Amnesty for rentals now on the books

Many landlords may find it difficult to comply with the conditions

By RICHARD HANNERS / Whitefish Pilot

A resolution granting amnesty for short-term rentals in residential areas is now on the city books, but the issue is far from over.

The Whitefish City Council spent several hours discussing the controversial amnesty proposal Dec. 3. A few hecklers broadcasted their opinions during the council's regular meeting.

"I appreciate the concerns," councilor Nancy Woodruff told vocal opponents in the audience, "but the amnesty period will provide time to study the issue."

Violators of the zoning regulation face a maximum $500 fine and 30 days in jail per instance. Six amnesty options were considered before the council approved a resolution that states:

? Only applicants who can prove they have booked short-term rentals prior to Oct. 1 are eligible for amnesty. That's when city attorney John Phelps issued a warning letter to suspected violators.

? The city will decline to prosecute property owners or property-management companies who comply with the resolution until after Sept. 7, 2008.

? Landlords or agencies must identify themselves, purchase a business license, file a monthly resort tax form and pay all city resort tax or state lodging tax.

? The amnesty does not apply to properties where short-term rentals are prohibited by covenants or other lawful restrictions. The council, for example, specifically prohibited the Monterra condominium complex from doing short-term rentals, so amnesty is not available there.

"The problem is way more widespread than we thought," city attorney John Phelps told the council during their Dec. 3 work session. "I recommend granting an amnesty period because there's no way we could prosecute everyone. It's a daunting prospect."

The amnesty period could serve an educational function, Phelps said. The city will also look at ways to allow some properties to continue renting on a short-term basis.

Phelps supported the idea of using conditional-use permits on a case-by-case basis because neighbors who opposed short-term rentals at a site could make their point during a public hearing.

In addition, Phelps suggested, the council could include a sunset clause with the conditional-use permit so homeowners wanting to rent their properties would have to re-apply.

Councilor Jan Metzmaker, however, cautioned that limiting notification to neighbors within 300 feet of a rental property might not alert all affected residents.

She also noted that allowing short-term rentals will drive up housing costs because it helps property owners afford expensive mortgages.

Councilor Shirley Jacobson said she had opposed the amnesty idea until Phelps explained it to her.

"I'm not sure how we could tackle the whole thing at one time," she said, suggesting the city address impacts one neighborhood at a time.

"We also need to get the message out on the Internet saying Whitefish does not allow short-term rentals in residential areas," she said.

"It's like any ordinance on the books," mayor Cris Coughlin said, comparing short-term rental regulations to the city's noise ordinance. "You do what you can to enforce it, but it's complaint-driven."

City planning director David Taylor said it could cost the 16 owners at Wildwood Condominiums several thousand dollars altogether to change the new growth policy map and the zoning to allow vacation rentals there, but it could be done.

"We don't have a cut-and-dry rule saying, 'Thou shalt not spot zone,'" he said.

The proposal will help neighborhoods, councilor Nick Palmer noted, because it will cut off rentals after summer 2008.

Short-term rentals may just the tip of the iceberg when it comes to vacation housing impacts. Phelps noted that several projects in the development pipeline call for "fractional ownership" of condo units.

To see if such an arrangement would have the same impact on neighbors as short-term rentals, the city has requested former city planning director Bob Horne to conduct some research on the topic, Phelps said.

Vacation rental issue draws comments

Residents provide emotional response to short-term rental amnesty proposal

By RICHARD HANNERS

Whitefish Pilot

The issue of short-term rentals in Whitefish's residential neighborhoods has drawn numerous comments from both sides of the fence.

"The reason why Whitefish is successful is because we are a genuine town where people live," Rhonda Fitzgerald told the city council during its Dec. 3 work session on short-term rentals. "That's what visitors like."

Fitzgerald opposes allowing vacation rentals in residential areas for a number of reasons, noting how other Rocky Mountain resort towns have been "hollowed out" by the vacation rental business. In some places, corporations buy up homes and turn them into rental properties, she said.

Judy Pettinato said residential areas should be saved by all means to keep Whitefish a family community. She asked the city to "follow your own laws."

"R1 zoning means no weekly rentals," she said. "Please do not turn Whitefish into Motelville, Montana."

Roger and Helena Doney, who have lived on Lacy Lane for more than 20 years, said the house next-door was sold several years ago to out-of-staters who hired a property-management service to rent it for $2,500 a week.

The Doneys said renters often "partied long and hard, with noise all day and night, all kinds of watercraft, lots of vehicles coming and going on our narrow road that has very little parking area."

They cited cases where "partiers" mistook their home for the house next-door, blocked the driveway and "took stuff off our dock, threw rocks at our dogs and were rude to us when we asked them to stop using our dock."

The Doneys asked the city council to carefully consider the issues before granting amnesty.

"It will turn residential neighborhoods into motels — that is what the house next door was for two years," they said.

Not everyone agrees about the negative impacts of short-term rentals.

"It's an unfortunate fact of life — Whitefish is in some respects a victim of its own popularity," said Jill Zignego, at Five Star Rentals.

Zignego said she has always observed the 30-day minimum for areas zoned WR-1, residential areas inside the city limits, but she was concerned about what could happen to areas zoned R-1, residential areas outside the city limits.

"I have rented those properties on a weekly basis since I began business 12 years ago," she said. "Furthermore, the owners of those properties bought them with the expectation of being able to rent them on a weekly basis."

Zignego also noted that many houses are rented by individual homeowners through friends or on Internet sites like Craig's List or VRBO, and not through professional property managers.

"The homeowners who really care about the neighborhood retain the services of a professional property manager," she said. "That property manager screens potential renters, advises them of their responsibilities, monitors the property and responds to concerns from neighbors."

Donna Emerson, who lives at Wildwood Condominiums on Wisconsin Avenue, said she supports making all the units there available for short-term rentals.

"I believe our group of condos is unique in this situation as they have been rented out for 30 years," she said. "Also, it is a complex, so I feel it would be discriminatory if some units were designated as nightly/weekly rentals while others were not."

Philip Raful said he disagreed with Joe Malletta, his Birch Hill Drive neighbor, about prohibiting short-term rentals there.

"From both a philosophical standpoint and from a financial one, the restrictions on short-term rentals ought to be tossed out," he said. "To allow for long-term rentals and to disallow short-term ones is discriminatory, unfair and contrary to the notion that, within reason, people ought to be able to do what they want with their own property."

Raful said Whitefish could benefit from short-term rentals by collecting tax revenue, license fees and sales tax — "much of which now goes to other jurisdictions with more reasonable views on this matter."

Susan Calkins, who owns Hideaway Resorts, a property-management business that mostly handles homes outside of the Whitefish area, said she was concerned about the possible impact to Whitefish's economy if short-term rentals dried up.

"Whitefish is a 'resort town,'" she said. "When a town promotes tourism, it assures tourists that there will be ample places for them to stay to enjoy the 'Whitefish experience.' Lodging in Whitefish is already limited, especially in the summer months. Most accommodations are booked months in advance before the summer, causing the overflow of tourists to go elsewhere and spend their money. Banning vacation rentals would compound this problem."

Calkins said the vacation-rental business is a viable business and an asset to the community. She said potential guests are carefully screened and that she rarely has to withhold security deposits for damage.

"Vacation rentals don't cost the community money — they make the community money," she said.

Calkins also wondered how many property owners on Whitefish Lake might sell their homes if they can't rent them to help pay for the mortgage.

"A flood of new listings on the lake can only depress prices in an already flat market," she said. "Homeowners are very sensitive to property values."