HomeMy WebLinkAbout08-08-23 Public Comment - B. Konkel - Short Term RentalsFrom:Blaine Konkel
To:Agenda
Subject:[EXTERNAL]Short Term Rentals
Date:Tuesday, August 8, 2023 8:44:41 AM
Attachments:The State of Short-Term Rentals in Montana.pdf
2021 Nonresident Visitation, Expenditures, & Economic Impact Estimates.pdf
The Montana Travel Industry 2021.pdf
Accommodations Taxes.pdf
Colorado Short Term Rental Study.pdf
Short_Term_Rentals_California.pdf
Microsoft Word - MHVR - Blaine Talking Points re Bozeman Ordinance 2131 on Short-Term Rentals 4895-0134-
6412 v.2.docx.pdf
Microsoft Word - MHVR - Bozeman Ordinance 2023 STRs 4872-1737-7644 v.3.docx.pdf
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Dear City Commissioners:
I am writing regarding the proposed idea of short term rental restrictions. The CityCommission needs to put a pause on any further restrictions to STR’s in the city of Bozeman.
Restricting STR’s to create workforce housing will not work, will only hurt tourism, theeconomy and individuals that use STR’s as a tool to create housing affordability for
themselves and their families, and is invasive of property rights. At the same time, it will dolittle to nothing to create more housing. There is a need for STR’s in tourist communities such
as Bozeman, and there is already a shortage of accommodations for travelers to use whenstaying in Bozeman. Furthermore, there are less intrusive means that can be used to
accomplish this goal of increasing the housing supply. I question whether housing supply is agrave threat to the public. For something to be a menace it must be a grave threat or danger to
the citizens as a whole. The notion that STR’s are a menace to the housing supply has clearlybeen debunked in the city’s own EPS report. Also, the city represents all that they govern and
as much as there is a need for workforce housing, there is a need for the city to protect andpreserve the rights of all property owners. Especially since the use of those rights is not
causing harm and serves a need for the community to house travelers that spend their moneyand support the local economy. According to the Montana Travel Industry 2021, 1 in 9
workers in Montana is supported by out of state travel.
If you want to create housing, build more houses, and build housing of the type that will meetthe need of workforce housing. Emergency means a sudden or unexpected and temporary
condition, and here the housing shortage is the result of historical structural issues and not asurprise. It has been presented that the community has a Crisis! The EPS report issued by the
city shows overwhelmingly that this is not caused by STR’s. Over the past few decadesBozeman has failed to plan and develop according to demand. This is mentioned in the CHAP
report from a few years ago. This is not an emergency crisis that warrants the restriction ofSTR’s. Let’s not focus on policies that harms property owners. Let’s find creative solutions
that can address the issues without causing harm. The most recent ordinance, ordinance 2131changes the objective of the STR policy to the following:
SEC 38.360.260. Short Term Rentals.
Purpose and intent. The purpose of this article section is to provide for the regulation of shortterm rentals in certain zoning districts within the city in order to preserve neighborhood
character and promote a supply of long term rental housing stock, while encouragingeconomic activity and diversity, and to promote public health, safety, and welfare.”
The City Commission, without any good data, proceeded to pass unanimously the affirmative
obligation ordinance. This vote took place when the best estimate of STR’s in the city wasestimated to be over 900. Now it is estimated that there are nearly half of that. Half of those
will likely be wiped out by the affirmative obligation ordinance. The City Commission doesnot need to be taking votes on issues based out of emotion but out of logic, reasoning, and
precise data. I applaud the city for doing this EPS audit and getting better data but wonder ifthis information should have been known before taking a vote on phase 1. While I appreciate
that the city did make some amendments to the ordinance that eliminated overly intrusivereporting requirements, now, before that has even gone into effect the city is considering
further potential bans to the ordinance. I recommend that the city avoid the “sunk costs”phenomenon of which it has already heavily invested in looking into STR restrictions to create
additional housing and realize what its EPS report is saying. The regulation of STR’s willhave little to no impact on workforce housing. The affirmative obligation rules will now be
enforced and are quite firm. Even if STR’s had an impact on affordable housing, individualproperty rights should be upheld before the city begins intrusive regulations. Again, STR’s
should be proven a menace to the public as whole before intrusive regulation is necessary.Even then those regulations should use the least intrusive means possible to satisfy that public
goal.
There is a lot of information regarding the impacts of short term rentals. “On average a 1%increase in Airbnb listings led to a .769% increase in (residential) permit applications,
suggesting that Airbnb can play a major role in boosting local real estate markets and thusboosting local tax bases.” Harvard Business Review, Research: Restricting Airbnb Rentals
Reduces Development, November 17, 2021. It could be argued that the STR’s haven’t reducedthe housing supply, but tourism communities failed to properly anticipate the demand for both
long and short term housing. The market will work this out in the long run absent regulation.The city recently issued a report from EPS looking at data within the city. While I would
caution that this data was taken from the Covid Boom and that it would be of benefit to look atthis year and the next few years to get more accurate data if future decisions are made. This
data affirms that STR’s don’t affect workforce housing. The stock of inventory for STR’s andworkforce housing is like comparing apples to oranges. The EPS study estimates, “about 63
percent of STR’s are valued above the median value of housing units.” These homes willnever be converted to affordable housing.
If the City Commission does choose to continue looking into the regulations of STR’s it
should look at: 1) How many are owned by out of state investors? 2) How many hotels areowned by out of state investors? 3) What are the vacancy rates for hotel rooms? 4)What are
the positive economic impacts of STR’s and how does it affect tourism and the localeconomy? Bozeman tenants united has framed a narrative that STR’s are just a bunch of
greedy out of state investors and we don’t want them buying up all our homes. This simply isnot true as can be shown by the cities’ initial reporting. 65% of registered STR’s are type 1 or
type 2 meaning they are either renting out a bedroom or renting their primary home forportions of the year that they are gone. The Colorado Impact Study shows that only 3% of the
STR inventory could be repurposed to fill the workforce housing gap based on typology,availability, and price point. This reiterates the EPS findings that the stock of STR housing
and workforce housing are not interchangeable and both can exist in unison.
Page 5 and 6 of the EPS Report also refer to some policy approaches including:Licensing approaches
Caps or limits on the number of STR licenses issued (This is not necessary as the EPSreport shows that STR’s make up only 2.5% of inventory. This is probably closer to 1.25%
once affirmative obligation takes effect.) Active Enforcement of STR licenses and affirmative obligation requirements
(Ordinance 2131 already passed and will soon go into effect) Tightening owner occupancy for STR licenses, such as requiring that an STR is an
owner’s primary residence or that an owner must reside on premises while the unit is rentedout. (This will do absolutely nothing to increase the workforce housing. This will only hurt
homeowners that rent out their primary residence for portions of the year to help with theirown housing affordability.)
Limits on rental nights per year (Again, this will not convert STR’s to workforcehousing as is the stated objective of the STR regulation. It also won’t preserve the historical
makeup of Bozeman)Zoning approaches
Limiting STR’s to specific zoning districts or areas (This has already been done) Minimum buffers between STRs or limits on STRs per block (This does not meet the
stated objective of the STR ordinance. I’m not sure of the rational basis for this or how itcould be applied equitably. This also seems like it has more to do with nuisance issues that
have not been presented than meeting the stated goal of increasing workforce housing.) A zoning approach can be combined with a license cap approach, such as regulating
STR’s differently by zone district or allocating a set number of licenses to different zonedistrict/areas/neighborhoods. (The Eps Report and numerous other studies show that this will
not increase workforce housing)Regulatory fees or taxes
Levying an annual fee on short term rentals per bedroom or unit in addition to theadministrative registration fee. This revenue could be specifically used for housing programs.
(I question whether the city has this authority as the city has stated in previous commissionmeetings that state law only allows for the collection of fees related to the actual cost of
implementing the ordinance) Additional excise taxes can be levied specifically on STR stays (STR’s are already
highly taxed. The city could look at ways that they can ask to receive funding from the nearly120 million in Bed Tax collected annually. They could explore hiring a grant writer to request
funding from the state Accommodations Tax funds. I believe that Big Sky and Whitefish dothis.)
Programs that incentivize STR owners to convert their property to long term rentalsfor locals, such as lease to local programs or buy down programs. (The EPS report showed
that most homes are above the median home price and would require significant gaps toconvert. Lower tiered STR’s have less of a gap but likely won’t convert because the
homeowners use the property for portions of the year. Without more research I don’t think thiswould be an effective use of dollars)
No additional STR Regulation is necessary. Has the city considered converting hotel rooms
into long term housing? Why are short term rental operators the only stakeholders that shouldlose their rights to correct the many variables and lack of planning that have led to a housing
shortage.
Further, if the city is considering amending ordinance 2131 it should consider many of theissues and redline edits that I brought forth in phase 1. While the city did take into
consideration some of the proposed redline edits, the timeframe from when those wereproduced to the city to the vote was very rushed. I would implore the city to reconsider some
of these redline edits that I think address some vagueness, missing guidance, and reasonableedits that make compliance easier for both the city and hosts. (Please see attached those
redline edits and talking points) Mainly, I think that grandfathering issues should be addressedbecause existing operators deserve to know whether they will continue to be able to use their
property as its existing use in the future. Secondly, I think that the permitting process could bemade easier, which would help both hosts and reduce the number of staff hours that are spent
on the permitting process. The rest of the edits can be seen in the accompanying documents.
While I realize that the city’s powers are constrained to the city. I think that STR’s are aregional issue, and many nearby cities and rural areas play a part in this issue. Bozeman, when
considering housing availability and affordability Bozeman should closely be consideringneighboring areas. How many units are in the pipeline in Belgrade and surrounding areas?
What kind of public transportation options are there that link the communities together? Thehousing supply issue may not be fixed overnight but it didn’t happen overnight either, and
Bozeman and surrounding communities should be working hand in hand to address theseissues with the least intrusive means possible.
In conclusion, Bozeman does not need further STR restrictions. We need to look at how Phase
1 works over the next few years. We should continue to look at the data and possiblyreconvene in a few years to see where we are at. Attached are several other sources of data
and studies that overwhelmingly show that the best solution to STR’s is to not overregulatethem. While I may not have all the answers to increase housing supply and create
affordability, I’m sure there are many stakeholders that would be willing to meet at the tableand come up with logical solutions that benefit the whole, but don’t harm individual property
owners’ rights.
Please see attached the following information:
1)The State of Short Term Rentals in Montana by the Institute of Tourism and Recreation
Research
2)Accommodations Tax Information
3)The Montana Travel Industry 2021
4)2021 Nonresident Visitation Expenditures and Economic Impact Estimates
5)Colorado Short Term Rental Impact Study
6)Milken Institute- Staying Power: The Effects of Short Term Rentals on California’s
Tourism Economy and Housing Affordability
7)Proposed Red Line Edits to Ordinance 2131
8)Talking Points Summary of Red Line Edits to Ordinance 2131
Thank you for your consideration to this matter,
Blaine KonkelMountain Home Vacation Rentals