The long road to short-term rental compliance
Numerous Big Sky organizations eye the issue and work toward a solution
The Big Sky Area Resort District Tax Board discussed once again the controversial and complicated issue of short-term rentals at their February 13 meeting.
“This is a big can of worms that we’ve been struggling with,” Board Chairman Kevin Germain said regarding short term rentals and business licensing. He further explained that the software MuniRevs has been helping and coordination with the counties is “critical.” Still, he suggested the board start working on the issues more intently when a district manager is hired.
Board Vice Chair Steve Johnson said short-term rentals also came up at a recent Gallatin County Zoning Advisory Committee meeting.
“There’s a short-term rental up in Sweetgrass Hills– which is otherwise a pretty quiet neighborhood – and apparently it’s become ‘the party place in town,’” Johnson said. “It is irritating the bejesus out of everybody.”
One resident filed a complaint about the home and attended the zoning meeting. Ultimately, Johnson explained, short-term rentals are a permitted use in every residential zoning district in the area.
“In the discussion it was abundantly clear that if there were a move to make them either a conditional, or not even allowed use at all, that there would be a howl from the real estate community – which sells a lot of property based on it ‘penciling out’ with the rentals,” Johnson said.
He further noted that homeowners’ associations are more appropriate avenues as far as regulating goes in that they can create stronger covenants regarding short-term rentals.
“That’s a much more finely discriminating tool than a zoning district which applies to a number of different areas,” Johnson said, explaining that’s the recommended course of action by the planning department in nuisance situations.
Board Treasurer Sarah Blechta said her homeowners’ association discussed the issue of short-term rentals and opted via survey to not make adjustments. Still, she said, the discussion is gaining traction in HOAs in the community.
Board Secretary Buzz Davis said his HOA also discussed the issue at its annual meeting and posted on the website about the need for long-term rentals as well as a statement explaining that short-term rental homeowners are “on the hook” for paying the 3 percent resort tax. He discussed the possibility of broaching the issues with other HOAs in an attempt to educate and garner compliance. Board members were receptive.
If an HOA wants to identify itself as a workforce-oriented neighborhood, covenants can be created which facilitate long-term rentals and ban short-term rentals. “I’d like to see some do that,” Johnson said.
Germain said the board is mainly concerned with resort tax compliance – making sure that homeowners with short-term rentals are paying the 3 percent tax to the resort tax district.
State-mandated and county-enforced inspections of short-term rentals were also discussed, with Germain expressing the necessity of getting Gallatin and Madison County officials in the same room to say, “Okay, how can we work together on this issue and make sure that they’re being inspected and that they’re complying with the ordinance.”
Candace Carr Strauss, CEO of the Big Sky Chamber of Commerce said that the organization is working with local attorney Mindy Cummings to offer a class to businesses working in the short-term rental realm in an effort to educate them on compliance.
Board director Mike Scholz suggested that the class and information be made available online for out-of-town homeowners. Strauss said the technology is in place to make that possible.
Laura Seyfang, director of Big Sky Community Housing Trust, mentioned that the housing trust is reaching out to about 10 other mountain communities to see how they are handling the short-term rental trend and resulting long-term housing crisis.
Big Sky Community Organization Executive Director Ciara Wolfe discussed the legal burden of HOAs which instills fear in most with regard to making changes to covenants. Many do not have the coffers to handle legal difficulties. “It needs to come from a coordinated effort because a lot of it comes from fear, not necessarily the desire to do the best thing,” she said.
Johnson said the housing group discussed providing legal support to HOAs that want to modify covenants to deal with the issue. Individual HOAs probably can’t afford to do it, but if they can get a template for how HOAs can modify, that might help.
Davis agreed that’s a great idea and asked about insuring short-term rentals to which Seyfang affirmed that per her conversations with insurance agents, most homeowners are wrongly or underinsured for short-term rentals.
Wolfe said many also do not have a license that is also required through the State of Montana. “Not just the inspection for the bed tax, but a license,” she clarified. “There’s a bunch of stuff and probably 80 percent of [homeowners] aren’t doing it.”
The bed tax law has language requiring registration, Johnson said.
Seyfang, prompted from questioning by Davis, said that the information her organization is attempting to get out would specify all the requirements for short-term rentals, “and if you don’t want to do that, here’s an alternative – rent local.”
She requested the opportunity for Big Sky Community Housing Trust to attach literature explaining the desire to provide homeowners with options and things to consider as well as to ask if they would consider not renting short-term and instead rent to locals.
The request was “respectfully declined” with Germain saying a move like that would be a “slippery slope.”
Seyfang also requested that addresses of short-term rental homeowners be shared with her organization, but Scholz iterated that the concept of sharing that kind of information is further muddied by the level of privacy enforced from the top; that the board cannot get necessary information from the State of Montana on the subject and they would be remiss to break from that standard.
Additional board business
In other board news, Germain provided a general update on staffing structure saying that the board had an amazing group of applicants and are now engaged in negotiations. He reserved details for the closed session. Although, he did later specify that Holmes & Turner out of Bozeman will be taking over bookkeeping for the board.
The Board made a decision regarding the Attorney Request for Proposal (RFP) by settling via unanimous vote on BKDH. This decision came after they invited proposals from five different firms, but only two responded. “We have a proposal from BKDH. We are very pleased with this. It is a very thorough response,” Johnson said. “It’s a top-notch firm. There are a lot of people who have experiences with them here.” The firm offered their services at a “somewhat discounted rate.”
The meeting also involved an update on the Big Sky Community Strategic Plan. A prevalent theme with discussion of the strategic plan was to engage more of the younger demographic as well as underrepresented groups. One idea was to attempt to engage the young professional’s organization in Big Sky.
Tune in next week – developments with the legislative effort for the Resort Tax Bill will be discussed in the next issue of the Lookout.