During a more than two-hour discussion of how to handle short-term rentals popping up within city limits, the Kalispell City Council’s Monday night work session focused on the potential impacts of legalizing the practice and whether it should be subject to density restrictions.

The council has grappled with the zoning issue during the past months, with city residents divided on whether the rentals provide a boon or a detriment to local neighborhoods.

Municipal code currently requires rentals in residential areas to operate with a minimum 30-day lease agreement. Although the city has yet to take any enforcement actions, vacation rentals operating within those zones are currently out of compliance.

Kalispell Planning and Building Director Tom Jentz emphasized that the relatively new businesses have yet to create any significant problems beyond the two to three complaints per year his staff has received on them.

“We have about 9,000 housing units” and an estimated 35 short-term rentals, Jentz said. “The impact they might have is negligible, and we don’t really see that taking off.”

He noted, however, that short-term rentals in the Colorado resort communities of Aspen and Durango have negatively impacted neighborhood character and housing affordability.

“Some cities have really serious issues. We have very moderate issues,” Jentz said. “It’s more the fact that they’re happening out there and our code doesn’t provide for it.”

But council member Phil Guiffrida said that even if no problems currently exist, he wants to craft a policy that will remain effective if the practice proliferates in the future.

“Do you all remember the casino zoning?” Guiffrida asked. “That was pulling back the reins. If we had hammered out the casino zoning the first time, we would have never went through that.”

The zoning ordinance amendment previously proposed would allow vacation rentals in residential areas as long as the owner adheres to density requirements and obtains a conditional use permit by getting a safety inspection, getting a state public accommodation license and registering for state bed tax purposes.

It also would prohibit signs advertising the dwelling as a short-term rental and require the homeowner to provide contact information to his or her neighbors.

Several council members expressed an interest in limiting the number of vacation rentals. Jentz said there were a number of ways a density requirement could be enacted, such as setting a maximum percentage per city block or establishing a minimum distance between the businesses.

Guiffrida noted the restriction could shut down existing vacation rentals if enacted, but he expressed reservations about grandfathering in businesses that are currently operating illegally.

Council member Rod Kuntz suggested aligning them with the existing density of long-term rentals.

“In my neighborhood we’ve got 60, 65 percent rentals,” Kuntz said. “I would just as soon see 60, 65 percent VRBOs.”

His comments aligned with those of council member Sandy Carlson, who said that short-term rental owners have a higher incentive to maintain their properties. Some public comments in favor of allowing the practice have called vacation rentals a “self-regulating” industry, reliant on websites such as Airbnb that allow prospective renters to quickly compare reviews of rental units in the same area.

During the public comment period, a handful of people expressed a mixture of support and disapproval for the city encouraging the practice.

“We will feel the neighborhood impact,” said Dan Shepherd, representing the Village Greens Homeowners’ Association. “As this opens up a can of worms down the road, this will be a major issue for us.”

Erica Wirtala, the government affairs director for the Northwest Montana Association of Realtors, said her organization’s members supported the proposal, which she said could provide homeowners with extra cash to help pay off their mortgages.

“There’s a conditional use permit, there’s criteria to meet, neighbors are being put on notice as to what’s going on and the most important thing of all is that if a permit is being abused or violated, it can be revoked,” Wirtala said.

After the work session, City Manager Doug Russell said the next iteration of the zoning amendment would likely include a recommendation on software to track vacation rentals in the city, allowing the city to easily monitor compliance and if necessary, density. Guiffrida urged them to tie the cost of any new software to the short-term rental owners through permitting fees.

The soonest the council could again consider an updated zoning amendment would be during its second regular meeting in July, Russell said.

Reporter Sam Wilson can be reached at 758-4407 or by email at swilson@dailyinterlake.com.