Bozeman Affordability, Accessory Dwelling Units, and Small Unit Development

Background

Bozeman’s recent housing challenges are driven, in part, by the strength of its local job market.  Bozeman added 11,000 new jobs since the Recovery at a rate of 4.4% annually and with unemployment at 2.5%, Bozeman’s economy was strong.[1]  But with nearly all of Bozeman’s local workforce currently employed, the City’s employers were forced to look for skilled workers outside of Bozeman to fill the open positions needed to meet the demands of its rapidly growing economy.  An influx of new residents and job seekers put increasing pressure on Bozeman’s short housing supply.   

Bozeman’s recent Community Housing Needs Assessment concluded that the City needed an additional 1,460 housing units to catch up to current demand, and as many as 6,340 new units by 2023.  Equally as important was the kind of housing units that were needed.  The Community Housing Needs Assessment indicated that a range of housing units were needed including, both rental and for-sale product meeting the distinct needs of families, employees filling vacant and newly created jobs, retirees, and other residential housing needs.  To help ensure affordability, at least 60% of the new housing supply would need to be subsidized. 

Dilemma

Early on, City leaders recognized that wider availability of a variety of housing types could help open Bozeman’s tight housing markets and positively impact affordability.  Residential developments with greater density of smaller, less expensive homes, featuring innovative design were increasingly top of mind for Mayor Cindy Andrus.  But how could City leaders encourage sustained innovation in the production of affordable housing supply while creating pathways to homeownership for middle income families? 

Proposed Solution

A recently adopted affordable housing mandate emphasizing for-sale units was a key first step.  In 2017, Bozeman’s Affordable Housing Ordinance No.1922 required that 10% - 30% percent of residential units proposed by developers be lower-priced or moderately priced homes affordable to households earning 65% - 100% of area median income. Lower and moderately priced homes were also required to have buyer qualification criteria, primary residence requirements, and provisions allowing for the recapture of subsidies in the event of sale, transfer, refinance, or default.     

Secondly, recent changes to Bozeman’s Unified Development Code (UDC) also made building accessory dwelling units (ADU) easier for homeowners.  In late 2018, the Bozeman Planning Division worked with a group of senior college students from Montana State University’s College of Architecture to test the adaptability of the recent changes to the UDC, stimulate the use of alternative housing types, and use the design process to engage property owners in considering building more ADUs.  Students worked with the Planning Division to ensure that designs were code compliant and addressed design problems ranging from new ways meet parking requirements to ensuring that the designs did not exceed the 600 square foot ADU size limit[2].  Final designs were presented to homeowners, the City Commission, and received official agency review by the Chief Building Official for UDC and building code compliance.  City officials hope that designs will serve as model for wider community use. 

The City also partnered with the Trust for Public Lands on the Bridger View Redevelopment Project (BVR) to create a dense community of over 60 modest, well-designed homes on an 8-acre parcel in northeast Bozeman.  The 1 - 3 bedroom homes ranged in size from 800 to 1500 square feet, and were arranged in a clustered layout emphasizing simple forms, shared common spaces, and outdoor living.  Over half of the homes were targeted for sale below market value at $175K - $250K[3], well below the median sale price of approximately $375K[4].  Revenue from the sale of market-rate units was earmarked to subsidize the sale of the below market value units.  And, to increase the feasibility of the project, the City of Bozeman split the cost of infrastructure and impact fees for the project.

 

 

[1] Wendy Sullivan & Christine Walker, Bozeman, Montana Community Housing Needs Assessment. City of Bozeman, 2019. https://www.bozeman.net/home/showdocument?id=8773.

[2] Babb, Mederios. “Architecture students present Accessory Dwelling Unit plans to Bozeman city commission.”KTVH News, 2018. https://ktvh.com/news/2018/10/03/architecture-students-present-accessory-dwelling-unit-plans-to-bozeman-city-commission/.

[3] Houghton, Katheryn. “Bozeman nonprofit pitches affordable housing project.” Bozeman Daily Chronicle, 2017. https://www.bozemandailychronicle.com/news/city/bozeman-nonprofit-pitches-affordable-housing-project/article_d09963ba-88bb-5992-85d4-331abb0b5b31.html.

[4] Wendy Sullivan & Christine Walker, Bozeman, Montana Community Housing Needs Assessment. City of Bozeman, 2019. https://www.bozeman.net/home/showdocument?id=8773.