Affordable housing advocates push to put state dollars toward price-controlled housing

Housing affordability advocates are working to drum up support in the Montana Capitol for a pair of bills that would put state resources into supporting the construction of more price-controlled housing for middle- and low-income Montanans — policies that would take a step beyond the free-market strategies that have so far drawn support from Republican Gov. Greg Gianforte.

House Bill 546, sponsored by Rep. Dave Fern, D-Whitefish, would expand an existing state program that uses money from the Montana Coal Trust to provide low-interest loans for affordable housing projects. A second, as-yet-unintroduced bill sponsored by Rep. George Nikolakakos, R-Great Falls, would create a state tax credit to complement the existing federal Low-Income Housing Tax Credit program.

Both measures are being pushed by the Montana Housing Coalition, a pro-affordable housing group that includes among other members nonprofit housing developers, social service agencies and local housing authorities.

“We all know just how unaffordable housing has become in our state. High demand and limited supply have overwhelmed us,” coalition board chair Andrea Davis said during a Tuesday event at the Montana Capitol.

Speaking at the coalition’s event Tuesday, Gianforte called the state’s housing crunch “probably the number one issue faced by working Montanans,” and touted his administration’s efforts to promote affordability by making it easier to build market-rate housing. He also urged lawmakers to pass a part of his proposed budget that would put $200 million to support higher-density housing construction by paying for water and sewer lines.

“In addition, there are a host of other bills that will help with housing, and I’d like to see them all on my desk,” Gianforte said.

However, the governor, who vetoed a housing tax credit bill in 2021, didn’t say Tuesday whether he’d sign the two coalition-backed bills into law. In interviews following the event, supporters of the bills said they hadn’t received a firm commitment in private either.

“We have been in discussion with his policy director,” Davis said. “There hasn’t been necessarily overt support for either one. I think he’s truly interested in seeing good legislation get to his desk.”

Gianforte declined a request for an in-person interview following the event Tuesday. His office didn’t provide a direct response to a question about whether his participation in the housing coalition’s event constituted an implied endorsement of the group’s two bills, instead saying the governor will give careful consideration to any measure forwarded to him by the Legislature.

“Increasing access to affordable workforce housing is a top priority for the governor, and he appreciates every Montanan committed to being a part of the solution, including members of the Montana Housing Coalition and his diverse, bipartisan Housing Task Force,” Gianforte Press Secretary Kaitlin Price said in an email.

Housing advocates often divide affordability efforts into two buckets, drawing a line between government programs that use public dollars to subsidize housing for low-income residents and measures intended to address affordability by broadly increasing housing supply.

The subsidized housing bucket includes things like Section 8 properties — apartment buildings or other housing developments that, because they participate in government housing programs, make their units available to rent at set prices specifically intended to be affordable for lower-income residents. Those properties, often owned privately, provide housing for people who would otherwise have a hard time finding rentals to match their budgets, such as seniors living solely on Social Security benefits or people who are unable to work as a result of a disability.

The two housing coalition-backed bills would give affordable housing developers additional options as they try to finance the construction of new set-price housing by, in essence, putting public dollars toward subsidies. For example, the low-income housing tax credit program provides credits that can be awarded to housing developers who sell them in order to raise cash for their projects. In exchange, the tax-credit supported projects are required to rent the new rentals at affordable rates, typically no more than 30 percent of household income.

Last year, the Montana Board of Housing awarded $29 million in tax credits to seven projects, enough to build or rehabilitate an estimated 158 units of price-controlled housing.

Gianforte and market-oriented Republicans have, however, generally been more enthusiastic about proposals that try to tackle the state’s housing crunch without exchanging subsidies for price controls. Instead, their proposals generally seek to rein in regulations such as environmental reviews or zoning restrictions that make it harder, slower and more expensive to build new housing. One bill under consideration by the Legislature, for example, would force Montana cities to allow home construction on smaller, less expensive lots.

The supply-focused theory, which has also been embraced nationally by some Democrats, reasons that adding supply to housing markets helps affordability broadly by easing competition for rentals and for-sale properties. Having, for example, more market-rate apartments in the mix to rent means that landlords may have to hold off on rent increases or even lower their prices in order to make sure they aren’t left without a tenant.

In interviews Tuesday, Davis and Nikolakakos, the sponsor of this year’s tax credit bill, said they were hopeful the bills promoting set-priced housing would win support from the Legislature and governor.

Nikolakakos said the new tax credit bill had been revised so it would omit a link to federal tax credit funding levels the governor had cited as a concern in his 2021 veto note. He also said it would be authorized as a fixed-term rather than an ongoing program.

“It’s a win-win-win piece of legislation, because you have developers who are getting a tax cut, they then get investments, those investments create a kind of housing that you can’t get otherwise, because it’s below market rate housing,” Nikolakakos said.

The coalition-backed bills, Davis argued, will take more immediate effect than measures that rely on fostering long-term economic shifts.

“Changes to the market, and improvements around affordability through market supply will take time,” she said. “And Montanans are suffering today.”

Eric Dietrich is deputy editor of the Montana Free Press, a Helena-based nonprofit newsroom. He can be reached at edietrich@montanafreepress.org.