Democrats pitch $500 million housing trust fund
Bill would put state dollars into subsidies for housing set at prices affordable to low-income residents.
By Eric Dietrich MONTANA FREE PRESS
A long-discussed Democratic bill that aims to direct $500 million of the state’s budget surplus into an affordable housing construction fund got its initial hearing Monday, giving proponents a venue to argue that the state needs to back up market-oriented housing efforts with public dollars that can subsidize affordable housing.
House Bill 574, sponsored by House Minority Leader Kim Abbott, D-Helena, would make hundreds of millions of dollars available for grants and loans to support private-sector housing projects that produce homes and apartments at prices intended to be affordable for lower-income residents. Money put into low-interest loans would be repaid to the fund by borrowers, providing an ongoing stream of state money for subsidized housing.
Abbott told the House Business and Labor Committee Monday that the proposal was a way to complement other efforts to address the state’s painful housing crunch, notably bills that would pull back existing development regulations in an effort to bring down market prices by broadly promoting home construction.
“This bill is really about investing in building,” Abbott said. “Because we can’t just build our way out of this problem — we need to actually make sure it’s affordable.”
It’s unclear whether the bill will get enough Republican support to advance from the committee or, if it does, how it will fare amid vigorous competition from other large spending proposals under consideration by the Legislature. Other measures vying for their share of the surplus, estimated at $2.5 billion to $3 billion in one-time cash, include a $267 million local infrastructure program, efforts to shore up pension funds, and a proposal to exempt social security income from state income taxes. Gov. Greg Gianforte, a Republican, also signed an initial spending package into law Monday that puts about $1 billion of the surplus into income and property tax rebates.
Abbott suggested Monday that the housing trust could, if necessary, be advanced at a lower funding level.
“I don’t know if it needs to be $500 million, but it needs to be a significant investment in building what is guaranteed to be affordable housing,” she said.
Many if not most Montana communities have seen rents and for-sale prices spike in recent years as an influx of pandemic-era migration has collided with the state’s finite supply of homes. Real estate website Zillow says the typical home value in the state was an estimated $420,000 in February, up from $265,000 at the beginning of 2020. A poll commissioned by University of Montana researchers last year reported three-quarters of Montana respondents considered lack of affordable housing an “extremely” or “very” serious issue.
Minority Democrats in the Legislature have advocated publicly for putting a large chunk of the surplus toward housing since last summer. Abbott, the elected head of the House Democratic caucus, introduced the bill Feb. 15. As a spending measure, it wasn’t subject to the Legislature’s transmittal deadline for non-budget bills on March 3.
Supporters of the measure at Monday’s hearing, which drew no opponents, included affordable housing developers, Shelter Whitefish, the city of Bozeman, the Montana Environmental Information Center, the Montana Budget & Policy Center and private-sector labor unions.
“When you’re actually building this type of housing, that is limited in terms of what you can charge for rent or what you can charge in terms of sale, it’s got to be lower than the market,” said Melissa Shannon, a lobbyist for the Montana Housing Coalition. “So for developers, it doesn’t pencil out without some investment.”
Montana Housing administrator Cheryl Cohen, who runs the state’s affordable housing programs at the state Department of Commerce, didn’t testify on HB 574 as a formal proponent Monday but did say in response to questions from lawmakers that the bill would make it easier for the state to use its entire allotment of federal housing subsidies, some of which are difficult for developers to put to use when not combined with subsidies from other sources.
“Other states that have established either a state housing trust fund or a state housing tax credit are better able to leverage federal funding sources,” Cohen said.
She also testified that the state is short by an estimated 31,000 homes and apartments that are available to rent at prices affordable to very low-income renters, such as families of four with incomes below $40,000 a year.
Currently, Cohen said, federal funding allows the state board of housing to subsidize the development of about 500 homes for low-income renters a year. Adding the bill’s state funding to the mix, she added, would probably let the state double that number.
The bill’s next procedural step is a committee vote. If it passes muster there, it will advance for debate on the House floor.