Kalispell closing in on short-term rental ordinance

The short-term rental debacle is coming to a close for the city of Kalispell, as officials set their sights on regulations they hope will please all parties involved. 

The Kalispell City Council’s work session on Monday produced a replacement for the limiting measures added into the ordinance to regulate short-term vacation rentals within city limits. Rather than requiring short-term rentals to be the operator’s primary residence, the ordinance will instead put a percentage cap on rentals within Kalispell city limits.

Council member Tim Kluesner, who suggested the cap limit instead of primary ownership, said his measure simplifies the city’s work in keeping track of the rentals.

“We’ve gone down the rabbit hole,” Kluesner said Monday. “We need to get back to the surface and just make this real simple.”

Monday’s session was the latest of a dozen meetings held over the last year as the council looks to both allow small businesses to operate and thrive in residential zones, while closing the opportunity for large commercial real estate firms from rewiring the “fabric of the neighborhood.”

The ordinance, which is still yet to be passed, would place no regulation on short-term rentals in business districts, mixed business and residential districts and apartment districts.

Proponents say short-term rentals bring new tourist dollars into the Flathead, while providing operators a new income source. Owners have said rentals live and die by online reviews, so the market is somewhat self-regulating.

Opponents believe by that allowing short-term rentals, they would lose some integrity of their neighborhood and facilitate a transient nature of residents.

The new cap measure from Monday’s meeting would be either a standing number, initially marked at 200, or a percentage, about 2 percent of Kalispell’s 9,000 homes. The percentage would place a cap right around that 200 number, but would grow naturally as Kalispell’s home number increases over time.

“I like a percentage base,” Mayor Mark Johnson said. “It grows as the city grows.”

Council member Chad Graham, who made the initial limiting measure to require owners to operate the rental in their primary residence, made a case for his measure over the replacement.

Although he believed it would better serve the long-standing residents, he could see the tide turning toward the new cap limit.

“I’ve heard from people saying that they’re concerned about the character of the neighborhood,” he said. “I would say mine does it better but I have a philosophy behind mine as to how it would be better, but it’s not selling.”

“Our job is how do we make it best for everybody here in Kalispell,” Johnson said. “Not everyone is going to get what they want.”

At public comment, two short-term rental owners, Cliff and Lisa Harshbarger, advocated for no regulation on the short-term rental market in Kalispell.

“We don’t understand why regulation is needed for this,” Lisa said. “If you’re getting one or two complaints a year, you really don’t have an issue here.”

Erica Wirtala, a spokesperson for the Northwest Montana Association of Realtors, said while the organization looks to promote private property owner rights, it also agrees with the cap as a form of market monitor.

“We are in agreement with the cap,” she said. “It’s a small business in our eyes, as well as residential, and we’re all for” allowing those businesses to operate.

The council will vote on the third reading of the ordinance next week, when officials are expected to repeal the primary ownership amendment and replace it with the cap.

Reporter Seaborn Larson may be reached at 758-4441 or by email at slarson@dailyinterlake.com.