MISSOULA - Nearly two months after sending a proposal to boost the initial fee to register a tourist home by 825% back to committee for additional work, the measure passed City Council on Monday night with few changes but sudden concern for the welfare of taxpayers.
City Council also boosted the annual renewal fee by 564%. While members of council have frequently approved endeavors that are subsidized by taxpayers, many on Monday suggested that regulating tourist homes should pay for itself.
The city said the fees are needed to track the industry and enforce local regulations free of the General Fund. But opponents have called the increase egregious, adding that it will put many small business operators who bring commerce to the city and rely upon the income to make ends meet out of business.
The measure passed on a 10-2 vote.
“The process has some communication gaps. It's not fair to ask to pay this much money when you go back to asking what people actually get in return,” said Council member Jennifer Savage, who ultimately supported the measure. “These are small businesses in many cases, and they're family-run businesses. They're funding other small businesses in Missoula, and a lot of time that gets overlooked.”
In their support, others also suggested that the program should operate free of taxpayer funding. City staff has never said how much it spends to subsidize the enforcement or inspection of tourist homes, but has only said it needs the revenue to do the work properly.
Sudden concern for taxpayers?
While such arguments focused on taxpayer concerns rarely surface in City Council debates, it did on Monday.
Council member Daniel Carlino supported the increase and introduced a resolution to boost the cost of the annual renewal fee from the proposed increase to $206 to $450, or another 118%.
It failed on a 10-2 vote.
“It's a good thing for Missoula taxpayers,” Carlino said of his failed measure. “Missoula taxpayers have been subsidizing the staff time and permitting costs for short-term rentals, while the short-term rental owners are taking what would have been a home for Missoulians off the market to make a higher profit.”
Missoula taxpayers subsidize a wide number of programs in Missoula including free bus service, affordable housing, the sale of public land, homeless shelters, and the purchase of private property, with little outcry from members of council.
But the majority expressed newfound concern for taxpayers on Monday. Still, some stopped short of funding a new city position to monitor the tourist-home industry. The Legislature has proposed capping what increases the city can spend year over year.
“It's not in the category of having a huge impact on our housing stock,” council member Gwen Jones said of the industry. “We want to continue to track it and to really take it to the next level to pin down a more specific number. But there's a lot of other areas I'd rather go in than hunting down short-term rentals in Missoula. We've got other things to work on with our housing crisis.”
Infringement on property rights?
The city has said the fee increase would fund the ability to contact operators who are out of compliance with city ordinance. The most recent figures suggest there are 541 tourist homes, but council members on Monday only referred to "300 or 400."
City staff said last year it saw just 42 new registrations for tourist homes and 92 renewals.
Despite the arguments waged by supporters on the need for added city revenue, opponents saw it as a financial grab by the city and an infringement on the rights of private property owners.
The increase will raise the cost of registering a tourist home from $60 to $555 while the cost of renewal will increase from $31 to $206. The increases weren't listed in the city's referral for Monday's decision but were included as an attachment in item 5.
City officials said the increase wasn't meant as a deterrent, but rather a matter of financial math. But not everyone agreed.
“I don't think it's the government's business or your neighbor's business what you want to do with your property,” said council member Sandra Vasecka. “If you want to rent it out for a couple nights for extra income, that's your property, you should be able to do that. A lot of people are not going to be in compliance with this. It's unconstitutional to dictate what you can and cannot do with your own property.”
Council member John Contos agreed and added that Missoula is well behind the nation in the tourist-home trend. He said the industry was dying off in Missoula and the concerns were overblown by those on the left given how the city spends tax money on other programs.
“I think of a lot of people are realizing there's not as much money in it as they think there is. There's a lot of costs to it,” Contos said. “I'm having a hard time with the increase. It's just not fair. That's not going to help people wanting to be compliant with this. There are quite a few issues here.”
