Montana is facing a housing crisis.
A lack of affordable housing is keeping working Montanans out of homes and forcing families to pay up 50% or more of their monthly incomes in rent. Lumber prices and labor shortages make it even tougher for developers to offer affordable homes to working families.
HB 397 bill will provide a state-based funding resource to help private developers make homes affordable and economical. Both chambers of the 67th Montana Legislature passed House Bill 397, and it is now on the Governor’s desk. The only thing standing between more affordable homes and working families is Governor Gianforte’s signature on HB 397.
HB 397 creates a state-based, workforce housing tax credit to leverage the federal Low-Income Housing program, a conservative, market-driven approach to increasing affordable housing implemented during the Reagan Administration.
It provides nonrefundable federal housing tax credits to developers via a competitive bidding process designed and administered by the Montana Board of Housing. Developers get the tax credits, sell them to investors, and use the cash for construction. This enables developers to eliminate or significantly reduce their debt service. Properties then have affordable rents for working families and remain affordable for up to 46 years.
Since 2016, the Montana Board of Housing has denied over $310 million in federal housing tax credit requests due to lack of funding, half of which were from Montana’s small towns.
Montana missed the opportunity to build 2,000 new affordable apartments and create 4,000 construction jobs with over $186 million in wages.
This year, there are 14 applications (six from small towns) for the federal tax credits totaling $81 million in construction. Unfortunately, only $29 million in federal tax credits will be awarded, which is only enough to fund 115 to 130 apartments.
HB 397, a state tax credit, would allow more of these projects – or 30 to 60 more apartments – to be planned this year alone. If signed into law, the state tax credit will double the number of apartments with construction starting in 2022.
HB 397 could mobilize enough private capital to produce 18,000 homes and apartments and generate over $828 million in economic activity over ten years.
Montana’s continued economic recovery relies on a strong workforce. A strong workforce relies on homes that workers can afford to rent. HB 397 is based on a very successful federal program with a decades-long proven track record.
The Montana Housing Coalition, Montana Chamber of Commerce, Montana Building Industry Association, Montana Association of Realtors, and Montana League of Cities and Towns all recognized the importance and merit of this legislation and supported HB 397 through the legislature. Please contact Governor Gianforte and urge him to sign HB 397 so Montana has homes our workforce can afford.