Bozeman's New Short Term Rental Ordinance and Proposed UDC Zoning Changes

*Updated 11/22/23
The UDC updates have been postponed until the first of the year due to community pushback. The city recently emailed out a survey to help them understand how they can better engage with the community. Click here to take the survey. 

There have been recent updates in Bozeman related to a short-term rental (STR) ordinance that has now been passed and the proposed Unified Development Code (UDC) that proposes zoning changes within the city. These updates have brought about opposing viewpoints within the community and caused some confusion. In this article, we will break down both the new STR ordinance as well as the proposed UDC. It's important to note that both the STR ordinance and proposed changes to the UDC are still evolving. We will keep you updated as we receive more information. 

BOZEMAN'S NEW STR ORDINANCE

The city of Bozeman groups short-term rentals into three categories. 

Type 1 - Owner occupied primary residence, owner is present during rental period
Type 2 -  Owner occupied primary residence, duplex, or ADU, owner is not present during rental period
Type 3 -  Entire home is not owner-occupied 

Short-term rentals (STRs) are restricted to certain zoning districts. Type 1 is allowed in all, but Type 2 is not allowed in RS and R1. Type 3 is not allowed in residential districts. Between 2020 and 2023, the number of short-term rentals in Bozeman has doubled. This has led to proposed changes, which have divided the community. Many supporters believe the changes will increase the housing supply and bring about more affordable options for the locals. On the other hand, opponents argue that the proposed changes infringe on the rights of property owners and will have an insignificant impact on housing affordability.

City Ordinance 2149 was passed on October 17 by Bozeman's City Commission. The new ordinance bans any future Type 3 STRs in Bozeman. Just over 100 existing, permitted Type 3 units have been grandfathered in. The ordinance also increased the residency requirements to be considered a primary residence from 50% to 70% and split the Type 2 rental into different categories. Type 2a is for units that are primary residence and rented when the person isn't there and Type 2b accounts for ADU (accessory dwelling units) or one unit in a multi-unit building. 

Ordinance 2149 isn't the only new change to Bozeman's STRs. In the summer of 2023, another ordinance passed which states that hosting platforms such as Airbnb and VRBO have to require short-term rental owners to include their permit number on their listings and remove any that don't have one. It also requires hosting platforms to share data with the city on listings, mandate fire safety inspection every three years, and charge fines for violations. For more information on Bozeman's short-term rentals, click here. 

BOZEMAN'S PROPOSED UDC ZONING CHANGES

The proposal is for a new development code in Bozeman that consolidates zoning districts. The proposed Unified Development Code (UDC) outlines zoning, building height, size, and parking requirements. One of the goals of the new code is to make it more straightforward and friendly to housing development in Bozeman. The draft has been delayed until early next year due to strong pushback from the community.

CURRENT ZONING R-S, R-1, R-2, R-3

The proposed code would consolidate the current code lowest density residential zoning districts (RS, R1, R2, R3) into one district called R-A or residential low. This new district would allow for up to eight dwelling units in a building and up to 10,000 square feet. It could accommodate single units, ADUs, duplexes, townhomes, rowhouses, triplexes, or fourplexes. The building can cover up to 40% of the lot and the building height is limited to 3 stories.

CURRENT R-4

The proposed code would turn current areas zoned R-4 into R-B or residential medium. This would allow up to 24 units and accommodate all of the above, as well as multi-unit dwellings. The building can cover up to 60% of the lot and the building height is limited to 4 stories.

CURRENT R-5

The proposed code would turn current areas zoned R-5 into R-C or residential high. This would include high-density, mixed-used zoning. Building space can cover 100% of the lot and the building height is limited to 5 stories. 

The proposed code would keep R-MH, which is residential manufactured home zoning as is.

The new draft takes into account the recent changes in Montana state law that apply to land use. The Montana legislature passed 3 bills with the goal of speeding up development review time, allowing multi-family buildings, and encouraging denser development within cities rather than expanding to the outskirts.

Bill 323
This stipulates that cities with over 5,000 residents must allow duplexes anywhere that single-family homes are allowed.

Bill 382
Overhaul land-use planning process and require cities to adopt 5 recommendations from a list of 14 strategies for increasing housing access. This applies to cities with more than 5,000 that are in counties with over 70,000 residents. 

Bill 245
Require cities to allow multi-unit housing developments in commercial zones. It applies to municipalities designated as urban areas that have more than 7,000 residents. 

There were far fewer changes to commercial zoning in the UDC draft. One notable change was a new district called B-3C which is proposed to separate Main Street between Grand and Rouse from the rest of downtown area zoned B-3. It reduces parking minimums for most commercial districts. It also would increase the maximum height in  B-1 (Neighborhood mixed-use) to four stories and allow a portion of developments in that zoning to include residential use. 

While the city has been working on the UDC proposal since the summer of 2022 and, according to the project’s website, the public engagement phase of the proposal was from winter 2022 to summer 2023, it seems that nearly the entire community was unaware of the UDC Proposal until just this month. After receiving a significant amount of pushback from residents, the city has announced that they are putting their timeline for updating the UDC on hold until the first of the year. 

To see the full UDC draft, stay up to date on when meetings are occurring, and review the timeline of the zoning changes, click here. If you want to be included in the conversations about the proposed zoning changes, we highly suggest that you attend the community development board and city commission meetings (click here for a calendar). You can also email your concerns to agenda@Bozeman.net to add to the public comment. 

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