BOZEMAN — Getting your mind around why Montana’s housing market is broken may be understood by looking at parking spaces and bowling alleys.
It’s one of the things that cities across the Treasure State regulate, said Mark Egge, a member of the governor’s task force on housing. He points out that that something seemingly as random as parking spaces and bowling alleys are directly related to the housing and affordability crisis.
In Roundup, bowling alley parking spaces are based on the square footage of the facility. In Missoula, there has to be two parking spaces for every four people the bowling alley has a capacity for. In Havre, the parking spaces for bowling alleys are based on the number of seats in the bowling alleys.
Having parking for patrons makes sense, but there’s little consistency and even less reason behind the rules.
And so in the conversation about affordable housing, Egge said Montana leaders must go back and question and re-evaluate the reasons for the rules. And in Montana, one of the biggest hurdles to creating more centralized, affordable housing is often a function of parking requirements.
Often cities have required a dedicated number of on-site parking spaces, whether in driveways or garages. That has created a hunger to build on more and more land, driving land prices steadily higher. More importantly, though, Egge said, it limits using existing housing better, by converting large housing into multi-family housing or creating accessory dwelling units, or backyard units, simply because of parking.
Egge who is a volunteer member of the City of Bozeman’s Community Development Board, said that focusing on zoning rules, as dry as that may sound, offers city a chance at meaningfully addressing the housing shortage. In Bozeman, which has become one of the national examples of cities dealing with unaffordable housing, he said that by changing the zoning requirements, the city is changing the equation of affordability.
“If you zone for apartments, you get a supply of apartments. When you zone for single-family housing, you get single-family housing,” Egge said.
From zoning to parking requirements to redesigning already-existing historic buildings, Montana has more options available than its leaders may even recognize.
But Bozeman realized it was missing the critical “middle” housing — affordable housing for average workers.
Currently, the median income needed for a single-family house in Bozeman is more than 200% of the area median income.
“Home ownership is completely out of reach,” he said.
But just because single-family home ownership was, and may still remain, out of reach, that hasn’t stopped the city from addressing affordable housing.
A look at the average Montana family shows that they spend more than $13,000 in transportation per year — automobile payments and gas. Much of that is because Montanans commute from work to a home that’s nearby in more affordable areas.
In Bozeman, it may be Belgrade. In Billings, it may be Lockwood or Laurel. So, Egge and other leaders in Bozeman are looking at ways to put more housing closer to the city’s center, decreasing the need to commute and travel.
“Many families are spending as much in transportation costs as they do housing,” he said. “But what happens when they need fewer vehicles?”
He said that as the city started exploring the housing problem, they discovered other areas where a little change could make a big difference. For instance, the city reconsidered minimum lot sizes.
“Some of those (requirements) create an artificial floor on home ownership,” he said. “It’s blatantly exclusionary because of the amount of wealth a family must possess to get in on the bottom rung of homeownership.”
Benjamin Horowitz, an economist with the Minneapolis Federal Reserve, who studies housing costs and trends, told a group of people gathered at a conference centered on affordable housing that there’s “no silver bullet” answer to Montana’s shortage of housing and increasing prices. Instead, there are areas that leaders must embrace to help correct the trends.
He said the top three things that can be done is for leaders to support affordability measures; increase housing supply; and streamline process and rules to speed up building.
Creative financing
Kaia Peterson, the executive director of the statewide NeighborWorks program, said that community development takes more creativity than it did several decades ago. And, that makes sense because housing then was often thought of as a single-family house on a quarter-acre of land.
“There is a huge range now of ways we occupy homes,” she said.
One of the largest barriers to affordable housing is simply the land cost. Most of the time, lots run in the six figures, which can make simply acquiring the land to build a home inaccessible. So, NeighborWorks has been exploring how to purchase and redevelop land, using community programs, public financing and grants to lower entry costs.
Other programs include helping mobile home park residents purchase their parks, converting them into cooperatives that own the land, and thereby stabilize lot rent prices.
“(The residents) become the owners, and the owners of the park get market rate,” Peterson said. “We then convert renters who were forced into instability and rising costs into owners.”
The same model has been used in Missoula to help apartment complex owners of the Wolf Avenue apartment become cooperative owners of their apartments, not renters.
Manufactured homes
Gallatin County Commissioner Zach Brown said that the irony of the affordable housing problems is that some of the people tasked with solving the problem are going through it themselves.
As the county has had an increasingly hard time finding employees who can afford to live there, it looked at creating its own employee housing, but said the demand was so strong that it couldn’t build enough to equitably give all the employees who need it a fair shot at housing.
Of the roughly 650 Gallatin County employees, only two earn enough money to afford an average home, Brown said.
The county’s 911 emergency services director lived in a camper at the fairgrounds for six months before finding adequate housing.
If the growth patterns continue, he said, Belgrade will surpass Bozeman in population because it has had more land, at cheaper rates and water.
And the unincorporated River Rock in the county already has more residents than Laurel, current population 7,203.
Recently, Bozeman just permitted its first manufactured or mobile home park since the 1980s, something that Brown said must be considered by more Montana cities.
He said that’s because Montana, like many other places, has been trying to create and then re-create what it has always been, largely a collection of single-family homes, each with its own little square of land.
“We haven’t grieved the fact that our neighborhoods change,” the Bozeman-based Brown said. “We do not recognize the town that we grew up in is no longer what it once was. The question is how do we steer those changes in a way that will help housing? How do we grieve what’s lost in a way that we can make it better?”
Past, meet future.
Billings architect and developer Randy Hafer may be the perfect example of how to use the fading past and convert it into a new and improved future.
His specialty is taking old buildings, some of them written off for dead, and converting them into housing. He’s plucked old schools, apartment buildings and warehouses and used historical tax credits, the most efficient designs, and turned buildings into affordable and up-cycled buildings across the state.
One of the advantages to converting these buildings is that the land and infrastructure is already built, so no new land gets gobbled up. Also, cities aren’t taxed by running power, gas, water, sewer and other services to them. Moreover, many of the buildings that he’s helped preserve are well-known and beloved by city residents who are glad to see them repurposed.
But, Hafer said that Montana is behind other states for leveraging these tax credits to help ease the affordability crisis.
“We don’t need to do anything different, we just need to improve what we’ve got,” he said.
Montana has a historic tax credit that it offers for rehabilitating properties that on the National Registry of Historic Places, and the federal government offers tax credits, too. But Montana’s 5% credit is the lowest in the nation, with many states offering triple that.
“Most states are between 20% and 25%,” Hafer said.
If Montana had a higher percentage, coupled with the federal tax credits, it could mean tax breaks of as much as 40% of the costs. And, Hafer said that those credits can be used by developers or sold as a way to help finance the project.
“These buildings already have the whole infrastructure — it already exists,” Hafer said. “By bringing back these buildings, we’re bringing back housing.”
Hafer isn’t just talking about these projects conceptually, he has loft and mixed-used properties in Whitehall, Billings and Great Falls, with projects in Roundup and Lewistown chugging ahead. In Roundup and Lewistown, he’s taken buildings that were literally crumbling yet in the center of town and converted them. When they’re through, they will be LEED-certified, which will make them among the most economical and efficient in the nation, Hafer said, ready to be used for the next century.
“We’re increasing property values and we’re re-energizing parts of towns,” Hafer said. “And this isn’t just in places like Billings, we’re doing these in Winnett and Ekalaka.”
He said that many people don’t realize that some of Montana’s smaller communities are the ones most in need of development like this because they’re at 100% employment and nearly 100% occupancy. He said one of the common things he hears as a developer in these smaller communities is that the towns want more professionals, or need places for teachers, doctors or nurses, but there is no available adequate housing, meaning the community can’t grow economically. By reconverting these already-existing building, they’re not just gobbling up new land, but transforming what’s already there.
“There’s no place to live. You need to provide a healthy vacancy rate,” Hafer said. “When there’s 100% occupancy, there’s no room for economic growth.”
Billings-based architect Randy Hafer speaks about leveraging historical credits to create more affordable housing at a Wheeler Center Conference at Montana State University on Nov. 19, 2024 (Photo by Darrell Ehrlick of the Daily Montanan). Hafer said one of the advantages of the historic tax credit is that they’re only available after the project is complete, so communities and the state isn’t risking capital or tax credits on a project that may or may not be completed.
“You don’t get the credits till you do the work,” Hafer said.
He has used the tax credit system to transform older buildings and then used tax credits to create energy-efficient buildings, not just bringing buildings back to life, but guaranteeing they’ll be ready for another century’s worth of work.
He said making buildings more efficient, including using solar or other techniques, the buildings can be built so that they lower energy costs for residents, making the cost of living lower.
“A lot of these buildings could produce hundreds of apartments, and they’re already built. They exist. That’s a 60% boost in making it more affordable because the land and the infrastructure to support them already exists,” he said.
That instantly lowers the cost for developers, which, in turn, lowers the cost for the residents.
Editor’s note: Darrell Ehrlick is on the board of the Burton K. Wheeler Center, a nonprofit organization housed at Montana State University in Bozeman, whose mission it is to bring together Montana residents, leaders and experts to discuss and explore topics facing the Treasure State.
Daily Montanan is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Daily Montanan maintains editorial independence. Contact Editor Darrell Ehrlick for questions: info@dailymontanan.com.
