House proposes state-wide lot mandate

The Montana House of Representatives is considering a bill that would allow lots in incorporated areas to be as small as 2,500 square feet if they are connected to municipal water and sewer access.

Proponents of the bill say that it could be incorporated into other bills later in the legislative session or passed on its own in an effort to lower housing costs as the state grapples with an ongoing housing crisis.

Opponents say this bill takes away local control over city planning and that this is not a decision that should be made at the state level.

The bill's sponsor, Rep. Katie Zolnikov, R-Billings, said this would simply be one tool that the state can use to find housing solutions. Right now the state has no standardized lot sizes, Zolnikov said. She added that for places like Houston, Texas, similar changes have been made to address the housing crisis, and they are working.

Zolnikov said the bill does not come directly from Gov. Greg Gianforte’s housing task force, which was created to find ways to incentivize affordable housing in Montana.

In drafting the bill she has been working with the Frontier Institute, which had several members on the task force, and said the bill is inspired by the task force’s findings.

She said she has heard some "false" criticism of the bill already, although it has only been heard once in the Housing and Local Government committee so far.

For instance, there are concerns that the bill would change how subdivisions are reviewed, which is not part of the bill.

“People are asking me if others are going to be able to build a high-rise in their neighborhood or develop a subdivision,” Zolnikov said. “Those concerns are dealt with during the permitting and subdivision review process.”

She said the bill does not require that a minimum amount of structures be built, like some bills that aim to reduce housing prices. Instead this bill relies on a completely free-market approach.

“People are worried about this bill taking away local control,” said “It doesn’t get any more local than a property owner.”

One opponent of the bill is Libby City Councilor Kristin Smith, who earned a Masters Degree in Environmental Planning from the University of Montana. Before being elected to the city council, Smith served as the Lincoln County planning director from 2009 until 2014.

“It’s well intentioned legislation,” Smith said. “I just don’t think this (bill) is that well thought out.”

The governor put together a task force to try to adjust the housing issue in Montana. The state is grappling with mismatched housing prices that don’t work well with median income households, Smith said.

The bill takes away local control from people and their neighborhoods, she said.

“Zoning sets up a predictable land use pattern. (People) know X, Y and Z can happen around them,” Smith said. “This legislation really puts everything on its head.”

In addition to the loss of local control, the bill could allegedly create non-conforming lots, and end in potential title issues caused by the smaller lots, Smith said. In turn, this could affect property values, she said.

“People at the state level should not be governing how each individual community plans for its future or accommodates its citizens and grows,” she said. “Neighborhood character and quality: those are very local issues.”

Smith said that high prices are the fallout of a market economy and that Montana is a high-demand state.

“Folks are moving here from other places, so I understand the difficulty is real. I understand that people can’t find housing that works for them within their income or their budget,” she said.

Still, Smith insisted there are a lot of other government interventions that work, including incentivizing density in certain areas, which a lot of communities have found useful. She also mentioned tax credits for builders who want to pursue housing that falls within a certain income range.

“I would encourage everyone to contact their legislatures, and oppose the legislation,” Smith said.

Another city official from northwest Montana, Polson City Manager Ed Meece testified in opposition to HB 337 when it was in committee.

“My opposition was based on a couple of different things,” Meece said.

Local land use decisions, including the minimum lot size of 2,500 feet, typically go through a thorough public review, Meece said. This involves public hearings and is a transparent public process.

“That’s not what this bill does,” Meece said.

Meece acknowledged the bill is trying to address the housing crisis. There is a perception that zoning codes are something imposed on citizens, but that’s not the case, he said.

“Zoning codes come from the citizens,” Meece said.

The market drives pricing, and the more inventory you have the more competition you have, Meece said. Still, in the current market there are multiple things at play, including cost of materials, infrastructure and land prices, he said.

“My opposition is that it basically bypasses the local process,” Meece said.

Larry Bruster R-Billings, is the committee chair of the Local Government Committee that HB 337 is being heard in.

“I don’t know where that bill is going yet,” Bruster said.

The House regularly spends time reconciling larger bills with smaller ones that deal with the same areas, Bruster said. He plans to vote for the bill because he hopes to include its ideas in the big-picture solution to housing shortages.

“I wanted it to at least be part of that discussion,” Bruster said.

Housing is certainly a hot topic in Montana at the moment. The Legislature has taken notice of that, as this seems to be the year of talking about development and zoning and planning and “the whole works,” Bruster said.

People are interested in work-force housing, but are not very interested in small-lot development, he said. If the public wants to see starter homes on the market then they should be OK with seeing small, useful homes that people can afford to buy, Bruster said.

Rentals are not the answer to the housing crisis according to Bruster. There isn’t any cost stability, he said.

“People who can buy homes can keep up with inflation,” he said.

Allowing smaller lot sizes is another tool to lower housing prices, and the Legislature will have to see how it blends with other bills and go from there, he said.

“I just want that concept to be a part of the discussion so that’s why I voted to pass that bill out,” he said. “And you can look at it in the context of that bill and any others that are closely related to it. They’ll probably form some sort of special committee to pull all that together.”

“I think that there’s always opportunities to change things when they get to the Senate, so this is just the start of it,” Bruster said.

Another bill, SB 382, the Montana Land Use Planning Act, was scheduled for a hearing in the Senate at 3 p.m. Wednesday and has the support of the Montana League of Cities and Towns. The bill lists Polson Sen. Greg Hertz as one of the co-sponsors.