Vacation rentals:

Not many takers for city's amnesty program

By RICHARD HANNERS / Whitefish Pilot

As Whitefish moves into the shoulder season before the busy summer tourist season, short-term vacation rentals continue to be a hot topic. But enforcing zoning regulations prohibiting illegal rentals is difficult, city staff say.

The Whitefish City Council approved a resolution in December granting a one-time amnesty for short-term rentals in residential areas. The decision followed several hours of heated public comment by residents angry over short-term rentals in their neighborhoods.

To qualify for an amnesty, applicants needed to prove they had booked short-term rentals prior to Oct. 1 last year. That's when city attorney John Phelps issued a warning letter to suspected violators.

The city agreed to not prosecute property owners or property-management companies who complied with the resolution until Sept. 7. After that, violators would face the normal penalty — a maximum $500 fine and 30 days in jail per instance.

As it turned out, only one rental agency applied for the amnesty, Phelps recently reported, and that agency only applied for two properties they had rented for a few days this summer.

During the city council's April 7 meeting, Phelps responded to an e-mail from Terry and Greg Anderson. The two own a townhome that is zoned for short-term rentals but feel they are having a difficult time renting it because of the number of illegal rentals on the market.

"Could you provide us with an update on what the city is doing to crack down on these illegal rentals?" they asked.

Phelps said he checked out the Web site provided by the Andersons, VRBO — Vacation Rentals By Owner, and found 72 units listed under the heading Whitefish. Thirty-three of them were outside the city limits and others were difficult to track down because the listings did not provide exact addresses.

Phelps said he checked out seven at random and found that one had been warned in the past and one offered a short-term rental. Many of the listings noted that the city required a minimum 30-day rental.

"So it's not as bad as once thought," Phelps said.

Phelps pointed out the renters would owe state lodging taxes and city resort taxes if found guilty.

"But they are difficult to catch and hard to prosecute," he said.

Councilor Nick Palmer said he wanted an additional penalty, and Phelps noted that the city could consider a penalty for renters who advertise for illegal short-term rentals.

Some local Realtors have suggested that the recent slump in home sales — particularly in the townhome market — might lead to more short-term rentals. Owners could use the rental income to subsidize mortgages on the second homes.

Affordable housing advocates say that strategy is one of the reasons behind booming real estate prices in Whitefish. If second-home buyers have to pay for real estate without the benefit of short-term rentals, they might not be willing to take on expensive mortgages, advocates say.