The Whitefish City Council received an update on the new short-term rental enforcement process and discussed possible changes to the Legacy Homes Program at a work session last week.
Codi Evenson, Whitefish’s short-term rental specialist, was hired last spring to get a handle on the number of illegally operated vacation properties.
A short-term rental is a property that allows stays of less than 30 days. A legally operated short-term rental must have a permit, be located in a zoned area that allows short-term rentals, pay tourist taxes, and have passed the necessary inspections.
Evenson said there are currently 380 short-term rental units in Whitefish, and 313 of them are actively advertised online.
Fifty-one of the short-term rentals in Whitefish are unlicensed, and 19 of those are in zones where vacation rentals are not allowed. Evenson reported that 22 units operating outside of the permitted zones were taken off the market or converted to month-to-month rentals.
Before Evenson was hired in March, the city had no short-term lease enforcement process. Evenson built the program from the ground up and is interested in networking with other cities that have a short-term lease enforcement process in place.
“There are no other real enforcement agencies in the state,” Evenson said. “Bozeman doesn’t have one. Kalispell has a permit system but no compliance officer for short-term rentals.”
Evenson said the RentalScape software the city purchased to enforce short-term rental regulations is a great tool and has greatly improved its ability to identify properties and collect detailed information about them.
“To prosecute illegal short-term rentals, you have to prove that it is advertising,” Evenson said, because advertising proves that a financial transaction is taking place.
Once an illegal rental property is identified, the owner will receive an initial notice of the violation and will have 15 days to comply with that notice. If they fail to do so, they will receive a second notice via certified mail and the owner will have 10 days to comply with the notice before a red door hanger is placed on the property. From that point, the owner will have 48 hours to comply with the notice.
At this point, the city attorney would review the situation and legal action could be taken.
“Cody has done a great job of being proactive and we’ve actually gotten pretty good responses to the letters we’ve sent,” said Whitefish City Attorney Angela Jacobs.
Whitefish code requires an annual fire inspection for short-term rentals, and Evenson is currently working on obtaining certification as a Basic Fire Marshall.
“I have to visit and inspect each of these properties throughout the year,” Evenson said. “Taking that off the fire department’s hands has been a huge relief for them.”
So far this year, 34 new short-term rental properties have been successfully approved in designated areas, but Evenson reported an 11.3% decline in the number of short-term rentals in Whitefish from July 2023 to July 2024.
TWO ASPECTS of the Legacy Homes Program, namely cash in lieu of housing units and incentives, were also discussed at the work session.
Whitefish City Planner Dave Taylor explained that the Legacy Homes Program was modified in 2021 due to statewide law changes prohibiting inclusionary zoning. The new, voluntary program offers incentives to encourage developers to deed restrict units.
To participate in the Legacy Homes program, 10% of the proposed units must be deed restricted based on affordability or a fee must be paid in lieu of providing the units. In return, the applicant is eligible for incentives such as higher density, increased building height and a reduction in required parking.
“Under this program, we encourage and want the construction of the units, but we also provide options for alternative fulfillment of the obligations, such as building the units off-site, paying cash in lieu, or potentially donating land in lieu,” Taylor said.
Cash payment fees are set each year by the City Council based on three-year average sales in the Whitefish zip code. Currently, the approved cash payment fee is $294,349 per unit and is slated to increase to $375,443.
Developers who agree to donate 10% of the permanently locked units or pay the equivalent amount in cash may choose from the following incentives: fewer parking spaces, increased building height, smaller or larger lot area, higher density, reduction in minimum lot width.
“When it comes to incentives, one of the things we’ve talked about is creating incentives for employees to be housed on-site or off-site,” Taylor said. “To make it easier for them to create those accommodations.”
Taylor reported that 99 proposed restricted-property units have development rights and are moving forward but have not yet received building permits. Another 27 restricted-property units are in the permitting phase but are not yet fully built, including Depot Park Townhomes.
“All in all, it’s quite an achievement to bring all these units in,” Taylor said of the Legacy Homes Program.
City Councilor Ben Davis expressed interest in finding ways to leverage the program for home ownership opportunities.
“I think the Legacy Homes Program seems to work in some cases for housing, but it doesn’t work for other types of projects,” Davis said. “How can we make it better for ownership, particularly for housing developments? I think it would need a different incentive structure.”
