to pay the state's 7-percent "bed" tax, which already applies to hotels. Another bill, from Facey, seeks to clarify how these rentals are defined and place their regulation in the hands of local governments.

"As a whole, we're moving from brick-and-mortar types of businesses ... to this internet business," Facey says. "How do we facilitate that and offer guidance for those on both sides of the transaction?"

Facey adds that his Senate Bill 251 would also clarify the Missoula ordinance's constitutional legality. He introduced the bill at the request of Missoula City Council members Gwen Jones and Emily Bentley, both of whom were particularly active in the ordinance discussion last fall. Jones traveled to Helena to testify in support of SB 251 in late February and, based on the different issues faced by different communities, she echoes Facey's assertion that regulation of VRBO-style rentals is most logically left to city officials.

But Facey's bill isn't without critics. John Sinrud of the Montana Landlords Association believes SB 251 leaves too many questions unanswered, potentially to the detriment of non-vacation rental owners statewide. He argues that the bill, as written, could allow cities to regulate short-term lodgings like college dorms. Sinrud also says the way the bill defines vacation rentals isn't specific enough to exclude rentals that should rightly fall under the Landlord Tenant Act.

"It opens everything up to not being defined and will give way too much non-clarity in regards to who's responsible for what," he says. "When they include 'home' in there, or a room rented on behalf of an owner, well, does that mean a property manager?"

Sinrud would prefer the Legislature examine the issue in-depth during the interim before the 2019 session. In the meantime, SB 251 shows no signs of slowing—it passed through committee last week on an 8-0 vote. For Missoula, at least, Jones feels the time is right to address an industry that has "caught on like wildfire."

"By being proactive we can steer it in the direction we want to, instead of trying to change expectations later on."

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