Montana Governor’s Housing Task Force Releases Recommendations to Increase Affordable Housing Supply

The Montana Governor’s Housing Task Force released a report that outlines strategies for state policymakers to address Montana’s housing shortage. The report proposes 18 policy recommendations, which fall under three overarching strategies: regulatory reform; incentives to encourage regulatory reforms; and investments in improved government efficiency, workforce development, and private sector home construction. Advocates celebrated the release of the report and will continue to weigh in with state legislators as they consider these proposals in the 2023 legislative session.

“We are pleased to see the Task Force recognize the market rate sector cannot solve the home affordability challenge for all Montanans. It takes more than regulatory change to overcome our housing shortage – it takes capital too,” said Andrea Davis, executive director of Homeword, an NLIHC member organization and a statewide community housing development organization and housing counseling agency. (Davis also chairs the Montana Housing Coalition.) “The Coalition saw all three of its 2023 Legislative priorities show up as recommendations in the report and that is great. However, we are recommending that if a bill proceeds for a State Affordable Housing Credit to be tied to zoning reform, that localities have a menu of options to choose from rather than a prescriptive or mandated list from the state. Each community is different, many are already working on this for their areas and there needs to be an ability for zoning reform to work with other community priorities – like transportation planning.”

Montana Governor Greg Gianforte signed Executive Order No. 5-2022 to establish the taskforce in July 2022. The Executive Order directed the Task Force to “provide the Governor with short- and long-term recommendations and strategies for the State of Montana to increase the supply of affordable, attainable workforce housing.” The Task Force is divided into four Subtask Groups that each focuses on one of four main topic areas: economics and other issues, local issues, regulatory and permitting issues, and construction. The Task Force and Subtask Groups met 16 times between July and October 2022. Members of the public were invited to attend the meetings and submit comments online. The Task Force published its draft report on October 3, and community members had until October 15 to submit feedback that would inform the final report to the governor. 

Six of the report’s recommendations encourage the Montana Legislature to address state and local regulatory barriers to increasing housing supply. The Local Issues Subtask Group recommends that the legislature set limits on local zoning authority. This Subtask Group outlines a proposal to prevent municipalities from requiring residential minimum lot sizes larger than 2,500 square feet in areas that are served by public sewer and water systems. The Local Issues Subtask Group also recommends that the state legislature require localities to legalize Accessory Dwelling Units (ADUs) on all single-family residential lots that are served by public sewer and water systems, and lists strategies for making ADU construction feasible. In addition, the group recommends rewriting the Montana Subdivision and Platting Act (MSPA), which governs the subdivision process and often imposes significant burdens on local governments and developers.

The Regulatory & Permitting Subtask Group recommends amending state law to streamline local adjudication of development applications by eliminating requirements for duplicative public hearings and review processes, reducing the wait time for implementation of zone map amendment decisions, establishing a uniform reasonable timeline for obtaining permits, and placing unopposed development actions on a consent agenda. This Subtask Group also encourages the state legislature to prevent local governments from banning multifamily housing. Cities of at least 5,000 residents should allow duplexes in areas currently zoned for single-family residences, and cities of at least 50,000 residents should allow duplexes, triplexes, and fourplexes. Finally, the Regulatory & Permitting Subtask Group recommends that cities modify municipal zoning laws to eliminate regulations on building design, lot sizes, parking mandates, and other requirements that do not directly advance public health and safety.

Four of the report’s recommendations focus on incentivizing local governments to address regulatory barriers. The Local Issues Subtask Group recommends enacting a State Affordable Housing Tax Credit that is conditioned on zoning reforms. Cities and counties would only be eligible for tax credits if 65% of their residentially zoned areas served by wet utilities allow multifamily housing and ADUs by right, require no more than one parking space per unit, and meet certain additional density requirements. The Subtask Group also proposes a housing infrastructure grant program to fund water, sewer, and street extensions for high-density neighborhoods. One hundred percent of the area served by the new infrastructure must meet the same density requirements as those outlined in the tax credit proposal. Similarly, the Construction Subtask Group recommends that the state incentivize municipalities to examine existing restrictive zoning requirements and prioritize sewer and water infrastructure investments in communities that maximize density.

Recommendations that fall within the third strategy emphasize targeted investments in improved government efficiency, workforce development, and private sector home construction. The Economics & Other Subtask Group urges the state legislature to make immediate supplemental budget allocations to the Department of Environmental Quality, Department of Commerce, and the Accelerate Montana workforce development program. These investments would enable shovel-ready projects to move forward, even before the 2023 legislative session begins. The Construction Subtask Group also recommends expanded investment in workforce development, trades programs, high school programs, and marketing campaigns that promote trades education and career paths. Finally, this Subtask Group encourages innovative home construction methods, which could include incentives for developing homes that are affordable to low-income households or homes that meet high environmental standards.

In addition, the report makes four recommendations that do not fall within any of the three overarching strategies. The Construction Subtask Group recommends greater collaboration between the public and private sectors to expand housing opportunities. The Economics & Other Subtask Group proposes that the legislature adopt criteria by which certain entities can sell designated parcels of land, such as university land, below market rate, which would decrease costs and incentivize affordable development. This Subtask Group also recommends that the legislature explore state tax reform to ensure that taxation allows local government to address their infrastructure needs without burdening property owners, although the report does not endorse a particular tax policy structure. Finally, the Regulatory & Permitting Subtask Group recommends that the state legislature enact a short-term rental reporting system, which would publish data about the number and location of short-term rentals. The Subtask Group recommendation narrowly focuses on data reporting and does not propose restrictions or new taxes on short-term rentals.

The report’s recommendations offer a comprehensive roadmap for Montana legislators as they take up housing policy in the 2023 state legislative session. The Task Force will publish a second report in December, which will focus on administrative actions that Governor Gianforte can take through state agencies.

The full text of the report can be found here.