Bill to add ‘free market’ solution to housing crisis with lot sizes rallies proponents

By: - February 1, 2023 8:23 pm

Photo illustration by Getty Images.

In Bozeman, people who have jobs are living in RVs and trying to keep them warm in winter because houses cost too much, said Henry Kriegel.

“It greatly saddened me to realize that in my own hometown, people are living out of RVs,” said Kriegel, with Americans for Prosperity.

In Billings, a local study showed workers in four out of five of the top occupations don’t earn enough to afford a median home there, according to the Billings Chamber of Commerce.

The cost of land contributes to the cost of a home — and housing costs are soaring in many parts of Montana.

This week, the House Local Government Committee heard a bill that would, in the words of the sponsor, “put sideboards on excessive minimum lot size regulations” as one way to allow the free market to help housing supply.

Kriegel and the Billings Chamber were among the many supporters of House Bill 337. Other proponents included a mix of free market groups, an affordable housing nonprofit, and the Montana Environmental Information Center.

Pushback came from people who said the bill would throw local control out the window, have unintended consequences such as on water quality in Flathead Lake, and take power away from local governments.

But Rep. Katie Zolnikov, R-Billings, said so far, local control hasn’t worked when it comes to housing given the unaffordability that’s long been brewing in Montana. In other words, housing is not a new challenge.

“Clearly, there’s a problem here that local government has not addressed,” Zolnikov said.

For example, in Three Forks, a search on a popular property website showed just one house out of 45 was listed for less than $300,000, and only five were less than $400,000, she said.

But the median income in Montana is $57,000, she said.

Zolnikov said she received a lot of comments from people opposing the bill — including many who had incorrect information — but she has a problem when someone says they don’t support incentives for affordable housing in their community.

“It tells me that their community does not envision anybody except upper-middle-class people that can afford expensive housing,” Zolnikov said.

As proposed, her legislation would prohibit zoning regulations from cumulatively requiring a minimum lot size greater than 2,500 square feet for property with city water and sewer services.

By comparison, Bozeman has reduced residential lot minimums from 5,000 square feet to generally 4,000, according to Mark Egge, who served on the governor’s task force and testified in support of the bill.

However, Zolnikov said the bill does not throw single-family zoning regulations out the window.

She also said Helena got rid of minimum lots sizes, and Billings replaced minimum lot size with a lot width requirement.

“And in both cities, the world kept on turning,” Zolnikov said.

A couple of representatives from smaller towns said they didn’t want the change, and the Montana League of Cities and Towns expressed strong opposition — although Kelly Lynch said affordability is a problem and one the League is addressing with many others, including the Governor’s Task Force.

“I cannot emphasize how much our members are committed to solving the housing crisis in Montana,” Lynch said.

However, she advocated for a more comprehensive approach instead of a bill with just one fix. She said the solution in Zolnikov’s bill is also presented as part of a larger package of solutions — and new framework — in a bill being drafted, LC 1251.

Lynch said Montana’s statutes are antiquated, and the bill that will be proposed by Sen. Forrest Mandeville, R-Columbus, represents 18 months of labor among a large working group that includes legislators.

She said Mandeville’s bill offers a broad approach rather than one narrow solution to address minimum lot sizes — not a fix-all, she said.

In Mandeville’s bill, she said communities will be required to choose options to help with affordability, but they will be able to choose specific tools and not be forced to implement one.

“The important piece is that they will be able to have those discussions at the local level about which reforms work better for that community,” Lynch said.

But most others called for adopting Zolnikov’s proposal.

Jake Brown, with Shelter Whitefish, said land is a significant portion of the cost of a home, so it’s a “no brainer” that the larger the lot size, the pricier the home. Shelter Whitefish describes itself as fighting for housing and equity.

He also said a Smart Growth America survey showed compact development costs on average 38% less in upfront and infrastructure costs than suburban development.

“We’re proponents because compact houses on smaller lots are simply one of the best ways that we can increase affordable housing options here in Montana,” Brown said.

Kendall Cotton, with the Frontier Institute, said the bill will allow growth to happen in cities and not in rural areas, avoiding sprawl and protecting the character of Montana. His organization advocates for “more freedom, not more government.”

“This bill would give landowners in cities more freedom to build more affordable starter homes like duplexes and triplexes on smaller lots,” said Cotton.

Ann Schwend, with the sustainable communities program of the Montana Environmental Information Center, said she believes in local control, and she wasn’t sure if she would be a supporter at first.

However, she said if some communities aren’t making the same accommodation as another, they’ll push people into surrounding areas — and that becomes a statewide problem.

Zoning reform is necessary, she said, but so are creative solutions.

“Montana has been discovered, and we have a lot of people that live here,” she said. “We need to find ways to accommodate more people in less space.”

In the minority, Bob Gilbert, with the City of Colstrip, said he fears people who have quality homes will face lower property values if they end up having small homes built next to them.

He also said small towns, especially in “extreme eastern Montana,” don’t need small housing.

“I was very upset over this bill,” Gilbert said.

The committee did not take immediate action Tuesday.

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Keila Szpaller
Keila Szpaller

Keila Szpaller is deputy editor of the Daily Montanan and covers education. Before joining States Newsroom Montana, she served as city editor of the Missoulian, the largest news outlet in western Montana.