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

Housing affordability advocates in the Montana Capitol are rallying for backing on two bills aimed at utilizing state resources to promote the development of affordable housing for middle- and low-income residents. These policies go beyond the free-market approaches that have thus far received endorsement from Republican Governor 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.

During a Tuesday event at the Montana Capitol, Andrea Davis, the coalition board chair, expressed that the unaffordability of housing in our state is widely acknowledged. The combination of high demand and limited supply has proven to be overwhelming.

At the coalition’s event on Tuesday, Gianforte addressed the pressing issue of the housing crunch faced by working Montanans, considering it as the top concern. He emphasized his administration’s endeavors to enhance affordability by streamlining the process of constructing market-rate housing. Gianforte further appealed to lawmakers to approve a section of his proposed budget, which allocates $200 million towards facilitating higher-density housing construction by covering the expenses of water and sewer lines.

Gianforte expressed his desire to have all the housing-related bills placed on his desk, emphasizing that there are numerous other bills that would provide assistance in this area.

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.

Davis stated that they had been engaged in conversations with the policy director, without any clear indication of explicit support for either side. Davis believes that the individual is genuinely interested in ensuring that commendable legislation reaches the desk.

After the event on Tuesday, Gianforte refused to grant an in-person interview request. When asked if his participation in the housing coalition’s event indicated his support for their two bills, his office did not give a clear response. Instead, they stated that the governor will thoroughly consider any measures sent to him by the Legislature.

In an email, Kaitlin Price, the Press Secretary for Gianforte, stated that the governor considers the enhancement of affordable workforce housing accessibility as a crucial objective. He expressed appreciation for all Montanans, including members of the Montana Housing Coalition and the diverse, bipartisan Housing Task Force, who are dedicated to contributing to the resolution.

Housing advocates typically categorize affordability efforts into two groups, differentiating between government programs that utilize public funds to subsidize housing for low-income individuals and strategies aimed at improving affordability by expanding housing availability.

The subsidized housing category encompasses various types of housing, including Section 8 properties. These properties are apartment buildings or housing developments that participate in government housing programs. As a result, they offer their units for rent at predetermined prices, specifically designed to be affordable for individuals with lower incomes. Typically owned by private entities, these properties serve as housing options for individuals who would struggle to find rentals within their budget. This includes seniors relying solely on Social Security benefits or individuals unable to work due to disabilities.

The pair of bills supported by the housing coalition aim to offer more choices to affordable housing developers in financing the creation of new homes with fixed prices. Essentially, these bills propose using public funds to provide subsidies. One such program, the low-income housing tax credit, grants credits to developers who can sell them to generate funds for their projects. In return, these projects must rent out the new units at affordable rates, generally not exceeding 30% 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.

During interviews on Tuesday, Davis and Nikolakakos expressed optimism about gaining support from the Legislature and governor for the bills promoting set-priced housing, with Nikolakakos being the sponsor of this year’s tax credit bill.

The new tax credit bill, according to Nikolakakos, has undergone revisions to remove the federal tax credit funding levels that the governor expressed concerns about in his 2021 veto note. Additionally, Nikolakakos mentioned that the bill would be authorized as a fixed-term program instead of an ongoing one.

According to Nikolakakos, this legislation is a triple win. Developers receive a tax cut and attract investments, resulting in the creation of affordable housing that would not be available otherwise.

Davis argued that the coalition-backed bills will have a more immediate impact compared to measures that depend on cultivating long-term economic changes.

“Although changes to the market and improvements in affordability through increased market supply will require time,” she acknowledged, “it is important to recognize that Montanans are currently enduring hardships.”