The Columbia Falls city council and the city’s planning commission have further examined ways to regulate short-term rentals in the city limits, but to what extent has yet to be determined.

After a lengthy discussion, the city planning commission recommended a regulatory framework that is similar to what the city of Bozeman has, which limits STRs in the city limits to primary residences or properties. An “accessory dwelling unit” on the property, typically a smaller house, would be allowed.

Bozeman’s ordinances read thusly and are far more complicated than what the city is contemplating.:

Type 1: A short term rental of one or more bedrooms in a host’s primary residence while the host is occupying the same dwelling unit for the entire short term rental period.

Allowed in nearly all zoning districts including low-density residential

Type 2: A Type-2 short term rental is the short term rental of a dwelling unit if the host is not occupying the dwelling unit during the entire short term rental period.

Not allowed in some residential zones

Type 2 short term rentals include: 

2A: A short term rental of a dwelling unit if the host is not occupying the dwelling unit during the entire term of the rental period. The dwelling unit offered as a short term rental must be the host’s primary residence.   

2B: A short term rental of an accessory dwelling unit (ADU) on the same lot as the host’s primary residence, or a short term rental of no more than one additional dwelling unit in the same building as the host’s primary residence regardless of whether host is present in the host’s primary residence during the short term rental period.

Type 3: As of December 14, 2023 new Type 3 STRs are prohibted in the city.  A Type 3 STR in compliance with all City regulations, allowed in their Zoning District, and operating with an active City permit before December 14th, 2023 is considered a Legacy Type 3 STR (see drop down menu below for additional information).  A Type 3 STR is the rental of an entire home that is not owner-occupied.

The Planning Commission recommended some modifications to Bozeman’s regulations to the city council which included:

• No zoning restrictions for new STR permits - all qualifying residents should have the ability to list their home or accessory dwelling unit as a short-term rental, as a tool for affordability. 

• “Primary Residents” are defined by the state’s new 2026 Department of Revenue property tax classifications: https://revenue.mt.gov/property/property-tax-changes/2026-property-tax-information. The owner must reside in the home for at least seven months per year, own the property, and use it as their sole primary residence. 

 • No numerical limit to the number of available STR permits in Columbia Falls.

“Again, we (the Planning Commission) believe that all qualifying residents should have access to the short term program,” it noted in a memo to council.

• Existing short term permits that are in good standing would not be affected by this proposed ordinance. If a secondary home owner or investor operator currently uses their property for short-term rentals, they will still have the ability to do so, provided the regulatory requirements are up-to-date and effectively renewed. 

“Furthermore, secondary homeowners affected by this ordinance should have appropriate notice of changing regulations, so that they may obtain an STR permit in advance of the ordinance going into effect, if they so wish,” the planning board said in its report.

If the property is sold, however, the property would revert back to traditional long-term housing uses. The permits for an STR would not automatically transfer. The new owners would have to reapply.

The problem with the primary residence requirement is the city could see a legal challenge to the law, noted City Attorney Justin Breck, as it could be considered a restriction on interstate commerce if the city restricts ownership from other entities, such as investors.

But the whole idea of restricting short terms to primary property owners is to keep investors from simply buying homes and converting them to short term rentals.

That has happened in some areas of the city. City Manager Eric Hanks noted the city could run into problems with condominiums, where some apartments have been converted to condos and investors bought them under the city’s current regulations, which allows for short term use.

On Nucleus Avenue, for example, there are several condos and apartments elsewhere in the city have also been converted to condos as well recently.

Nucleus Avenue, however, is commercially zoned, and short-term rentals are currently allowed, with the proper permitting, by default.

Hanks also noted that overall, the number of investor-owned properties was small and those owners were Columbia Falls residents, not outside companies.

The city has 110 permitted short-term rentals. Only 10 make more than $50,000 a year; 28 make $25,000 to $50,000 annually; 25 make $15,000 to $25,000 and 32 make less than $15,000.

Last year they collectively paid $96,000 in resort taxes and amount to 4.7% of all properties in the city.

The city staff recommended bolstering regulations for short-term rentals, which would include higher annual fees, a requirement to post “house rules” and a mechanism where they would be assigned a permit number that online outlets like VRBO and Airbnb would use to help the city regulate non-compliance.

For example, if a short-term rental was listed in Columbia Falls without a valid permit number, it could be removed from the listing site.

But city staff stopped short of requiring owner-occupied short-term rentals.

While just 4.7% of properties in the city are short-term rentals, some councilmembers noted frustrations with trying to find a rental here and anything to curb short-term rentals in the city would help.

“I think we should go with the planning commission recommendations,” councilwoman Marijke Stob said. “If we let this not go regulated we’re prioritizing tourists over residences.”

She spoke of people sleeping in cars because they can’t find housing.

During the meeting Breck looked up a court case from the Ninth Circuit that upheld the city of Santa Monica, California’s requirement that short-term rentals could not only be regulated to owner-occupied structures, the city could require the owner be present in the home when it was rented.

Still, he noted the case didn’t really speak to federal laws on interstate commerce, which was his concern. He also noted cities like Santa Monica and Bozeman had large legal departments, while Columbia Falls does not.

The council took no action on the matter. It decided to mull the problem over in the next three weeks and then make a decision at its first meeting in April.

Having said that, the overall mood was that something needed to be done.

“The Columbia Falls Planning Commission recognizes short-term rentals as both a vital part of the local tourism economy and a potential tool for affordability for its residents,” the planning commission noted in its report. “A healthy inventory of short-term rental options ensures that visitors have options for accommodations within City limits, which critically boosts local businesses. Furthermore, short-term rentals provide much-needed income for many of our residents: many homeowners rely on income generated by short-term rentals in order to offset rising property taxes and housing costs in general. However, many residents are frustrated by the impact that short term rentals have on available housing stock, housing prices, and the ‘look and feel’ of our streets and neighborhoods. The Planning Commission believes that housing units in Columbia Falls should be available for those that live, or would like to live, here in town.”