Increased Cost of Housing and Lack of Supply
In Montana, it has become increasingly difficult for low- and middle-income workers to find affordable places to live where they work. Many factors play into this housing affordability crisis, including wages not keeping up with the cost of living, rental costs increasing significantly, and a lack of housing supply. Between 2010 and 2020, the state’s housing unit growth of 6.6 percent was well below the state’s population growth of 9.6 percent. The 2023 Legislature passed House Bill 819 to help solve the affordable housing crisis in Montana. A summary of the legislation and how the 2025 Legislature can improve it follows.
HB 819 Seeks to Expand Home Ownership through Community Reinvestment Organizations
HB 819 created a Reinvestment Plan Account, which funds community reinvestment organizations (CROs) to assist eligible households in purchasing deed-restricted housing. Deed-restricted housing refers to real estate that must be used as ‘affordable’ housing for a certain amount of time. This program serves individuals who do not qualify for programs like Section 8 or housing choice vouchers. Households that are eligible must earn between 60 and 140 percent of the median household income for the county or state where they reside. These individuals are often service workers like nurses and firefighters. The account is initially funded with a one-time $50 million state investment, which must be matched locally. The program can also partner with local employers to help entice and retain employment in Montana.
The Governor’s Office of Economic Development has begun accepting applications and comments on the application process for establishing a CRO.
HB 819 Increases Funding for Multifamily Projects
The Coal Trust Multifamily Homes Program is an existing program that provides low-interest loans for multifamily home projects. HB 819 increases the total amount authorized from the coal trust fund from $15 million to $65 million with a minimum interest rate no less than 0.5 percent below the current coal trust fund performance. Eligible projects for this include the development or preservation of mobile home parks.
The state has already utilized $41.4 million of the additional $50 million allocated, showing the high demand for funding for affordable housing projects.
HB 819 Seeks to Expand Workforce Housing for State Facilities
Another section of HB 819 allocates $6 million for workforce housing in locations with state-owned facilities. Qualifying communities will receive funds proportionally to the average number of state inmates or behavioral health patients in the state-owned facility and the number of employees in the county who work in the state-owned facility.
These funds are allocated with the $50 million allocated through Community Reinvestments Programs as seen above. The Governor’s Office of Economic Development has begun accepting CRO applications.
HB 819 Supports the HOMES Revolving Loan Account
The HOMES (Homeownership Means Economic Stability) Revolving Loan Account provides loans and bonds to increase housing supply, homeownership, and long-term rental opportunities through partnerships with state and local governments and the private sector. These potential projects must include a density of at least 10 units per acre to be financed by loan/bond for $1 million or 50 percent of the total cost over a 20-year term. Seven million dollars of the funds must be prioritized to counties with state-owned facilities, like the Workforce Housing funds. Examples of projects eligible for funds are demolition, expansion, or extension of infrastructure – e.g., water, wastewater, stormwater, streets, curbs, gutters, and sidewalks.
Out of these funds, $56.1 million of the $106 million have been spent and the remaining funds will be committed by June 2024. The $56.1 million already spent will facilitate the creation or preservation of 1,213 housing units across Montana.
HB 819 Funds and Prioritizes Workforce Housing
Twelve million dollars of funding from HB 819 will go towards workforce housing, which is housing for employees who work at state-owned facilities that house individuals who have been incarcerated or behavioral health patients. These funds are distributed based on the annual average of the state-owned population and the number of workers in each county. Examples of eligible uses for these funds include construction costs, providing matching funds for CRO revolving loans, providing funds to reduce housing costs, and acquiring housing. For example, a project is currently going through the funding allocation process for 26 workforce housing units in Deer Lodge, Montana.
HB 819 Supports Local and Tribal Governments through Community Planning Grants
Lastly, $1 million can be used to grant planning grants to local and Tribal governments for planning and zoning reforms to increase housing supply. These funds are given to the Department of Commerce and administered by the Community Montana Division.
Lessons Learned for the 2025 Legislature on HB 819
The 2025 Legislature will likely continue to seek solutions to Montana’s housing crisis. Fortunately, some simple changes to HB 819 can help organizations to better use this funding and create more housing.
MBPC is a nonprofit organization focused on providing credible and timely research and analysis on budget, tax, and economic issues that impact low- and moderate-income Montana families.