How Missoula, MT Increased Rental Compliance and Engagement with Residents

While many might consider Montana the land of big skies and open spaces, Missoula, the state’s second largest metropolitan area, features a population of over 73,000, is considered the state’s cultural center, and is home to the University of Montana. A recent study showed that Missoula creates over $5 billion gross metropolitan product. Missoula is no small town.

Like other burgeoning metropolises, the last decade has found Missoula dealing with the growth of the short-term rental (STR) market, as many of those who call the Missoula valley home look to reap the benefits of the natural tourism the area offers.

“We’re not a resort community, but we do see a lot of tourism and our housing market is incredibly challenged and constrained,” said Montana James, Deputy Director, Community Development Division, Community Planning, Development & Innovation for the City of Missoula, MT

As with many communities, Missoula took an approach to dealing with STRs that seemed reasonable in the early stages. Starting in 2014, James said, the first local ordinances regarding STRs, were “pretty basic,” requiring any potential rental merely register with the city, pay a licensing fee, and comply with building and fire codes.

“Our registration fee, until the beginning of this year, was really low,” said James of the ordinances. “It hadn’t changed since that original 2016 ordinance, and it was set really low at that point, with the hopes of encouraging high compliance. I would say that the compliance had been pretty stagnant since then.”

Despite the efforts to create policies that encouraged self-compliance, James said that of the routinely 400 to 600 properties that she would see advertised as whole-unit rentals, only “about 100 or 110” would register with the city. As STRs rose in popularity, so too did the discussions around how these rentals were impacting housing policy. Over the last two years, James said that increased concerns from community members and elected officials regarding the impacts of short-term rentals on the housing market dictated a new strategy not only for compliance but for better engagement with STR operators.

“We don’t do active compliance, really, on any of the ordinances that our department oversees,” she said. “Our code compliance officers would just respond as they saw complaints come in about properties. I think they were actually manually combing through different platforms to try to find if that property was listed, and then contacting the property owner that way.”

With what she called a “really tight rental and home ownership market” in the community, James knew that the city had a primary concern to create a system that would provide reliable data on properties operating as STRs, but also to help lay the groundwork for long-term policies that would meet any future ordinance shifts regarding compliance.

James’ team worked implemented the Granicus Host Compliance platform to help manage the STR market. The first benefit that James said that she saw was the tool’s dashboard, that provided a more functional tool for tracking properties and compliance.

“The compliance team has been using that tool since we signed up and have been more responsive to complaints about tourist homes,” she said. “And our permit folks can use the tool as they’re processing registrations.”

While the Host Compliance tool helped get Missoula better organized regarding properties, James said it quickly became clear that the information coming from this new approach would provide valuable data for the public regarding concerns over STRs in the community.

“We pretty quickly realized that we wanted some additional support analyzing the data and helping us interpret it to understand some of the nuances since we were hearing all of the concerns about the housing market,” she said. “And that conversation got to be more public at city council meetings.”

STR operators who saw income as a supplement to their mortgage also wanted to see the city justify any fee increases for compliance, James added, making data reporting a crucial part of the city’s evolution with STRs.

“We wanted to be thoughtful about kind of digging into all of the nuances of that market, and understanding really what was at play,” she said. “The consultant from Granicus really helped us to do that in a defensible, consistent way, and connected us with team members who brought expertise on what other communities are doing, how they’ve tackled this issue.”

Engagement also factored into the change in how Missoula handled their STR market. The Host Compliance tool included automated reminders for staff to connect with owners about license renewals and connecting over other time-sensitive deadlines. But Missoula took their outreach beyond that, integrating information regarding STRs into the Engage Missoula website, built on Granicus’ EngagementHQ tool, to share reports, studies, processes, and other data for Missoula residents to review and connect with conversations regarding potential changes to fees or other policies.

“They’re kind of incorporating that more regular outreach and touch points to tourist home operators,” said James. “We used (Engage Missoula) to post information about when meetings would happen and engage in conversation with our housing policy specialist after we presented the report, and before we proposed the fee increase to just gather feedback from folks and share what had been done and what we learned.”

Through the platform, Missoula has achieved a 90% identification rate. Currently there are 583 STRs in operation, a number that has doubled in the last seven years. With an approach that James called “very much a kind of friendly information sharing,” Missoula staff use this data to both educate local STR operators and increase compliance.

“I think the Host Compliance platform has been really helpful in enabling us to do that outreach,” she said. “To have the listings, the data, and addresses at our fingertips it helps make us able to do that outreach and improve compliance. And we want to see those numbers continue to improve.”

While other communities continue to have STRs dominate housing conversations, James said that one of the best outcomes of the new technologies being used for compliance is that the issue is taking up less and less of Missoula’s public conversation, with staff saving over half the time in pursuing property information than before implementing Granicus tools.

“We’re able to shift our housing policy staff back to implementation of the policy and working on these higher impact areas,” she said. “Knowing that this is an area that we will continue to monitor, it’s not the top priority that has to be dealt with. It’s not how we get to affordable housing for everyone in the community, for example.”

The combination of data and engagement provides the keys to success for Missoula’s efforts, James said, something that will continue to be at the core of future compliance efforts.

“We have the information available to make informed decisions, and it improves the efficiency of our staff work related to this particular ordinance and compliance,” she said. “I’m always a huge fan of engagement. That combination is effective. We’ll continue to keep using our project page for more general public information about the issue. And then for operators, we’ll probably do a more targeted outreach.”