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Initial impacts of Montana Legislature's action on housing development

Montana State Capitol
Posted at 10:39 PM, Nov 22, 2023
and last updated 2023-11-23 01:10:11-05

HELENA — During the Montana Legislature’s 2023 session, lawmakers passed a series of bills intended to make a dent in the state’s housing shortage by encouraging more housing development. However, it’s still an open question how quickly those changes will have an effect.

The Legislature approved a number of changes to zoning and land-use laws, including several recommendations that came out of Gov. Greg Gianforte’s housing task force. The need for affordable housing remained a prime topic throughout the session.

“I think attainable housing for the residents of Montana have been on the minds of everybody,” said DJ Smith, president of the Montana Association of Realtors.

Smith said one of MAR’s priorities during the session was Senate Bill 382, sponsored by Sen. Forrest Mandeville, R-Columbus, which made a major overhaul to larger cities’ land-use planning processes. He said it took a coalition of stakeholders, including local governments, to work through the needed adjustments.

Smith said their hope from SB 382 is that communities will have discussions up front about where they want to see growth, then adopt zoning that supports those plans.

“So when an investor has an opportunity to bring that product to line, they're not getting last-minute conditions of subdivision approval – just that condition can make or break a project,” he said. “They should know that before they put the investment, to purchase, to do the engineering and to do all that. We're asking not that there are less restrictions or less conditions, but that they know the conditions and restrictions ahead of time.”

Supporters of SB 382 told MTN they’ve already seen some real estate listings citing the act as a reason a parcel may now be more attractive for development. However, Smith said, in general, they’re expecting the impact will be in the longer term.

"I don't think immediately you saw property values increase or decrease because of that,” he said. “There are significant requirements on local governments to actually implement the benefits of this.”

In Whitefish, a community where the demand for housing has been front of mind for a long time, Alberto Valner is currently developing the Alpine 93/40 project. It’s a mixed-use development on the city’s south end that will combine 15,000 square feet of commercial space with 210 one- and two-bedroom apartments.

“These are not Airbnb, these are not luxury apartments,” Valner said. “These are what we call truly workforce housing units.”

In the development, 10% of the units will be deed-restricted to serve people with lower incomes.

Valner says developers initially looked at the site near the intersection of two main highways for strictly commercial activity, but the idea evolved to make retail a small part of a primarily residential project.

Alpine 93/40 is the type of project that will be encouraged through Senate Bill 245, sponsored by Sen. Daniel Zolnikov, R-Billings. The law requires municipalities designated as urban areas that have more than 5,000 residents to allow mixed-use developments and multiple-unit dwellings as a permitted use in areas zoned for commercial use.

Valner says Alpine 93/40 was already in the works before SB 245 was introduced – and he actually didn’t know about the bill until after it passed the Legislature. However, he said he does believe it helped the project as it’s been making its way through the approval process.

“The reality is that SB 245 without a doubt, I believe, facilitated our approvals,” he said.

Valner says they’ve been working very cooperatively with the city of Whitefish throughout the process, and, in fact, they agreed to a voluntary development agreement that he said would put them under many of the same requirements they would have had if they had gone through a planned unit development process.

“I do not know what would have happened if SB 245 had not been in place,” he said. “Would we have gotten all of our approvals – I'm not going to say it was easy, but with the same ease as we did? I don't believe so. I think we would have had even more restrictions put in place. I think that there were definitely advantages from having SB 245 pass. But again, I want to reiterate, we did not use it as a tool to go against the city in our case.”

Valner says it’s clear housing development in the Flathead Valley hasn’t kept up with demand for years, and their goal is that Alpine 93/40 provide housing that is attainable and affordable – so people aren’t fully priced out of communities like Whitefish.

“That's something that we all as members of our community should not allow, because it's not in the best interest of the fabric of any community to be a community that only has a certain segment of the population,” he said.

Smith said new housing development alone wouldn’t fully address the rise in Montana home prices, but he believes it will at least help bring the inventory closer to the demand. He said building housing in more than one price segment could also help people upgrade and downgrade based on their changing needs.

“Do I think development is going to produce a decrease in prices? No,” he said. “But do I think it could level off some of our prices in our community? I really do.”

Gianforte’s housing task force is opening the next phase of its work going into next year. Their focus is going to be on looking at specific development proposals around the state, to try to get a better understanding of what makes some projects a success, while others face obstacles.