BOZEMAN Editor’s Note: This is the first in a two-part series on actions by the 2021 legislature to address the affordable housing crisis in Montana

Kayla Tengdin says that without a special zoning program forcing Bozeman builders to include more affordable homes in their developments, she and her husband Rolf probably wouldn’t have been able to buy a home – or even stay in Bozeman.

“Getting this house has changed our lives,” she told MTN News last week. “We both really felt like we had stable ground to build on, in order to pursue our careers, develop our lives here, and be part of the community.”

But Republicans in the Montana legislature in 2021 voted to end the program, in Bozeman and across the state.

In party line votes, GOP lawmakers passed a bill to ban “inclusive zoning,” which Bozeman and Whitefish put in place two years ago, after other efforts to create affordable housing have failed.

The homebuilding industry opposes inclusionary zoning, saying it is their responsibility to address Montana’s burgeoning housing crisis, which has many causes.

“Inclusion zoning, in Bozeman, as it is written, forces me to raise the prices of other houses to subsidize the house that is classified as affordable,” says Eugen Graf, Bozeman’s real estate developer and owner of EG Construction. . “If we have an affordability problem, we need a community solution. “

Graf and others – including many Republican lawmakers – say other options exist to address the problem, which is a severe shortage of homes and other housing units in many areas of the state.

Mike Dennison-MTN News

The approach favored by the Conservatives is to ease restrictions on zoning and subdivisions, which they say slow or block the approval of construction projects or construction changes that can reduce the shortage.

“What we’ve seen happening here lately is that (local) control is getting more and more onerous,” said State Senator Greg Hertz, R-Polson. “We’ve taken some of that local control away, just because it doesn’t just delay the process, it adds costs to the new construction. “

Regardless of the response from state policymakers, few dispute that the lack of affordable housing has become one of Montana’s most pressing problems.

In Bozeman, a fast-growing city, the price of an average home is over $ 600,000 – double the cost of just 10 years ago. Missoula and the Flathead Valley aren’t far behind, and even Helena and Billings are around $ 300,000 for a median house price.

“We very quickly became a place that was just unaffordable for many people,” says Jeff Mihelich, Director of the City of Bozeman. “We don’t want to be a community of only the very wealthy and people who work in service industries that serve the wealthy.”

According to the Zillow housing website, the median price of homes statewide in Montana climbed to $ 329,000, up 11% from last year.

Mike Dennison-MTN News

The legislature has considered at least a dozen bills related to affordable housing, mainly in two categories: those that provide direct incentives for lower-cost housing or, more often, those that seek to rewrite building and development regulations.

Two of the first are House Bill 21, which would expand a coal-funded loan program to finance low-cost housing developments, and HB379, which creates a builders tax credit for low-rent tenants. returned.

Both measures were passed by the House, but remain parked in Senate committees, while lawmakers decide whether state money should be spent on the efforts.

Hertz also sponsored a bill to prevent certain city restrictions on “accessory housing units,” which are things like basement or second floor apartments in existing homes, or older units. small on urban land that already has a larger house.

He argued that the restrictions prevent homeowners from creating affordable options for many tenants.

But this measure died in committee last week, strongly opposed by the cities.

The only measure that has been passed, however, is the repeal of the inclusionary zoning supported by the GOP. Almost all Republicans, who control large majorities in the House and Senate, voted for the bill; all Democrats opposed it.

HB259 is now heading to Republican Governor Greg Gianforte for his signing.

Kevin Gartland, executive director of the Whitefish Chamber of Commerce, said he and other local officials were asking Gianforte to veto the bill.

Mike Dennison-MTN News

“I think we have to give the (inclusionary zoning) a chance before we declare it a failure,” he told MTN News. “We shouldn’t be depriving our people in the area, who are… best placed to come up with a cohesive plan that can work for the community. “

Gianforte’s office has only said it will examine HB259 when it reaches his office – although sources told MTN News they suspect the governor of backing him.

The main supporters of HB529 are the residential construction industry and real estate agents. In testimony before a Senate committee last month, they said requiring developers to set aside part of a project as “affordable” or for lower-cost homes is costing them money. .

They said that many factors are contributing to the rise in the cost of homes, such as increased demand, soaring lumber prices, labor shortages and more regulation, and that builders do not. should not be the only ones to shoulder the burden of a solution.

Still, officials at Bozeman and Whitefish said they tried to work voluntarily with builders, to get them to build houses cheaply, to no avail.

Bozeman’s program, launched in 2018, led to the construction of 27 houses at a lower cost and generated cash flow that led to the construction of another 30 houses, Mihelich said.

“The most frustrating part, given the legislation, is that we have 70 more units in the pipeline,” he says. “If the legislation is signed by the governor, then those 70 units could disappear. “

Under Bozeman’s zoning program, any development in the city with at least 10 units must provide at least 10% as “affordable.” If the developer does not want to build the houses, he can donate equivalent land or make a cash payment.

In Whitefish, the business community provided the impetus for its inclusionary zoning program as high housing prices made it increasingly difficult for local businesses to recruit workers.

“What we have tried to do here is to find a way for the people who work here to feel that they are part of the community, and in fact part of the community, of all economic levels,” Garland explains.

Tengdin, whose husband is a teacher at a public school in Livingston, said they paid Bozeman $ 1,400 a month in rent before they could finally buy a house built under the Inclusion Zoning Program.

Their home in northwest Bozeman cost $ 217,000. After using interest-free loans and family help for the down payment, the Tengdins now have a house and a monthly mortgage payment of just under $ 1,200.

Tengdin acknowledges that the program has only helped a few people so far, at a cost to the developers, but says it should remain one of many approaches to tackle the huge affordable housing problem.

“If this is taken away, then a lot of people like my husband and I will not be able to have a safe and stable place to live in this city we love so much,” she said. “I think we all have a responsibility to take care of our neighbors and nurture the kind of city we want to live in.”

Tomorrow: Will removing zoning and subdivision restrictions lead to lower cost housing?