Urban zoning debate in Legislature heats up with controversial ADU proposal

(Daily Montanan) Montana’s priciest cities are once more opposed to legislation that would force local governments to loosen their zoning restrictions in an effort to stimulate the supply of affordable housing in the state. It’s a goal that has engendered some bitter fights this session as policymakers in Helena work to figure out the extent of their role in keeping the Big Sky affordable.

Senate Bill 397, heard in the Senate Local Government Committee on Monday afternoon, would prevent cities, towns and counties from passing zoning ordinances that ban or uniquely regulate accessory dwelling units, or ADUs — in layman’s terms, a small apartment or house attached to or on the same lot as a single-family home.

Doing so would remove square footage maximums, parking requirements and all number of other zoning ordinances that prevent cities and developers from meeting the demand for “missing middle” housing through options like ADUs, contends Sen. Greg Hertz, the bill’s sponsor.

“We have a housing shortage, a possible crisis in Montana,” Hertz said. “A lot of it has to do with supply and demand. One of the easiest and most economical vehicles to increase supply is an ADU. When I started looking at the various regulations across the state in regards to ADU, it became quite apparent that they’re very difficult to build.”

For Hertz, R-Polson, who’s carrying the bill alongside Democratic Sen. Ellie Boldman, SB397 has the added benefit of removing what he sees as generally onerous regulation and reverting to a simpler zoning environment.

“When I grew up, that’s the way it was,” Hertz told the Daily Montanan. “You had a single-family home next to a duplex next to a little commercial zone.”

Montana’s housing problem is well documented, especially with rising rents and skyrocketing home prices in Bozeman and Missoula. COVID-19 has only worsened an existing phenomenon.

But coming up with solutions has been far from straightforward. City planners and officials say they want to work to add housing supply and keep prices low, but efforts by the Legislature to step in with zoning overhauls have been met with vociferous opposition.

“As Senator Hertz stated, ADUs can be a great housing choice for our communities, but let’s leave it to local residents and elected officials to allow them to regulate them across Montana,” said Wyeth Friday, a planner with the city of Billings. 

Billings, following a lengthy process to rewrite its zoning laws, moved to allow ADUs in all but one of its residential districts at the beginning of the year, Friday said. The city imposes parking and owner-occupancy requirements and demands that accessory units match the architectural style of the home with which they share a lot, measures that Friday said help keep absentee landlords in check.

These are all regulations that Hertz’s bill would ban. The same can be said for ordinances in other Montana cities that impose 600-square-foot maximums on ADUs or enforce lot coverage requirements.

To Hertz, these are anti-competitive policies that create unfair standards to homeowners who might want to rent out their basement or a cottage out back, even as a landowner can freely rent out a single-family home. The Legislature gave cities the ability to zone, Hertz said, and it’s able to roll back that freedom.

“A lot of (zoning) has to do with protecting certain residential areas to the benefit of those individuals and not to the benefit of anyone else,” he sad. 

But Friday and other opponents said removing these regulations would interfere with the ability of local government to coordinate development and manage land use in its own boundaries — not to mention removing the process of public feedback around local development.

SK Rossi, a lobbyist for the city of Bozeman, where the state’s housing crisis is perhaps most acute, argued Monday that SB397, which has no specific requirements for affordability, would in fact just pave the way for profiteering by property owners with questionable benefit.

“This allows for the unfettered building of things like guest houses and tiny homes that are going to be owned by people who own the single family home and used as rentals for tourists,” Rossi said. 

Rossi gave similar testimony on another bipartisan zoning bill this session, HB134, which would prevent some cities from banning duplexes, triplexes and fourplexes in single-family residential zones. That bill, like SB397, was marketed as an affordability effort, but Bozeman opposed the proposal as overreach from the state government that could not guarantee decreased rents or home prices. The bill is likely dead, failing to make it out of committee before the Legislature’s transmittal deadline.

Bryce Ward, an economist from the University of Montana, said there’s no evidence to support that most ADUs would become short-term rentals — and even if they did, more supply would have a downward effect on prices for both short-term and long-term rental units. Either way, people on both sides of the issue are likely exaggerating the potential impact of such a policy, he added.

Montana cities like Whitefish and Bozeman would prefer to deal with the affordability crisis on their own terms through policies like inclusionary zoning, which require that a certain portion of new-build housing is set aside for low-income residents. Bozeman says that policy has added 60 new affordable units to the city’s housing stock.

Ironically, just as the Legislature has pushed deregulatory policies to increase supply, some lawmakers — Hertz included — have supported legislation likely to reach the governor’s desk to ban inclusionary zoning.

“Bozeman’s dream for affordable housing is that workforce housing will be available,” Rossi said. “The way that they have envisioned that shows up in your inclusionary zoning law which is likely going by the wayside.”

HB259, sponsored by House Majority Leader Sue Vinton, who co-owns a construction company, passed out of the Senate on party lines last week. That bill pitted Hertz and Boldman, D-Missoula, the co-sponsor of the ADU bill, against each other. Hertz said he sees inclusionary zoning as an extension of the same flawed philosophy that created dozens of residential zoning types.

“I believe in local control, but when local control is an overreach…then we can’t support that,” he said on the Senate floor last week.

“Please acknowledge that housing is a crisis in Montana,” Boldman responded. “You will turn us into Jackson Hole, you will turn us into Aspen, if you don’t allow us to respond to the needs of our own community. Please recognize that one size doesn’t fit all. This is government overreach.”