Housing Crisis in Big Sky Country

Frank Baril works two jobs in this vibrant college town north of Yellowstone National Park but still can’t afford to buy a house.

“It’s hard to afford anything here,” said Baril, a Salvation Army family services administrator who also puts in about 40 hours a week giving music lessons.

Even that much work leaves Baril, 50 and single, hard-pressed to buy in a town where the median home price shot to $268,500 last year, surpassing Portland, Ore., Denver and Minneapolis, among others.

Supporters of a proposed ordinance mandating some lower-cost housing say they fear Bozeman, where the median price was $149,500 six years ago, is becoming an enclave for the affluent.

“A gold-rush, boomtown mentality has driven up the price of land to the point of outrageousness,” said City Commissioner Jeff Rupp, a leading backer of the ordinance.

It would require developers to dedicate some of their dwellings as “workforce housing” priced for people of moderate means, currently defined as those with annual household incomes up to $67,680. Houses would be comparable to those nearby offered at going prices. In return, developers would be allowed to put houses closer together than regulations ordinarily allow.

Rupp said the proposal was one way to help Bozeman be a place not just for the well-off, but also for teachers, firefighters, grocery store checkers and other working people who help make a community whole.

City commissioners will consider the ordinance Monday and have indicated they will appoint a committee to find ways to improve it, then report back in about six weeks.

Critics acknowledge affordability in housing is a problem but say the ordinance, at least as drafted, is no solution.

“This is purely social engineering,” said builder Mike Jarrett, whose family is developing a 100-acre subdivision in Bozeman, a relaxed town of about 36,000 residents with thousands more in outlying areas.

The community’s appeal includes a mountain setting, outdoor recreation -- ski resorts, hiking, whitewater rafting -- and the amenities of Montana State University. In the increasingly stylish downtown, high-end boutiques dot Main Street, and even an old cowboy bar got a face-lift, but there are drug and hardware stores, as well.

Less appealing is the average annual wage. Last year it was $28,897 in Gallatin County, of which Bozeman is the seat. The numbers were $29,157 statewide and $40,671 nationally.

Based on a conventional 30-year mortgage at 6% interest, buying a house in Bozeman at the median $268,500 would take an annual income of $77,270.

The Southwest Montana Building Industry Assn. is a leading voice against the ordinance drafted by Bozeman’s Affordable Housing Advisory Board.

If broadening homeownership is a community ideal, then the community as a whole should bear the expense, government affairs director Shawn Cote said. The ordinance stands to raise housing prices overall, because costs would have to be recovered by passing them on to buyers able to pay market prices, Cote said.

Better to address housing costs by decreasing “the hoops people have to jump through to develop property,” said Jarrett, the association’s past president.

Others dispute the effect government regulations have on prices.

The ordinance in Bozeman, a community with room to grow through annexation, is similar to what many U.S. cities have adopted. But the concept is new to Montana. Across the state, even zoning is patchy.

Alec Hansen, executive director of the Montana League of Cities and Towns, said he knew of no Montana cities with affordable-housing ordinances. The ski community of Whitefish, in the state’s northwest corner, rivals Bozeman for expense and has adopted incentives for affordable housing. But participation by developers is voluntary.

Bozeman’s ordinance calls for price controls on 25% of the houses in new projects. City commissioners recently reduced that to 10%.

Guidelines say it must be affordable by moderate-income households spending 30% of monthly income on mortgage principal and interest, taxes and insurance. Appreciation of the home’s value would be capped at an annual 4.5% for the first 10 years of ownership. After a decade, deed restrictions would end.

Homes sold before 10 years had elapsed could go only to buyers meeting the special eligibility requirements, and a new 10-year span would start. The rules include provisions for homeowners to recoup the cost of making substantial property improvements.

Rupp, who manages a community service agency that includes a food bank, Head Start and housing programs, said Bozeman’s need for the ordinance was evident partly from the homeownership rate here. It is Montana’s lowest outside of Indian reservations, he said, and the calculation does not include transient college students.

He points to social and environmental consequences from Bozeman’s high prices. To the west of Bozeman, the lower-cost towns of Belgrade, Manhattan and Three Forks have become home to people who work here. Their daily round-trip commutes on Interstate 90 range from 20 miles to more than 60.

The commutes are short compared to those in many metropolitan areas. But the commuter way of life isn’t part of Montana’s fabric; many newcomers say shedding the daily drive was a top reason for moving to the state.

The arguments swirl as Baril pays rent of $350 a month for his longtime residence, a three-bedroom house with “a postage-stamp yard” near downtown.

“Landlords are very generous around here,” said Baril, who likes his rental. But he believes buying “would make so much sense” nonetheless.