HomeMy WebLinkAbout08-07-23 Public Comment - A. Konkel - STR Planning Meeting Public CommentFrom:Allison
To:Agenda
Subject:[EXTERNAL]STR Planning Meeting Public Comment
Date:Saturday, August 5, 2023 12:31:26 PM
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Dear City Commission,
After reading the Short-Term Rental Assessment prepared for the City of Bozeman I hope we can all
feel assured the STR’s are not having a negative impact on our community. Below are a few key
takeaway and comments from that report.
A significant portion of Bozeman’s economy is supported by tourism. In tourism economies, a bed
base of hotels and other forms of lodging (STR’s) in needed to host overnight visitor stays. STR’s
make up 43 percent of the overall bed base. This is based on 568 units which will soon be decreased
through affirmative obligation. Rather than further bans on STR’s this report seems to indicate that
we may need to consider approving more STR’s.
Taxes and Fees – STR’s pay an 8% tax. While this tax doesn’t go directly to the city, it goes to the
state and is dispersed in many ways that do impact the city. Our local chamber does receive some
amount of bed tax dollars and much of it supports the state general fund which benefits everyone.
More research should be done to see if there are ways our community can receive more of this
funding. The report also notes that lodging tax revenue grew by 250 percent over the last decade.
My business, Mountain Home – Montana Vacation Rentals generated over $450K in bed tax dollars
in 2022.
Community Trends
Housing prices have increased 12.4 percent per year while rents have only increased 4 percent.
What does this data indicate? Obviously landlords aren’t increasing rents at to the same extent that
their mortgages and other costs are increasing. Landlords seems to be absorbing much of the
increased housing costs in our community or more investors are building product that is strictly
available for rentals. It appears the communities needs are starting to be met!
Combining legal and illegal rentals in our marketplace, STR’s only make up 2.5% of the housing
supply. Once the affirmation obligation ordinance goes into effect this number will likely be under
2%.
Less than 100 units are registered as Type 3. There are very few full time STR’s in our community. In
my 15 plus years managing STR’s even Type 3’s receive some owner use. Most of these are not
strictly investment properties. They are second homes. None of the inventory that I manage would
convert to long term rental. Owners have stated they would just try to use their properties more or
offer stays to friends and family.
The median assessed value of a short-term rental is 49 percent higher than the median assessed
value of a housing unit in Bozeman according to the report. That means the STR’s are typically more
expensive homes that would never be used as workforce housing. Again, these homes are not going
to convert to long term rentals and even if a few did, they would not create workforce housing.
The report states that short-term rentals performed very well in recent years (Covid years). As a
major property manager in the area, I know that is not true of 2023. The entire tourism industry is
down nationwide. Just look at Yellowstone Park visitation numbers. This is well reported in national
news. Markets will regulate themselves. This is a great article you should read.
Fall in Airbnb Listings Revenues Sparks Housing Market Crash Fears (newsweek.com)
Long-term rental incentive program:
The numbers in not accurate in this section of the report in my opinion.
If the target for an affordable unit is $19,692 (we’ve already established the STR’s aren’t part of this
inventory based on the average median price of STR’s).
That aside if the average STR will gross $52,000 annually you need to consider an STR owner is likely
paying all of their utilities, cleaning expenses, management fees, increased homeowners and general
liability insurance rates, licensing, fire inspections, the cost of furnishing the unit and maintaining
linens, towels, and other household essentials.
For the lower 25 percent of the STR market (the most affordable homes in the STR inventory) that
gap is estimated at just $10,000. With the line items listed above are accounted for the gap is
marginal at best. I am not in favor a subsidies to covert short term rentals to long term rentals.
There simply isn’t much difference financially and the choice of how to use the property more often
comes from an owners negative experience with a long term rental or their desire to use the home
for some nights personally. It’s not often strictly bases on ROI.
The location of short term rentals-
The report indicates that Type 3 short-term rentals are generally concentrated around the
downtown area, particularly in newer condo and multifamily projects. I’m assuming these must be
illegal units that will be going away with affirmative obligation as Type 3 units are only allowed in the
business district downtown. As far as I’m aware, all new developments downtown only allow 30 day
minimums per their covenants. The only exception to my knowledge is the SOBO building. This also
doesn’t make sense when compared to the chart on page 13 of the report where it states 55% of
Type 3 STR’s are over 40 years old. Here is an example of a long term rental advertised on VRBO. I
don’t think they have been removed from the total count of STR’s so I believe the number of STR’s in
the community is still slightly over estimated.
https://www.vrbo.com/search?
adults=1&d1=&d2=&destination=Downtown%20Bozeman%2C%20Bozeman%2C%20Montana%2C%
20United%20States%20of%20America&endDate=&isPets=false&latLong=45.67784%2C-
111.03747&mapBounds=45.66949%2C-111.06547&mapBounds=45.68618%2C-
111.00947&neighborhood=&poi=&pwaOverlay=map®ionId=553248633938969476&selected=&s
emdtl=&sort=RECOMMENDED&startDate=&theme=&userIntent=
I think what is happening here is that the heat map is showing illegal units and some 30 day units
that are advertised on VRBO / Airbnb. I would argue that the data from the heat map is probably
inaccurate because it potentially includes 30 day rentals advertised on VRBO.
Short term rentals have an average of 3.3 bedrooms per unit. Affirmative obligation may take 994
bedrooms away from the 1852 units currently available in the lodging market. We need more legal
rentals not more restrictions. We need workforce housing but we also need lodging rooms. We
need to expand both categories of lodging on our community.
As always……I would love to be a resource to the city and commend you for your efforts to enforce
the 2017 existing ordinance. Now is not the time for further bans.
Allison Konkel
Mountain Home – Montana Vacation Rentals
406-586-4589
www.mountain-home.com