506 East Beckwith

Missoula, Montana 59801

Telephone: (406) 721-2976

SOL & WOLFE

Law Firm PLLP Michael Sol, BA, JD, MBA
[email protected]

February 15, 2022

Angela Jacobs,
Whitefish City Attorney
418 NE 2nd Street
Whitefish, MT 59937.

Email Angela Jacobs

Phone: 406-863-2444

re: Montana Landlord’s Association v. City of Whitefish, Montana

Dear Angela Jacobs,

We represent the Montana Landlords Association, and wish to discuss with you the matter of
Zoning by the City of Whitefish as it impacts residential landlord and tenant relationships,
through the City’s effort to regulate residential rentals within certain zoning districts in
Whitefish.

I am referring to the Zoning Codes of the City of Whitefish, Ordinance 20-21, enacted January 3,
2021 and an earlier ordinance, as described in the Flathead Beacon, December 28, 2021.

The January 3, 2022 ordinance purports to regulate “Short term” residential rentals, [11-3-35],
and defines the application of the City Code by defining “Residential Short Term Rental” as
follows:

RESIDENTIAL, SHORT-TERM RENTAL:

The rental of an entire furnished privately owned house, townhouse unit, condominium
unit, apartment or other residence, or any space within a dwelling unit rented
independently, for stays of less than thirty (30) days to transient guests or tourists.
Advertising for available stays of thirty (30) days or less on sites that predominantly cater
to travelers looking for short-term rentals presumes the property is being used as a
short-term rental. Short-term rentals as defined herein do not include the following: bed
and breakfasts, hostels, and motel or hotel establishments unless individual rooms or
units with a kitchen or kitchenette are condominiumized, and under different ownership
than the hotel or motel. Short-term rentals shall not provide food or beverages for sale on
premises or with the rental of the dwelling. Renting a portion of the home for a
short-term rental does not qualify as a home occupation.
The ordinance further defines “residential purposes” as follows:

RESIDENTIAL PURPOSES:

The intent to use and/or the use of a room or typically unfurnished dwelling unit for the
living, sleeping and housekeeping activities of persons on a long-term basis of intended
tenure, typically on a six (6) to twelve (12) month or longer lease, but also on a
month-to-month basis with the intent to continue renting long-term to the same individual
or family for housing. Short-term and medium term rentals are not considered residential
purposes.

Chapter 2 of the Whitefish Codes, purports to define the specific legal uses of the various zoning
districts within the City of Whitefish. They include Article K, WN-2 Secondary Business
District, Article L, WB-3 General Business District, Article N, WRR-1 Low Density Resort
Residential District, Article O, WRR-2 Medium Density Resort Residential District, Article P,
WRB-1 Limited Resort Business District, Article Q, WRB-2, General Resort Business District,
Article T, WBMV Big Mountain Village District and Article U, WBMRR Big Mountain Resport
Residential District.

All of these classifications purport to include “residential” housing. Presumably, this also
includes residential rental housing.

Ordinance 21-18, purports to require licensing in the form of “an Administrative Conditional Use
Permit” for propertry in the WR-4 Zoning District (High Density Multi-Family Residential
District) with five to eighteen unites where the previous requirement was eight to eighteen units.

Further, Municipal Code 11-3-35, 11-3-35: SHORT TERM RENTAL STANDARDS:

Publisher's Note: This Section has been AMENDED by new legislation (Ord. 21-20 ,
passed 1-3-2022). The text of the amendment will be incorporated below when the
ordinance is codified.

Certain zoning districts such as the WB-3, Resort Residential and Resort Business
Districts permit paid visitor accommodation of less than thirty (30) days within a legal
residential unit. These standards do not apply to bed and breakfasts, hostels, hotels or
motels. Short term rentals are not compatible with other residential areas as there are
potential traffic and noise impacts, as well as the diminished availability of long term
rental and affordable housing units.

A. Performance Standards: Short term rentals are allowed in applicable zoning districts
provided the following criteria are met. Each rented unit must:
1. Register a joint application for a short term rental and business license with the
Whitefish Planning Office;
2. Conform to the land use provisions of this title and other applicable regulations;
3. Not exceed the allowable dwelling unit density of the underlying zoning district. A
short term rental is defined as either a dwelling unit per section 11-9-2 of this title or any
space within a dwelling unit rented independently for stays of less than thirty (30) days;.
Etc...”..
 As reported in the Flathead Beacon, December 28, 2021, a modified ordinance was
unanimously passed on December 20, 2021.:

“The Whitefish City Council last week unanimously voted to approve an ordinance that
will put zoning requirements in place for certain rentals being rented out for periods of
between 30 and 90 days.

“The ordinance requires rentals of 30 to 90 days that would qualify as “medium-term

rentals” to be in zones classified as resort residential, similar to the zoning requirement
for short-term rentals. City staff had come up with the proposed changes after being
directed to look into the issue by the council following a report from the Sustainable
Tourism Master Plan Committee.

“Additionally, the ordinance adds more requirements for short term rentals, including
registration, increased fire inspections, and advertising requirements, which Taylor said
would add more tools for enforcement. ...

“Part of the ordinance creates the definition of a “medium term” rental, which are rentals
of “entirely furnished privately owned house townhouse unit condo unit or apartment or
other residence to tourists and remote workers for stays between 30 and 90 days without
the intent to rent to the same individual or group for long term housing.”

“Medium term rental definition would not apply to long-term month-to-month rentals to
individuals or families, or rentals of less than 90 days to local workers.”

Exclusions From Application Of Chapter 70, Title 24, of the Montana Code Annotated.

70-24-104. Exclusions from application of chapter. Unless created to avoid the

application of this chapter, the following arrangements are not governed by this chapter:

(1) residence at a public or private institution if incidental to detention or the provision of

medical, geriatric, educational, counseling, religious, or similar service, including all
housing provided by the Montana university system and other postsecondary institutions;

(2) occupancy under a contract of sale of a dwelling unit or the property of which it is a
part if the occupant is the purchaser or a person who succeeds to the purchaser's interest;

(3) occupancy by a member of a fraternal or social organization in the portion of a

structure operated for the benefit of the organization;

(4) transient occupancy in a hotel or motel;

(5) occupancy by an owner of a condominium unit or a holder of a proprietary lease in a

cooperative;

(6) occupancy under a rental agreement covering premises used by the occupant primarily
for commercial or agricultural purposes;

(7) occupancy by an employee of a landlord whose right to occupancy is conditional upon

 employment in and about the premises; and

(8) occupancy outside a municipality under a rental agreement that includes hunting,
fishing, or agricultural privileges, along with the use of the dwelling unit.

The City of Whitefish has made a series of modifications to residential zoning

requirements, which undertake, in the guise of “zoning,” substantive regulation of the type of
residential rental agreements and their impact, in ordinances passed in March, 1982, in 2013, in
2018, in December, 2021 and in January, 2022.

All of these changes purport to regulate residential housing. As Klaus Sitte, who was the
primary drafter resulting in the Montana Landlord and Tenant Act of 1977, stated as recently as
2018 in a presentation, reiterated, the Montana Landlord and Tenant Act “covers ALL
relationships between residential landlords and tenants.” Emphasis is Klaus Sitte’s.

The actions of City of Whitefish violate virtually the entirety of the point and purpose of
Montana Landlord and Tenant Law. We are attempting a resolution of these issues. The City of
Whitefish must rescind these policies. Whitefish does have an avenue of redress, through
amendments to the Montana Landlord and Tenant Act but, pursuant to that Act, that is the only
legal recourse.

We challenged the City of Missoula, which undertook similar regulatory efforts, in

Western Montana Proprietary Association v. City of Missoula, Dept. No. 2 Cause No. DV-01-
861. The Western Montana Proprietary Association won that case. The City of Missoula had to
pay attorney fees and court costs. That case is apropo, as on summary judgement, Judge Henson
found, succinctly, that the City could not license, or charge fees, to landlords outside of the
Montana Landlord and Tenant Act, to wit: “The City of Missoula is herewith enjoined and
prohibited from further collecting any such license fees, however described, which violate MCA
§ 7-1-111(13), and likewise restrained from the prosecution of any individual or entity charged
with violating the ordinance.” A copy of the Opinion is attached for your convenience.

We also prevailed in a landmark case, Summers v Crestview Apartments, 236. P.3d 586
(Mont. 2010). The landlord and tenant issues were deemed important enough to the Montana
public to order oral argument before the Montana Supreme Court at the University Theater in
Missoula. Over 1500 people attended that extraordinary session. With extensive publicity, we
prevailed. We won the case and received the full award of attorney fees in that case of $76,000.

We would appreciate a response by February 23, 2022.

Sincerely.
/s/ Michael Sol
Michael Sol
Attorney at Law

cc: John Sinrud, Montana Landlord’s Association

Attached, Order of the District Court, 9/14/2004, John S. Henson
John S. Henson, District Judge
Department No. 2
Missoula County Courthouse
200 West Broadway
Missoula, MT 59802

MONTANA FOURTH JUDICIAL DISTRICT COURT, MISSOULA COUNTY

WESTERN MONTANA PROPRIETARY ) Dept. No. 2

ASSOCIATION, d/b/a Western Montana ) Cause No. DV-01-861
Landlords Association, )
)
Plaintiff, )
)
-vs- ) OPINION and ORDER
) DECLARATORY JUDGMENT
CITY OF MISSOULA, a Municipal ) and PERMANENT
Corporation organized under the Laws ) INJUNCTION
of the State of Montana, )
)
____________________________________) ___

The Motion of the City of Missoula for Summary Judgment comes on regularly

before the Court by way of pleadings and a hearing held April 30, 2002. The Plaintiff

agrees that the matter is one that is appropriate for summary judgment, that the issues

are legal and not factual. The matter having been fully briefed and the Court fully

advised, the Court issues the following Opinion and Order.

Opinion

I. Background

The Plaintiff is an organization of landlords and property managers principally

doing business in Missoula, Montana, as an association representing primarily residential

rental property owners. Its members have been required to obtain licenses under this

ordinance, and are therefore directly affected by it. It has an interest in this matter

Opinion and Order Page 5

representing individuals who own and rent residential property within the city limits of

Missoula, Montana. Its’ standing to bring this suit on behalf of its members has not been

contested.

The City of Missoula is a municipality with self-governing powers pursuant to Title

7, Chapter 1, Montana Code Annotated. T he City of Missoula does not contest that it is a

proper party and that the District Court of Missoula County is the proper venue for this

action.

Prior to June 14, 1999, the City of Missoula [hereinafter “City”], through Title 5 of

the Missoula Municipal Code required businesses including the rental of triplex and

denser numbers of residential apartments located within the Missoula City limits to obtain

a business license. On June 14, 1999, the City amended its ordinances by adopting City

Ordinance 3100 which amended the general city business licensing ordinances to

include the requirement of city business licenses for the rental of duplexes, single unit

residential dwellings, and room rentals.

II. The Ordinance

As adopted, the Ordinance made various revisions and additions, to finally read

as follows:

1. Section 5.04.020 defines “Apartment or residential rental unit” as

meaning “a dwelling unit, sleeping room, or suite of sleeping rooms that are
rented which are designed to be for living purposes in an apartment house or
residential dwelling unit.”

2. The licensing requirement for business applies to “any and all rental
of office, commercial, residential dwelling units or own occupied residences
wherein room rentals occur regardless of the amount of rent derived from the
rental. Business also includes any and all industries, pursuits, occupations,
avocations, professions and businesses that have annual gross receipts of
three thousand seven hundred fifty dollars or more ... [This monetary
threshold does not apply to residential rental license requirements. All
residential rentals shall be licensed unless expressly excluded in section
5.04.030(B), MMC.]”

Opinion and Order Page 6

 3. Section 5.08.030 sets forth the license fee schedule. Section
5.08.030(B)(1) states that “the license fee shall be seven dollars and fifty
cents per dwelling unit for an apartment house, duplex, residential rental
designed for single family occupancy whether rented in its entirety or in which
sleeping rooms are rented. The minimum license fee shall be thirty dollars and
the maximum license fee shall be six hundred dollars. By contrast, Section
5.060.030(B)(3) states that the license fee for “rental of office, retail,
wholesale and warehouse space shall be three-fourths of one cent per square
foot for retail and office space and three-eighths of one cent per square foot
for wholesale and warehouse space. The minimum license shall be thirty
dollars and the maximum license shall be six hundred dollars.”

4. “It shall be the duty of the city treasurer to issue a license upon
presentation of a properly completed application blank together with tender of
the appropriate license fee, unless upon review or inspection ... indicates a
violation of any city ordinance or code existing at the place of business sought
to be licensed ... Inspections of existing residential dwelling units shall be
performed on a complaint driven basis or at the time of new or remodeled
construction or change of type of land use.” Section 5.08.020(B).

Apparently in response to the Missoula ordinance, during the 2001 Leg islative

session, the Montana Legislature amended § 7-1-111, Montana Code Annotated, by

inserting subsection (13) pursuant to HB 382, set forth as chapter 446,. Laws of

Montana, 57th Legislature, Volume II, at 2060-2061. The title to HB 332 is “An Act

Prohibiting Self-governing Local Government Unit from Exercising Certain Powers

Related to Landlords and Tenants and Amending Section 7-1-111 MCA.”

The statute, as amended, reads as follows:

7-1-111. Powers denied. A local government unit with self-government powers

is prohibited from exercising the following:
...
(13) any power that applies to or affects landlords, as defined in 70-24-103,
when that power is intended to license landlords or to regulate their activities
with regard to tenants beyond what is provided in Title 70, chapters 24 and 25.
This subsection is not intended to restrict a local government’s ability to require
landlords to comply with ordinances or provisions that are applicable to all other
businesses or residences within the local government’s jurisdiction.

The legislative history of the enactment shows that it was opposed by the City as

well as the Montana League of Cities and Towns, the mayor of Bozeman, the Montana

Public Interest Research Group, the City of Great Falls, and individuals appearing on

Opinion and Order Page 7

behalf of homeless veterans. The proposal was supported by the Montana Landlord’s

Association, local chapters from Kalispell and Dillon, the Missoula County Association of

Realtors, and Montana Housing Providers.

The Missoula City Attorney testified to a legislative committee that the ordinance

was passed out of concern for university student housing in Missoula and that the

legislature should require the university to provide housing for all their students. The

Mayor of Missoula testified by letter that he was concerned that the proposed legislation

might “be interpreted to include a prohibition against municipalities attempting to regulate

such items as sidewalk repair and maintenance, sidewalk snow removal, weed problems,

garbage problems, sanitary/sewer regulations, nuisance and noise violations and zoning,

such as off-street parking.”

The Court takes judicial notice that the City is a self-governing municipality and

that it has enacted extensive and comprehensive zoning regulations, enforced through

the Missoula Office of Planning and Development, has a building code licensing and

inspection scheme through its “Building Inspection Division” of the Public Works

Department, as well as inspection and licensing of sanitary facilities through the Missoula

City-County Health Department. Regulations provide for complaint procedures, and each

of these agencies has enforcement powers and penalties for non-compliance with the

existing regulations. This regulatory authority appears to extend broadly and covers

residential and businesses purposes and uses alike.

The Court specifically notes that Missoula’s City Zoning Ordinances provide

“minimum requirements for the promotion of the public health, safety, convenience,

comfort, prosperity and general welfare.” ORD 19.02.010.

The City zoning ordinances establishing residential zoning do not distinguish

between rental housing and owner-occupied housing. ORD 19.95, 19.33, 19.35, 19.06,

Opinion and Order Page 8

19.48, 19.34, 19.36, 19.91,19.37, 19.33, 19.38, 19.08, 19.92, 19.46, and 19.40. T he City

has not established a “business” exception for residential rental property under its zoning

ordinances.

The City zoning ordinances also establish permissible locations for professional

offices, including real estate offices, within certain kinds of residential dwellings, ORD

19.04.070, as well as neighborhood business zoning for banks, cafes, clothing stores,

food stores and similar businesses. ORD 19.44. Retail stores, laundry, and theaters are

specifically accommodated in other zoned areas under ORD 19.10, “Restricted

Commercial.” Other commercial designations exist under ORD 19.16 and 19.14, 19.18

and others. Light industrial is provided for under ORD 19.30 and heavy industrial under

ORD 19.32.

The Court also takes judicial notice of various Municipal Ordinances such as

Ordinance 3040, “Sidewalk Maintenance,” which provides for snow and ice to be

removed from sidewalks by owners of property in order to provide “safe, easily passable

sidewalks for pedestrian wintertime travel within the City of Missoula, and to require

owners and tenants of the adjoining premises to keep the same free from snow or other

obstruction.” [Ordinance 3040, Section 12.16.020(A)]. The Ordinance provides for

enforcement and penalties. The Ordinance is applicable to all property, commercial and

residential. Likewise, Missoula has a weed control ordinance, Ordinance 3210, which

provides for weed and grass control of all property in Missoula by the “owner, his

representative, contract purchaser or any occupant of the real property ...” [Ordinance

3210, Section 8.40.020] and provides for enforcement mechanisms. The Ordinance is

applicable to all real property within the Missoula City limits.

III. The Position of the Western Montana Landlord’s Association

The Western Montana Landlord’s Association (W MLA) takes the position that the

Opinion and Order Page 9

Ordinance, when enacted, was an unauthorized tax disguised as a business license, a

denial of equal protection of the laws under both Federal and Montana constitutions, that

the enforcement used by the City was contrary to the ordinance, that the license licensed

property managers who were already licensed to conduct rental property management

by the State Board of Realty Regulation, that the Ordinance presents a conf lict of laws

with the state’s regulation of landlord and tenant matters through the enactment of MCA

§ 702-4-101 et. al..

Since the Legislature enacted MCA § 7-1-111(13), the W MLA alleges that the

City’s continued enforcement of the Ordinance violates express state prohibition.

IV. The Position of the City

The City of Missoula takes the position that municipalities with self-governing

powers have broad licensing powers under Title 7, Chapters 21, parts 41 and 42, MCA.

The City correctly points out that such powers are to be liberally construed.

The City argues that the ordinance, in addition to the powers exercised under

applicable zoning, health, and general statutes, provides “additional information,

emergency information, administrative review and security that is not already provided to

either tenants or landlords.” [Reply Brief, Motion for Summary Judgment, 8:4-7]. The

Ordinance “will assist Defendant City in knowing approximately how many residential

dwelling units exist in the City of Missoula. Further ORD 3100 in part provides an

administrative tool to help ensure that rental structures are being utilized in compliance

with Uniform Building Codes by trying to identify potential illegal bedrooms without

adequate legal ingress and egress bedroom windows.” [Reply Brief, Motion for Summary

Judgment, 9:1-6].

The City also maintains that the license is not a disguised tax, does not conflict

with state laws, that the Ordinance does not attempt to license property managers, only

Opinion and Order Page 10

residential dwelling units, and that the effect of the license is to regulate and license the

rental dwelling, not the landlord.

“Currently,” the City states, “there is no provision that allows for a citizen or city

official to readily learn and identify who the responsible owner and/or property manager

is for citizen complaint, public safety and health, or emergency service purposes.” [Brief,

Motion for Summary Judgment, 7:6-9]. “The language and intent of ORD 3100 is to

license residential dwelling rental units and not landlords or landlord activity with respect

to tenants.” [Brief, Motion for Summary Judgment, 10:12-14].

“Pursuant to ORD 3100, the City of Missoula is regulating and licensing residential

dwelling rental units and not professions or occupations. Pursuant to general city

business license regulations, the city imposes a license fee on the residential dwelling

rental unit.” [Brief, Motion for Summary Judgment, 11:4-7].

Succinctly, the City denies the allegations of the WMLA and denies that the

passage of MCA § 7-1-111(13) in 2001 was intended to have any effect on the City

Ordinance imposing a license fee on residential rental units, even though the City

opposed passage of the statute precisely on those grounds.

V. DISCUSSION

Missoula City Ordinance 3100 was enacted pursuant to state law permitting self

governing municipalities to license businesses within their city limits. A local government

unit that adopts a self-governing charter, as Missoula has,

“may exercise any power not prohibited by this constitution, law or charter
...”. Sec. 6, Art. XI., Montana Constitution.

7-21-4101 General Licensing power of municipalities. (1) The city

or town council has power:
(a) to license by ordinance all industries, pursuits, professions, and
occupations and to impose penalties for failure to comply with such
license requirements.
...

Opinion and Order Page 11

 Limiting the general power expressed in the foregoing statute are certain specific

prohibitions. Relevant prohibitions include:

MCA § 7-1-111.
(1) Any power that applies to or affects any private or civil relationship,
except as an incident to the exercise of an independent self-government
power.
(13) Any power that applies to or affects landlords, as defined in 70-24-
103, when that power is intended to license landlords or to regulate their
activities with regard to tenants beyond what is provided in Title 70,
chapters 24 and 25. This subsection is not intended to restrict a local
government’s ability to require landlords to comply with ordinances or
provisions that are applicable to all other businesses or residences within
the local government’s jurisdiction.

MCA § 7-1-112. A local government with self government powers is

prohibited the exercise of the following powers unless the power is
specifically delegated by law:
(1) The power to authorize a tax on income or the sale of goods or
services, except that this section shall not be construed to lim it the
authority of a local government to levy any other tax or establish the rate
of any other tax.

As part of its ordinance licensing rental property, Missoula has imposed a license

fee requirement that distinguishes between apartment houses, duplexes and single

family units, including sleeping rooms, licensed for a $7.50 license fee per dwelling unit,

with a minimum $30 fee and maximum $600 fee [ORD 5.08.030(B)(1)], trailer courts and

mobile home parks, $7.50 license fee per hook-up with a minimum $30 fee and a

maximum $600 fee [ORD 5.08.030(B)(2)] and a license fee for rental of office, retail,

wholesale and warehouse space based upon 3/4 cent per square foot for retail and office

and 3/8 cent per square foot for wholesale and warehouse. [ORD 5.08.030(3).

Other business licenses are calculated based upon a f ee of $7.50 per employee,

the minimum fee being $30 and the maximum fee being $600.00. [ORD 5.08.030(A)].

The viability of the ordinance rests on four points. These are: 1) is it a license or a

tax, 2) if it is a business license, does it interfere with state regulation of landlord and

tenant relationships, 3) is it is a business license, does it accom plish a purpose that does

Opinion and Order Page 12

not interfere with the licensing power of the state for property managers, and 4) does it

violate MCA § 7-1-111(13)?

VI. What, or Who, is Being Licensed?

The City’s argument is finely nuanced. On the one hand, the City maintains that

the license is not meant to license landlords, but rather licenses rentals, meaning the

rental property itself. The City does not offer a cogent argument as to how its ordinance

licenses the business of residential property rentals. Rather, it offers only that it intends

to assess the license against the property that is being offered for residential rental.

Unlike the criteria set for other kinds of business licenses, based on number of

employees or rental of square footage of commercial space, the City has no criteria other

than “residential rental.” The same fee is assessed for a sleeping room as for a four

bedroom house. The minimum license fee, of $30.00 is charged for rental of a single

sleeping room or for five four bedroom houses. The maximum fee, $600, is charged

whether a landlord or property manager has 80 units, or 800 units.

The City’s argument that it is licensing rental “property” rather than landlords is

disingenuous. The minimum and maximum fees are assessed based on the number of

rental dwelling properties “licensed” by a single applicant at a given physical location.

[ORD 5.080.020[A][2][f]. Each additional location requires an additional license.

The Ordinance has nothing to do with licensing of individual rental properties

except as this plays a role in the calculation of the license fee charged to the applicant.

On the other hand, the fee is charged, within the license fee limits, per unit per

year. This is very similar to the situation described in Montana Innkeepers v. Billings

(1983) 206 Mont. 425, 671 P.2d 21.

There, the Billings ordinance imposed a “fee” of $1.00 per adult transient for each

day of occupancy of a room in a hotel, morel or other place of lodging within the city. The

Opinion and Order Page 13

fee was paid by the motel, hotel, or owner of the “other place of lodging.”

Within the limits of the fee provisions described above, the Missoula ordinance

purports to impose a $7.50 fee per year on each residential rental within the City of

Missoula. The City Attorney contends that the “license” is a “license for the rental of

residential dwelling units as well as office, retail, wholesale and warehouse space.” [Brief

11:8-10].

However, licensing of office, retail, wholesale and warehouse space clearly is

designed to license business activities because that is what occurs by definition within

those spaces.

There is no business conducted, by definition, within a residential dwelling unit,

and within the limitations imposed by the zoning ordinances of the city. The broad

reading of the city zoning ordinances do not, in fact, permit general businesses uses in

areas zoned residential for the most part, and do not create any exceptions for

residential rentals. If the city is not licensing the conduct of business on the premises,

then the fee must be imposed on the transaction leading to the rental of the premises for

residential purposes.

However, the transaction itself, the signing of a rental agreement, may very well

occur somewhere else, even at a location licensed as a business under the Missoula

business license ordinance.

Municipalities are empowered to license businesses in Montana.

7-21-4101 General Licensing power of municipalities. (1)

The city or town council has power:
(a) to license by ordinance all industries, pursuits, professions, and
occupations and to impose penalties for failure to comply with such
license requirements.
...

A reading of the enabling statute suggests that the legislature intended that cities

Opinion and Order Page 14

could license business activities. The statute cannot be stretched to read that it perm its

cities to license the property used in the activity. Even though it is a “profession” as

contemplated by 7-21-41-1, M.C.A., it is also regulated on a state-wide basis by the

Supreme Court and so a city cannot require a license of an attorney to practice in a city.

Harlen v. City of Helena (1984) 208 Mont. 45, 676 P.2d 191. Could a city evade this

requirement by assessing a license fee against the property of an attorney? We think in

that case that the distinction would founder upon the fact that the language of the statute

cited above does not create a broad power to license property used in the pursuit of

industry, professions or occupations.

By assessing a license fee through an ordinance with no apparent function other

than identification of the license holder and the property owned or administered, the City

is plainly not assessing “a license fee for a privilege not possessed by the citizens,” as

defined in Glodt v. City of Missoula (1948) 121 Mont. 178, 190 P.2d 545. Taking the

city’s argument at face value that it is not a license fee for doing business but rather a

license is for the property that is rented, this contradicts the provision of section

5.08.020(2)(I) which states that licenses shall “not be transferrable to successors in

interest. Successors in interest must apply for a new license in their name.” Though a

license may be issued for the property, and the presumable compliance with city

ordinances, the sale or transfer of the property terminates the license, even though the

property presumably remains in “compliance”.

The City’s arguments founder upon the exceptions that it creates at Section

5.04.030. It does not require a license for caretaker or barter arrangements, only cash

transactions. What public safety concern is resolved by this distinction? The city only

applies the license fee to rental arrangements payable “at a monthly rate.” Can landlords

evade the ordinance by merely charging weekly, or bimonthly, or annually? It appears so.

Opinion and Order Page 15

If so, why is this ordinance so selective? It does not so much license the rental, as it

licenses a particular means of rental payment. How can this possibly protect the citizens

of the City of Missoula? The City has cited no authority for the licensing of a particular

payment method as the underlying trigger for requiring a business license.

The fact is, it is difficult to reconcile the City’s many nuances of exactly what is

being licensed, particularly when read in conjunction with the narrow limitation requiring

licensing of only those rentals “rented out at a monthly rate” but excluding barter

arrangements for that monthly rate. [ORD 5.04.030(B)]. The business license ordinance,

and MCA § 7-21-4101, permits a city government to license by ordinance all industries,

pursuits, professions, and occupations and to impose penalties for failure to comply.

Here, the City says it intends to license the rental property used in the rental business,

but then imposes transfer conditions, limits the payment methods used, and exempts a

variety of common residential rental arrangements. [“...excluding situations involving

nanny, caretaker or barter arrangements or foster children or foreign exchange students

...”. ORD 5.04.030(B)].

Clearly, rental property is not licensed by the ordinance. Rather, rental

agreements involving cash, not barter, payable on a monthly basis, and excluding a

variety of specific rental arrangements are affected by the ordinance. A landlord or his

agent entering into a specific type of rental agreement covered by the statute must apply

for the license.

VII. State Pre-emption of the Field for Licensing of Property Managers

The City’s rationale also requires property managers, who are licensed in

Montana to manage and enter into rental transactions in Montana pursuant to 37-51-601,

MCA, need an additional city license to conduct their authorized business within the

Missoula city limits, for each residential rental transaction they conduct under the

Opinion and Order Page 16

authority of their state license. The definition of “property manager” at MCA § 37-51-

102(17) states that this means any person who, for “a salary, commission, or

compensation of any kind engages in the business of leasing, renting, subleasing, or

other transfer of possession of real estate belonging to others without transfer of the title

to the property ...”.

The City’s attempt to distinguish its requirement for a business license to conduct

the “rental” of residential property (“‘business’ means any and all rental of office,

commercial, residential, dwelling units, or owner occupied residents wherein room rentals

occur ...” ORD 5.04.040) from the legislature’s definition of property manager, one who

“engages in the business” of renting, does not distinguish much, at least insofar as

property managers are concerned.

As discussed elsewhere in this opinion, the property manager gains nothing by the

purchase of the license. The license itself states plainly that it does not “mean that the

rental unit is in compliance with all applicable building or housing codes.” [ORD

5.08.020(B)]. The property manager only purchases the right to enter into property rental

agreements for the premises by purchasing the city license, on a property by property

basis. But, the property manager already has a state license authorizing that

occupational pursuit. The property manager is already obligated to honor the housing

conditions imposed by the Montana Landlord and Tenant Act. The property manager is

already obligated to honor the zoning laws, housing laws, building codes, and sanitary

regulations. The City license is merely a tax on a right to pursue an occupation already

authorized by the state.

Clearly, Missoula’s business license is in conflict with the state’s licensing of

property managers as it regards a requirement that a duly licensed property manager,

licensed by the state of Montana to conduct the business of managing residential rental

Opinion and Order Page 17

property, cannot conduct the business of renting residential business property unless, on

a property by property basis, the property manager also obtains a city business license.

Unlike the circumstances set forth in Billings Associated Plumbing, Heating and Cooling

Contractors v. State Bd. Of Plumbers (1979) 184 Mont. 249, 602 P.2d 597, the State has

not authorized dual licensing of property managers. If a state and a municipal licensing

system conflict, it is the municipal system which must yield. Ibid at p. 252.

VIII. State Regulation Exists for the Subject Matter of Residential Housing

Even where a regulatory purpose is promoted, that purpose cannot interfere with

state regulation where the state has acted.

Under Montana State law, self-governing municipalities are permitted to enact

ordinances even where the Legislature has already acted in a particular area of

regulation, but only if the Ordinance provides stricter regulation. The source of the

regulatory police power under our State Constitution is the State itself . The Constitution

or the Legislature makes the grants of powers to cities and towns. Billings v. Herold

(1956) 130 Mont. 138, 296 P.2d 263. “T he powers conferred on cities by the general

laws of the state to regulate ... must be construed in connection with the limitations,

expressed or implied, in a particular statute ...”. At p. 143.

A local government unit with self-government powers which elects

to provide a service or perform a function that may also be provided or
performed by a general power governmental unit is not subject to any
limitation in the provision of that service or performance of that function
except such limitations as are contained in its charter or in state law
specifically applicable to self-government units. MCA § 7-1-103.

A local government unit that adopts a self-governing charter “may

exercise any power not prohibited by this constitution, law or charter ...”.
Sec. 6, Art. XI., Montana Constitution.

Regarding licensing of professions regulated by the state, the Montana Attorney

General has issued an opinion determining that city licensing may not conflict with state

Opinion and Order Page 18

regulation, including licensing of professions. 37 A.G. 100 (1977).

A city license must be consistent with state and federal law; it must
be reasonable; and it must not “inhibit” the issuance of a license by the
state nor “nullify” a state license. Stephens v. Great Falls, 119 Mont. 368,
379 (1946).
Your ... question concerns city licensing of persons or enterprises
already licensed by the state. As a general matter, state laws are superior
to local laws, and if there is a state preemption of a field, local regulation
is ousted. State ex.rel. Libby v. Haswell 147 Mont. 492, 494-95 (1966).
Thus, the statutes, if any, must be consulted to determine whether there
has been any state preemption. If not, local activities of these enterprises
are subject to local police power.
Section 66-1934(4), governing real estate agents, specifically
provides:
No license fee or tax may be imposed on a real estate broker or
salesman by a municipality or any other political subdivision of the state.
Almost identical language applicable to attorneys is found in
Section 93-29010. There is no comparable exclusion of local regulation in
the barber statutes, Section 66-401 et.seq.. However, these statutes
construed as a whole evidence a comprehensive scheme of state
regulation under the principles of State ex. Rel. Libby v. Haswell, supra.
The only specific mention of local regulation is a requirement that
barbershops comply with local sewer and water regulations. Section 66-
403(11). Thus the statutes on each state-regulated business or profession
must be consulted as specific questions arise.

Even for municipalities with self-governing powers, those cities may exercise

regulatory powers where the state has acted and is prohibited f rom doing so only where

the city action “establishes standards or requirements which are lower or less stringent

than those imposed by state law or regulation.” MCA § 7-1-113(2). Billings Firefighters

Local 521 v. City of Billings (1985) 214 Mont. 481, 694 P.2d 1335,

Missoula ordinance 3100, although purporting to be a regulatory ordinance,

establishes no standards or requirements. The Montana Landlord and Tenant Act of

1977, on the other hand, establishes detailed criteria f or compliance with health, safety,

and the duties of both the landlord and the tenant. It establishes not only complaint

procedures, but alternative means of resolving safety and code violations. MCA § 70-24-

303 enumerates the Landlord’s duties including commanding compliance with

Opinion and Order Page 19

“applicable building and housing codes materially affecting health and safety in effect at

the time of the original construction in all dwelling units where construction is completed

after July 1, 1977" MCA § 70-24-303(1)(a). The Landlord must keep the premises “fit and

habitable.” 70-24-303(1)(b). The Landlord must keep common areas “clean and safe.”

70-24-303(1)(c). The Landlord must “maintain in good and safe working order and

condition all electrical, plumbing, sanitary, heating ventilating, air-conditioning, and other

facilities and appliances, including elevators ...”. 70-24-303(1)(d). The Landlord must

“provide and maintain appropriate receptacles and conveniences for the removal of

ashes, garbage, rubbish, and other waster incidental to the occupancy of the dwelling

unit ...”. 70-24-303(1)(e). The Landlord must install smoke detectors. 70-24-303(1)(g).

The Act requires the Tenant, as well, to perform certain duties “imposed upon tenants by

applicable provisions of building and housing codes materially affecting health and

safety.” 70-24-321(1)(a). The Tenant is required to keep the premises “clean and safe.”

70-24-321(1)(b). The Tenant is required to “dispose from the dwelling unit all ashes,

garbage, rubbish and other waste in a clean and safe manner.” 70-24--321(1)(c). The

Tenant is required to “keep all plumbing fixtures ... clean.” 70-24-321(1)(d). The Tenant

must “use in a reasonable manner all electrical, plumbing, sanitary, heating, ventilating,

air conditioning and other facilities ...”. 70-24-321(1)(e).

The remedies under the act are specific. “[I]f there is a noncompliance with 70-24-

303 affecting health and safety, the tenant may: (a) deliver a written notice to the landlord

... (b) make repairs ...” 70-24-406. The Tenant may recover actual damages and obtain

injunctive relief. 70-24-406(2). “The remedy provided in subsection (2) of this section is in

addition to the right of the tenant arising under subsection (1).” 70-24-406(3). The Tenant

may also complain to a regulatory authority, and the Landlord is prohibited from

retaliatory conduct if the tenant has “complained of a violation applicable to the premises

Opinion and Order Page 20

materially affecting health and safety to a governmental agency charged with

responsibility for enforcement of a building or housing code.” 70-24-431(1)(a).

Comparing the Missoula ordinance with the Montana Landlord and Tenant Act,

the Montana Landlord and Tenant Act is the more detailed of the two in terms of specific

requirements for compliance. The Missoula ordinance is entirely derivative of existing

ordinances.

The main objective of Missoula City Ordinance 3100 appears to be to single out a

particular class of residential property owners and impose upon them a license fee to

ensure compliance with the same set of ordinances that all Missoula residential property

owners are already bound by. This raises equal protection questions.

As the Supreme Court asked in Tipco Corp v. City of Billings (1982) 197 Mont.

339, 642 P.2d 1074, 1078, “[u]nder such circum stances where is the control?” Looking

there to an ordinance which discriminated against door-to-door salesmen, the Court

looked at ordinances which create “a classification which is patently arbitrary [that] bears

no rational relationship to a legitimate government interest offends equal protection of the

laws.” At p. 1078.

The Legislature of Montana has enacted a comprehensive scheme regulating the

duties of landlords and their agents, including property managers, in Montana through

the Montana Landlord and Tenant Act of 1977, MCA § 70-24-101. et. seq. which

contains provisions for compliance with zoning, health, safety and building codes, and

permits apportionment of some of those duties between the landlord and the tenant, f or

example MCA § 70-24-321.

IX. Is It a License or a Tax?

The City’s reliance on the fact that the ordinance regulates the issuance of such a

license on a property-by-property basis begs the question of what is being licensed.

Opinion and Order Page 21

People conduct business, not properties. Further, the ordinance does not clarif y if it is the

property itself that is subject to the license fee, or the transaction -- the rental of the

property -- that is subject to the license. The language of the ordinance is not helpful.

If it intends to license the property, it appears merely to be an annual property tax,

in addition to the property tax already assessed and paid for the type of property being

considered. If it intends to license the relationship between the landlord and the tenant,

the rental relationship, then it surely is assessing the kind of tax on services proscribed

by Montana Innkeepers v. Billings, supra. Because the City does not license residential

property in general, the “license,” can only be on the transaction that occurs when

residential property is rented, that is, on the rental. As the Montana Supreme Court

stated succinctly in the Innkeeper case: “the renting of the room cannot be divorced from

the collection of the tax. Therefore, the tax is a tax on the sale of a service and prohibited

by 7-1-112(1), MCA,” citing J.A. Tobin Const. Co. V. Weed (1965) 158 Colo. 430, 407

P.2d 350, 68 Am.Jur.2d Sales and Use Taxes, § 5.

Particularly regarding residential sleeping rooms or single family dwellings, the

property may serve different uses at different times. A family may rent out a room to a

college student. Nothing has changed about the property. The family has not opened a

business as that term is generally understood. It is not advertising. It does not maintain a

“place of business.” It has entered into a private, exclusive contract. The City asserts that

it is permitted to demand a license for that rental transaction for each year that the room

is available for occupancy for hire.

As in Innkeepers, “no title changes hands, but the consumer comes into

temporary occupation of the room. A tax placed on that transaction is a sales tax.” [p.

430].

The Missoula ordinance bears a striking similarity. It is not the general conduct of

Opinion and Order Page 22

business that is licensed, but the occupation of the premises for each discrete rental unit,

under discrete rental agreements, on an annual basis, rather than the daily basis of the

Innkeeper’s case. Insofar as residential rentals are not the transient relationships

described in Innkeeper’s, the Missoula ordinance applies equally to a short term tenancy

as to one that may extend for years, with no changes to the tenant nor to the premises.

In that case, it is simply the ongoing relationship between the tenant and the landlord that

the City is licensing. That is, it is a fee imposed upon the actual service of providing the

residential rental, rather than a license permitting the regulation of an ongoing business.

It is a license fee imposed upon each single, private contract between individuals.

It is not a license to do business, but rather similar to the fact situation in Lindeen

v. Montana Liquor Control Board (1949) 122 Mont 549, 552, 207 P.2d 947, w herein the

business license fee, calculated according to the consumption of liquor, was, in reality, a

tax on consumption, a sales tax.

MCA § 7-1-112 prohibits a local government with self government powers from

taxing income or the sale of goods or services.

The Missoula ordinance would look little different if it proposed to license tenants,

or assess an annual fee on tenants and merely proposed that the license fee or tax be

collected by landlords or property owners. Because of this, the Missoula ordinance can

be best explained as a tax on tenancies which is collected by landlords or their agents,

and paid over to the city. Once the rental relationship ends -- the student is no longer

renting the room -- the license is not imposed, even though the premises may continue to

be used as a residence by the family.

What the ordinance really does, then, is impose a fee upon a very specific kind of

residential rental relationship which is irrespective of whether a rental situation exists or

not, and irrespective of the property itself, imposed only where money changes hands,

Opinion and Order Page 23

and only if payable on a monthly basis.

This is a tax, very specifically targeted at a very narrow category of property

owners and imposes the fee only based upon a particular kind of payment arrangement,

qualified based upon disability, national origin and purpose, and age. This kind of a fee

is, among other things, in violation of Montana’s constitution prohibiting such

discriminatory treatment and guaranteeing equal protection of the laws, at Article II,

Section 4. It creates a housing discrimination in violation of MCA § 49-2-305.

The ordinance was such a tax when it was enacted, and was illegal on that date.

This conclusion is reinforced by the fact that the ordinance does not regulate

anything not already regulated by other valid, existing city ordinances, and requires no

information to the city not already provided for by routine tax and real estate records.

X. Inconsistent and Unequal Application

That the underlying alleged purpose of the ordinance appears just about

nonexistent by the fact that it is “complaint driven” [Section 5.08.020(B)], and that the

license itself states “on its face that the license does not mean that the rental unit is in

compliance with all applicable building or housing codes,” [5.08030(B)(5)], is further

underscored by the fact that the residential purpose of the dwelling does not change

whether there is a license or not. It’s use does not change whether there is a license or

not. The city’s own zoning ordinances do not recognize the distinction between

landlord/tenant residential housing, or any other kind of residential housing, for licensing

purposes.

We examine the effect of the ordinance in detail. The owner of a mobile home

park lot is required to obtain a license for the bare lot. The owner of a mobile home on

the lot must obtain a license if he or she seeks to rent the mobile home. The tenant of

the mobile home, if he or she takes in a boarder renting a room, must also obtain a

Opinion and Order Page 24

license under this ordinance. Is there really a purpose served for what amounts to a

single residential property to be assessed three license fees? Without answering that

question , what is clear is that it is the landlord/tenant relationship that is clearly being

licensed under this ordinance, and not merely the property.

How much information does the city need to determine zoning compliance when

its zoning code does not distinguish single family residences used for residences and

single family residences used for rental residences? And for a building code that does

not distinguish a single family residence used for a residence and one used for a rental

residence?

XI. Discriminatory Impact

Further, the ordinance exempts “foreign exchange students temporarily residing at

a residence”. As testimony to the city council showed, there was some idea that this

would put “control on some of the things we’re seeing in the university area especially.”

[Public Hearings, p. 6, Testimony of Chuck Gibson, City’s Exhibit #1, attached to Answer

to Complaint, January 18, 2002]. The idea appears here that homeowners renting to

Montana college students should be required to obtain a license under this ordinance,

but that homeowners renting to “foreign exchange students” should not be licensed. The

City failed to explain why the licensing requirement purportedly enacted to assist in

enforcement of zoning, sanitary, and building codes should apply to one homeowner,

and not the other, based upon the nationality of the renter and his purpose for renting.

Finally, the City ordinance also exempted landlords who rent or have “living

arrangements involving assisted living or assisted care for the disabled, ill, elderly, or

youth.” But, this begs, particularly, the question as to why the safety and welfare

concerns of the city are not equally important for these arrangements, perhaps more so?

XI. The Legislature Acted to Prohibit Licensing

Opinion and Order Page 25

 In any case, there is no doubt that the ordinance bec ame invalid upon the

passage of MCA § 7-1-111(13). Both the legislative history and the plain language of the

statute itself make clear that this enactment was designed to revoke the Missoula

ordinance. The City argued that, if passed, it would do just that. The City is, accordingly,

estopped from now denying that the legislation prohibits the City from enforcing the

ordinance. Instead, the ordinance, although somewhat vaguely written, is clearly an

assessment, through a license fee, on landlord and tenant relationships. T he license fee

could not be imposed if there were not a landlord and tenant relationship in existence.

XII. The Ordinance Violates Equal Protection

The Plaintiffs have also made a constitutional challenge to the City Ordinance,

claiming it denies equal protection of the laws under Federal and State constitutions,

Fourteenth Amendment, Section 1, U.S. Constitution; Article II, Section 3, Montana

Constitution.

The right of a person to rent out their residence or a portion of their residence

appears to be a fundamental property right as a natural attribute of “acquiring,

possession and protecting property ...” as set forth in Article II, Section 3 of the Montana

Constitution. This includes operating businesses and entering into contracts. Billings

Associated Plumbing and Cooling Contractors v. State Board of Plumbers (1979) 184

Mont. 249, 252, 602 P.2d 597.

Fundamental rights are subject, however, to the police power of the states and

communities to regulate such activities to protect the public interest. 16A AmJur 562.

A license that is necessary simply to exercise a fundamental right invokes a strict

scrutiny test. Tipco Corp. V. City of Billings (1982) 197 Mont. 339, 642 P.2d 1074. In this

situation, the City of Missoula has imposed a license on rental transactions involving

residential real property with, as its sole real purpose, “identification” of various persons

Opinion and Order Page 26

that might be involved in the ownership or management of the property. The license itself

is granted to whoever applies for it.

The ordinance itself enforces nothing. A “police power” is not to be found within its

contents other than an “identification” purpose, and we can find no case in which this

rationale, alone, constitutes a proper exercise of police power. The ordinance purports to

seek to enforce other city ordinances against residential property used for residential

rental purposes, but does not seek to enf orce the same ordinances, through this

ordinance, against residential property in general. The idea that the City needs to control

properties rented to tenants who pay by cash on a monthly basis, but does not need to

do so for a wide variety of other residential rental arrangements is patently arbitrary.

Requiring landlords and property managers to obtain a license for compliance with

regulatory laws which are equally applicable to residential property owners who dwell in

their own houses, but who are not required to obtain a license, is arbitrary. Both are

subject to the identical regulatory ordinances. One class, however, has to obtain a

license, the other class does not.

Considering that the ordinance imposes no police power regulation on its own

except registration of a narrow class of property owners, it bears no rational relationship

to any legitimate governmental interest and offends the equal protection of the laws.

Tipco Corp. V. City of Billings (1982) 197 Mont. 339, 346, 642 P.2d 1074.

The Montana Legislature, having acted by the passage of MCA § 7-1-111(13),

clearly intended to specifically ban such a discrimination, and requires that residential

property landlords be subject only to those ordinances which affect all other businesses

and residences equally within the local government’s jurisdiction.

The ordinance imposes an unconstitutional burden upon a spec ific class of

citizens for no other purpose than to identify that class of persons, the property they own

Opinion and Order Page 27

or manage, and charge a fee. It does not license all persons subject to the identical

regulatory scheme and for that reason fails the test of constitutionality even at level of the

“rational relationship” test set forth in Stanley v. Illinois (1972) 405 U.S. 645, 92 S.Ct.

1208, 31 L.Ed. 2d 551.

CONCLUSION

The Missoula City Ordinance 3100 is invalid as amended and as it came into

effect on July 14, 1999. No fees collected under the ordinance, pursuant to the

amendments, were validly collected. The Montana legislature prohibited, in any case,

general ordinances of this nature by its enactment of MCA § 7-1-111(13). Although the

reach of the ordinance when amended in 1999 was merely to extend an existing

ordinance covering multiple dwellings to duplexes, single family residences and rooms

within single family residences, and was illegal insofar as it did this and in the manner

that it did this, the Legislature however has enacted a much broader prohibition. The

Legislature states that municipalities with self-governing powers may not license

landlords. However the City argues it, it was licensing landlords or their agents. It was

licensing them to enter into landlord and tenant agreements. Without the license, a

landlord may not enter into a rental agreement with a tenant for residential property that

contemplates payment of cash on a monthly basis. Since the license itself disclaims any

compliance with existing codes or laws, the only actual effect of the license, or the lack of

one, is to permit, or prohibit, the legal consummation of a rental agreement between a

landlord and a tenant.

The ordinance did nothing to impose any additional duties on landlords that

landlords were not already obligated to perform under existing ordinances and for which

existing means of enforcement existed. The legislature has now made illegal any license

that applies to landlords or attempts to regulate their activities beyond what is required by

Opinion and Order Page 28

state law or by existing ordinances uniformly applicable to businesses and residents

otherwise.

7-1-111 (13) Any power that applies to or affects landlords, as defined in

70-24-103, when that power is intended to license landlords or to regulate
their activities with regard to tenants beyond what is provided in Title 70,
chapters 24 and 25. This subsection is not intended to restrict a local
government’s ability to require landlords to comply with ordinances or
provisions that are applicable to all other businesses or residences within
the local government’s jurisdiction.

Missoula City Ordinance 3100 fails for the following reasons:

1. It violates the equal protection guarantee of the Montana and Federal

constitutions.

2. It creates a housing discrimination in that it exempts the license fee for rentals

to a variety of classes of people.

3. It licenses a particular form of rental payment, monthly and in cash, for no

reason that the Court can discern. All other forms of residential rental agreements are

legal without the license.

4. It is an annual tax on a transaction governed by Title 70, Chapters 24 and 25 of

the Montana Code Annotated.

5. It is on its face not a license for the privilege of conducting business, but rather

as a mechanism to enforce compliance with existing ordinances of the City to which the

license holders are already bound to compliance.

6. It violates Montana Code Annotated § 7-1-111(13).

7. It is not a business license as defined by the city business license ordinance,

but rather an annual levy on selected properties used for residential purposes.

8. A property manager, licensed by the State of Montana to conduct the business

of rental transactions throughout Montana, is required, if the owner does not apply, under

Missoula Ordinance 3100 to purchase an additional license to conduct that business f or

Opinion and Order Page 29

each separate property and each rental unit located on such property, located within the

City of Missoula and is barred from conducting that business for that property without the

license. This is an impermissible interference with the state license which grants the

authority to conduct that business. The City does not lose its ability to ensure compliance

with building codes, safety standards and zoning by not requiring this license. Indeed, the

City’s authority and ability to require compliance is the same with or without the

ordinance. Because of that, the license requirement is an impermissible interference with

the state license authority and therefore prohibited.

9. The ordinance violates Montana Code Annotated § 7-1-113, “consistency with

state regulations required.”

The Landlords have requested a declaratory judgment pursuant to MCA § 27-8-

101, et. seq. and particularly under MCA § 27-8-202 which permits any person whose

rights are affected by a city ordinance to obtain a declaration of rights. This is an

appropriate matter for a declaratory judgment. The Landlords have also requested a

permanent injunction. The Landlords have complied with the requirements of MCA § 27-

19-104 in that they have named the specific members of the association and their

addresses in the Complaint as part of their request for injunctive relief. The City has not

contested that the Landlords have met the threshold of compliance to make the request.

For the reasons discussed above, it is appropriate that the City be restrained and

enjoined from further collection of the license, or prosecution of any person charged

under the statute for failure to obtain the license.

The Defendant’s Motion for Summary Judgment is DENIED. Summary Judgment

is GRANTED to the Plaintiffs on the issues and legal questions underlying their request

for a Declaratory Judgment and for a Permanent Injunction.

ORDER, DECLARATORY JUDGMENT and

Opinion and Order Page 30

 PERMANENT INJUNCTION

For the reasons set forth above, DECLARATORY JUDGMENT is granted in favor

of the Plaintiff and against the City of Missoula. Missoula City Ordinance 3100, as

enacted July 14, 1999 is unconstitutional for the reasons stated above, void and

unenforceable. Further, any portion of Missoula Municipal Code Title 5, “Business

licenses and regulation,” which requires a license of any type which regulates a landlord,

property manager, agent, owner, or representative of residential rental property, or

requires a license in order to make residential rental property available in the City of

Missoula, was void and unenforceable after October 1, 2001 by the passage of Montana

Code Annotated § 7-1-111(13).

The City of Missoula is herewith enjoined and prohibited from further collecting

any such license fees, however described, which violate MCA § 7-1-111(13), and

likewise restrained from the prosecution of any individual or entity charged with violating

the ordinance.

Other issues stated in the Complaint were not before the Court, including the

WMLA contention that the enforcement used by the City was contrary to the ordinance

which was not briefed and which requires evidence, damages and attorneys fees and no

judgment is issued regarding those matters.

DATED this 14th day of September, 2002.

/s/ John S. Henson

JOHN S. HENSON, District Judge

Opinion and Order Page 31