A pair of initiatives championed by Kalispell Mayor Ryan Hunter to spur affordable housing development and restrict short-term rentals failed to gain majority support from City Council on Monday night.  

Councilors considered his proposals to donate surplus city-owned lots to nonprofits for affordable housing and to cap short-term rentals at 2% in each of the city's four wards.  

Hunter said Council has spent years approving developments to increase the city's housing supply, but many still can't afford market-rate housing as the demand for affordable units remains high. He said expanding affordable housing should be a priority.  

Citing similar efforts in Bozeman, Missoula and Whitefish, he said the city could donate land to affordable housing nonprofits, eliminating a large cost barrier to development. 

The nonprofit would then finance the project and seek federal housing tax credits to build deed-restricted housing on the site, like the Junegrass Place development and forthcoming apartments on Appleway Drive.  

He proposed either donating a city-owned downtown parking lot or purchasing a larger vacant parcel elsewhere in Kalispell. The city could fund the purchase by selling some downtown parking lots or using tax increment financing dollars, he said.  

Tax increment financing is a redevelopment tool used by municipalities to fund improvements in designated blighted areas by using future increases in property tax revenue generated by those improvements.  

While the property would be tax-exempt, using the funds for workforce housing is allowed under city code and development could encourage additional growth in the surrounding area, Hunter said.  

He added that such an endeavor would take several years to complete, but starting now would be beneficial if favorable properties were on the market.  

Most councilors said they wanted to hold off on donating or purchasing land until a citywide housing study is completed.  

Council earlier this month hired Cushing Terrell to conduct the study, which the city allocated $126,000 for from a federal grant.   

Councilor Lisa Blank said deed-restricted housing already exists in the city and questioned whether it makes sense to purchase new property, which would reduce the tax base and place a greater burden on middle-income residents.  

"Does it make sense to take on that when we know we need a compliance officer that's been asked for many times?" Blank said. "I know in my [ward] I don't see a lot of call for this."

Councilor Sam Nunnally also opposed taking additional property off the tax rolls, arguing that tax increment financing is intended to increase taxable property.  

Nunnally manages the Flathead County Fairgrounds, a tax-exempt property that recently requested $2.5 million from the West Side Core Area tax increment financing fund for improvements.  

"When the people of Kalispell come in on the west side, I want them to be as proud as they are at all of our other corridors," Nunally said.  

Councilor Kari Gabriel said shopping for property before the housing study is released would be like "putting the cart before the horse."  

"I don't need a plan to tell me that this is a viable strategy, because I've seen it done so many times," Hunter countered. 

Kalispell resident Ron Gerson also told Council there was no need to wait for the housing study and that the city could still begin gauging interest from nonprofits.  

"You need flexibility, not rigidity in all this," he said. 

Hunter said several deed-restricted housing projects are nearing the end of their low-income housing tax credit periods and could revert to market-rate housing, though City Manager Jarod Nygren said most projects choose to extend their enrollment in the federal program.  

Councilors opposed selling any city-owned parking lots, citing concerns raised by residents and business owners that there is a lack of available parking downtown.  

"Selling lots that are parking lots does not, in my mind, align with what I'm learning about parking," Blank said. 

Hunter said a majority of the nine city lots would remain, but that he is not concerned about losing a few of them.  

"My belief is that those spaces are more valuable, they're more useful for the vibrancy of downtown, if they have development on them," he said.  

Councilors ultimately expressed interest in exploring how tax increment financing funds could be used for projects that benefit the community — not just affordable housing but also recreational facilities — once the housing study is completed.  

"There's a lot of interesting projects, public-private partnerships, that cities can get involved in," Councilor Wes Walker said.  

HUNTER ALSO failed to receive majority support to replace the city's current 2% cap on short-term rentals with a separate 2% cap in each ward.  

While the surge in Airbnb's and Vrbo's has slowed since its peak during the Covid-19 pandemic, Hunter said he wants the city to take a proactive approach in case another boom occurs.  

"I've heard from a number of constituents that they don't like it when they have more than one or two in their neighborhood or on the block," Hunter said.  

Short-term rentals currently make up less than 1% of the city's residential housing stock.  

Short-term rental permits must be renewed annually and are subject to regulatory requirements that have made them less attractive to owners than in the past, according to Nygren. He said the number of new short-term rentals is not growing as quickly as the city's housing supply.   

As of June 2026, there were 115 active short-term rentals in the city, 86 of which were in residential and residential-apartment zones. The rest were in commercial zones, where hotels and other short-term stays are expected. 

Hunter's proposal would impose a moratorium on new short-term rental permits in Ward 3, which includes much of downtown and is the only ward that slightly exceeds the proposed 2% cap.  

Some councilors said that they didn't want to thrust tighter restrictions on property owners who may be trying to make ends meet. 

"I hate to hem in somebody's ability to be able to pay their mortgage, and for a number of people, I'm sure that's the case," Gabriel said.  

Nunnally said the change could restrict older-aged property owners looking to rent out their house while traveling the country, for example.  

Councilor Jed Fisher said he plans to do just that in the coming years and noted that the popularity of Airbnb rentals around downtown shows visitors want to stay there and patronize local businesses. 

AT THE end of the meeting, Blank responded to a July public comment from former Planning Commission member Karlene Khor — who accused councilors of spending too little time downtown to justify imposing new parking rules — by showing off her haul of merchandise from various local shops.  

She lifted an array of jackets and shoes up over the dais that were purchased from The Toggery before presenting a pair of skis and winter jacket from Rocky Mountain Outfitters. She also pointed to several downtown restaurants she is "addicted" to and described her regular appointments to Nail Toepia.  

"I'd show you my toes, but I think that'd be inappropriate," Blank quipped.  

"I could go on, but I'm not going to go further. But Ms. Khor, I absolutely shop downtown," Blank said.  

Reporter Jack Underhill can be reached at 406-758-4407 or [email protected]. If you value local journalism, pledge your support at dailyinterlake.com/support.