HomeMy WebLinkAbout01-13-25 CD Agenda and Packet MaterialsA. Call to Order - 6:00 pm
B. Disclosures
C. Changes to the Agenda
D. Action Items
D.1 An Ordinance to Repeal and Replace Division 38.380, Bozeman Municipal Code in Support of
Affordable Housing Production(Montana/Fine)
THE COMMUNITY DEVELOPMENT BOARD OF BOZEMAN, MONTANA
CDB AGENDA
Monday, January 13, 2025
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Consider the Motion: Having reviewed and considered the staff report, draft ordinance, public
comment, Economic Vitality Board recommendations, and all information presented, I hereby adopt
the findings presented in the staff report for zoning text amendment application 24529 and, acting as
the Planning Commission, move to recommend approval of Ordinance 2025- to repeal and replace
Section 38.380 of the Bozeman Municipal Code to establish land use, residential density, lot size,
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E. Public Comments on Non-agenda Items Falling within the Purview and Jurisdiction of the Board
F. FYI/Discussions
F.1 Upcoming Items for the January 27, 2025, Community Development Board
Meeting(Saunders)
G. Adjournment
width, coverage, building height, mass and scale, and parking incentives for targeted residential and
mixed-use districts for production of affordable housing.
This is the time to comment on any non-agenda matter falling within the scope of the Community
Development Board. There will also be time in conjunction with each agenda item for public
comment relating to that item but you may only speak once per topic.
Please note, the Community Development Board cannot take action on any item which does not
appear on the agenda. All persons addressing the Community Development Board shall speak in a
civil and courteous manner and members of the audience shall be respectful of others. Please
state your name, and state whether you are a resident of the city or a property owner within the
city in an audible tone of voice for the record and limit your comments to three minutes.
General public comments to the Board can be found in their Laserfiche repository folder.
Information only, no action required.
This board generally meets the first and third Monday of the month from 6:00 pm to 8:00 pm.
City Board meetings are open to all members of the public. If you have a disability that requires
assistance, please contact our ADA Coordinator, David Arnado, at 406.582.3232.
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Memorandum
REPORT TO:Community Development Board
FROM:
Susana Montana, Senior Planner
Chris Saunders, Community Development Manager
Erin George, Director of Community Development
David Fine, Economic Development Urban Renewal Manager
Renata Munfrada, Housing Division Manager
Britt Fontenot, Economic Development Department Director
SUBJECT:
An Ordinance to Repeal and Replace Division 38.380, Bozeman Municipal
Code in Support of Affordable Housing Production
MEETING DATE:January 13, 2025
AGENDA ITEM TYPE:Community Development - Legislative
RECOMMENDATION:
Consider the Motion: Having reviewed and considered the staff report, draft
ordinance, public comment, Economic Vitality Board recommendations, and
all information presented, I hereby adopt the findings presented in the staff
report for zoning text amendment application 24529 and, acting as the
Planning Commission, move to recommend approval of Ordinance 2025- to
repeal and replace Section 38.380 of the Bozeman Municipal Code to
establish land use, residential density, lot size, width, coverage, building
height, mass and scale, and parking incentives for targeted residential and
mixed-use districts for production of affordable housing.
STRATEGIC PLAN:4.5 Housing and Transportation Choices: Vigorously encourage, through a
wide variety of actions, the development of sustainable and lasting housing
options for underserved individuals and families and improve mobility
options that accommodate all travel modes.
BACKGROUND:
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On August 20, 2024, the City Commission held a work session to consider
amendments to the Bozeman Municipal Code (BMC) affordable housing
program and its incentives to produce affordable housing. The City
Commission directed staff to amend existing non-cash financial incentives
for the production of below-market affordable dwelling units to respond to
current market forces and to ensure affordability of targeted dwellings for
fifty (50) years rather than 30 years.
The ordinance, if adopted as proposed, is expected to induce developers to
incorporate below-market-rate dwellings within their market-rate housing or
mixed use development in the city. For more information see the Executive
Summary and Appendix A in the attached staff report. The amendment
applies to new subdivision, master site plan and site plan applications and to
applications undergoing development review under Chapter 38 of the City’s
Unified Development Code (UDC).
Project documents are available at this direct link to the public Laserfiche
archive for application 24529 with direct links to individual documents
provided below:
Draft Ordinance 2025- Affordable Housing Ordinance. Contains the proposed
language for the Chapter 38 amendments.
Additional materials are also available on the City’s Housing Dashboard
website page for the proposed standards.
UNRESOLVED ISSUES:None.
ALTERNATIVES:See attached staff report.
FISCAL EFFECTS:None at this time.
Attachments:
24529 CBD Staff Report AHO update 01 08 25.pdf
Affordable Housign Ordinance DRAFT for CDB 12 21 24_.pdf
Report compiled on: January 8, 2025
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Page 1 of 55
Project 24529; Community Development Board Staff Report for the Bozeman
Municipal Code (BMC) Division 38.380 Affordable Housing Text
Amendment--Ordinance 2025-###
Public Hearings:
Community Development Board meeting – January 13, 2025.
City Commission public hearing – January 28, 2025.
Project Description: Repeal Bozeman Municipal Code (BMC) Division 38.380, Affordable
Housing, and replace it in its entirety with an amended Division 38.380, Affordable
Housing. See Appendix B on page 38 for a summary comparison of the incentives
offered by the current Affordable Housing provisions of Division 38.380 and the
proposed AHO incentives.
Project Location: The Ordinance is applicable City-wide.
Recommendation: The proposed Affordable Housing Ordinance amendment to the
Bozeman Unified Development Code (UDC) meets the Section 38.260.010
Zoning Text Amendment criteria for approval as noted below in Section 2.
Economic Vitality Board Motion: Having reviewed and considered the staff memo, draft
ordinance, public comment, and all information presented, I hereby recommend
approval of the proposed Affordable Housing Ordinance with the following
modifications: (1) Both Type B and C incentives should have a minimum parking
requirement and (2) the 60% of AMI affordability level should be evaluated every three
years and should be based on HUD-AMI data as well as other metrics and information
(please see the Economic Vitality Board discussion on page 11 below).
Community Development Board Recommended Motion: Having reviewed and considered
the staff report, draft ordinance, public comment, and all information presented,
the Community Development Board acting as the Zoning Commission, hereby
adopts the findings presented in the staff report for application 24529 and moves
to recommend approval of the proposed Affordable Housing Ordinance 2025, as
reflected in the staff report.
Report: January 8, 2025
Staff Contact: Susana Montana, Senior Planner, Community Development
Department
David Fine, Economic Development Department, Housing Manager
Agenda Item Type: Action – Legislative
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 2 of 55
TABLE OF CONTENTS
EXECUTIVE SUMMARY ...................................................................................................... 3
Project Summary ................................................................................................................. 3
Public Comment.................................................................................................................. 5
Economic Vitality Board .................................................................................................... 6
Alternatives ......................................................................................................................... 7
SECTION 1 - RECOMMENDATION AND FUTURE ACTIONS ........................................ 8
SECTION 2 - TEXT AMENDMENT STAFF ANALYSIS AND FINDINGS ....................... 8
Section 76-2-304, MCA (Zoning) Criteria ......................................................................... 9
PROTEST NOTICE FOR ZONING AMENDMENTS ......................................................... 25
APPENDIX A - DETAILED BACKGROUND AND PROJECT DESCRIPTION .............. 26
APPENDIX B - COMPARISON OF CURRENT DEEP AND SHALLOW INCENTIVES
WITH PROPOSED TYPE A, B AND C INCENTIVES……………………………………38
APPENDIX C - NOTICING AND PUBLIC COMMENT .................................................... 53
APPENDIX D - APPLICANT INFORMATION AND REVIEWING STAFF .................... 55
FISCAL EFFECTS ................................................................................................................. 55
ATTACHMENT LINKS ........................................................................................................ 55
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 3 of 55
EXECUTIVE SUMMARY
This report is based on the proposed ordinance text, advisory board recommendations, public
comment received to date, and evaluation of zoning text amendment criteria of Section 76-2-304
Montana Code Annotated (MCA).
Policy Questions
A 2021 analysis prepared by the housing economics firm, Root Policy Research, suggested that
the then proposed AHO zoning code incentives at the designated affordability levels would make
feasible a certain amount of long-term affordable housing. The proposed incentives were adopted
in 2022.
Since the current 2022 Affordable Housing Ordinance No. 2105 has been in effect, 12 residential
developments have qualified for and taken advantage of its incentives, resulting in 1,005 income-
restricted affordable dwelling units committed to be income-restricted for a period of 30 years.
One policy issue revolves around whether the flexibility allowed by the citywide incentives of the
2022 Affordable Housing Ordinance (AHO) are too broad to be assured that utilizing the parking
and height incentives on “in-fill” projects, in particular, would result in a project that may not be
in “character” with the existing neighborhood or may have negative impacts on the site environs.
Is this impact an acceptable exchange for the public benefit of providing long-term (50 years)
affordable housing units within that development? The projects utilizing the incentives on
undeveloped (“greenfield”) or redeveloping sites have generally been deemed successful in
providing affordable units while creating a new mass and scale “character” in its environs or in
matching the scale and massing of nearby apartment complexes in developing areas of the city
such as its northwest and southwest edges.
The proposed AHO seeks to remedy or reduce perceived negative impacts of incentives on in-fill
sites while encouraging the development of affordable housing on greenfield sites.
Project Summary
Proposed Affordable Housing Ordinance Incentives
The proposed Affordable Housing Ordinance is a proposal to amend the land use regulations of
Chapter 38 of the Bozeman Municipal Code (BMC) in support of affordable rental housing
production. The proposed amendments will affect land use, residential density, building height
and design, and parking standards for targeted residential and mixed-use districts. The amendment
applies to new development and applies to projects undergoing development review under Chapter
38 of the City’s Unified Development Code (UDC).
The amendment would repeal UDC Division 38.380, Affordable Housing, in its entirety and would
replace it with a new set of standards addressing:
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 4 of 55
(1) incentives to build below-market-rate affordable dwelling units in the city;
(2) criteria and qualifications for the granting of the incentives;
(3) clarification of administration of the affordable housing program;
(4) extension of the duration of affordability for subject dwellings from thirty (30) years to
fifty (50) years;
(5) establishing the minimum percentage of affordable dwellings per project and the
maximum rental rate measured by the Bozeman Area Median Income (AMI); and
(6) establishing four (4) options of non-cash financial incentives to produce below-market-
rate affordable dwellings in the city. Please see Appendix B for a comparison of the current
and proposed AHO incentives and Attachment A for a link to the entire proposed revised
AHO ordinance and Attachment B for a link to the current Affordable Housing Ordinance
No. 2105.
The current AHO offers two types of incentives: Shallow Incentives and Deep Incentives. The
proposed AHO re-names and amends the two types of incentives as Type A Incentives, Type B
Incentives, creates a third set of incentives, called Type C Incentives, and creates a fourth option
called Off Site Contribution in which a developer utilizing incentives may request to pay cash-in-
lieu to the affordable housing fund or donate buildable land to the city for the production of
affordable housing rather than provide the affordable units on-site within the development. The
city may establish administrative procedures the application and implementation of a cash-in-lieu
program. The city must use all cash-in-lieu funds to support the creation or preservation of
affordable dwellings.
Overall. based on City Commission guidance at an August 20, 2024, work session, and on
Advisory Board recommendations and public comments received to date, the proposed AHO
addresses these comments and recommendations by:
(1) reducing the building height and parking incentives offered for affordable housing
projects; (2) extending the affordability term from 30 years to 50 years;
(3) lowering the affordability level from 80% of AMI to 60% of AMI;
(4) requiring a greater number or percent of affordable units in a development in exchange
for the greater incentives;
(5) incorporating development standards for the affordable dwellings within a market-rate
development to insure equity in construction and amenities;
(6) specifying the contents of the mandated Affordable Housing Plan for projects using
incentives; and
(7) clarifying Assumptions and Calculations for affordable units and for the Administration
and Compliance of the AHO program,
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 5 of 55
The changes to the current AHO Section 38.380 generally lower or reduce the development
incentives offered to market-rate developers in exchange for providing a greater number of
affordable units at a lower AMI rental rate and for a longer period of time. The remaining
incentives were carefully designed, based on experience and data, to respond to market conditions,
such as land, material and labor costs and demand for specific housing types, and to offer the
specific development incentives to make inclusion of the affordable units financially feasible.
Broad Issue Impacts
Limited housing opportunities within the city negatively impacts economic development,
transportation networks, and sustainability. Lack of housing directly effects many areas of life for
Bozeman citizens including health, economic and social stability, and wellness. Affordable
housing needs must be addressed to maintain a sufficient resident workforce in all fields of
employment, and to ensure the public safety and general welfare of the residents of the city,
affordable housing needs must be addressed.
The purpose of incentives is to encourage and enable construction of housing that would be
unlikely or impossible without the incentives. The incentives codified in this ordinance will
advance the city's legitimate interest in assuring that additional housing is built in the city. This
ordinance is adopted pursuant to the city's self-governing powers, the city’s zoning authority, and
the police power to protect public health, safety, and general welfare.
Public Comment
The Economic Development Department’s Housing Team hosted an open house to discuss options
for amending the current Affordable Housing Ordinance (AHO). Staff presented a slide show on
housing issues and options for incentives toward supporting low-income-affordable housing in the
city and they queried participants as to their preferences of incentives that could be offered
developers of affordable housing or mixed market-rate and affordable housing projects. Staff also
hosted a short on-line and “hard copy” survey to query residents about their concerns and
preferences for incentives to offer in an updated AHO. The AHO survey is closed now and the
results are now available in the Resource Documents section on AHO Engage Bozeman along with
written comments received at the Open House. The Economic Development staff’s open house
slide show as well as Mayor Cunningham’s housing presentation slide show can be viewed in the
Resource Documents section of that webpage.
Continuing written public comments on this draft AHO will be archived and available through the
project folder in the City’s Laserfiche archive. Comments provided orally at public meetings will
be available through the recordings of those public meetings. Links to recordings will be added to
this report as the review of the project moves forward. For general public comments about
affordable housing in the city go to this link or:
https://weblink.bozeman.net/WebLink/Browse.aspx?id=286701&dbid=0&repo=BOZEMAN
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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Economic Vitality Board
The Economic Vitality Board (EVB) has the duties of the former Community Affordable Housing
Advisory Board. The EVB reviewed the draft ordinance on December 4, 2024. There were two
persons providing oral public comment at the meeting and six persons commenting in writing in
advance of the meeting.
The oral public comments included the following topics:
1. It was stated that the current AHO program fails to provide a benefit to the city, and
it is anticipated that the update will also fail. It destroys the historic character and
sense of place where the incentives are granted; for example, the Guthrie (located
at N. 5th Avenue at Villard), Block B (511 E. Babcock) and the Yard (Tamarack
and Front Streets) projects.
2. Mr. Daniel Carty provided written comments to the EVB in which he proposes a 3-
step program to improve the city’s affordable housing program.
3. The Ability Montana organization stated that they urge the AHO to provide
accessible parking close to the development project entrances; a “drop off zone” is
inadequate. The speaker urged the Board to review the Belonging in Bozeman
accessibility recommendations.
The written comments to the EVB can be found at this link. The video recording of the EVB can
be found here. The Affordable Housing agenda discussion begins at 9:14 in the recording. Public
Comment begins beyond that at 1:38 in the recording. Questions to staff begin at 28:30 in the
recording. Board discussion begins at 57:10 in the recording. The Board voted 6-0 in favor of each
of three motions recommending approval of the ordinance with amendments.
The EVB discussion of the proposed AHO update included the following topics:
1. Build in review of the Area Median Income (AMI) affordable levels every two years or
so due to changes in the HUD-designated income levels and market conditions in Bozeman
such as housing need/demand and housing production needs.
2. Type C no parking requirement; what is the ADA parking requirement if no parking is
required?
3. Will change in the incentives affect existing affordable housing projects in the pipeline?
4. What areas or zoning districts would a 7-story building be allowed with the Type C
incentives?
5. Types B and C should have a minimum parking requirement.
6. Affordable dwelling unit size should be a quality, livable space.
7. Concern with the cash-in-lieu option that no affordable housing will result.
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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After discussion by the Board, three separate motions were made, seconded, and approved
unanimously, 6 to 0 to recommend to the City Commission the following amendments to the AHO
proposal:
Motion 1: The Type C incentive should have a minimum parking requirement.
Motion 2: Both Type B and C incentives should have a minimum parking requirement.
Motion 3: The 60% of AMI affordability level should be evaluated every three years and
should be based on HUD-AMI data as well as other metrics and information.
Staff response to the EVB recommendations.
The proposed AHO now proposes minimum vehicle and bicycle parking requirements for all
housing types except Types A and B Incentives which exempt townhouse or rowhouse
dwellings of 1,200 square feet of livable space or less from on-site parking. The small
townhouse and rowhouse is deemed a suitable match for the city’s “missing-middle”/
workforce housing demand and staff opines that the exemption of parking for this type of
housing would facilitate its development, particularly in new subdivisions or other “greenfield”
sites. Additional flexibility is provided for parking placement if the developer chooses to use
it.
Sections 38.380.020.I, Assumptions and Calculations and 38.380.070.A.1, Administration, of
the proposed AHO establishes procedures for review of AMI requirements as used in this
Division. Staff opines that these administrative provisions enable the review and use of
standard metrics other than U.S. Department of Housing and Urban Development (HUD) AMI
for Bozeman, if appropriate and anticipates the metrics will be reviewed annually.
Alternatives
1. Do not recommend adoption the ordinance as presented, based on findings of non-
compliance with the applicable zoning text amendment criteria contained within the staff
report;
2. Do not adopt the ordinance as it is not the policy desired by the City Commission;
3. Direct amendments to the text prior to adoption such as:
a. Establish a minimum parking requirement for Types B and C incentives; or
b. Propose other amendments to address issues identified by advisory bodies or public
comments; or
4. Continue the public hearing on the application, with specific direction to staff to supply
additional information or to address specific items.
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 8 of 55
SECTION 1 - RECOMMENDATION AND FUTURE ACTIONS
Having considered the criteria established for a zoning text amendment, the Staff finds the
proposed AHO amendments meet the minimum criteria for approval as proposed and, therefore,
recommends approval of the application as submitted. The city’s Development Review Committee
(DRC) reviewed and considered the amendment and did not identify infrastructure deficiencies
associated with the proposed amendment.
The Economic Vitality Board held a public meeting to discuss these amendments on December 4,
2024. As noted above, the Board recommended the proposed AHO be adopted with minimum
parking requirements for Type B and C incentives and recommended that the AMI household
income levels be evaluated every three years for relevancy to Bozeman’s affordable housing needs.
The City Commission will hold a public hearing on the text amendment on January 28, 2025, at
6:00 p.m. in the Commission Room at City Hall, 121 N. Rouse Ave, Bozeman, Montana. Remote
electronic participation may also be available. Instructions for participating remotely will be
included on the meeting agenda. The agenda is available in the Events portion of the City’s website
at https://www.bozeman.net/home at least 48 hours prior to the meeting.
At the City Commission’s public hearing the City Commission may act to approve, modify, or
reject the proposal, as Affordable Housing Ordinance for UDC Division 38.380, or may continue
the public hearing to another date. The City Commission may revise the proposed AHO
amendment referred in this notice during the public hearing process.
SECTION 2 – ZONING TEXT AMENDMENT STAFF ANALYSIS AND
FINDINGS
Strategic Plan Implementation
In April 2018, the City Commission adopted a Strategic Plan to guide city policy formation and
its implementation. Strategic Plan priorities relevant to this AHO include the following:
4.2 High Quality Urban Approach - Continue to support high-quality planning, ranging
from building design to neighborhood layouts, while pursuing urban approaches to issues
such as multimodal transportation, infill, density, connected trails and parks, and walkable
neighborhoods.
City-adopted building codes, zoning codes, utility and infrastructure codes and master plans all
play a role in supporting high-quality planning and development throughout the city. The proposed
AHO is one key element in this array of strategies to retain a high-quality urban approach to
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
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building and servicing city neighborhoods. The AHO focuses on non-cash development incentives
to produce needed affordable housing that, otherwise, the private sector would not produce. These
AHO incentives are often paired with financial incentives such as Tax Increment Financing or Tax
Credits to produce the lower-income affordable housing.
4.5 Housing and Transportation Choices - Vigorously encourage, through a wide
variety of actions, the development of sustainable and lasting housing options for
underserved individuals and families and improve mobility options that accommodate all
travel modes.
The AHO seeks to provide development incentives to encourage smaller lots and dwelling units
that make most efficient use of land already served by public utilities and services such as water,
sanitary sewer, stormwater management, transit, police, fire, medical care, schools, libraries,
recreation and the like. The AHO focuses on serving the city’s low-income households,
particularly the city’s service workforce, who could not afford to rent market-rate dwellings. The
AHO would require income-restrictions for a minimum of 50 years. The AHO incentives for
increased density in the higher-density zoning districts, particularly in the northwest and southwest
regions of the city, would provide increased ridership for the new transit district to extend service
to those developing areas of the city.
7.3 Best Practices, Creativity & Foresight- Utilize best practices, innovative
approaches, and constantly anticipate new directions and changes relevant to the
governance of the City. Be also adaptable and flexible with an outward focus on the
customer and an external understanding of the issues as others may see them.
City leadership has been vigilant in researching and understanding the housing needs of its citizens
and in seeking to fund various approaches to meeting this need. Over the decades, they have tried
many financial and non-financial strategies for producing housing for its workforce and those in
need of assisted housing. When the 2007 inclusionary zoning AHO was adopted, it was amended
several times to better address market conditions and housing needs. This proposed AHO also
seeks to be flexible and creative in responding to current market conditions, housing policy and
housing needs of the city’s low-income workforce as measured by the city’s AMI.
Section 76-2-304, Montana Code Annotated (MCA), Zoning Criteria
In considering applications for zoning text amendment approval under this title, the advisory
boards and City Commission must consider the following criteria (letters A-K below). As an
amendment is a legislative action, the Commission has broad latitude to determine a policy
direction.
A zone text amendment must be in accordance with the growth policy (criteria A) and be designed
to secure safety from fire and other dangers (criteria B), promote public health, public safety, and
general welfare (criteria C), and facilitate the provision of transportation, water, sewerage, schools,
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
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parks, and other public requirements (criteria D). Therefore, to approve a zone text amendment
the Commission must find that Criteria A-D are met.
In addition, the Commission must also consider criteria E-K, and may find the zone text
amendment to be positive, neutral, or negative with regards to these criteria. To approve the zone
text amendment, the Commission must find the positive outcomes of the amendment outweigh
negative outcomes for criteria E-K. In determining whether the criteria are met, Staff considers the
entire body of plans and regulations for land development. Standards which prevent or mitigate
negative impacts are incorporated throughout the entire municipal code but are principally in
Chapter 38, Unified Development Code.
The existing development review processes and standards were previously found to satisfy all of
the following criteria during earlier reviews. The focus of this report is only on the proposed AHO
amendments. Where a finding of Neutral is presented, it represents that the criteria is either not
applicable to the proposed amendments or that the change does not materially advance or detract
from compliance. Therefore, a finding of Neutral is not an indication of a deficiency in the
proposed amendments or the existing standards.
As noted below, the required criteria A through D are met by the proposed AHO. For Criterion
H, Character of the District, the proposed AHO is deemed neutral in satisfying this criterion as
demonstrated on page 20. The Criterion J, Value of Buildings, is also deemed neutral in that the
proposed AHO may affect existing buildings as a property is redeveloped but the value of the new
building and property would increase. Criterion F, Effect on Motorized and Non-motorized
Transportation Systems is deemed “neutral” the proposed AHO as the parking incentives are likely
to increase competition for on-street parking resources in the neighborhood where an affordable
housing project using the parking incentives is located. This is balanced by the provision of low-
and moderately-priced housing.
Overall, the proposed AHO meets the MCA zoning criteria for a text amendment.
A. Be in accordance with a growth policy.
This criterion is met. A growth policy provides a high-level vision of how a community hopes to
develop over time. As a key tool to implement the growth policy, zoning must be in accordance
with the growth policy per 76-2-304(1)-(a), MCA. The proposed AHO, inclusive of Division
38.380, Affordable Housing, and the two associated changes to the Definitions zoning text of the
Bozeman Municipal Code (BMC), positively address numerous relevant Bozeman Community
Plan 2020 (BCP) growth policies as noted below, particularly those seeking to facilitate housing
and “missing middle” affordable housing.
Goal N-3: “Promote a diverse supply of quality housing units”.
Policy N-3.1—"Establish standards for provisions of diversity of housing types in a given
area.”
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
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N-3.3 Encourage distribution of affordable housing units throughout the City with priority
given to locations near commercial, recreational, and transit assets.
N-3.4—"Require development of affordable housing through coordination of funding for
affordable housing and infrastructure.”
N-3.7— “Support compact neighborhoods, small lot sizes, and small floor plans, especially
through mechanisms such as density bonuses.”
N-3.8— “Promote the development of “Missing Middle” housing (side by side or stacked
duplex, triples, live-work, cottage housing, group living, rowhouse/townhouses, etc.) as one of
the most critical components of affordable housing.”
N-3.9— “Ensure an adequate supply of appropriately designated land to accommodate Low
Income Housing Tax Credit development in qualifying census tracts.
Dwelling units in apartment buildings provide the most efficient use of units of land and this
housing type is supported by the incentives of the proposed AHO which offers increased building
heights, increased residential density, and lower or no minimum parking requirements in exchange
for long-term rental housing affordability.
The AHO also broadly supports “missing middle” townhome and rowhouse housing types by
allowing those types of housing in the lower-density R-1, RS and RMH districts, by reducing lot
widths, lot size and lot coverage. For this type of housing with exclusively small units (1,200 gross
square feet or less), no parking is required. This supports “diversity of housing” and affordable
units throughout the community. It should be noted that recent changes in state law require the R-
1, RS, and RMH districts to allow duplexes with or without affordability requirements.
The BCP establishes the City’s policies for land development. It continues concepts and
community priorities that were established in several prior plans and growth policies. As early as
1972, the community’s planning documents identified affordable housing as a priority concern.
Affordability of housing is influenced by many issues. Only a few of them are under control of the
city. Lending practices, personal housing preferences, labor and materials availability, and land
costs are examples of material housing cost influences that the city does not control.
Bozeman’s policy for many years has been to establish zoning districts that have access to
centralized public services, and which can accommodate housing of various types and densities
that can satisfy local housing needs and preference of surroundings. However, in order to
accommodate current and anticipated population growth, more efficient use of land for housing
within the city limits, close to public services and within the designated BCP Growth Area is
needed. This development is planned to occur both in newly annexed areas and existing developed
area. Infill development has been a long-standing community priority. Zoning regulations that
allow a variety of housing types at higher densities enable construction at economies of scale and
obtains maximum or most efficient use of property. This approach lessens pressure for the
annexation of farmland on the edge of the city yet within the Growth Area. Higher density “in-
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fill” development of undeveloped or underdeveloped lands within the city keeps initial housing
construction/development costs lower than building housing on County “green fields” which also
results in more efficient long-term operational costs of maintenance of roads, water, sewer,
stormwater management facilities, and public safety services. It is noted that the City’s Climate
Action Plan encourages compact development and higher development densities.
BCP discusses housing affordability. The discussion identifies national and local trends and issues
affecting affordability and housing needs. The AHO affordability incentives are designed to
encourage construction of homes at prices that market rate construction generally cannot reach.
The AHO incentives can be paired with other housing support such as Low-Income Housing Tax
Credits. The proposed AHO’s incentives recognizes these land use parameters and market forces
and was crafted to respond to these factors in such a way as to result in as many low-income
affordable dwellings as is possible under current market conditions and current state regulations.
Providing development incentives to facilitate construction of rental housing affordable to
households with annual incomes below the city’s Area Median Income (AMI) supports several
growth policy goals including:
R-2.4 Social Equity: Provide solutions that are inclusive with consideration to populations that
are often most fragile and vulnerable to sudden impacts.
Goal N-1: “Support well-planned, walkable neighborhoods.”
N-1.1. Promote housing diversity, including missing middle housing.
N-1.11--“Enable a gradual and predictable increase in density in developed areas over time”;
EE-1.4 Support employee retention and attraction efforts by encouraging continued
development of affordable housing in close proximity to large employers.
The proposed AHO incentives allow for smaller lots and dwelling unit size in exchange for low-
income affordability of rental housing. The developments that take advantage of these incentives
are expected to be more walkable by virtue of smaller block sizes. The Community Design
standards of Article 4 and the Project Design standards of Article 5 of the UDC are not changed
by this AHO. The AHO does incentivize the smaller lots and dwelling unit size that are expected
to meet the demands for “missing middle” housing for the city’s service workforce. The incentives
are combined with the permitted uses in zoning districts so that higher intensity development is
located in locations determined by district designation to be appropriate to more development.
Increased numbers and locations of mixed-use zoning districts supports implementation of housing
and employment in close proximity to larger employers.
Sustainability and mobility options can also support housing affordability. Examples of
community plan objectives that integrate with housing affordability include:
Goal DCD--1: “Support urban development with the City.”
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Policy DCD--1.1: “Evaluate alternatives for more intensive development in proximity to high
visibility corners, services and parks.”
DCD-1.2— “Remove regulatory barriers to infill.”
DCD 1.5— “Identify underutilized sites, vacant, and undeveloped sites for possible
development or redevelopment, including evaluating possible development incentives.”
Goal DCD-2: “Encourage growth throughout the City while enhancing the pattern of
community development oriented on centers of employment and activity. Support an increase
in development intensity within developed areas.
Policy DCD-2.1- “Coordinate infrastructure development, land use development and other
City actions and priorities through community planning.”
DCD-2.2- “Support higher density development along main corridors and at high visibility
street corners to accommodate population growth and support businesses.”
DCD-2.7- “Encourage the location of higher density housing and public transit routes in
proximity to one another.”
DCD-3.6 --Evaluate parking requirements and methods of providing parking as part of the
overall transportation system for and between districts.
Goal DCD-4: “Implement a regulatory environment that supports the Community Plan goals.
Policy DCD-4.4: “Differentiate between development and redevelopment. Allow relaxations
of code provisions for developed parcels to allow redevelopment to the full potential of their
zoning district.”
The AHO does not change the future land use map or zoning designation of land within the city to
address these policies. Rather, it offers density and building height incentives and parking
reductions in the city’s higher residential, commercial, and mixed-use zoning districts that can
implement these BCP policies in exchange for long-term housing affordability. Chapter 3 of the
BCP describes the various future land use designations and notes that higher densities are
appropriate and needed to accomplish policies of the plan.
Evaluation and consideration of alternate means to address transportation needs, including parking,
is directed by the BCP. Local and national experience has identified that affordable housing has a
lower, but still existent need for motor vehicles. The proposed amendments adjust parking
incentives to better fit the location and scope of development to amount of required parking
compared to the existing affordable housing incentives. Minimum parking for accessibility,
bicycles, and a ratio per dwelling is included in the regulations. The existing flexibility for location
is expanded. Tools other than individual project parking provision also exist in the municipal code
which can be used to manage public parking utilization more holistically.
The BCP seeks to coordinate housing with employment opportunities. The AHO addresses the
following policies by providing incentives to mix housing and jobs in the city’s M-1 light
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manufacturing districts. Whereas, apartments are now permitted as an accessory use per building
in the M-1 districts and they are permitted only above the ground floor, the AHO allows housing
on the ground floor of buildings and deems residential uses as accessory to the non-residential uses
within the development as a whole rather than on a per-building basis.
M-1.1 Prioritize mixed-use land use patterns. Encourage and enable the development of
housing, jobs, and services in close proximity to one another.
M-1.12 Eliminate parking minimum requirements in commercial districts and affordable
housing areas and reduce parking minimums elsewhere, acknowledging that demand for
parking will still result in new supply being built.
M-1.4 Develop safe, connected, and complementary transportation networks for pedestrians,
bicyclists, and users of other personal mobility devices (e-bikes, electric scooters, powered
wheelchairs, etc.).
The character of the community is also a subject of BCP goals, objectives, and actions. Please see
the discussion under Criterion H.
No element of the proposed ordinance affects the BCP future land use map (FLUM), as the
incentives do not change zoning district boundaries. Therefore, no analysis of the future land use
map is provided.
B. Secure safety from fire and other dangers.
This criterion is met. Building code standards for fire resistance, fire sprinklers for larger buildings,
exiting, seismic durability, and other protection remain in place and will continue to protect the
public. The requirements to avoid floodplains and similar physical hazards remain in place.
Requirements in the municipal code for access by emergency services, suitable water and sewer
services, and other safety features remain. Review of individual applications will provide an
opportunity to check for function of these parameters. The Applicability wording in the AHO
Section 38.380.020 below specifically states that the City can impose conditions to address
identified safety and other concerns. Generally applicable BMC authorization to impose conditions
where needed and justified remains.
“The incentives in this division supersede the applicable standards otherwise provided in
this chapter. All other provisions of this chapter remain applicable. The city retains the
authority to approve, approve with conditions, or deny an application based on compliance
with other portions of this code but may not attach conditions to an approval that have the
effect of negating the incentives provided in this division. The incentives in this division
are in addition to the departures for housing creation provided in 38.320.070.”
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The Development Standards for Affordable Dwellings section of the AHO (38.380.050) mandate
that the affordable dwelling units must be comparable in construction, design features, appliances,
and other amenities to the market-rate units within the development.
The purpose of the incentives is to support creation of homes that would otherwise likely not be
built. The rental cost limits and availability of additional housing enable homes for people who
otherwise may not have them thereby reducing danger, such as weather exposure, to those people
from housing insecurity.
C. Promote public health, public safety, and general welfare.
This criterion is met. The existing standards addressing this criterion remain in place such as
floodplain protections, road improvements, provision of water, sanitary sewer and stormwater
management facilities and similar public services. See also responses to Criteria B and D. The
incentives do authorize construction on smaller lots and in taller buildings. Such allowances are
not inherently counter to this criterion. Standards remain for building codes and utility codes and
setbacks remain for light, air, privacy, utility services, emergency services, and other services to
protect public health and physical safety.
Housing access is a substantial factor in public safety and wellness of individuals. Cost of housing
is a significant influence on housing access. The AHO incentives provided are intended to
encourage creation of homes available to persons with incomes lower than the Area Median
Income. Bozeman has experienced very high price escalation for homes over the past few years.
The prices are increasingly beyond the income of many of Bozeman’s workers. Loss of employees
due to lack of housing has been identified by many employers as a barrier to success and growth.
In turn, lack of economic opportunity damages the community as a whole.
D. Facilitate the provision of transportation, water, sewerage, schools, parks and other
public requirements.
This criterion is met. The City conducts extensive planning for municipal transportation, water,
sewer, parks, and other facilities and services provided by the City. The adopted plans allow the
City to consider existing conditions and identify enhancements needed to provide additional
service needed by new development. The City implements these plans through its capital
improvements program (CIP). The CIP identifies individual projects, project construction
scheduling, and financing of construction. The CIP projects are targeted to facilitate new housing
in the most efficient locations while upgrading existing, older facilities and systems serving the
built environment.
The amendments do not alter the requirements for the identified services. Considering the
municipal code as a whole, the standards requiring provision of the infrastructure listed in this
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criterion are not being changed with these amendments and the development that takes advantage
of the AHO incentives can be accommodated by these assets and services. To the extent that the
amendments facilitate housing for the necessary staff to operate the identified services, they are
supportive of their provision.
E. Reasonable provision of adequate light and air.
This criterion met. Adequate light and air are provided by a mix of site development standards
including building setbacks, on-site open space as well as building code requirements for air for
combustion and ventilation. Each standard addresses a different functional element. There is no
specified quantity of day light or other physical outcome required by this criterion. The standard
is for reasonableness and adequacy, which vary by type of use and other specifics of development.
Building codes also address this criterion through requirements for ventilation and lighting and the
AHO does not change any of these standards.
The AHO incentives provide for smaller lot sizes and smaller dwelling sizes. Setbacks remain the
same so even on the smaller lots and for smaller dwellings, there is opportunity for light and air to
reach individual rooms. Building code requirements for emergency exit windows in sleeping areas
will also help ensure there is access to light and air. The Block Frontage design standards for
ground floor dwellings’ provision for light, air, privacy, and safety remain in place.
The incentives provide for additional building height ranging from one to four stories depending
on the depth of rental rate control for the homes and the zoning district. Depending upon the
neighboring-built environment, a four-story addition to the number of stories already allowed by
the zoning district can create a significantly taller building. However, to reduce such perceived
negative impacts to the environs, the proposed AHO includes a provision that, when a building
seeking building height incentives abuts a lower intensity zoning district, the transition in building
height standards of 38.320.060.B.2.c apply. This zone edge transition in building height provides
a step-back requirement that leaves visual access to the sky for its neighbors. It does not entirely
remove all visual impacts of the taller building, but no city zoning standard or state law protects
or preserves viewscapes or designates “air rights” of views to any adjacent landowner.
F. The effect on motorized and non-motorized transportation systems.
This criterion is neutral. The City conducts extensive planning for municipal transportation, trails,
and parks related to this criterion and services provided by the City. The adopted plans allow the
City to consider existing conditions and identify enhancements needed to provide additional
service needed by new development. The proposed AHO does not alter these plans, nor does it
relieve any development using the incentives from providing roads, trails and other transportation
facility built to city standards. The existing standards for collector and arterial streets are not
changed. The requirements for multiuse paths and recreational trails are not changed.
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The proposed AHO positively addresses the following BCP goals and growth policies:
Goal DCD-2: “Encourage growth throughout the City while enhancing the pattern of
community development oriented on centers of employment and activity. Support an increase
in development intensity within developed areas.
Policy DCD-2.1- “Coordinate infrastructure development, land use development and other
City actions and priorities through community planning.”
DCD-2.2- “Support higher density development along main corridors and at high visibility
street corners to accommodate population growth and support businesses.”
DCD-2.3— “Review and update minimum development intensity requirements in residential
and non-residential zoning districts.”
DCD-2.7- “Encourage the location of higher density housing and public transit routes in
proximity to one another.”
DCD-3.6 --Evaluate parking requirements and methods of providing parking as part of the
overall transportation system for and between districts.
Goal DCD-4: “Implement a regulatory environment that supports the Community Plan goals.
Policy DCD-4.4: “Differentiate between development and redevelopment. Allow relaxations
of code provisions for developed parcels to allow redevelopment to the full potential of their
zoning district.”
M-1.1 Prioritize mixed-use land use patterns. Encourage and enable the development of
housing, jobs, and services in close proximity to one another.
M-1.12 Eliminate parking minimum requirements in commercial districts and affordable
housing areas and reduce parking minimums elsewhere, acknowledging that demand for
parking will still result in new supply being built.
M-1.4 Develop safe, connected, and complementary transportation networks for pedestrians,
bicyclists, and users of other personal mobility devices (e-bikes, electric scooters, powered
wheelchairs, etc.).
The AHO does not change the zoning designation of land within the city to address these policies.
Rather, it offers density and building height incentives and parking reductions in the city’s higher
residential, commercial, and mixed-use zoning districts that can implement these BCP policies in
exchange for long-term housing affordability.
The BCP seeks to coordinate housing with employment opportunities. The AHO addresses the
following policies by providing incentives to mix housing and jobs in the city’s M-1 light
manufacturing districts. Whereas, apartments are now permitted as an accessory use per building
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in the M-1 districts and they are permitted only above the ground floor, the AHO allows housing
on the ground floor of buildings and deems residential uses as accessory to the non-residential uses
within the development as a whole rather than on a per-building basis.
M-1.1 Prioritize mixed-use land use patterns. Encourage and enable the development of
housing, jobs, and services in close proximity to one another.
M-1.12 Eliminate parking minimum requirements in commercial districts and affordable
housing areas and reduce parking minimums elsewhere, acknowledging that demand for
parking will still result in new supply being built.
M-1.4 Develop safe, connected, and complementary transportation networks for pedestrians,
bicyclists, and users of other personal mobility devices (e-bikes, electric scooters, powered
wheelchairs, etc.).
However, the proposed incentives include reduction of required parking, to as little as zero for
small size (1,200 sf) townhome and rowhouse dwellings. The previous ordinance’s reduction in
street cross section for a new street class called a yield street is eliminated as it was not proven to
be useful to subject developments, the narrower yield street did not accommodate on-street
parking, and it did not respond to market desires.
The proposed AHO better fits parking requirements to the location and scale of development than
the current AHO incentives. Local and national experience has identified that affordable housing
has a lower, but still existent, need for motor vehicles. Minimum parking for accessibility, bicycles,
and a ratio per dwelling is included in the proposed incentives. The existing flexibility for location
is expanded. Tools other than individual project parking provision also exist in the municipal code
which can be used to manage public parking utilization more holistically.
For development with reduced or no on-site parking, parking by project residents and guests must
be accommodated by on-street parking spaces. This will result in additional pressure for parking
in some adjacent areas, particularly for in-fill developments. Persons constructing affordable
housing can choose to provide more than the minimum parking incentives. Local parking use
studies have found that price-limited housing in the 60% or less AMI range does use less parking
than market rate homes. The AHO requires multi-household developments to provide from 5% to
50% of the total housing units as affordable to households with annual incomes no greater than
60% of AMI for Types B and C Incentives and no greater than 80% of AMI for Type A Incentives.
Affordable housing developments using the lower or no parking incentives and located in
neighborhoods close to the city’s downtown or the university will cause additional pressure on
local public parking assets. Without increased bus service to those areas, parking management
strategies, such as permit parking districts, may be warranted. The recent establishment of the
transit district may enable expansion of bus service to areas developing with urban-scale housing,
connecting homes to employment centers.
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Some parking districts with associated permit systems are already in place around MSU and
Bozeman High School. A parking benefit district system has been adopted in Chapter 36 Article
4 Division 3 of the municipal code but has not yet been activated. Active parking management
could be expanded to address possible impacts from the reduced parking requirements where
affordable housing projects without parking congregate.
The growth policy includes DCD-3.6 “Evaluate parking requirements and methods of providing
parking as part of the overall transportation system for and between districts.” Continuation of the
ongoing evaluation of parking options and alternative means to manage parking is consistent with
the growth policy.
The nature of an incentive is that it inevitably involves a trade-off of one good thing for another.
In this case, the City is willing to accept some additional risk of overflow parking and street
congestion in order to support the desired outcome of increasing low- and moderately priced rental
housing stock.
G. Promotion of compatible urban growth.
This criterion is met. The City’s UDC Section 38.700.040.c defines compatible development as:
“The use of land and the construction and use of structures which is in harmony with adjoining
development, existing neighborhoods, and the goals and objectives of the city’s adopted
growth policy. Elements of compatible development include, but are not limited to, variety of
architectural design; rhythm of architectural elements; scale; intensity; materials; building
siting; lot and building size; hours of operation; and integration with existing community
systems including water and sewer services, natural elements in the area, motorized and non-
motorized transportation, and open spaces and parks. Compatible development does not
require uniformity or monotony of architectural or site design, density, or use.”
There is no one pattern or method in which to build a community. Many different configurations
of uses and buildings can coexist well. The City has adopted many land use and building design
standards to avoid or mitigate demonstrable negative impacts of development. Most of those
standards remain as presently adopted. The adoption of the AHO incentives is a legislative
determination that under the new standards as well as the remaining existing standards,
compatibility can be maintained. Where additional building heights are allowed by the Type C
AHO incentives, the development is subject to the height transition step-back provisions of
38.320.060.B.
Compact development in locations close to public infrastructure and services not only meets BCP
policies and objectives, but it is the most efficient and economical development for installing,
maintaining, repairing, and replacing over time public infrastructure. The proposed AHO
facilitates compact development in locations within the city that meets these objectives and that
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increases the number of dwellings available and affordable to median-income households.
Therefore, staff concludes this criterion is met.
H. Character of the district.
This criterion is neutral. Goal N-4: Continue to encourage Bozeman’s sense of place.
Goal DCD-2: Encourage growth throughout the City, while enhancing the pattern of
community development oriented on centers of employment and activity. Support an increase
in development intensity within developed areas.
DCD-2.9--: “Evaluate increasing the number of stories allowed in centers of employment and
activity while also directing height transitions down to adjacent neighborhoods.
Preserving the existing character of the community is often raised in public comments and other
community feedback. There is a tension between preserving what is already here, acknowledging
what may already be allowed by zoning already in place but is unbuilt, addressing what is needed
under today’s conditions, and preparing for the future. New development that reflects today’s
market/housing preferences, development pressures, and economics are not the same as what
existed many years ago. Acknowledgement of this ongoing change process is woven through the
BCP, see Criterion A above, and the plans that came before it. Freezing the status quo is not the
adopted policy of Bozeman whether in previously undeveloped areas or areas that have been
developed for many decades and no part of Chapter 38 forbids new construction when regulatory
standards are met.
The proposed AHO incentives allow higher densities, taller buildings, and parking reductions; and
at the same time will facilitate development of smaller dwellings than the historical norm in
Bozeman. This will result in a different character for those projects than the baseline standards in
place now. Bozeman’s development standards steadily evolved over the past 30 years as
community needs and household preferences changed. It is expected that the community will
continue to evolve. It is expected that most development will continue to follow the baseline
standards. Therefore, the majority of the community will continue to evolve as the baseline
standards are revised. Constant change is expected in a growing community. With the proposed
changes to the AHO including revised parking standards, more limited height of buildings, and
capped maximum building size, it is anticipated that the individual projects that use the affordable
housing incentives will be less different from the baseline and therefore fit better within its
environs and the overall community framework.
Section 76-2-301 MCA says “Municipal zoning authorized. For the purpose of promoting health,
safety, morals, or the general welfare of the community, the city or town council or other legislative
body of cities and incorporated towns is hereby empowered to regulate and restrict the height,
number of stories, and size of buildings and other structures; the percentage of lot that may be
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occupied; the size of yards, courts, and other open spaces; the density of population; and the
location and use of buildings, structures, and land for trade, industry, residence, or other purposes.”
Section 76-2-302, MCA says “…legislative body may divide the municipality into districts of the
number, shape, and area as are considered best suited to carry out the purposes [promoting health,
safety, morals, or the general welfare of the community] of this part.” Emphasis added.
The City has adopted form and intensity standards in Division 38.320 as part of the implementation
of the zoning enabling language cited above. The City has adopted building and site design
standards in Divisions 38.510 and 38.530 also as part 6 of the implementation of the zoning
enabling language cited above. These standards remain and are applied to all development
according to the district in which the development is located. Part of the incentives offered in the
current AHO ordinance waived portions of these design standards. The proposed AHO eliminates
these waivers. All affordable housing projects must meet the design and site development
standards of 38.510 and 38.530. Projects located within the scope of 38.340, Overlay District
Standards, are subject to review for certificate of appropriateness standards as may be relevant to
the building use and location.
Character of a district is made up of many different elements; including but not limited to uses,
size of lots, and building features. There is no one pattern, design style, or method which is always
the best way to build a community. The City has adopted a range of zoning districts to address
different needs. The zoning districts are amended from time to time as needs of the City and its
resident’s change. The City regularly updates its regulations to stay current with the changing
needs and values of the community. Many different configurations of uses and buildings can
coexist well, and the City does not restrict specific architectural styles. The City’s growth policy
and allowed land uses per zoning district encourage mixed uses.
The City’s residential zoning districts all provide for a range of residential uses and building
configurations. This is long standing practice and does not change with this ordinance. The
ordinance does not alter the uses allowed in individual zoning districts with the exception that it
would allow, as an incentive for affordable housing, townhomes and rowhouse types in RS
(Residential Suburban), R-1 (Residential Low Density) and RMH (Residential Manufactured
Home) districts where they are not now permitted. State law requires that duplexes (two-
household dwellings) be allowed in these same districts, so the impact of the incentive is minor on
the character of these districts.
Incentives inevitably involve a trade-off of one good thing for another. In this case, the City is
willing to accept some difference in the character of in-fill sites in order to support the desired
outcome of increasing low- and moderately- rental rate housing stock. Depending on the district
and depth of commitment to price-limited homes to be provided (5% to 50%), an additional 1 to 4
stories are permitted as incentives. Minimum lot sizes are reduced or waived. Parking requirements
are reduced or waived. Depending on how incentives are applied it will result in a different and
more intensive character of development than would otherwise be possible within the specific
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district. Type B incentives limits apartment buildings to a maximum of 36 dwellings each and a
maximum of four stories in height or that which is permitted in the zoning district, whichever is
less. This better integrates affordable housing projects into the zoning districts where apartments
and mixed-use developments are permitted.
Any development proposing housing may elect to use the incentives. It is not possible to predict
how many or where they will occur. Any residential district and most non-residential district,
including the M-1 Light Manufacturing District, may see new development using the incentives.
It is beneficial to the city, to the neighborhoods and to the residents that affordable housing be
distributed throughout the community and not concentrated in just one portion per BCP Objective
N-3.3: “Encourage distribution of affordable housing units throughout the City with priority given
to locations near commercial, recreational, and transit assets.”.
This proposal amends the UDC text only and not the zoning map. The proposal does not add or
delete zoning districts.
I. Peculiar suitability for particular uses.
This criterion is met. The proposed amendments are not changing the zoning map, or the uses
allowed within zoning districts with the exception that it would allow, as an incentive,
development of townhouses and rowhouses in the RS, R-1 and RMH districts. Townhomes and
rowhouses have their own definitions in the UDC Section 38.700 noted below. The AHO does
not amend these definitions. It just allows this housing type to the mix of types allowed within
those districts. Townhomes lie upon “fee-simple” (ownership) lots which can be purchases
separately from their attached neighboring home and lot. A rowhouse is attached to a similar
house which shares the land or lot upon which the row of attached houses lie. The following
definitions are found in UDC 38.700:
“Townhouse. A dwelling unit, located on its own lot, which shares one or more common or
abutting walls with each wall having no doors, windows or other provisions for human passage
or visibility with any other dwelling units, each located on its own lot. A townhouse does not
share common floors/ceilings with other dwelling units. Each of the attached dwelling units
must have:
1. Independent water and sewer service lines and metering pursuant to the applicable plumbing code and all other city regulations;
2. Individual services for all private utilities; and
3. A two-hour fire separation separating the dwelling unit from any adjoining dwelling units.”
“Townhouse cluster. A building consisting of three or more dwelling units, each meeting the definition of a townhouse, placed side-by-side and/or back-to-back.”
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The AHO does not amend this definition of a townhouse. It allows this type of housing in the RS,
R-1 and RMH districts. The incentives encourage the development of this “missing middle” type
of housing by allowing smaller lot size and widths and reduced parking in all residential districts
in exchange for affordable dwelling units. The Type A incentives encourage the development of
townhouse and rowhouse development by exempting their development of lot size, width, lot
coverage, density, and parking when all dwellings therein are 1,200 gross square feet or less in
size.
The AHO does not alter the design standards for townhouse and rowhouse development found in
38.360.250.
“Rowhouse. A dwelling unit that shares one or more common or abutting walls with one or
more dwelling units. A rowhouse does not share common floors/ceilings with other dwelling units.”
“Rowhouse cluster. A building consisting of three or more rowhouses.”
The AHO does not amend this definition of a rowhouse. It allows this type of housing in the RS,
R-1 and RMH districts with the same incentives as noted above for townhouses.
J. Conserving the value of buildings.
This criterion is neutral. The proposed amendments are not changing the zoning map, or the uses
allowed within zoning districts other than allowing townhouse and rowhouse dwellings in the RS,
R-1 and RMH districts. No zoning standard is being created which will reduce allowed building
areas or otherwise restrict the development capacity of a specific property. On the contrary, the
incentives allow greater development and intensity of development of a particular site which
increase the utility and may benefit value of an existing building by allowing reconfiguration of
uses. However, the income-limitation requirements for homes constructed with the incentives
will reduce individual home costs and may prevent valuation increases for a building as a whole.
The AHO amendments may increase motivation for redevelopment of underdeveloped properties
by landowners who seek to increase the utility of their property in such a strong economic market
as exists in the city. With the Neighborhood Conservation Overlay District (NCOD), which does
not change with the AHO, particular buildings of high value would be protected by the existing
UDC Division 38.340. Adaptive reuse and renovation of existing buildings is allowed and
encouraged in the NCOD and the proposed AHO may facilitate such for some existing buildings.
With or without the AHO amendments, it is anticipated that the value of land and new buildings
would increase under naturally occurring redevelopment of underdeveloped properties over time.
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K. Encourage the most appropriate use of land throughout the jurisdictional area.
This criterion is met. The zoning map and future land use map of the BCP growth policy identify
areas where specific uses are generally deemed appropriate. However, both occur at a broad level
of detail and do not authorize construction. The proposed amendments do not alter the zoning map.
Both residential and most non-residential districts contain the opportunity for housing construction
in some form. The proposed amendments allow townhouse and rowhouse development in the RS,
R-1 and RMH districts and allow housing on the ground floor of buildings in the M-1 light
manufacturing district. As noted above, duplexes are required to be allowed in all districts where
a single home is allowed. The addition of the “missing middle” townhouse/rowhouse-type of
housing in the RS, R-1 and RMH districts and the expansion of residential uses in the M-1 districts
are consistent with the following BCP growth policies.
Goal N-1: “Support well-planned, walkable neighborhoods.”
N-1.1. Promote housing diversity, including missing middle housing.
N-1.2 --“Increase required minimum densities in residential districts.”;
N-1.11--“Enable a gradual and predictable increase in density in developed areas over time”;
Goal N-3: “Promote a diverse supply of quality housing units”.
Policy N-3.1—"Establish standards for provisions of diversity of housing types in a given
area.”
N-3.3 Encourage distribution of affordable housing units throughout the City with priority
given to locations near commercial, recreational, and transit assets.
N-3.7— “Support compact neighborhoods, small lot sizes, and small floor plans, especially
through mechanisms such as density bonuses.”
N-3.8— “Promote the development of “Missing Middle” housing (side by side or stacked
duplex, triples, live-work, cottage housing, group living, rowhouse/townhouses, etc.) as one of
the most critical components of affordable housing.”
EE-1.4-- Support employee retention and attraction efforts by encouraging continued
development of affordable housing in close proximity to large employers.
The proposed AHO ordinance positively addresses these growth policies and does not change the
zoning map or the BCP future land use map (FLUM). Therefore, the criterion is met.
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PROTEST NOTICE FOR ZONING AMENDMENTS
In the case of written protest against the proposed zoning text amendment to Division 38.380 of
the Bozeman Municipal Code, protests signed by the owners of 25% or more of the area of the
land within the amendment area or those lots or units within 150 feet from land directly impacted
by a proposed change, the amendment shall not become effective except by the favorable vote of
two-thirds of the present and voting members of the City Commission.
The City will accept written protests from property owners against the proposal described
in this report until the close of the public hearing before the City Commission. Pursuant to
76-2-305, MCA, a protest may only be submitted by the owner(s) of real property within the area
affected by the proposal or by owner(s) of real property that lie within city limits affected by the
proposal. The protest must be in writing and must be signed by all owners of the real property. In
addition, a sufficient protest must: (i) contain a description of the action protested sufficient to
identify the action against which the protest is lodged (including the application number, 24055);
and (ii) contain a statement of the protestor’s qualifications (including listing all owners of the
property and the physical address), to protest the action against which the protest is lodged,
including ownership of property affected by the action. Signers are encouraged to print their names
after their signatures. A person may in writing withdraw a previously filed protest at any time prior
to final action by the City Commission. Protests must be delivered to the Bozeman City Clerk,
121 North Rouse Ave., PO Box 1230, Bozeman, MT 59771-1230.
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APPENDIX A – DETAILED BACKGROUND AND PROJECT DESCRIPTION
Revisiting the 2022 AHO
After two years’ experience with the current incentive program, in the summer of 2024, at the
direction of the City Commission, staff began a series of meetings to engage the public and
citizen advisory boards on the AHO in response to public comment.
• August 5, 2024 – Community Development Board
• August 7, 2024 – Economic Vitality Board
• August 8, 2024 – Inter-Neighborhood Council
• August 12, 2024 – Community Development Board Special Meeting
• August 20, 2024 – City Commission Work Session
• October 21, 2024 – Affordable Housing Ordinance Open House
• December 4, 2024 – Economic Vitality Board
The City Commission held a work session on August 20, 2024, to discuss the affordable housing
incentives of AHO No. 2105 to see if they need to be bolstered or adjusted to provide affordable
housing that that meets the needs of the city’s low-income households while being compatible
with its environs. During the work session on the AHO, the City Commission asked staff to
propose revisions falling into three categories:
1. Administrative changes to provide clarity in its application;
2. Enhancements to better incentivize the voluntary creation of new affordable housing units;
and
3. Amend or remove the “deep” incentives in response to current market conditions and
substantial public feedback (link to work session video).
The Commission’s discussions can be found in the following link to the video of that session
beginning at 5:05 of the session.
In response to City Commission direction, staff proposes to repeal and replace the existing
affordable housing regulations of Section 38.380 of the Unified Development Code (UDC) to
positively address issues and concerns with the previous AHO incentives and to respond to current
market forces since AHO 2105 was implemented in 2022. Typical housing input variables that
have changed since the adoption of the AHO include the costs of land, labor, materials, financing,
design and approvals, infrastructure costs, taxes, permitting fees and review times. Other variables
include the timing of when multiple new residential developments come onto the market and can
be “absorbed” by households seeking new accommodations, as well as the increase in demand for
housing by households earning less than the Bozeman Area Medium Income (AMI).
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Proposed Affordable Housing Ordinance Incentives
The proposed Affordable Housing Ordinance is a proposal to amend the land use regulations of
Chapter 38 of the Bozeman Municipal Code (BMC) in support of affordable housing production.
The proposed amendments will affect land use, residential density, building height and design, and
parking standards for targeted residential and mixed-use districts. The amendment applies to new
development and applies to projects undergoing development review under Chapter 38 of the
City’s Unified Development Code (UDC).
The amendment would repeal UDC Division 38.380, Affordable Housing, in its entirety and would
replace it with a new set of standards addressing (1) incentives to build below-market-rate
affordable dwelling units in the city; (2) criteria and qualifications for the granting of the
incentives; (3) clarification of administration of the affordable housing program; (4) extension of
the duration of affordability for subject dwellings from thirty (30) years to fifty (50) years; (5)
establishing the minimum percentage of affordable dwellings per project and the maximum rental
rate measured by the Bozeman Area Median Income (AMI); and (6) establishing four (4) options
of non-cash financial incentives to produce below-market-rate affordable dwellings in the city.
Please see Appendix B for a comparison of the current and proposed AHO incentives and
Attachment A for a link to the entire proposed revised AHO ordinance and Attachment B for a
link to the current Affordable Housing Ordinance No. 2105.
The current AHO offers two types of incentives: Shallow Incentives and Deep Incentives. The
proposed AHO re-names and amends the two types of incentives as Type A Incentives, Type B
Incentives and creates a third set of incentives, called Type C Incentives, and creates a fourth
option called Off Site Contribution in which a developer utilizing incentives may request to pay
cash-in-lieu to the affordable housing fund or donate buildable land to the city for the production
of affordable housing rather than provide the affordable units on-site within the development. The
city may establish administrative procedures the application and implementation of a cash-in-lieu
program. The city must use all cash-in-lieu funds to support the creation or preservation of
affordable dwellings.
The proposed AHO addresses these changes in housing demand and market inputs with the goal
of balancing the economics of producing housing by the private sector, including where affordable
land for such housing can be acquired, with the goal of preserving the overall zoned character of
the “receiving” area while achieving a supply of long-term affordable housing and promoting the
public health, safety, and welfare.
To respond to current market forces, community goals, and Commission direction, Division
38.380 is being replaced in its entirety. Other sections, such as the parking Section
38.540.050.A.1.b and definitions Division 38.700.170.S, which are affected by the revisions, are
being amended to match up with the revised incentives-based approach and to clarify related
wording.
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For more details, see Appendix B of this staff report for a summary of the proposed incentive
changes and see Attachment A on page 26 for a link to the full text of the proposed AHO
Ordinance.
Elements of the proposed amendments include:
1. Repeal Division 38.380, Affordable Housing, in its entirety. Replace with a new Division 38.380, Affordable Housing, changing the incentives provided for creation of affordable housing. The amendments are required by and consistent with recent changes in state law.
The new wording describes how and when incentives can be used, how the program is
administered, and what incentives are provided. Incentives are applicable to rental housing
only; the AHO addressing “for sale” dwelling units will be proposed at a later date.
These rental housing incentives include, but are not limited to, more permissive form and
intensity standards such as increased building height and density, decreased lot sizes, lot
widths and lot coverage, and decreased parking requirements.
2. The amendments remove references to the former affordable housing standards in the
Section 38.700, Definitions, to revise the definition of “affordable home” to “affordable
dwelling” and repeal the definition of “affordable housing” and “yield street”.
For a comparison of the current (2022 AHO No. 2105) with the proposed AHO incentives, please
see Appendix B.
The proposed AHO would replace BMC Division 38.380 with a new set of standards addressing:
(1) incentives to build below-market-rate affordable rental dwelling units in the city;
(2) criteria and qualifications for the granting of the incentives;
(3) clarification of administration of the affordable housing program;
(4) extension of the affordability period for subject dwellings from thirty (30) years to fifty
(50) years;
(5) establishing the minimum percentage of affordable dwellings per project and the
maximum rental rate allowed measured by the Bozeman Area Median Income (AMI); and
(6) establishing options of off-site land dedication or cash-in-lieu alternatives as a means
of meeting the affordable housing required to use the incentives (see Attachment A on page
26 for a link to the proposed AHO).
The proposed AHO seeks to provide land use incentives through additional building height,
reduced lot size, width, lot coverage and residential density standards, reduced parking, allowing
two-unit townhomes and rowhouses in R-1, RS and RMH zoning districts, expanded allowance
for housing in M-1 light manufacturing districts as an accessory or principal use, among other
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incentives in exchange for providing affordable rental housing at 60% or 80% of AMI for 50 years
(see Appendix B for a summary of incentives).
This 2025 AHO update does not address for-sale dwelling units; that aspect of affordable housing
will be proposed in a later amendment.
Current severely limited housing opportunities within the city negatively impacts economic
development, transportation networks, and sustainability. Affordable housing needs must be
addressed to maintain a sufficient resident workforce in all fields of employment, and to ensure
the public safety and general welfare of the residents of the city. However, with the limited
financial resources available to the city, and the regulatory constraints placed upon the city by the
State Legislature, the target of producing affordable housing of all types is difficult to achieve.
The proposed AHO utilizes all the zoning code incentives available that are balanced by current
market conditions, including (1) the type and location of buildable lands that can accommodate
urban scale housing and can connect to city infrastructure; (2) the type and rental rate of housing
that can satisfy local demand; (3) financial institution’s lending policies; and (4) and the scale of
risk and required return on investment that the private sector is willing to take.
Several reports, studies, and plans document the city’s housing needs, including the 2019
Community Housing Needs Assessment, the 2021 Unified Development Code Affordable Housing
Assessment (Clarion Report), the 2020 Community Housing Action Plan, the 2021 Root Policy
Research Feasibility Analysis of Certain Development Incentives in Exchange for Affordable Units
in Bozeman, the 2021 One Valley Community Foundation “A Seat at the Table” Report, the 2024-
2028 Bozeman Fair Housing Plan, and the 2021 Gallatin County Regional Housing Study. Each
of these studies document the need for housing and the challenges in providing housing at costs
affordable to residents. The City of Bozeman evaluated and implemented many different
approaches over the years with limited success compared to the need. The current work continues
the City’s efforts and commitment to practical and achievable actions, within the City’s control,
to support creation of housing and specifically housing at lower (below market-rate) rents. The
issue remains very challenging. The tools available to Bozeman are limited, especially compared
with the scope of the challenges. The suggested actions will not solve all the issues; however, they
represent important tools to advance incremental progress.
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Policy Background
The recent pandemic amplified existing housing and work trends and housing prices have greatly
increased over the past three years. An article by Tim Ford in the May 1, 2022, Bozeman Magazine
shows median single home sale prices in the Bozeman area increasing over the first quarter 2020
to first quarter 2022 by $389,000. This is an increase of 76% in two years. The following year the
median sales price in 2023 had increased an additional $10,500 showing a continued elevation in
location housing prices. Average sale price remained over a million dollars in the same time
horizon.
Chapter 1 of the Bozeman Community Plan 2020 includes a section titled “To Grow Or Not To
Grow, If So How?” This section considers the question of whether or not the City should continue
policies encouraging development within City limits. Several different related issues are discussed,
and the section concludes that construction within the City is a better outcome.
Affordable housing is a long-standing community concern. It was first addressed in the 1972
Master Plan for the community and then all subsequent community land use plans. Several reports,
studies, and plans including the Community Housing Action Plan and the One Valley Community
Foundation, Gallatin County Regional Housing Study, document the needs for housing and the
challenges in providing housing at costs affordable to residents. The state legislature has limited
the tools the city has to support affordable housing construction. The city is required to use
incentives to encourage construction rather than mandating the construction of affordable housing.
The proposed ordinance places an increased emphasis on affordable housing as a public benefit in
exchange for the flexibility allowed through the updated Division 38.380.
The city has many ongoing efforts to support creation of housing overall including:
o supporting and completing infrastructure construction,
o primarily of-right development review except where required by state law,
o use of tax increment financing in support of housing,
o general fund support for affordable housing projects, and
o many others.
The city consistently reviews and updates its regulations to keep them relevant and effective.
Over the past 20 years, the city has increased allowed development intensity and removed
possible cost barriers by the following and other actions:
• reduced standards such as land area per type of home by up to 60%,
• reduced setbacks from property lines by as much as 58%,
• removed requirements for minimum home sizes,
• increased maximum allowed heights,
• authorized accessory dwellings for all residential zoning and reduced standards related to
accessory dwelling several times,
• simplified landscaping standards and encouraged lower water use plantings,
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• approved dozens of zone map amendments to allow more intensive uses, and
• simplified review processes.
• flexible zoning districts that allow for a wide range of housing types
Despite this work, the cost of housing has continued to escalate, especially compared to wages.
There has been continuing high demand for housing from across the nation. This was particularly
reinforced during the pandemic. Bozeman’s growth into a metropolitan statistical area has also
expanded our profile and brought attention from firms and persons who may not otherwise have
considered locating here. This demand has supported increased housing costs.
Home prices are keyed to the Area Median Income (AMI). AMI is established each year by the
U.S. Department of Housing and Urban Development. AMI is a standard measure used for many
functions including determination of housing affordability. A home is considered affordable if a
household pays 33% or less of its income for housing. AMI is the amount of money where half of
the households earn more and half less in the county. The AMI includes adjustments for
households with more or fewer members.
The gap between cost of construction and wages is not limited to Bozeman city limits. The One
Valley Community Foundation prepared a housing study in 2021 looking at the entire county and
affordable housing issues. Across all housing types and locations, they found consistent gaps in
available wages and cost of construction. The following image is from that report.
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There are no regulations that have such impact that their removal could be even close to offsetting
such large increases in home prices and capital gaps between wages and cost of construction. The
city can, and is, examining what it does control to identify such incremental improvements as may
help.
Unified Development Code Revisions to Support Housing Affordability
In 2021, the city initiated a two-year process to revise its unified development code to remove
barriers to housing creation. To do so, the City retained Clarion and sub consultants to review the
City’s land use regulations. The scope of work included a code audit of the entire UDC, the
creation of administrative departures to facilitate housing creation, the replacement of the planned
unit development (PUD) process with a new streamlined planned development zone (PDZ) process
and, finally, a replacement of the affordable housing ordinance. This work was supported by
multiple public outreach efforts including but not limited to:
April 20, 2021, outreach to the development community
April 26, 2021, joint meeting of the planning board and zoning commission
May 12 and September 8, 2021, meetings of the community affordable housing advisory
board
September 15, 2021, Neighborhoods outreach meeting
March 1, 2022, City Commission Policy Discussion
After an open public process with several public events, Clarion provided a report with
recommendations of possible regulatory changes. The City Commission considered that report on
March 1st and directed staff to begin drafting amendments to regulations. Commission materials
[external link] for the March 1st meeting are available online through the City’s archive.
Materials in the Commission packet included the staff memo, financial feasibility analysis of the
suggested incentives for affordable housing, and the Clarion housing assessment report. The public
review process for the individual ordinance followed required procedures for public notice,
meetings, and hearings providing multiple opportunities for interested persons to meaningfully
comment and participate.
The first of the amendments to move forward was the Housing Departures for Housing Creation
text amendment, Ordinance 2111. Ordinance 2111 completed final adoption on June 28, 2022. The
effective date of the ordinance is July 28, 2022. The second amendment was a replacement of
Division 38.430, Planned Unit Development, and associated amendments to other sections. The
Commission held a public hearing on Ordinance 2104 on July 12, 2022, and directed an
amendment before moving forward. Final adoption of Ordinance 2104 occurred on Sept 27, 2022.
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The City Commission also adopted a replacement for the previous affordable housing ordinance
pursuant to Ordinance 2105. The Commission held a public hearing on Ordinance 2105 on August
23, 2022, with final adoption on October 27, 2022, and an effective date of November 26, 2022.
The new affordable housing Ordinance used non-cash financial incentives through the unified
development code as a voluntary incentive to create affordable housing. This work was
necessitated by passage of House Bill 259 by the 2021 state legislature which forbid the city to
require construction of affordable housing.
Since the passage of HB 259, the city is required to use incentives to encourage construction rather
than mandating the construction of affordable housing. The current and proposed AHO places an
emphasis on affordable housing as a public benefit in exchange for the flexibility allowed through
the AHO incentives.
Following the passage of House Bill 259, the City Commission sought to replace the city’s
Affordable Housing Ordinance (AHO) with one that does not require any of the actions prohibited
by House Bill 259. Instead, the new AHO offered non-cash but realistic financial incentives to
property owners and developers willing to construct housing at levels of affordability consistent
with the housing needs and goals identified in the City’s Community Plan, the Community
Housing Needs Assessment, and the Community Housing Action Plan. The current Affordable
Housing Ordinance (AHO) was adopted in 2022 by Ordinance 2105, pursuant to the city’s self-
governing powers, the city’s zoning authority, and the City’s police power to protect public health,
safety, and general welfare. The current AHO provides a suite of incentives to developers who
include below-market rental or for-sale units within their residential or mixed-use development.
These incentives include (1) reduced or exemption from on-site parking for all dwelling units
within the development, (2) reduced lot size, (3) increased residential density, (4) additional
building height, (5) townhouse and rowhouse project allowed in lower density R-1, RS and RMH
residential districts, (6) concurrent construction allowance, (7) reduced street widths, and (8)
relaxed building design standards.
Modeling Non-Cash Financial Incentives
One of the main reasons why housing is expensive is because land remains expensive. When State
or local laws restrict adding more housing units on the same amount of land, buildable land
becomes scarcer, demand goes up, and homes become more expensive. In most development
projects, land costs are the largest single expense alongside the cost of construction materials,
labor, design, and financing. This cost ends up playing a major role in determining the viability
of a development project and whether it will move forward.
Developers can only build affordable housing or include affordable units within their development
if they can anticipate a suitable return on their time and financial investment. They need to be
offered either cash or non-cash financial incentives to produce the affordable units. Cash
incentives can include direct cash subsidies to the developer, tax credits used for other income
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sources, reduced impact fees or infrastructure fees. Non-cash financial incentives typically focus
on allowing more housing unit per unit of land because it spreads the cost of land, design,
permitting, materials, labor, financing, and infrastructure across a larger number of units, resulting
in a lower per-unit cost. The lower per-unit cost allows the affordable unit to be rented below-
market. As noted above, the non-cash financial incentives include exemptions from zoning
regulations and standards that limit the number of dwelling units per land area. These can include
lot area, lot coverage, lot width, lot size/density limits, building height, parking requirements, open
space requirements, and some land use limits such as the type of housing permitted within a
particular zoning district.
In 2022, the City of Bozeman engaged Clarion Associates and their sub-consultant, Root Policy
Research, a firm specializing in housing economics, to propose changes to the unified development
code (UDC) to use non-cash financial incentives through the development code to incentivize the
production of community housing units. An appropriate way to evaluate any incentive is to apply
a “but for” test: The incentive must enhance the feasibility of providing affordable housing units
that would not be financially feasible “but for” the application of the incentive. The team developed
prototype proformas of for-sale and rental housing types from single household detached housing
units to multi-household units based on regional housing prototypes and costs, market data and
interviews. These proformas create base case scenarios for evaluating the financial feasibility of
affordable housing production within existing code. The consultants modeled the following base
case scenarios:
• 3-story rental residential with standard parking requirements (2.0 spaces for a 2-bedroom
unit);
• 3-story multifamily condo development with standard parking requirements (2.0 spaces for
a 2-bedroom unit)
• For-Sale townhomes with a 3,000 square foot lot size
• Single-household units with a 4,000 square foot lot size
The UDC currently allows for these base case scenarios in applicable zoning districts, where
townhomes and multi-household, respectively, are currently allowed.
The consultants applied code incentives to these base case scenarios to see how the incentives
change the feasibility of providing affordable housing units. These incentives constitute a bonus
on what is currently allowed by the code. The proposed code changes include the following
incentives:
• Reduced lot size requirements
• Reduced parking requirements
• Increased building height allowances
The consultants adjusted the base case scenarios by allowing smaller lot sizes, increased building
heights, and/or parking reductions in exchange for the inclusion of income-restricted, affordable,
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units in the development. They evaluated the impact of these bonuses on project feasibility and
projected the percentage of affordable housing units these incentives would facilitate that would
likely not exist “but for” the incentive. Root modeled these base case scenarios in 2021 and
updated the same scenarios based on 2024 construction costs and AMI data. Root Policy
Research’s, “Bozeman AHO Analysis for Shallow Incentives—Market Conditions Update”
(2024) (attached). Clarion found that incentives that would ordinarily enhance affordability had
only modest impact in the Bozeman market. Yet, long-term affordable housing units remain
community assets and every unit counts. Based on these projects Staff and Clarion recommended
the creation of the Shallow Incentives. The 2022 Shallow Incentives and the proposed Type A
incentives are based on the analysis by Root Policy Research.
Type A Incentives (replacement for shallow incentives)
The new Type A incentives constitute a replacement for the shallow incentives and are based on
the updated 2024 financial analysis (attached) conducted by Root Policy Research.
Type A Incentives:
• 5% of Rental Units up to 80% AMI for single-household detached and single-household
attached dwelling units.
• 5% of Rental Units up to 60% AMI, or 8% of units up to 80% AMI for apartment buildings.
• Smaller single detached and townhome lots
• Multi-household buildings get 1-2 stories taller with lower parking requirements.
These Type A Incentives are designed to allow the market to produce long-term affordability with
a range of housing unit types without the provision of cash or another subsidy.
Type B and Type C Incentives (replacement for Deep Affordability Incentives)
In 2022, Clarion recommended larger code-based incentives for developments that produced
affordability well-beyond what the market would produce with code-based incentives alone. These
projects, like GMD’s Arrowleaf and Perennial Park low-income housing tax credit (LIHTC - “Li-
Tech”) development and the Bridger View development near Story Mill Park, produced
affordability in 50% or more of their units by harnessing federal monetary subsidy, social impact
investing, and private philanthropy. In exchange for this depth of affordability, Staff and Clarion
recommend the creation of what became the Deep Incentives.
Based on public participation and policy direction from the Bozeman City Commission staff is
revising the deep incentives and proposing two new types of incentive, the Type B Incentives, and
the Type C incentives to replace them.
Type B Incentives (replacement for deep incentives)
• Height allowed by the underlying zoning district or 4 stories, whichever is less;
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• 0.25 space per dwelling parking requirement.
Type C Incentives (replacement for deep incentives)
• 1-4 story height bonus, depending on zoning district;
• 0.5 space per dwelling parking requirement.
Given the massive public and private incentives required to produce deep affordability, Staff
believes providing more significant incentives are appropriate, and likely necessary, to make more
projects like these possible.
While the legislature prohibited requiring affordable housing, state law does allow communities
to provide incentives to encourage creation of affordable housing. The incentives provided in the
new Division 38.380 of the ordinance, occur in three tiers. See proposed section 38.380.040
beginning on page 11 of the ordinance for details. Developments providing a greater number of
dwellings meeting rent rates have additional incentives. The incentives apply throughout the
entirety of a development including qualifying residential buildings, even if some buildings in the
development contain no price limited dwellings. The provisions of 38.380 do not affect other
incentives or tools the City has to support affordable housing, like direct funding.
City Initiatives to Support Housing Affordability
The current project is a continuation of a long series of efforts in support of producing affordable
housing. The city works hard to leverage opportunities and partnerships that can help carry forward
housing production and especially housing for the least advantaged. These efforts include but are
not limited to:
• Regular analysis of housing needs and creation of housing action plans to identify tools
and options for housing, most recently the Community Housing Action Plan;
• Direct financial support from general funds for multiple affordable housing projects;
• Financial support for homebuyer education and down payment assistance;
• Accommodating new annexations to provide land for housing;
• Supporting rezonings for in-fill development of housing near transit;
• Flexible zoning districts that allow for a wide range of housing combinations;
• Administrative of-right reviews of most development to provide certainty to the public and
development communities;
• As noted above, many zoning code revisions have been made over the past 20 years; and
• Infrastructure (e.g. streets, water, and sewer) planning and construction support to avoid
delays in being able to bring homes to production and be cost effective in installation and
operation of essential services.
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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As noted earlier, the city’s first inclusionary zoning policy was adopted in 2007 by Ordinance No.
1709 but it was placed “on hold” until 2012. Other actions included over the years:
• 2015 by Ordinance 1922, the City Commission replaced the 2007 Inclusionary Zoning
provision;
• 2016 by Ordinance 1930, a revision to implement Ord. 1922;
• 2017, by Ord. 1980 to remove condominiums from Inclusionary Zoning (IZ) requirements;
• 2019 by Ord. 2012, to revise IZ standards;
• 2021, the Montana State Legislature adopted House Bill 259 which prohibits local
governments from requiring housing fees or the dedication of real property for the purposes
of providing housing for specified income levels or sale prices, and which prohibits zoning
regulations that require housing fees or the dedication of real property for the purposes of
providing housing for specified income levels or sale prices. In other words, they
prohibited Inclusionary Zoning;
• 2022, Ord. 2104 replaced Planned Unit Development with Planned Development Zones,
one of which was to produce affordable housing; and
• 2022, Ord. 2105 (current Affordable Housing zoning) established non-cash financial
incentives to developers who provide affordable housing.
In addition to the above zoning non-cash financial incentives, the City continues its financial
support for creation of housing, including, among others:
• Supporting and completing infrastructure construction such as roads, water, sanitary sewer,
and stormwater systems to accommodate urban-scale and density growth;
• Use of Tax Increment Financing in support of housing in Urban Renewal Areas;
• General fund support for the Affordable Housing Fund and for specific affordable housing
projects;
• Community Development Block Grant funds supporting housing and, in particular,
affordable housing; and
• Support of on-going studies, strategies and staffing of City Housing Programs.
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 38 of 55
APPENDIX B: COMPARISON OF THE CURRENT AHO SECTION 38.380
DEEP AND SHALLOW INCENTIVES TO THE PROPOSED TYPE A, B AND C INCENTIVES.
The Affordable Housing Ordinance (AHO) is a repeal and replacement of the current Ordinance
2105 which would amend the land use regulations of Chapter 38 of the Bozeman Municipal Code
(BMC) in support of affordable rental housing production. The proposed amendments will affect
land use, residential density, building height and design, and parking standards for targeted
residential and mixed-use developments. The amendment applies to new development and applies
to projects undergoing development review under Chapter 38 of the City’s Unified Development
Code (UDC) and which has not received a determination of application completeness or
“adequacy” for further review, public notice, and processing.
The AHO would replace UDC 38.380 with a new set of standards addressing (1) incentives to
build below-market-rate affordable rental dwelling units in the city; (2) criteria and qualifications
for the granting of the incentives; (3) clarification of administration of the affordable housing
program; (4) extension of the duration of affordability for subject dwellings from thirty (30) years
to fifty (50) years; and (5) establishing the minimum percentage of affordable dwellings per project
and the maximum rental rate allowed measured by the Bozeman Area Median Income (AMI); and
(6) establishing options of off-site land dedication or cash-in-lieu alternatives as a means of
meeting the affordable housing required to use the incentives.
The current AHO offers two types of incentives: Shallow Incentives and Deep Incentives. The
proposed AHO replaces the Shallow and Deep Incentives with three types of incentives: Type A
Incentives which are a variation of the Shallow Incentives, Type B Incentives which are a variation
of the Deep Incentives, Type C Incentives which are another variation of the Deep Incentives, and
two more options allow Off-Site Land Donations and Cash-in-Lieu Contributions to satisfy the
affordable dwellings for projects utilizing Incentives.
The following section compares the current Shallow and Deep Incentives to the proposed Types A, B and C Incentives.
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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CURRENT Table 38.380.020-2: Affordable Homes Required Shallow Incentives
Minimum
Percentage of
Homes
Maximum Percentage of AMI Duration
Rental
Dwellings
For-Sale
Dwellings
(includes
condominiums)
Type of Housing
Single-
Household
Detached
Dwelling
=>5% 80% of AMI 120% of AMI =>30 years
Single-
Household
Attached
Dwelling
=>5% 80% of AMI 120% of AMI =>30 years
Multi-
Household
Dwelling
=>5% 80% of AMI 120% or AMI =>30 years
PROPOSED Table 38.380.020-1 Affordable Dwellings Required Type A Incentives
[Changes are in
highlighted text]
Minimum
Percentage of
Dwellings
Maximum Percentage of AMI Duration
Rental Dwellings
Single-Household
Detached Dwelling
All dwelling unit
types
=>5% 80% of AMI =>50 years
Single-Household
Attached Dwelling
=>5% 80% of AMI => 50 years
Multi-Household
Dwelling
=>5% or,
=>8%
60% of AMI
80% of AMI
=> 50 years
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
Page 40 of 55
I. Comparison of Shallow Incentives to proposed Type A Incentives
1. Single household Detached Dwelling Units
Shallow Incentives (existing)
For each single household detached dwelling a minimum lot size of 3,000 square feet, or 2,500
square feet, if the applicant demonstrates that all applicable city regulations related to lot
development, access and utilities can be met.
Proposed Type A Incentives [no change proposed]
For each single household detached dwelling a minimum lot size of 3,000 square feet, or 2,500
square feet, if the applicant demonstrates that all applicable city regulations related to lot
development, access and utilities can be met.
2. Dwellings in attached townhome or rowhouse buildings.
Shallow Incentives (existing)
For each single household attached dwellings (townhouse or rowhouse), a minimum lot size of
2,200 square feet (sf), or 1,800 sf, if the applicant demonstrates that all applicable city regulations
related to lot development, access and utilities can be met.
Proposed Type A Incentives (New incentives are underlined).
For each single household attached dwelling (townhouse or rowhouse)
a. A minimum lot size of 2,200 sf or 1,800 sf if the applicant demonstrates that all
applicable city regulations related to lot development, access and utilities can be met.
b. No minimum lot width, maximum lot coverage or maximum floor area ratio
requirement if the applicant demonstrates that all applicable city regulations related to
lot development, access and utilities can be met.
c. A townhouse or rowhouse development that includes only dwellings of 1,200 square
feet or less of livable square footage is exempt from a minimum on-site parking
requirement but may provide one parking space located within a driveway area in the
required front setback, provided that the building in which the dwellings are located is
three or fewer stories in height.
d. A townhouse or rowhouse cluster with four or fewer attached homes that includes only
dwellings of 1,200 livable square feet or less in size is exempt from the following: (1)
a minimum parking requirement; (2) minimum lot size; (3) lot coverage limitation; (4)
floor area ratio limitation; (5) lot area per dwelling unit density standard; and (6)
minimum lot width standards.
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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3. Multi-household dwellings and dwellings in mixed-use buildings.
Shallow Incentives (existing)
For multi-household dwellings and mixed-use buildings:
a. Ten percent reduction in lot area for applicable dwelling type in Table 38.320.030.A.
b. One additional story of height (maximum 15 feet per story) beyond that allowed in the
RS, R-1, R-2, R-3, RMH, R-4, R-5, R-O, NEHMU, and B-1 zoning districts.
c. Two additional stories of height (maximum 15 feet per story) beyond that allowed in
the UMU, REMU, B-2, B-2M, and B-3 zoning districts.
d. Minimum vehicle parking requirement of one stall per dwelling for all districts other
than B-3 and bicycle parking standards and requirements of 38.540.050 still apply.
e. Minimum vehicle parking requirement of 0.75 stall per dwelling for B-3 district;
bicycle parking standards and requirements of 38.540.050 still apply.
f. Townhouses and rowhouses (two attached units) are principal uses in the R-1, RS, and
RMH zoning districts.
Proposed Type A Incentives [New incentives are underlined deleted text is struck-
through.]
For multi-household dwellings and mixed-use buildings:
a. In all zoning districts:
i. The residential off-site parking standards of 38.540.070.A may be expanded up
to 1,000 linear feet from the commonly used entrance to the residential building.
ii. Up to 80% of the residential open space requirements of 38.520.060 may be
met by providing private balconies provided every affordable dwelling is
provided a balcony and access to a ground floor common open space is
provided for all residents.
Ten percent reduction in lot area for applicable dwelling type in Table
38.320.030.A.
b. For affordable housing developments in the RS, R-1, R-2, R-3, RMH, R-4, R-5, R-
O, NEHMU, and B-1 districts, one additional story of height (maximum 15 feet per
story), provided that if the development abuts a lower intensity residential district,
the transition height setback provisions of 38.320.060.B apply.
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Community Development Board Staff Report for the Affordable Housing Ordinance 2025,
Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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c. For affordable housing developments in the UMU, REMU, B-2, B-2M, and B-3
districts, two additional stories of height (maximum 15 feet per story), provided
that if the development is adjacent to a lower intensity residential zoning district,
the transition height setback provisions of 38.320.060.B apply.
d. Minimum motor vehicle parking requirement of one space per dwelling for all
districts other than B-3; however, the bicycle parking standards and requirements
of 38.540.050 remain applicable.
e. Minimum motor vehicle parking requirement of 0.75 stall per dwelling for B-3
district; however, bicycle parking standards and requirements of 38.540.050 remain
applicable.
f. For affordable housing developments in R-3, R-4, R-5, R-O and RMH, the
minimum area per dwelling standards in Table 38.320.030.A do not apply.
g. For the M-1 zoning district:
i. An apartment building in an M-1 zoning district is a principal use and
the prohibition on locating residential uses on the ground floor of an
apartment building in M-1 zone in Table 38310.040.C does not
apply.
ii. In determining the maximum allowable residential square footage of
a development in M-1, Table 38.310.040.C fn6 is calculated for the
development as a whole rather than per individual buildings.
h. Townhomes & rowhouses (two attached units) are principal uses in the TR-1,
RS and RMH zoning districts.
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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II. Comparison of current Deep Incentives versus proposed Type B Incentives
Changes are highlighted. Note that various elements of the Deep Incentives of the current AHO
are divided into the two new types of incentives in the proposed update: Types B and C.
CURRENT Table 38.380.020-1 Affordable Homes Required for Deep Incentives
Minimum
Percentage of
Homes
Maximum Percentage of AMI Duration
Rental
Dwellings
For-Sale
Dwellings
(includes
condominiums)
Type of Housing
Single-
Household
Detached
Dwelling
=>50% 80% of AMI 120% of AMI =>30 years
Single-
Household
Attached
Dwelling
=>50% 80% of AMI 120% of AMI =>30 years
Multi-
Household
Dwelling
=>50% 80% of AMI 120% or AMI =>30 years
Proposed Table 38.380.020-2 Affordable Dwellings Required for Type B Incentives
Changes are
highlighted
Minimum
Percentage of
Dwellings
Maximum Percentage of AMI Duration
Rental Dwellings
All dwelling unit
types.
Single-Household
Detached
Dwelling
=>50% 80% of AMI => 50 years
Single-Household
Attached Dwelling
=>50% 80% of AMI =>50 years
Multi-Household
Dwelling
=>50% 60 % of AMI =>50 years
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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Current Incentives for Table 38.380.020-1-- Deep Incentives. If the developer
proposes to construct affordable homes that meet the standards in Table 38.380.020-1 in the same
geographically contiguous development as market rate homes, the developer may apply the
following incentives to all primary buildings in the development in which 50 percent or more of
the gross floor area contains residential uses:
1. For single household detached dwellings:
a. Minimum lot size of 2,000 square feet (sf); or 1,600 sf if the applicant demonstrates
that all applicable city regulations related to lot development, access and utilities can
be met.
b. No minimum lot width requirement above that necessary for access and utilities if the
applicant demonstrates that all applicable city regulations related to lot development,
access and utilities can be met.
c. Off-street parking requirement of one space per dwelling.
d. Concurrent construction of infrastructure and dwellings per 38.270.030 is allowed.
2. For single household attached dwellings (townhouses and rowhouses):
a. Minimum lot size of 1,600 sf; or 1,400 sf if the applicant demonstrates that all
applicable city regulations related to lot development, access and utilities can be met.
b. No minimum lot width requirement if the applicant demonstrates that all applicable
city regulations related to lot development, access and utilities can be met.
c. Off-street parking reduction to one space per dwelling.
d. Concurrent construction of infrastructure and housing per 38.270.030 is allowed.
3. For multi-household dwellings and mixed-use buildings:
a. One additional story of height (maximum 15 feet per story) beyond that allowed in the
RS, R-1, R-2, R-3, or RMH zoning districts.
b. Two additional stories of height (maximum 15 feet per story) beyond that allowed in
the R-4, R-5, R-O, NEHMU, and B-1 zoning districts.
c. Four additional stories of height (maximum 15 feet per story) beyond that allowed in
the UMU, REMU, B-2, B-2M, and B-3 zoning districts.
d. No minimum on-site vehicle parking requirement, but bicycle parking standards and
requirements of 38.540.050 still apply.
e. Townhouses* and rowhouses* (two attached units) in the R-1, RS, and RMH zoning
districts.
f. Exemption from each of the following for buildings containing dwellings, unless an
alternative standard is provided in this division:
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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(1) Minimum lot size, lot area per dwelling units, and lot width requirement in all
zoning districts.
(2) Section 38.510.030.E to J block frontage standards, provided that vehicle parking
is prohibited between the front or side of a principal building and a public or private
street;
(3) Section 38.530.040.E maximum façade width standards;
(4) Section 38.530.040.F roofline modulation standards;
(5) Section 38.530.050 building detail standards; and
(6) Section 38.530.060 building material standards.
(7) Concurrent construction of infrastructure and housing per 38.270.030.
4. Developments subject to 38.380 may use yield streets without requirement for
additional zoning review requirements beyond that for the development within which
the yield street will be used. A yield street has the following characteristics:
a. Forty-foot right-of-way with two-way dedicated travel in a 16-foot advisory yield zone
for motor vehicles and five-foot walkways outside on either side.
b. Staggered seven-foot-wide parallel parking spaces which may include chicane style
streetscape for varying width of paved area.
c. No parking in front of private property that blocks access to property adjacent to the
street.
d. Passing areas every 100 feet minimum for sight line assurance and yielding capabilities.
Passing pullout areas to be not less than 25 feet long. Driveway accesses may serve as
passing areas.
e. Snow management plan, including enforcement provisions, must be provided during
initial development review.
(1) No snow storage in passing areas;
(2) Adequate storage areas or removal methods must be provided to address two 25-
year storms.
f. Stormwater must be managed within the right-of-way unless an alternate method
compliant with municipal standards is provided.
g. A comprehensive street signage plan must be included with initial submittal and
executed with infrastructure plans and construction including but advisory signage for
yielding to pedestrians/bikes/PTDs and other vehicle travelers.
h. The proposed design must be consistent with accessibility requirements established by
any governmental agency.
i. Design shall address inclusion of any proposed street furnishings, amenities, plantings,
etc.
j. Yield streets are exempt from the requirements of 38.550.070 for installation of street
trees adjacent to individual lots.
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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k. The city may limit speeds to less than standard for a local street.
l. Maintenance must be maintained by landowners in the development unless the city
explicitly assumes responsibility. A funding mechanism equal to that for private streets
in 38.400.020 is required for private maintenance.
m. Length may not exceed 400 feet without intersecting with a street. Ends must terminate
at a street or be provided a fire code compliant turn around. A total length may exceed
400 feet if there are crossing streets with a yield street.
n. Adjacent buildings must not exceed three stories unless setup space for fire department
ladder trucks is provided adequate to access all buildings in excess of three stories.
Proposed Type B Incentives compared to the current Deep Incentives [New
incentive text is underlined, deleted text is struck-through.]
Type B Incentives allow:
1. For single household detached dwellings:
a. 2,000 or 1,600 square feet minimum lot size and no minimum lot width for single
household detached dwellings if the applicant demonstrates that all applicable city
regulations related to lot development, access and utilities can be met.
b. off-street parking required at one space per dwelling.
c. Concurrent construction of infrastructure and housing per 38.270.030 is allowed.
2. For townhouse or rowhouse dwellings:
a. 1,600 to 1,400 sf lot size and no minimum lot width if the applicant demonstrates that all
applicable city regulations related to lot development, access and utilities can be met.
b. Off-street parking requirement of one space per dwelling. A townhouse or rowhouse
development that includes only dwellings of 1,200 livable square feet or less of livable
square footage is exempt from a minimum on-site parking requirement but may provide
one parking space located within a driveway area in the required front setback, provided
that the building in which the dwellings are located is three or fewer stories in height.
3. For multi-household or mixed-use buildings:
For multi-household dwellings and mixed-use buildings:
a. When incentives are requested, the building height of any building in the
development is limited to that permitted in the zoning district or four stories,
whichever is less and the maximum number of dwellings in a single
building is limited to that permitted in the zoning district or 36 dwellings,
whichever is less.
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b. ADA parking spaces must be provided in accordance with applicable
building codes.
c. In addition to the ADA parking required, a minimum of .25 vehicle parking
spaces per dwelling are required. One short-term parking space located at
the main building entrance must be provided and identified as a loading
zone.
d. Bicycle parking standards and requirements of 38.540.050 apply. The
number of secure bicycle racks provided must exceed or be equal to 50
percent of the number of dwellings within the development.
e. For multi-household dwellings and mixed-use buildings in all zoning
districts the minimum lot area per dwelling does not apply.
f. For the M-1 zoning district:
i. An apartment building in an M-1 zoning district is a principal use and
the prohibition on locating residential uses on the ground floor of an
apartment building in M-1 zone in Table 38310.040.C does not apply.
ii. In determining the maximum allowable residential square footage of
a development in M-1, Table 38.310.040.C fn6 is calculated for the
development as a whole rather than per individual buildings.
a. One additional story of height (maximum 15 feet floor to floor height per story) beyond
that allowed in the RS, R-1, R-2, R-3, or RMH zoning districts.
b. Two additional stories of height (maximum 15 feet floor to floor per story) beyond that
allowed in the R-4, R-5, R-O and B-1 zoning districts.
c. Four additional stories of height (maximum 15 feet per story) beyond that allowed in the
UMU, REMU, B-2, B-2M, and B-3 zoning districts.
d. No minimum onsite vehicle parking requirement, but the bicycle parking standards and
requirements of 38.540.050 still apply.
e. Townhouses & rowhouses (two attached units) [are principal uses] in the R-1, RS and
RMH zoning districts.
f. Exemption from each of the following for buildings containing dwellings, unless an
alternative standard is provided in this division:
1. Minimum lot size, lot area per dwelling unit density standard, and lot width
requirements, as noted in subsection B.1 and 2 above.
2. Section 38.510.030.E to J block frontage standards, provided that vehicle parking
is prohibited between the front or side of a principal building and a public or private
street;
3. Section 38.530.040.E. Maximum façade width standards;
4. Section 38.530.040.F, Roofline modulation standards;
5. Section 38.530.050, Building detail standards; and
6. Section 38.530.060, Building material standards.
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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g. Concurrent construction of infrastructure and housing per 38.270.030.
h. Developments subject to 38.380 may use yield streets without requirement for
additional zoning review requirements beyond that for the development within which
the yield street will be used. A yield street has the following characteristics:
a. Forty-foot right-of-way with two-way dedicated travel in a 16-foot advisory yield
zone for motor vehicles and five-foot walkways outside on either side.
b. Staggered seven-foot-wide parallel parking spaces which may include chicane
style streetscape for varying width of paved area.
c. No parking in front of private property that blocks access to property adjacent to
the street.
d. Passing areas every 100 feet minimum for sight line assurance and yielding
capabilities. Passing pullout areas to be not less than 25 feet long. Driveway accesses
may serve as passing areas.
e. Snow management plan, including enforcement provisions, must be provided
during initial development review.
(1) No snow storage in passing areas;
(2) Adequate storage areas or removal methods must be provided to address two 25-
year storms.
f. Stormwater must be managed within the right-of-way unless an alternate method
compliant with municipal standards is provided.
g. A comprehensive street signage plan must be included with initial submittal and
executed with infrastructure plans and construction including but advisory signage for
yielding to pedestrians/bikes/PTDs and other vehicle travelers.
h. The proposed design must be consistent with accessibility requirements
established by any governmental agency.
i. Design shall address inclusion of any proposed street furnishings, amenities,
plantings, etc.
j. Yield streets are exempt from the requirements of 38.550.070 for installation of
street trees adjacent to individual lots.
k. The city may limit speeds to less than standard for a local street.
l. Maintenance must be maintained by landowners in the development unless the
city explicitly assumes responsibility. A funding mechanism equal to that for private
streets in 38.400.020 is required for private maintenance.
m. Length may not exceed 400 feet without intersecting with a street. Ends must
terminate at a street or be provided a fire code compliant turn around. A total length may
exceed 400 feet if there are crossing streets with a yield street.
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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n. Adjacent buildings must not exceed three stories unless setup space for fire
department ladder trucks is provided adequate to access all buildings in excess of three
stories.
NEW Proposed Type C Incentives (compared with AHO Ordinance 2105 Deep
Incentives with Yield Street provision deleted. Additions are underlined and deletions are
struck-through.)
1. For single household detached dwellings:
a. Minimum lot size of 2,000 square feet; or 1,600 square feet (sf) if the applicant
demonstrates that all applicable city regulations related to lot development, access and
utilities can be met.
b. No minimum lot width requirement above that necessary for access and utilities if the
applicant demonstrates that all applicable city regulations related to lot development,
access and utilities can be met.
c. Off-street parking requirement of one space per dwelling unit.
d. Concurrent construction of infrastructure and dwellings per 38.270.030 is allowed.
2. For townhouses and rowhouses:
a. A development that proposes a single grouping of two townhouses or rowhouses are a
principal use in the R-1, RS and RMH zoning districts.
b. A minimum lot size of 1,600 sf or 1,400 sf if the applicant demonstrates that all applicable
city regulations related to lot development, access and utilities can be met.
c. No minimum lot width requirement if the applicant demonstrates that all applicable city
regulations related to lot development, access and utilities can be met.
d. Off-street parking requirement of one space per dwelling unit. A townhouse or rowhouse
development that includes only dwellings of 1,200 livable square feet or less of livable
square footage is exempt from a minimum on-site parking requirement but may provide
one parking space located within a driveway area in the required front setback, provided
that the building in which the dwellings are located is three or fewer stories in height.
e. Concurrent construction of infrastructure and housing per 38.270.030 is allowed.
3. For multi-household dwellings and mixed-use buildings:
a. One additional story of height (maximum 15 feet floor to floor height per story) beyond
that allowed in the RS, R-1, R-2, R-3, or RMH zoning districts.
b. Two additional stories of height (maximum 15 feet floor to floor per story) beyond that
allowed in the R-4, R-5, R-O and B-1 zoning districts, provided that where any building in
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Division 38.380 Repeal and Replacement Text Amendment, Project No.24529
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the development which utilizes building height incentives abuts a lower intensity
residential district, the transition height setback provisions of 38.320.060.B apply.
c. Four additional stories of height (maximum 15 feet per story) beyond that allowed in the
UMU, REMU, B-2, B-2M, and B-3 zoning districts, provided that where any building in
the development which utilizes building height incentives abuts a lower intensity
residential district, the transition height setback provisions of 38.320.060.B apply.
d. No minimum onsite vehicle parking requirement, but bicycle parking standards and
requirements of 38.540.050 still apply. ADA parking spaces must be provided in
accordance with applicable building codes. In addition to ADA parking spaces, a minimum
vehicle parking requirement of 0.5 space per dwelling is required. One short-term parking
space located at the building entrance must be provided and identified as a loading zone.
f. Bicycle parking standards and requirements of 38.540.050 still apply with the number of
bicycle racks provided must exceed or be equal to 50% of the number of dwellings within
the development.
g. For multi-household dwellings and mixed-use buildings in all zoning districts the
minimum lot area per dwelling does not apply.
h. For the M-1 zoning district:
i. An apartment building in an M-1 zoning district is a principal use and the
prohibition on locating residential uses on the ground floor of an apartment building
in M-1 zone in Table 38310.040.C does not apply.
ii. In determining the maximum allowable residential square footage of a development
in M-1, Table 38.310.040.C fn6 is calculated for the development as a whole rather
than per individual buildings.
NEW AHO Section 38.380.060, Alternatives for Land Donation and Cash-in-lieu.
As an alternative to constructing the affordable dwellings required by 38.380.020, the applicant
may qualify for the incentives listed in 38.380.040 by:
A. An applicant may donate one or more parcels of land within the city limits to the city for
the purpose of building affordable dwellings, subject to the following:
1. The donated land may be one or more undeveloped parcels or ready-to-build lots
but must be capable of building residential dwellings that meet the standards of this
division. All donated land will be used only to support the creation or preservation
of affordable dwellings.
2. The value of the donated land must be equal to or exceed the cost of designing,
obtaining land use and building approvals for, installing or upgrading infrastructure
for, and constructing the number of affordable dwellings the applicant would
otherwise be required to provide in return for the requested incentives in
38.380.040, as established by an independent valuation and economic report dated
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no less than one year prior to transfer of the ownership of the land to the city
produced by one or more independent firms selected by the city and paid for by the
applicant.
3. The city commission must approve the donation of land pursuant to 2.08.100.
B. An applicant may provide a cash-in-lieu payment to the city’s community housing fund.
The review authority may establish administrative rules and procedures for the calculation
and implementation of a cash-in-lieu program. The city must use all cash-in-lieu funds to
support the creation or preservation of affordable dwellings. The following apply to
payment of cash-in-lieu:
1. For each affordable dwelling required by 38.380.020, but not provided, the cash-
in-lieu amount will be established based on a per dwelling price adopted by
resolution of the commission.
2. The per dwelling amount must be based on the difference between the average new
construction rental rate for apartments in the city and the established affordable
rental rate calculated over the course of 20 years.
3. The cash-in-lieu amount must be determined on the number, type of dwellings, and
mix of bedrooms identified as affordable in the affordable housing plan and
proposed to be constructed.
4. Cash-in-lieu payments must be paid prior to issuance of a building permit for any
dwelling in the development.
In addition to amendments to the Affordable Housing Division 38.380, Section
38.540.050.A.1.b(1) of the Bozeman Municipal Code would be amended as follows:
“Affordable dwellings housing. When calculating the amount of required parking for
affordable dwellings housing, as defined in section 38.700.020, of this chapter if the project is
guaranteed for use as affordable housing for a minimum period of 30 years and the use as affordable housing is
subject to long term monitoring to ensure compliance and continued use as affordable housing, required parking
spaces must be calculated based on number of bedrooms outlined in Table 38.540.050-1, but may not exceed 1.5
spaces per unit. if the project is subject to an approved affordable housing plan, then required
parking spaces must be provided pursuant to division 38.380.”
Division 38.700, Definitions, of the Bozeman Municipal Code would be amended as follows:
1. That the definition of “affordable home” in 38.700.020. – A definitions be amended as
follows: “Affordable dwelling home. A residential dwelling unit for rent or purchase
that a subdivider or developer has committed to making affordable as an affordable
home at the AMI levels to qualify for the incentives in pursuant to 38.380.
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2. That the definition of “affordable housing” in 38.700.020. – A definitions be repealed.
3. That the definition of “yield street” in 38.700.170. - S definitions (subsection 9 within
the definition of "Street Types") be repealed.
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APPENDIX C - NOTICING AND PUBLIC COMMENT
Notice for text amendments must meet the standards of 38.220.410 & 420. Notice was published
in the Bozeman Daily Chronicle on 2/21/2024, 12/28/24 and 1/4/25 and contained all required
elements. The notice and text were also provided through the City’s Community Development
web viewer and the Bozeman.net news page. Notice was provided at least 15 calendar days before
the public hearing before the Community Development Board in their capacity as the Zoning
Commission, and not more than 45 days prior to the City Commission public hearing. The City
exceeded the required notice provision. Hearing dates are on the first page of this report.
The Economic Development Department’s Housing Team hosted an open house to discuss options
for amending the current Affordable Housing Ordinance (AHO). Staff presented a slide show on
housing issues and options for incentives toward supporting low-income-affordable housing in the
city and they queried participants as to their preferences of incentives that could be offered
developers of affordable housing or mixed market-rate and affordable housing projects. Staff also
hosted a short on-line and “hard copy” survey to query residents about their concerns and
preferences for incentives to offer in an updated AHO. The AHO survey is closed now and the
results are now available in the Resource Documents section on AHO Engage Bozeman along with
written comments received at the Open House.
Several written public comments have been received on the need to revise the AHO and they are
found a this link through the Laserfiche archive. If additional written comments are received prior
to the Community Development Board/Zoning Commission meeting, they will be placed in the
project folder in Laserfiche.
Public Comment Summary of Topics:
• The projects utilizing the incentives result in loss of mature trees, wetlands, and their
habitat;
• The affordability period of 30 years is insufficient;
• The “swap” of off-site, distant land for no affordable units within a development is
inappropriate and the “gifted: land may never be developed with affordable housing;
• The projects provide only a few (in one case, only two) affordable units for height
incentives on a development that is out of scale with the neighborhood;
• Loss of “naturally occurring affordable housing (NOAH) with redevelopment projects
and the new development should require the same number of affordable units as that
were destroyed in addition to the AHO requirements;
• AHO developments within the Neighborhood Conservation Overlay District (NCOD)
should have height transition requirements (within the same zoning district) and limit
the height incentives to result in no more than two stories higher than the building next
to it;
• Require affordability period to be 75 years;
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• Density does not create affordability as shown by the 1,100 apartments for rent in
Bozeman listed on Apartment.com at unaffordable rents, rather, it ruins the essence of
the community;
• Instead of demolishing NOAH units, we should empower our city and residents and
invest in a Housing Authority to produce permanently affordable units;
• The AHO allows administrative review of developments using incentives rather than
the City Commission;
• Remove the NCOD from the AHO and limit its use to greenfield sites;
• Designate an Affordable Housing Overlay Zone within the NCOD which preserves
NOAH sites and allows new “neighborhood-friendly” affordable housing to be built as
part of redevelopment or infill projects;
• Amend subsection D of BMC 38.410.130, Water Adequacy, to require 33% affordable
housing in all residential developments of 3 or more units that seeks to pay cash-in-lieu
of water rights;
• Reduced parking and increased height “dwarfs” existing homes. Please replace this
with affordable housing overlays for suitable infill or redevelopment sites or with a
public housing authority that actually provides long-term affordable housing without
severely disrupting the quality of life of those living near it.
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APPENDIX D - APPLICANT INFORMATION AND REVIEWING STAFF
Applicant: City of Bozeman, PO Box 1230, Bozeman MT 59771
Representatives: Department of Community Development, City of Bozeman, PO Box 1230,
Bozeman MT 59771; and Economic Development Department/ Housing Division, City of
Bozeman, 212 N. Rouse Avenue, Bozeman, MT.
Report By: Susana Montana, Senior Planner and Chris Saunders, Community Development
Manager and David Fine, Economic Development Department, Housing Manager
FISCAL EFFECTS
No unusual fiscal effects have been identified. No presently budgeted funds will be changed
by this Amendment.
ATTACHMENTS
The full application and file of record can be viewed at the Community Development
Department at 20 E. Olive Street, Bozeman, MT 59715.
Attachment A: Link to the proposed AHO Ordinance
Attachment BL Link to the current AHO Ordinance No. 2105
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Ord 2025-###
Page 1 of 22
ORDINANCE 2025-###
AN ORDINANCE OF THE CITY COMMISSION OF THE CITY OF BOZEMAN,
MONTANA TO REPEAL AND REPLACE DIVISION 38.380 OF THE BOZEMAN
MUNICIPAL CODE FOR AFFORDABLE HOUSING; ESTABLISH A 50 YEAR
AFFORDABILITY PERIOD; AMEND SECTION 38.540.050.A.1.B.(1) FOR PARKING
STANDARDS; AMEND 38.700.170 DEFINITIONS TO AMEND THE DEFINITION OF
AFFORDABLE HOME, REPEAL THE DEFINITION OF AFFORDABLE HOUSING,
AND REPEAL THE DEFINITION OF YIELD STREET.
WHEREAS, the City of Bozeman (the “City”) has adopted land development and use standards
to protect public health, safety and welfare and otherwise execute the purposes of Montana Code
Annotated §§ 76-1-102, 76-2-304, and 76-3-102; and
WHEREAS, the Economic Vitality Board held a public meeting on December 4, 2024, and, by a
unanimous vote of 6 to 0, recommended to the Bozeman City Commission that the policy
modifications included in the staff memorandum for the proposed amendments to the affordable
housing ordinance be approved with the provisions that: (a) Incentive Types B and C have
minimum parking requirements; and (b) that the 60 percent Area Median Income (AMI) affordable
rental rates be reviewed every three years and be established based on the current AMI and other
relevant metrics and housing needs data; and
WHEREAS, after proper notice, the Community Development Board, acting in their role as the
City’s zoning commission, held a public hearing on January 13, 2025, to consider the proposed
amendments and made a recommendation to the City Commission that the amendments included
in this ordinance be _______________; and
WHEREAS, after proper notice, the City Commission held its public hearing on January 28, 2025,
to receive and review all written and oral testimony on the proposed amendment to the zoning
regulations; and
WHEREAS, the City Commission has reviewed and considered the recommendations of advisory
bodies, including the zoning commission, public comment, the staff report, all information
presented, and all applicable zoning text amendment criteria established in Montana Code
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Annotated § 76-2-304 and finds the proposed amendments are [insert determination whether
consistent with] the criteria.
NOW THEREFORE, BE IT ORDAINED BY THE CITY COMMISSION OF THE CITY
OF BOZEMAN, MONTANA:
Section 1
Legislative Findings
The City Commission hereby makes the following findings in support of adoption of this
Ordinance:
1. The City’s 2018 Strategic Plan affirms that affordable housing is one of the city’s main
strategic goals, stating in Goal 4.5: “Housing and Transportation Choices – Vigorously
encourage, through a wide variety of actions, the development of sustainable and lasting
housing options for underserved individuals and families and improve mobility options that
accommodate all travel modes.”
2. The City’s 2019 Community Housing Needs Assessment finds additional housing, and more
diversity in housing, is needed at prices residents can afford. The Needs Assessment also
determined the city needs housing that provides choices, supports the ability to move to new
locations as life circumstances change, and the ability for employers to fill jobs, recruit and
retain employees.
3. The Bozeman Community Plan 2020 acknowledges that zoning and land use regulations are
processes that influence the cost of housing. The Community Plan supports housing regulations
that allow for a range of housing types intermixed in a given neighborhood, denser
development, and efficiencies of various types that can help reduce housing costs.
4. The Bozeman Community Plan 2020 establishes goals, objectives and policies to increase the
supply of affordable housing in the city including: Goal N-3, Policy N-3.3, which encourages
the “distribution of affordable housing units throughout the city with priority given to locations
near commercial, recreational and transit assets;” Policy N-3.8, which encourages the City to
“promote the development of “Missing Middle” (side by side or stacked diplex, triplex, live-
work, cottage housing, group living, rowhouses/townhouses, etc.) as one of the most critical
components of affordable housing;” Policy M-1.12, which seeks to “eliminate parking
minimum requirements in commercial districts and affordable housing areas and reduce
parking minimums elsewhere, acknowledging that demand for parking will still result in new
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supply being built;” and Policy EE-1.4, which seeks to “support employee retention and
attraction efforts by encouraging continued development of affordable housing in close
proximity to large employers.”
5. The Bozeman Community Plan 2020 encourages compact, contiguous development and infill
development to achieve efficient use of land and infrastructure and reduce urban sprawl.
6. The 2020 Community Housing Action Plan defines community housing as: “homes those who
live and work in Bozeman can afford to purchase or rent. This includes apartments,
townhomes, condominiums, emergency shelters, accessory dwelling units, mobile homes and
single dwelling homes – all dwelling types – serving the entire spectrum of housing needs.”
7. The 2024-2028 Community Development Block Grant (CDBG) Consolidated Housing Plan
reinforced the issues identified in the 2019 Community Housing Needs Assessment, including
increasing and preserving affordable rental opportunities as a top need in the community.
8. The Consolidated Housing Plan found that, in 2020, the rental vacancy rate was two percentage
points below what is considered healthy for a market with adequate supply, underscoring the
tightness in Bozeman’s rental market. Nearly 5,300 renters in Bozeman are cost-burdened and
1,880 homeowners are cost-burdened.
9. The City of Bozeman 2024-2028 Fair Housing Plan found that land development regulations
that increase development costs make residential development overly expensive and can limit
the supply of affordable housing. In some communities, this has a direct impact on racial and
ethnic minorities, larger households and families with children, and persons living with
disabilities because these groups are disproportionately represented among those residing in
lower cost housing. Limits or prohibitions on multifamily housing or restrictions on household
occupancy are examples of how land development codes can negatively affect the groups
protected under the Fair Housing Act.
10. According to the 2024 Point-in-Time (PIT) Count, 409 individuals are experiencing homeless
in Bozeman, which equals 20% of all residents experiencing homelessness in the State of
Montana. Homelessness is increasingly related to rapidly rising rental housing costs relative to
incomes, limited and low production of affordable housing units, and limited resources to serve
low-income households.
11. The City has, through multiple iterations of its land use regulations spanning decades, made
revisions to its development standards to support production of housing including: reducing
land area per dwelling requirements, authorizing accessory dwellings in all residential zoning
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districts, authorizing mixed-use buildings and apartment buildings in the majority of non-
residential districts, reducing parking requirements, capping dedication of parkland, zoning the
majority of residential areas for multiple dwelling buildings, limiting short term rentals to
prevent diversion of units from the housing stock, increasing building heights in all residential
districts, simplifying review processes, providing for concurrent construction of infrastructure
and housing, and creating by-right approvals for regulatory compliant developments, among
other actions.
12. The City facilitates housing development by undertaking comprehensive planning for land use,
facilities, and services necessary to support housing development, and by establishing a capital
improvement program to support timely installation of infrastructure which reduces delays in
the ability to plat subdivisions and complete other development.
13. In 2021, the Montana State Legislature prohibited the City from adopting regulations that
require housing fees or the dedication of real property for the purposes of providing housing
for specified income levels or sale prices. As a result of the passage of HB 259, IN 2022, the
City adopted Ordinance 2105 to replace prior affordable housing requirements by offering
incentives to property owners and developers willing to construct housing at levels of
affordability consistent with the housing needs and goals identified in the Community Plan,
the Community Housing Needs Assessment, and the Community Housing Action Plan.
14. According to the 2023 Bozeman Economic and Market Update, the increase in housing prices
has significant implications for affordability, workforce attraction and retention, and quality of
life.
15. Insufficient affordable housing supply within the city negatively impacts economic vitality,
transportation networks, and sustainability. Affordable housing needs must be addressed to
maintain a sufficient resident workforce in all fields of employment, and to ensure public safety
and general welfare of city residents. According to the 2023 Bozeman Economic and Market
Update, 7,400 households are at or below 60% of the area median income yet Bozeman only
currently has 1,517 units of income restricted housing.
16. This Ordinance aims to create more housing options across the spectrum of need, more
innovative and diverse development projects, dynamic and resilient neighborhoods, and to
improve land use and public infrastructure efficiency.
17. This Ordinance is adopted pursuant to City’s self-governing powers, the city’s zoning
authority, and the city’s police power to protect public health, safety, and general welfare. The
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incentives codified in this Ordinance will advance the City’s efforts to provide more housing
diversity at prices that residents can afford.
18. The staff report accompanying this Ordinance found the required criteria for a zoning code text
amendment are satisfied, including that the Ordinance substantially complies with the 2020
Community Plan.
19. The City Commission determines the incentives provided in this Ordinance are compatible and
consistent with all other provisions of Chapter 38 of the Bozeman Municipal Code.
20. The City Commission further determines the housing developed through the use of the
incentives of this Ordinance will be compatible with existing and future uses and development
in the City.
21. The required public hearings were advertised more extensively than required in state law and
municipal code by publication in the Bozeman Daily Chronicle and the City of Bozeman’s
Engage Bozeman website, and all persons had the opportunity to review the applicable
materials and provide comment prior to a final decision.
22. The Bozeman Community Development Board acting as the City’s zoning commission
conducted its public hearing according to state law and, after considering application materials,
staff report, and all submitted public comment, recommended to the City Commission that this
ordinance [insert the finding of the Community Development Board].
23. The City Commission conducted a public hearing to provide all interested parties the
opportunity to provide comment regarding this ordinance prior to the City Commission acting
on the application.
24. The City Commission considered the application materials, staff analysis and report, zoning
commission recommendation, all submitted public comment, and all other relevant
information.
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Section 2
That Division 38.380 (Affordable Housing) of the Bozeman Municipal Code is repealed in its
entirety and replaced to read as follows:
“Division 38.380. - Affordable Rental Housing
Sec. 38.380.010. - Purpose
A. The purpose of this division is to promote the public health, safety, and welfare by
incentivizing increased production of affordable rental housing to meet the needs of city
residents and businesses and the goals of the adopted growth policy and the community
housing action plan and to maintain the affordability of housing.
B. The purpose of this division is also to provide regulatory incentives to ensure housing
affordability in new development and redevelopment. The incentives in this division
require affordable rental rates and provide for an increase in the amount of affordable
housing provided as a landowner increases the use of the incentives. The greater the
incentives being requested the greater the affordability required.
Sec. 38.380.020. - Applicability and Affordability Requirements
A. The incentives in this division supersede the applicable standards otherwise provided in
this chapter. All other provisions of this chapter remain applicable. The city retains the
authority to approve, approve with conditions, or deny an application based on compliance
with other portions of this code but may not attach conditions to an approval that have the
effect of negating the incentives provided in this division. The incentives in this division
are in addition to the departures for housing creation provided in 38.320.070.
B. The incentives in 38.380.040 may be approved in conjunction with a preliminary plat,
master site plan, or site plan, that:
1. Contains or will contain dwellings that will be offered for rent or lease; and
2. Provides at least the minimum percentages of affordable dwellings in the
development at rental rates affordable at no more than the maximum percentages
of the area median income (AMI) established in Tables 38.380.020-1, 2, and 3 of
this division.
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C. Tables 38.380.020-1, 2, and 3 provide the required percentage of affordable dwellings, the
affordability thresholds, and the duration of the affordability period for the types of housing
to be constructed in a development in reliance on incentives:
Table 38.380.020-1
Affordable Dwellings Required with Type A Incentives
Type of Housing Minimum Percentage
of Dwellings
Maximum AMI
Percentage for
Rentals
Duration of
Affordability Period
Single-Household
Detached Dwelling
≥ 5% of Dwellings 80% of AMI ≥ 50 Years
Single-Household
Attached Dwelling
(Rowhouses and
Townhouses)
≥ 5% of Dwellings 80% of AMI ≥ 50 Years
Multi-Household
Dwelling
≥ 5% of Dwellings at
or
≥ 8% of Dwellings at
60% of AMI or
80% of AMI
≥ 50 Years
Table 38.380.020-2
Affordable Dwellings Required with Type B Incentives
Type of Housing Minimum Percentage
of Dwellings
Maximum AMI
Percentage for
Rentals
Duration of
Affordability Period
Single-Household
Detached Dwelling
≥ 50% of Dwellings 80% of AMI ≥ 50 Years
Single-Household
Attached Dwelling
(Rowhouses and
Townhouses)
≥ 50% of Dwellings 80% of AMI ≥ 50 Years
Multi-Household
Dwelling
≥ 50% of Dwellings 60% of AMI ≥ 50 Years
Table 38.380.020-3
Affordable Dwellings Required with Type C Incentives
Type of Housing Minimum Percentage
of Dwellings
Maximum AMI
Percentage for
Rentals
Duration of
Affordability Period
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Single-Household
Detached Dwelling
≥ 50% of Dwellings 80% of AMI ≥ 50 Years
Single-Household
Attached Dwelling
(Rowhouses and
Townhouses)
≥ 50% of Dwellings 80% of AMI ≥ 50 Years
Multi-Household
Dwelling
≥ 50% of Dwellings 60% of AMI ≥ 50 Years
D. Each affordable dwelling must be maintained as affordable pursuant to the adopted
affordable housing plan and the compliance document required pursuant to 38.380.030 for
no less than fifty (50) years. The affordability period begins to run at the issuance of a
certificate of occupancy for each building wherein affordable dwellings are provided. For
subdivisions that rely on an incentive, the affordability period does not begin at the time
final plat is recorded; rather, the affordability period for each affordable dwelling begins at
the time each affordable dwelling in the subdivision receives a certificate of occupancy.
E. For the entire affordability period, except for adjustments as may be authorized pursuant
to 38.380.070.A, an affordable dwelling must be rented only to persons whose household
income is verified to not exceed the applicable AMI thresholds.
F. An applicant may provide all or a portion of the required affordable dwellings on a site
other than the site or parcel where the incentives are applied only if the affordable dwellings
will be provided in the same development.
G. Accessory Dwelling Units (ADU), short term rentals, and group living are not eligible to
be used as affordable dwellings and cannot be considered as qualifying affordable
dwellings.
H. The following applies to previously approved annexations, subdivisions, or site plans that
request to provide affordable dwellings in exchange for incentives as provided in this
division:
1. A previously annexed but undeveloped parcel of land, a subdivision that has
received final plat, or an approved site plan that received final approval prior to
[insert effective date of enabling ordinance] and that has not previously received
an incentive in return for commitments to provide affordable housing, may apply
for the incentives in this division. The application for the previously undeveloped
parcel must comply with the standards and procedures of this division.
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2. Only the portion of the amended plat or site plan application, including associated
code standards and conditions of approval, pertaining to the request for approval of
one or more incentives will be subject to amended plat or site plan review.
I. Assumptions and Calculations.
1. All references to area median income (AMI) are to the most recent AMI values for
the city established by the U.S. Department of Housing and Urban Development
(HUD). As HUD publishes updated AMI values, the values are immediately
effective without further action by the city. The city may establish administrative
rules and procedures for application and implementation of AMI in calculating
maximum rental rates.
2. The maximum rental rates of an affordable dwelling are based on the AMI of a
household and corresponding number of bedrooms within each affordable
dwelling. The following establishes the maximum rental rate of each bedroom type
based on the correlation between the number of bedrooms with the corresponding
area median household income:
a. Efficiency unit: AMI for a one-person household;
b. One-bedroom dwelling: AMI for a two-person household;
c. Two-bedroom dwelling: AMI for a three-person household; and
d. Three-bedroom unit or larger: AMI for a four-person household.
3. If the calculation of the required number of affordable dwellings results in a fraction
of an affordable dwelling, the developer must construct affordable dwellings equal
to the next lower integer and either provide a cash-in-lieu payment for the additional
fractional amount or construct an additional affordable dwelling.
4. Income averaging of the rental rates for affordable dwellings is allowed. Income
averaging allows an applicant to establish affordable dwelling rental rates so the
average rental rate for all affordable dwellings in a development meets the required
AMI level. The city may establish administrative rules and procedures to
implement income averaging. As an alternative, the applicant may use an income
averaging procedure adopted by the Montana Board of Housing or the U.S.
Department of Housing and Urban Development (HUD).
Sec. 38.380.030. - Affordable Housing Plan Required
A. For a development authorized pursuant to 38.380.020.B to request incentives under this
division the applicant must submit an affordable housing plan at the time of submittal of
the application for preliminary plat, master site plan, or site plan. The affordable housing
plan, upon approval of the development, controls the rental rates and occupancy by income
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verified persons of all affordable dwellings within the development for the entire
affordability period.
B. A subdivision preliminary plat, master site plan, or site plan that requests incentives may
not receive approval for the development until the affordable housing plan has been
approved.
C. The affordable housing plan may be approved if the plan is in compliance with the
standards and criteria in this division, including but not limited to the standards in
38.380.020 and any administrative procedures related to this division.
D. An approved affordable housing plan binds the applicant and the applicant's successors in
interest to comply with the plan for the duration of the affordability period. The approved
affordable housing plan must be incorporated into a recorded restrictive covenant, deed
restriction, or other document (referred to as the compliance document) acceptable to the
city attorney, which implements the affordable housing plan. The compliance document
must be recorded in the records of the Gallatin County Clerk and Recorder as follows:
1. For subdivisions where the incentives were requested and approved as part of the
preliminary plat, the compliance document must be recorded with the final plat;
and
2. For site plans, unless a compliance document was recorded with the subdivision,
the compliance document must be recorded prior to the issuance of a building
permit. The affordability period begins on the date of issuance of a certificate of
occupancy.
E. Contents of an Affordable Housing Plan.
1. A description of the requested incentives in 38.380.040.
2. The applicable AMI and maximum rental rates applicable to each affordable
dwelling.
3. The total number of affordable dwellings, and market-rate dwellings in the
development.
4. A narrative describing how the applicant will ensure the rental of the affordable
dwellings is only to income verified people for the duration of the affordability
period. In addition, the narrative must describe the management system the
applicant will use to meet the above requirement.
5. A description of how each affordable dwelling will comply with the development
standards of this division.
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6. A description of common amenities or facilities the applicant will provide and how
the applicant will ensure the occupants of the affordable dwellings will have the
same access to such amenities or facilities.
7. A description of how each incentive will apply to each building within the
development, regardless of whether the building contains affordable dwellings or
market rate dwellings or both.
8. The number of bedrooms in each dwelling in the development.
9. Clearly identify on the preliminary site plan or preliminary plat the specific location
of each affordable dwelling.
10. Information sufficient to determine the timing of construction and distribution of
affordable dwellings and market-rate dwellings throughout the development.
11. If the development is to be constructed in phases, provide a description of how the
affordable dwellings will be distributed among the phases including whether the
applicant proposes to have any subsequent phase of market rate dwellings rely on
affordable dwellings provided with earlier phases.
12. Any other information the review authority determines necessary to evaluate the
compliance of the affordable housing plan with the requirements of this division.
Sec. 38.380.040. - Incentives.
A. The number of affordable dwellings must meet or exceed the minimum standards set forth
in section 38.380.020 needed to qualify for the applicable incentive. Any incentive not
requested in the affordable housing plan in 38.380.030 is waived.
B. Incentives may be applied to dwellings:
1. In a residential-only development; or
2. In a mixed-use development. If the mixed-use development contains a mix of
residential and nonresidential primary uses, the incentives in this section are only
available if 50 percent or more of the gross floor area of the development contains
residential uses.
C. Type A Incentives (Table 38.380.020-1). The applicant may apply the incentives in this
subsection as follows:
1. For single-household detached dwellings, a minimum lot size of 3,000 square feet.
Alternatively, if the applicant demonstrates that all other applicable city regulations
related to lot development, access, and utilities can be met, a minimum lot size of
2,500 square feet is allowed.
2. For single-household attached dwellings (townhouse or rowhouse):
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a. A minimum lot size of 2,200 square feet. Alternatively, if the applicant
demonstrates that all other applicable city regulations related to lot
development, access, and utilities can be met, a minimum lot size of 1,800
square feet is allowable.
b. No minimum lot width, maximum lot coverage, or maximum floor area
ratio requirement if the applicant demonstrates that all other applicable city
regulations related to lot development, access, and utilities can be met.
c. A townhouse or rowhouse development that includes only dwellings of
1,200 square feet or less of livable square footage is exempt from a
minimum on-site parking requirement but may provide one parking space
located within a driveway area in the required front setback, provided that
the building in which the dwellings are located is three or fewer stories in
height.
d. In addition to the above incentives, a townhouse or rowhouse cluster with
four or fewer attached homes that includes only dwellings of 1,200 livable
square feet or less in size is exempt from the following:
i. Minimum lot size;
ii. Lot coverage;
iii. Floor area ratio;
iv. Lot area per dwelling unit density standard;
v. Lot width; and
vi. Minimum parking requirement.
3. For multi-household dwellings and mixed-use buildings:
a. In all zoning districts:
i. The residential off-site parking standards of 38.540.070.A may be
expanded up to 1,000 linear feet from the commonly used entrance
to the residential building.
ii. Up to 80% of the residential open space requirements of 38.520.060
may be met by providing private balconies provided every affordable
dwelling is provided a balcony and access to a ground floor common
open space is provided for all residents.
b. For affordable housing developments in the RS, R-1, R-2, R-3, RMH, R-
4, R-5, R-O, NEHMU, and B-1 districts, one additional story of height
(maximum 15 feet per story), provided that if the development abuts a
lower intensity residential district, the transition height setback provisions
of 38.320.060.B apply.
c. For affordable housing developments in the UMU, REMU, B-2, B-2M,
and B-3 districts, two additional stories of height (maximum 15 feet per
story), provided that if the development is adjacent to a lower intensity
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residential zoning district, the transition height setback provisions of
38.320.060.B apply.
d. Minimum motor vehicle parking requirement of one space per dwelling for
all districts other than B-3; however, the bicycle parking standards and
requirements of 38.540.050 remain applicable.
e. Minimum motor vehicle parking requirement of 0.75 space per dwelling
for B-3 district; however, the bicycle parking standards and requirements
of 38.540.050 remain applicable.
f. For affordable housing developments in R-3, R-4, R-5, R-O and RMH, the
minimum area per dwelling standards in Table 38.320.030.A do not apply.
g. For the M-1 zoning district:
i. An apartment building in an M-1 zoning district is a principal use and
the prohibition on locating residential uses on the ground floor of an
apartment building in M-1 zone in Table 38310.040.C does not
apply.
ii. In determining the maximum allowable residential square footage of
a development in M-1, Table 38.310.040.C fn6 is calculated for the
development as a whole rather than per individual buildings.
D. Type B Incentives (Table 38.380.020-2). If the applicant proposes to construct affordable
dwellings that meet the standards in Table 38.380.020-2 in the same development as
market-rate dwellings, the applicant may apply all of the following incentives to all
buildings in the development in which 50 percent or more of the livable floor area contains
residential uses:
1. For single-household detached dwellings:
a. A minimum lot size of 2,000 square feet. Alternatively, if the applicant
demonstrates that all other applicable city regulations related to lot
development, access, and utilities can be met, a minimum lot size of 1,600
square feet is allowed.
b. Off-street parking requirement of one space per dwelling.
2. For single-household attached dwellings (townhouses and rowhouses):
a. A minimum lot size of 1,600 square feet. Alternatively, if the applicant
demonstrates that all other applicable city regulations related to lot
development, access, and utilities can be met, a minimum lot size of 1,400
square feet is allowed.
b. No minimum lot width requirement if the applicant demonstrates that all
applicable city regulations related to lot development, access, and utilities
can be met.
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c. Off-street parking requirement of one space per dwelling. A townhouse or
rowhouse development that includes only dwellings of 1,200 livable square
feet or less of livable square footage is exempt from a minimum on-site
parking requirement, but may provide one parking space located within a
driveway area in the required front setback, provided that the building in
which the dwellings are located is three or fewer stories in height.
3. For multi-household dwellings and mixed-use buildings:
a. When incentives are requested, the building height of any building in the
development is limited to that permitted in the zoning district or four stories,
whichever is less and the maximum number of dwellings in a single
building is limited to that permitted in the zoning district or 36 dwellings,
whichever is less.
b. ADA parking spaces must be provided in accordance with applicable
building codes.
c. In addition to the ADA parking required, a minimum of .25 vehicle parking
spaces per dwelling are required. One short-term parking space located at
the main building entrance must be provided and identified as a loading
zone.
d. Bicycle parking standards and requirements of 38.540.050 apply. The
number of secure bicycle racks provided must exceed or be equal to 50
percent of the number of dwellings within the development.
e. For multi-household dwellings and mixed-use buildings in all zoning
districts the minimum lot area per dwelling does not apply.
f. For the M-1 zoning district:
i. An apartment building in an M-1 zoning district is a principal use and
the prohibition on locating residential uses on the ground floor of an
apartment building in M-1 zone in Table 38310.040.C does not apply.
ii. In determining the maximum allowable residential square footage of
a development in M-1, Table 38.310.040.C fn6 is calculated for the
development as a whole rather than per individual buildings.
E. Type C Incentives (Table 38.380.020-3). If the applicant proposes to construct affordable
dwellings that meet the standards in Table 38.380.020-3 in the same development as
market-rate dwellings, the applicant may apply the following incentives to all buildings in
the development in which 50 percent or more of the livable floor area contains residential
uses:
1. For single-household detached dwellings:
a. A minimum lot size of 2,000 square feet. Alternatively, if the applicant
demonstrates that all other applicable city regulations related to lot
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development, access, and utilities can be met, a minimum lot size of 1,600
square feet is allowed.
b. Off-street parking requirement of one space per dwelling.
2. For single-household attached dwellings (townhouses and rowhouses):
a. A development that proposes a single grouping of two townhouses or
rowhouses are a principal use in the R-1, RS, and RMH zoning districts.
b. A minimum lot size of 1,600 square feet. Alternatively, if the applicant
demonstrates that all other applicable city regulations related to lot
development, access, and utilities can be met, a minimum lot size of 1,400
square feet is allowed.
c. No minimum lot width requirement if the applicant demonstrates that all
applicable city regulations related to lot development, access, and utilities
can be met.
d. Off-street parking requirement of one space per dwelling. A townhouse or
rowhouse development that includes only dwellings of 1,200 square feet or
less of livable square footage is exempt from minimum on-site parking
requirements, but may provide one parking space located within a driveway
area in the required front setback, provided that the building in which the
dwellings are located is three or fewer stories in height.
3. For multi-household dwellings and mixed-use buildings:
a. One additional story of height (maximum 15 feet per story) beyond that
allowed in the RS, R-1, R-2, R-3, or RMH zoning districts.
b. Two additional stories of height (maximum 15 feet per story) beyond that
allowed in the R-4, R-5, R-O and B-1 zoning districts, provided that where
any building in the development which utilizes building height incentives
abuts a lower intensity residential zoning district, the transition height
setback provisions of 38.320.060.B apply.
c. Four additional stories of height (maximum 15 feet per story) beyond that
allowed in the UMU, REMU, B-2, B-2M, and B-3 zoning districts provided
that where any building in the development which utilizes building height
incentives abuts a lower intensity residential zoning district, the transition
height setback provisions of 38.320.060.B apply.
d. ADA parking spaces must be provided in accordance with applicable
building codes.
e. In addition to ADA parking spaces, a minimum vehicle parking requirement
of 0.5 space per dwelling is required. One short-term parking space located
at the building entrance must be provided and identified as a loading zone.
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f. Bicycle parking standards and requirements of 38.540.050 apply. The
number of bicycle racks provided must exceed or be equal to 50 percent of
the number of dwellings within the development.
g. For multi-household dwellings and mixed-use buildings in all zoning
districts the minimum lot area per dwelling does not apply.
h. For the M-1 zoning district:
i. An apartment building in an M-1 zoning district is a principal use and
the prohibition on locating residential uses on the ground floor of an
apartment building in M-1 zone in Table 38310.040.C does not apply.
ii. In determining the maximum allowable residential square footage of
a development in M-1, Table 38.310.040.C fn6 is calculated for the
development as a whole rather than per individual buildings.
Sec. 38.380.050. - Development Standards for Affordable Dwellings
A. The affordable dwellings must be constructed with the same features, such as appliances,
as market-rate dwellings within the same development but the quality of the features may
vary between market rate and the affordable dwellings.
B. The mix of bedrooms per unit in affordable dwellings must be as similar as possible to the
mix of bedrooms per unit of the market-rate dwellings in the development.
C. A one-bedroom dwelling must include a bedroom separated from other living areas of the
dwelling by a solid door. For the purposes of this division, a one-bedroom dwelling must
be greater than or equal to 450 square feet of floor area.
D. Access to shared amenities, other than parking, by residents of the affordable dwellings
must be the same as those in market-rate dwellings in the development and the cost of any
such amenity must be included in the required affordable rental rate.
E. All the affordable dwellings required to be developed pursuant to this division must be
completed and a certificate of occupancy issued prior to or at the same time as the market-
rate dwellings. The timing of construction and distribution of affordable dwellings
throughout a development must be approved in the affordable housing plan.
F. For multiple-phase developments or developments with more than one building:
1. All affordable dwellings must be constructed prior to the issuance of a building
permit for a building that consists exclusively of market-rate dwellings or at the
same time as market rate dwellings that use the incentives of this division.
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2. An applicant may use the incentives provided by affordable dwellings in a previous
phase of a development in a subsequent phase that consists of market-rate
dwellings.
Sec. 38.380.060. - Alternatives for Land Donation and Cash-in-Lieu
As an alternative to constructing the affordable dwellings required by 38.380.020, the applicant
may qualify for the incentives listed in 38.380.040 by:
A. An applicant may donate one or more parcels of land within the city limits to the city for
the purpose of building affordable dwellings, subject to the following:
1. The donated land may be one or more undeveloped parcels or ready-to-build lots,
but must be capable of building residential dwellings that meet the standards of this
division. All donated land will be used only to support the creation or preservation
of affordable dwellings.
2. The value of the donated land must be equal to or exceed the cost of designing,
obtaining land use and building approvals for, installing or upgrading infrastructure
for, and constructing the number of affordable dwellings the applicant would
otherwise be required to provide in return for the requested incentives in
38.380.040, as established by an independent valuation and economic report dated
no less than one year prior to transfer of the ownership of the land to the city
produced by one or more independent firms selected by the city and paid for by the
applicant.
3. The city commission must approve the donation of land pursuant to 2.08.100.
B. An applicant may provide a cash-in-lieu payment to the city’s community housing fund.
The review authority may establish administrative rules and procedures for the calculation
and implementation of a cash-in-lieu program. The city must use all cash-in-lieu funds to
support the creation or preservation of affordable dwellings. The following apply to
payment of cash-in-lieu:
1. For each affordable dwelling required by 38.380.020, but not provided, the cash-
in-lieu amount will be established based on a per dwelling price adopted by
resolution of the commission.
2. The per dwelling amount must be based on the difference between the average new
construction rental rate for apartments in the city and the established affordable
rental rate calculated over the course of 20 years.
3. The cash-in-lieu amount must be determined on the number, type of dwellings, and
mix of bedrooms identified as affordable in the affordable housing plan and
proposed to be constructed.
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4. Cash-in-lieu payments must be paid prior to issuance of a building permit for any
dwelling in the development.
Sec. 38.380.070. – Administration
A. The applicable review authority shall enforce all rules and regulations, and take all actions
necessary for the effective operation and enforcement of this division, unless such authority
is expressly reserved to the city commission or another city official, including but not
limited to:
1. Promulgate any rule or regulation necessary to the operation and enforcement of
this division, including but not limited to maintenance of the affordable dwellings,
periodic reporting, and notice and tenant protections in the event of foreclosure.
2. Adopting application, monitoring, reporting forms, compliance documents, and
obtaining any other information required from applicants for implementation of this
division.
3. Establishing standards for determining AMI requirements, including income-
averaging, and calculating and making available to the public the AMI required to
qualify for the various incentives listed in this division.
4. Establishing standards for the qualification of renters, ongoing income verification
and eligibility, primary occupancy requirements, and reporting and performance of
property management entities.
5. Establishing standards that would allow the review authority to approve an upward
adjustment of the AMI standards for renter qualification if an affordable dwelling
remains vacant for more than 30 calendar days and no person qualifying within the
required AMI applies for the affordable dwelling.
6. Monitoring compliance with this division, notifying the subdivider, applicant, or
current owner of the property of noncompliance, and ordering compliance,
including imposing sanctions permitted by this division.
B. All rules and regulations established by the applicable review authority are subject to city
commission review and modification.
Sec. 38.380.080. - Noncompliance and Sanctions
A. If the city determines an applicant, its successor, or the current owner of a property fails to
comply with any requirements of the affordable housing plan, or the requirements of this
division, or with the provisions of a compliance document, the applicable review authority
must notify the applicant, its successor, or the current owner of the property of the
noncompliance in writing and order compliance. Notification must describe the date by
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which the person or entity must be in full compliance and must describe the nature of the
noncompliance and the sanctions for noncompliance.
B. In addition to other remedies available to the city pursuant to this chapter, if the person or
entity remains in noncompliance on the date by which compliance was required, the city
may impose one or more sanctions, including but not limited to the following:
1. Issuing a civil penalty pursuant to 24.02.040;
2. Enforcing the requirements of the compliance documents;
3. Withholding or revoking building permits;
4. Issuing stop-work orders;
5. Withholding or revoking certificates of occupancy; and
6. Any other sanction available under local, state, or federal law.”
Section 3
That Section 38.540.050.A.1.b(1) of the Bozeman Municipal Code be amended as follows:
“Affordable dwellings housing. When calculating the amount of required parking for
affordable dwellings housing, as defined in section 38.700.020, of this chapter if the project is
guaranteed for use as affordable housing for a minimum period of 30 years and the use as
affordable housing is subject to long term monitoring to ensure compliance and continued use as
affordable housing, required parking spaces must be calculated based on number of bedrooms
outlined in Table 38.540.050-1, but may not exceed 1.5 spaces per unit. if the project is subject to
an approved affordable housing plan, then required parking spaces must be provided pursuant to
division 38.380.”
Section 4
That Division 38.700 of the Bozeman Municipal Code be amended as follows:
1. That the definition of “affordable home” in 38.700.020. – A definitions be amended as
follows: “Affordable dwelling home. A residential dwelling unit for rent or purchase
that a subdivider or developer has committed to making affordable as an affordable
home at the AMI levels to qualify for the incentives in pursuant to 38.380.
2. That the definition of “affordable housing” in 38.700.020. – A definitions be repealed.
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3. That the definition of “yield street” in 38.700.170. - S definitions (subsection 9 within
the definition of "Street Types") is hereby repealed.
Section 5
Repealer.
All provisions of the ordinances of the City of Bozeman in conflict with the provisions of
this ordinance are, and the same are hereby, repealed and all other provisions of the ordinances of
the City of Bozeman not in conflict with the provisions of this ordinance shall remain in full force
and effect.
Section 6
Savings Provision.
This ordinance does not affect the rights and duties that matured, penalties that were
incurred or proceedings that were begun before the effective date of this ordinance. All other
provisions of the Bozeman Municipal Code not amended by this Ordinance shall remain in full
force and effect.
Section 7
Severability.
That should any sentence, paragraph, subdivision, clause, phrase or section of this
ordinance be adjudged or held to be unconstitutional, illegal, or invalid, the same shall not affect
the validity of this ordinance as a whole, or any part or provision thereof, other than the part so
decided to be invalid, illegal or unconstitutional, and shall not affect the validity of the Bozeman
Municipal Code as a whole.
Section 8
Codification.
This Ordinance shall be codified as appropriate in Sections 2 – 4.
Section 9
Effective Date.
This ordinance shall be in full force and effect thirty (30) days after final adoption.
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PROVISIONALLY ADOPTED by the City Commission of the City of Bozeman, Montana, on
first reading at a regular session held on the _____ day of ________________, 2025.
____________________________________
TERENCE CUNNINGHAM
Mayor
ATTEST:
____________________________________
MIKE MAAS
City Clerk
FINALLY PASSED, ADOPTED AND APPROVED by the City Commission of the
City of Bozeman, Montana on second reading at a regular session thereof held on the ___ of
____________________, 2025. The effective date of this ordinance is __________, __, 2025.
_________________________________
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TERENCE CUNNINGHAM
Mayor
ATTEST:
_______________________________
MIKE MAAS
City Clerk
APPROVED AS TO FORM:
_________________________________
GREG SULLIVAN
City Attorney
81
Memorandum
REPORT TO:Community Development Board
FROM:Chris Saunders, Community Development Manager
Erin George, Community Development Interim Director
SUBJECT:Upcoming Items for the January 27, 2025, Community Development Board
Meeting
MEETING DATE:January 13, 2025
AGENDA ITEM TYPE:Citizen Advisory Board/Commission
RECOMMENDATION:Information only, no action required.
STRATEGIC PLAN:4.2 High Quality Urban Approach: Continue to support high-quality planning,
ranging from building design to neighborhood layouts, while pursuing urban
approaches to issues such as multimodal transportation, infill, density,
connected trails and parks, and walkable neighborhoods.
BACKGROUND:The January 20th regular meeting will be moved to January 27th due to the
City being closed on January 20th for Civil Rights day.
The following applications are presently scheduled for review at the January
27, 2025, Community Development Board meeting:
None.
UNRESOLVED ISSUES:None.
ALTERNATIVES:None.
FISCAL EFFECTS:None.
Report compiled on: January 7, 2025
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