HomeMy WebLinkAbout07-28-26 Public Comment - J. Pape - Data describing the negative consequences of not achieving Opportunity Zone 2.0 designation for Census Tract 11.02 BozemanFrom:Mike Maas
To:Bozeman Public Comment
Subject:Fwd: [EXTERNAL]Data describing the negative consequences of not achieving Opportunity Zone 2.0 designation
for Census Tract 11.02 Bozeman
Date:Tuesday, July 28, 2026 7:20:53 AM
Attachments:SUD_OZ2.0_Commission_OnePager_Margin_Brief.pdf
SUD_OZ2.0_Commission_Priorities_Appeal_Tract11.02.pdfSUD_OZ2.0_Commission_Reconsideration_Tract11.02.pdfSUD_OZ2.0_Deliverability_Brief_Tract11.02_vs_Tract6.pdf
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From: Jerry Pape <jpape@espt.com>Date: July 27, 2026 at 7:23:42 PM MDTTo: Mike Maas <Mike.Maas@bozemanmt.gov>Subject: [EXTERNAL]Data describing the negative consequences of notachieving Opportunity Zone 2.0 designation for Census Tract 11.02 Bozeman
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Bozeman Commissioners,
You will find attached information necessary to make a fully informeddecision about Census Tract 11.02 and Opportunity Zone 2.0.
Jerry
--Jerry Pape, PresidentExcalibur, Inc.www.espt.com(406) 579-3636
Opportunity Zone 2.0 and New Housing in Census Tract 11.02
Bozeman's university-district tract, south and west of Montana State — an analytic brief for the City Commission
Being an Opportunity Zone on paper no longer helps Bozeman. The 2017-era benefit has effectively lapsed for any project
starting now, and the original 2018 designation expires at the end of 2028. What matters going forward is Opportunity Zone
2.0 — and for the housing the community most needs, that designation is often the difference between a project that gets built
and one that is shelved.
Why “we already have an Opportunity Zone” does not help
For a project breaking ground today, the old benefits are essentially gone: the tax deferral has decayed to a 2026 cutoff, the basis
reductions expired years ago, and what remains sits on a designation that expires in 2028. Incumbency is not a usable incentive.
Opportunity Zone 2.0 — effective January 1, 2027 for newly designated tracts — restores the full, now-permanent benefit and a fresh ten-
year runway. Capturing it requires the tract to be designated in this year's round.
Why the designation is decisive right now
New construction happens only when a project's expected return beats the cost of building and borrowing by a margin. That margin is thin
today: long-term interest rates sit above 4% and apartment debt commonly runs 5.5–7.5%; construction costs are up roughly a third since
2020; and Bozeman pays a freight premium because materials are trucked into a mountain market. Many local projects clear the bar by
only a slim margin — a point or two — if at all. Opportunity Zone 2.0 capital improves an investor's after-tax return by roughly that same
margin, and for projects that are close it is frequently what closes the financing gap — whether that gap shows up as too-thin equity
returns or as a debt shortfall the equity must cover. Put plainly: on strong deals the incentive is a windfall; on marginal deals it is the swing
factor — and Bozeman's current costs push an unusually large share of its deals into the marginal band. It will not rescue a deeply
unprofitable project; its power is on the many that are close.
THE MARGIN MATCH
Return margin a marginal Bozeman project must close ~0.5 – 2 pts
Return the OZ 2.0 benefit adds for patient, build-to-hold capital ~1 – 3 pts
Same magnitude → for projects that are close, the incentive is frequently the deciding factor.
This is not theoretical — it is already in the City's own records
OZ capital already works in this tract. Highmark — a 162-home community in Census Tract 11.02 built by national institutional
manager Clarion Partners with Wentworth Property Company — was developed as an Opportunity Zone investment under the expiring
2017 program: a major OZ investor chose this tract for its first Bozeman project. What the omission from the OZ 2.0 submittal now puts at
risk is the next wave. A 4+ acre site on the west side of South 19th Avenue, within Census Tract 11.02 but outside the South University
District, is slated for a large LIHTC development well positioned to use Opportunity Zone financing; and the publicly announced
Alpenglow project at South 19th and Kagy — a roughly $110 million multifamily development by a demonstrated long-term holder — is
breaking ground September 2026 and intends to use an Opportunity Zone. Alpenglow is a patient, build-to-hold developer, exactly the
investor for whom the ten-year benefit is decisive. Both would draw only the lapsed 2018 benefit — and their later phases risk no OZ
support at all — unless the tract is designated for OZ 2.0. The City's own Development Viewer shows the same pattern across other new
applications in and around the tract.
What it means for the Commission's own goals
Every project the incentive tips into construction is new housing — including the income-restricted, mixed-income supply the
Commission has prioritized — and a new-construction property-tax event. Under Montana's levy cap (§ 15-10-420, MCA), new
construction is the City's principal lever for real, non-inflationary revenue growth. Census Tract 11.02 lies in no urban-renewal / tax-
increment district, so that new value flows straight to the general fund. Directing the incentive away from this tract removes the swing
factor from exactly the projects that would deliver both the housing and the tax base.
The question is not whether Bozeman “already has” an Opportunity Zone — for new projects, it effectively does not. It
is whether the tract where the housing and the tax base can actually be built receives the OZ 2.0 designation that makes those
projects pencil. For Census Tract 11.02, at current costs, that designation is decisive.
Prepared by the Bozeman Development Consortium and Jerry Pape of Triple Creek Realty for discussion; brokerage interest disclosed and comprising well
under one percent of the tract. Return figures are analytic estimates; project-level economics vary and depend on hold period, leverage, and appreciation. The
Opportunity Zone benefit accrues to equity investors and does not lower construction or borrowing costs. Sources: current commercial mortgage and Treasury/
SOFR rate data (July 2026); One Big Beautiful Bill Act (2025) and IRS Notice 2026-40; § 15-10-420, MCA; Clarion Partners public announcements (Highmark,
Bozeman, 2025); City of Bozeman Development Viewer; U.S. Census Bureau ACS 2020–2024. Prepared July 7, 2026.
Keeping the Promise: The Opportunity Zone 2.0 Nomination and
the Commission’s Own Priorities
A request that the City Commission reconsider forwarding Census Tract 11.02 for Op-
portunity Zone 2.0 designation
Submitted by the Bozeman Development Consortium and Jerry Pape of Triple Creek Realty · Boze-
man, Montana
The ask, in one paragraph
On March 3, 2026, this Commission adopted four priorities to guide its work through 2027. On
June 23, 2026, in a single compressed vote on the State’s Opportunity Zone 2.0 nomination, the
Commission forwarded only Census Tract 6 and left Census Tract 11.02 off the list. This memo-
randum makes one argument: that the omission works against the very priorities the Commission
adopted three months earlier, and that reconsidering it — while the State’s nomination window
is still open — is the surest way to make those priorities real on the ground. The request is to
forward Census Tract 11.02 for designation; ideally alongside Census Tract 6 where the State’s
allocation allows, but if the Commission will forward only one tract for housing, Census Tract
11.02 is the one that serves all four priorities.
A. The priorities the Commission adopted
Per Resolution 2026-23, adopted March 3, 2026, the Commission’s 2026–27 priorities are:
1.Protect Bozeman’s heritage, neighborhoods, and natural environment.
2.Engage meaningfully with the community.
3.Bridge the affordability gap, with a focus on starter homes.
4.Advance Bozeman as a safe and welcoming place for all.
The paragraphs that follow take each priority as the Commission wrote it and ask a single question:
which tract advances it?
B. Census Tract 11.02 advances every priority. Census Tract 6 puts the first
one at risk.
Priority 1 — heritage, neighborhoods, and natural environment.This is the priority the
choice of tract most directly implicates, and it is where the two tracts diverge most sharply.
Census Tract 11.02, west and south of the university, is largely open valley ground. Housing built
there adds supply without touching a single historic block, because there is no historic fabric to
touch. It is the definition of channeling growth to where it does no harm.
Census Tract 6 is the opposite kind of ground. It is the built-up, near-core area — which is exactly
why it carries the community’s historic neighborhoods and the Neighborhood Conservation Over-
lay District at its edges, and why it also carries the city’s environmental burdens. An Opportunity
Zone is, by design, a magnet for large institutional investment capital — the same category of
capital that Bozeman residents have spent the past year warning is eroding the human scale of
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the downtown-core neighborhoods. Aiming that incentive at Census Tract 6 aims it at the precise
neighborhoods Priority 1 exists to protect. It is also worth naming plainly that this was the con-
cern voiced from the dais in opposition to Opportunity Zones generally: that the incentive could
drive redevelopment pressure into established and historic neighborhoods. That concern is legit-
imate — and the way to honor it is not to forgo the tool, but to point it at greenfield land where
it protects the historic core instead of threatening it. Directing Opportunity Zone 2.0 to Census
Tract 11.02 resolves the tension the Commission itself identified.
The environmental half of Priority 1 points the same direction. Census Tract 6’s developable land
is encumbered by two contaminated-site legacies — the federal Idaho Pole Superfund site and the
state Bozeman Solvent Site groundwater plume — where new development means remediation,
institutional controls, and long timelines. Census Tract 11.02 carries none of that.
Priority 3 — bridge the affordability gap, starter homes.Affordable and starter housing
is precisely the product that can be built at scale on Census Tract 11.02’s open, appropriately
zoned land, and precisely the product whose thin margins most depend on the Opportunity Zone
incentive to pencil (Section C). Census Tract 6’s aggregation, demolition, and remediation costs
push in the opposite direction. If the goal is more attainable homes, the incentive belongs where
attainable homes can actually be produced.
Priority 4 — safe and welcoming for all.Every home added where it can be built lets one more
household afford to live in Bozeman; that is what “welcoming” means in a market priced like this
one. And “safe” is not incidental: Census Tract 11.02 is clean ground, not a remediation site.
Priority 2 — engage meaningfully with the community.The June 23 decision was made
under an extremely compressed State timeline that left little room for public testimony or expert
input (Section E). Reconsidering it now, on a full record and in open session, is itself an act of the
meaningful engagement the Commission committed to.
The fiscal footnote — and a fair path for Census Tract 6.There is a revenue dimension the
June 23 discussion did not reach. Census Tract 6 lies within an urban-renewal / tax-increment
district. Under Montana’s levy cap (§ 15-10-420, MCA), the new taxable value created inside a
tax-increment district is captured as increment and excluded from the City’s general-fund levy
capacity for the life of the district — so new construction there does comparatively little for the
general fund. Census Tract 11.02 sits in no such district: new value there flows straight to the
general fund and lifts the City’s levy ceiling. This is not an argument against Census Tract 6; it is
an argument about sequence. Census Tract 6 already possesses a funding tool its neighbor lacks
— tax-increment financing it can direct toward the infrastructure and site preparation that would
make it genuinely development-ready, positioning it well for a future Opportunity Zone round
(designations now recur every ten years). Census Tract 11.02 has no such tool and is ready now.
The rational order is Census Tract 11.02 this cycle, Census Tract 6 when its own financing has
done its work.
C. This is not a hypothetical exercise. Real projects turn on it, in a market
that is genuinely marginal.
Opportunity Zone capital already works in this tract. Highmark — a 162-home community in
Census Tract 11.02 built by the national institutional manager Clarion Partners with Wentworth
Property Company — was developed as an Opportunity Zone investment under the expiring 2017
program. A major national investor chose this tract, specifically as an Opportunity Zone, for its
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first Bozeman project. That is proof of concept, not saturation: the tract’s substantial remaining
land is where the next wave must go.
What the omission puts at risk is that next wave. A 4+ acre site on the west side of South 19th
Avenue, within Census Tract 11.02 but outside the South University District, is slated for a large
income-restricted (LIHTC) development well positioned to use Opportunity Zone financing. The
publicly announced Alpenglow project at South 19th and Kagy — a roughly $110 million multifam-
ily development by a demonstrated long-term holder — is breaking ground in September 2026 and
intends to use an Opportunity Zone; as patient, build-to-hold capital, it is exactly the investor for
whom the incentive is decisive. Both would draw only the lapsed 2018 benefit, and their later
phases risk no Opportunity Zone support at all, unless the tract is designated for Opportunity
Zone 2.0. (None of these are projects of Triple Creek Realty.)
Why the incentive is decisive here, in plain terms. New construction happens only when a project’s
expected return clears the cost of building and borrowing by a margin. At today’s interest rates
and construction costs — with materials trucked into a mountain market — that margin is thin,
and many Bozeman projects clear the bar by only a point or two, if at all. On strong deals an
Opportunity Zone is a windfall; on marginal deals it is the difference between built and shelved;
and Bozeman’s costs push an unusually large share of its deals into that marginal band. Affordable
and starter housing sits deepest in that band, because holding rents down is what makes a project
marginal in the first place.
This is where the Commission’s own record is the strongest argument. Montana law (House Bill
259, 2021) bars the City from requiring affordable housing; the City may only incentivize it. That
is why the Affordable Housing Ordinance exists, and why the Deputy Mayor described it candidly
as “a handout to the development community… that’s all that we have at our disposal to rein in
development into the type of projects that we want.” The Commission has already accepted the
premise that affordability must be purchased with incentives. The Opportunity Zone is exactly
such an incentive — a federal one, at no cost to the City’s budget, that does precisely what the
Affordable Housing Ordinance strains to do. To ask for affordable housing and simultaneously
decline the tool that makes affordable housing feasible is to work against one’s own goal.
D. There is still time to correct this — and a clean way to do it.
The State’s nomination process makes this reversible without drama. Under the federal designa-
tion guidance (Rev. Proc. 2026-14), the Governor’s nomination window opened July 1, 2026 and
runs through September 28, 2026, with an extension to October 28 available on request. Gover-
nors may submit nominations in installments and amend a submission already made, at any point
until the window closes. Certified designations take effect January 1, 2027 and run through 2036.
In practical terms: the Commission can place reconsideration on an upcoming agenda, forward an
amended recommendation that adds Census Tract 11.02, and transmit it to the Governor’s office
through the Department of Commerce well within the window. Nothing about the June 23 vote is
final as to the State, and nothing forecloses adding a tract now. The only thing in short supply is
calendar — which is why this request is made now rather than after the window narrows.
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E. An offer, not a complaint.
The June 23 decision was reached under a State timeline so compressed that it left little oppor-
tunity for public testimony or for the kind of tract-level analysis a decision of this consequence
deserves. That is not a criticism of the Commission; it is the reality of the schedule the State
handed every Montana city. But it does mean the record before the Commission that evening was
thinner than the stakes warranted.
The undersigned are prepared to remedy that — to present, in writing or in testimony at a reconsid-
eration hearing, the full basis summarized here: the priority-by-priority alignment, the eligibility
confirmation, the fiscal and tax-increment analysis, the siting and environmental constraints in
Census Tract 6, and the specific projects now in motion. Whatever the Commission decides, it
should decide on a complete record. This memorandum, and those submitting it, are offered
toward that end.
F. The question before the Commission.
Adopted priorities are either operative commitments that guide real decisions, or they are aspi-
rational language. The Opportunity Zone 2.0 nomination is an early, concrete test of which they
are — and it is a test the Commission can still pass.
There are two ways forward. Leave the list as it stands, and the housing incentive is aimed at the
tract where housing is hardest to build and where new investment presses on the neighborhoods
Priority 1 protects — an action pointing away from the priorities. Or reconsider, and forward
Census Tract 11.02 — the tract where attainable housing can actually be produced, where clean
ground raises no heritage or environmental concern, and where new value reaches the general
fund — an action that advances all four priorities at once.
The respectful recommendation of this memorandum is the second course: forward Census Tract
11.02 for Opportunity Zone 2.0 designation, alongside Census Tract 6 if the State’s allocation
permits, and ahead of it if the Commission will forward only one. Doing so is not a favor to any
developer. It is the Commission keeping the promise it made to Bozeman on March 3.
Respectfully submitted,
The Bozeman Development Consortium
and Jerry Pape — Triple Creek Realty, 11 N. 25th Avenue, Bozeman, MT 59718 · (406) 522-8314
Disclosure: Jerry Pape is a licensed Montana real estate broker with a brokerage interest in
property within Census Tract 11.02 that comprises well under one percent of the tract’s area.
The projects identified above are not projects of Triple Creek Realty. This memorandum argues
the public merits of the tract’s designation.
Sources: City of Bozeman Resolution 2026-23, Adopting 2026–27 Commission Priorities (March
3, 2026); Bozeman City Commission meeting record, June 23, 2026; Montana House Bill 259
(2021); City of Bozeman Affordable Housing Ordinance (municipal code Div. 38.380) and related
public statements; § 15-10-420, MCA; IRS/Treasury Rev. Proc. 2026-14 (Opportunity Zone 2.0
designation guidance) and IRS Notice 2026-40; U.S. EPA Region 8 (Idaho Pole Superfund) and
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Montana DEQ (Bozeman Solvent Site) records; Clarion Partners public announcements (High-
mark, Bozeman, 2025); City of Bozeman Development Viewer; current commercial mortgage and
Treasury/SOFR rate data (July 2026).
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Memorandum to the Bozeman City Commission
Re: Reconsideration of the June 23, 2026 removal of Census Tract 11.02 from
Bozeman’s Opportunity Zone 2.0 recommendation
From:The Bozeman Development Consortium and Jerry Pape, Triple Creek Realty Date:[set
on transmission]Subject:The decision to forward only Census Tract 6, and to strike Census
Tract 11.02, for Opportunity Zone 2.0 designation — and why it should be reconsidered while the
window remains open
The bottom line
On June 23, 2026, the Commission struck Census Tract 11.02 — the large tract south and west
of Montana State University — from Bozeman’s Opportunity Zone 2.0 recommendation and for-
warded only Census Tract 6. The stated reason for removing 11.02 was its “large proportion of
undeveloped, unannexed land.”
The Montana Department of Commerce identified three Bozeman census tracts as eligible for OZ
2.0 nomination. One lies entirely on the Montana State University campus and is not developable
for this purpose — correctly set aside — which left two real candidates: Census Tract 11.02 and
Census Tract 6. Of those two, the Commission forwarded the weaker one.
That rationale is backwards. The feature named as disqualifying is the single most valuable thing
a tract can bring to this program, and it is the exact growth pattern the City’s own adopted plan
directs Bozeman to pursue. In one motion the Commission removed its most distressed, most
build-ready, most defensible tract — the City’s incumbent Opportunity Zone — and advanced in
its place the one tract on which the housing this program is designed to finance cannot lawfully
be built. It did so, the record indicates, without the one analysis that should have governed the
choice: the fiscal consequence under Montana’s property-tax levy law, which points the opposite
direction from the vote (Section 4).
This is a serious and correctable error. It costs the City nothing to fix: the designation window
belongs to the Governor, not to the City’s internal calendar, and it is open now. What follows is
why the decision was wrong on every dimension the program measures, and what reconsideration
looks like.
1. The rationale inverts the purpose of the program
Opportunity Zones exist to move private capital into places with need and room but without in-
vestment. The dominant empirical finding on the 2017 program is that capital flowed dispropor-
tionately to tracts that already had momentum, financing development that would have happened
anyway. Against that record,“development is already occurring there”is not a qualification for
the incentive — it is the failure mode the incentive is supposed to avoid.
Census Tract 11.02’s undeveloped, entitlement-ready land is therefore not a liability to be dis-
counted. It is the asset. It is the ground on which designation can produce net-new housing
that would not otherwise be financed — the additional outcome the program is built to create.
Striking the tract for having developable land is striking it for being the right tract.
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2. What was forfeited, and what was chosen in its place
Measure Census Tract 11.02 (struck) Census Tract 6 (forwarded)
Poverty 33.4%— highest of any
candidate; ≈1,808 people,
nearly triple Tract 6
22%; ≈654 people
OZ history Bozeman’s incumbent 2017
Opportunity Zone
Not the incumbent
Land for new housing Substantial vacant, flat
land across the tract, much
of it already zoned REMU
Largely built out; principal
redevelopable parcel legally
barred from housing (§5)
Water Prepaid municipal water
rights already secured
—
Tax-base growth New value flows to the
general fund (§4)
New value captured by tax
increment, not the general
fund (§4)
Growth-policy fit Executes the Community
Plan 2020 (§3)
—
On the metrics the program is meant to serve — depth of need, capacity to produce housing,
and alignment with local policy — the Commission forwarded the weaker tract and removed the
stronger one.
Opportunity Zone capital already works in this tract.This is not hypothetical:Highmark —
a 162-home community in Census Tract 11.02 developed by national institutional manager Clar-
ion Partners with Wentworth Property Company — was built as an Opportunity Zone investment
under the expiring 2017 program, and a major Opportunity Zone investor chose this tract for its
first Bozeman project. That is proof of concept, not saturation: the tract’s substantial remaining
developable land is where the next wave of that capital must go.
The removal has concrete casualties already in the City’s own pipeline.At today’s interest
rates and construction costs, development margins are thin — many Bozeman projects pencil
only a point or two above the line, if at all — and that is exactly the band in which this incentive
is decisive: on strong deals it is a windfall, but on marginal deals it is the swing factor, and
Bozeman’s current costs push an unusually large share of its deals into the marginal band. For
projects that are close, OZ 2.0 capital is frequently what closes the financing gap, whether that
gap presents as an equity-return shortfall or as a debt shortfall the equity must backfill. Two live
projects show what the omission from the OZ 2.0 submittal puts at risk: a 4+ acre site on the west
side of South 19th Avenue — within Census Tract 11.02 but outside the South University District
— slated for a large LIHTC development well positioned to use Opportunity Zone financing;
and the publicly announced Alpenglow project at South 19th Avenue and Kagy Boulevard —
a roughly $110 million multifamily development by a demonstrated long-term holder,
breaking ground September 2026 — which intends to use an Opportunity Zone and, as patient
build-to-hold capital, is exactly the profile for which the ten-year exclusion is decisive rather than
incidental. Neither is a project of Triple Creek Realty.
And incumbency does not save them. For any project capitalizing now, the 2017 designation is
nearly worthless — the deferral has decayed to a 2026 cutoff, the basis step-ups expired years ago,
and the designation itself sunsets at the end of 2028. Only OZ 2.0, effective January 1, 2027 for a
newly designated tract, restores the full, permanent benefit and a clean ten-year runway. Because
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both projects are phased, their post-2026 phases can qualify for Opportunity Zone treatment only
if the tract carries the new designation; in a 2018-only zone, later-phase construction generally
fails to qualify at all. The strike therefore does not withhold a bonus — it leaves real, imminent,
financed housing with the expiring remnant of the old program and strips its later phases of the
incentive entirely.
3. The decision contradicts the City’s own adopted growth policy
This is the center of the error.
The Bozeman Community Plan 2020 — the growth policy this Commission is charged with
implementing under Montana law — directs the community’s growth toward compact, land-
efficient development on serviceable land within and adjacent to the city, expressly in
preference to sprawl. Among the growth focus areas it names are the Montana State University
area and the Cottonwood corridor — the two features that define Census Tract 11.02, which is
anchored by MSU and bounded on the west by Cottonwood Road.
So the “undeveloped, unannexed land”the Commission cited as grounds to remove 11.02 is the
very land the City’s own plan directs it to develop first. The removal rationale does not merely lack
support; it is in direct conflict with adopted City policy. A designation that would have executed
the growth plan was struck for doing precisely what the growth plan calls for.
The removal also runs against positions stated at the same meeting. The concern that growth
should be directed to the core rather than pushed outward is answered by Census Tract 11.02,
which is compact, in-city growth — not edge sprawl. The stated interest in directing the incentive
toward mixed-income housing is answered by the tract’s REMU-zoned land plus Opportunity Zone
and Low-Income Housing Tax Credit capital — the combination that produces exactly that housing.
The concern for land-use control is already satisfied on the tract’s zoned, entitled land: the control
is in place.
4. The fiscal error — the point that should have decided the vote
This is the consequence the record shows the Commission never weighed, and on its own it is
dispositive.
Montana law strictly caps how much a city can grow property-tax revenue on its existing base.
Under § 15-10-420(1)(a), MCA, a city may raise its levy only enough to collect the prior year’s
taxes plus one-half of the average rate of inflation over the prior three years — capped at
4%. In an inflationary period that barely holds the City even in real terms.
The statute provides one structural escape from that cap:“newly taxable property.”Section
15-10-420(3)(a)defines it to include new construction, annexation, and subdivision — value
added on top of the capped base that expands the City’s lawful levy capacity. New construction
is, quite literally, the only lever Montana law gives Bozeman to grow real revenue without going
to the voters for a levy increase.
Here is the provision that decides between the two tracts. Section 15-10-420(3)(b)states, in
plain terms, that “newly taxable property does not include an increase in value that arises because
of an increase in the incremental value within a tax increment financing district.”Census Tract
6’s defining attribute is that it overlays the City’s urban-renewal / tax-increment (TIF) districts.
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New construction there therefore does two things the record gives no indication the Commission
registered:
1.Its incremental taxes are captured by the TIF district — dedicated to that district’s projects
and bond debt, not to the general fund that pays for police, fire, streets, and parks citywide
— for the life of the district, which with bonding can run two to three decades.
2.That same increment is excluded by statute from the City’s “newly taxable property,”
so it does not expand the City’s general levy capacity under § 15-10-420 during the district’s
life.
Census Tract 11.02 — the university-district tract — sits in no TIF district. New construction on
its developable, largely residentially and mixed-use-zoned land is newly taxable property in full:
it flows to the general fund and it lifts the City’s levy ceiling. (The Tract 6 increment is not lost
forever — it funds district infrastructure and, under § 15-10-420(4) and Department of Revenue
guidance, returns to the general rolls when the district terminates. But that is years or decades
out; for the entire life of the districts the general fund and the City’s growth capacity see none of
it.)
So the fiscal reality is the opposite of the intuition that Tract 6’s existing development districts
make it the productive choice. Steering the development incentive into Tract 6’s TIF footprint
channels the resulting value into increment capture; steering it to Census Tract 11.02 converts
that value into general-fund revenue and levy headroom. For a City whose revenue growth is
capped by state law, the Commission chose the tract that starves the general fund and passed
over the one that feeds it.
This is not a matter of opinion — it is the arithmetic of § 15-10-420. And it compounds the growth-
policy contradiction in Section 3: the Community Plan treats compact, serviced infill as the fiscally
responsible growth pattern, and the tract that delivers general-fund revenue is the same tract the
Plan prioritizes. A commissioner who wanted the tool directed at mixed-income housing, or who
chose development in the core over sprawl into the surrounding county, or who means to honor
the adopted growth plan, is better served on every one of those aims by Census Tract 11.02.
The vote ran against all of them at once — which is what happens when a decision of this fiscal
magnitude is made without a fiscal analysis in front of it.
5. The siting error — the housing tool was aimed where housing is barred, and hardest to
build
Census Tract 6’s principal redevelopable distressed parcel is the Idaho Pole Superfund site. Its
recorded institutional controls — deed covenants that run with the land in perpetuity —prohibit
residential development or use on the industrially zoned (M-1/M-2) acreage, with “residential”
expressly defined to include children’s day care. Those covenants can be modified only through
a federal EPA/DEQ process that may require a formal remedy amendment. The site adjoins the
rail line and Interstate 90.
Low-Income Housing Tax Credit family housing — which by design concentrates households with
children — therefore cannot lawfully be sited on that parcel without a federal remedy modifi-
cation, and would be inappropriate there on child-safety and environmental-justice grounds even
if the covenant were lifted. In forwarding Census Tract 6 as the housing recommendation, the
Commission steered the housing tool toward the one place housing is legally prohibited.
Nor is Idaho Pole the tract’s only constraint. The same northeast quadrant carries a second
Superfund footprint — the Bozeman Solvent Site, a Montana state (CECRA) cleanup whose
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tetrachloroethene groundwater plume and Controlled Groundwater Area extend across both sides
of North 19th Avenue toward the East Gallatin River, under recorded land-use restrictions and a
decades-long remediation. The quadrant is also bisected by Interstate 90 and the active rail
corridor — hard barriers that sever north–south and east–west connectivity, frustrating both a
coherent bike and transit network and the assembly of contiguous developable land. Producing
housing at scale there means parcel aggregation, demolition, and brownfield remediation stacked
on the northeast side’s already high per-foot cost — the inverse of Census Tract 11.02, where the
same homes rise on flat, largely open valley land at a fraction of the basis and the friction. This
is the deeper reason the two tracts are not interchangeable: even setting aside the legal bar on
the Idaho Pole parcel, Census Tract 6 is structurally the harder, costlier, slower place to build the
housing the program exists to produce.
6. It is not too late — and the complete correction is simple
The Opportunity Zone 2.0 nomination window is the Governor’s, and it is open. The City’s internal
submission deadline is an administrative date, not the legal deadline for designation; the State’s
window runs well beyond it.
The Commission can correct the record at either level:
1.Best:re-recommend both tracts — Census Tract 11.02 alongside Census Tract 6. This
forfeits nothing and captures the strongest tract.
2.At minimum:register no objection to the Governor designating Census Tract 11.02,
whether alongside or in place of Census Tract 6.
Designating both is the cleanest outcome and the one most consistent with the City’s own plan,
its own fiscal interest, and the program’s purpose. Nothing in the June 23 vote prevents the
Commission from reaching it now.
Disclosure
Jerry Pape, of Triple Creek Realty and among the undersigned, holds a brokerage interest in land
within Census Tract 11.02. That interest is disclosed here without reservation. It represents a
small fraction of a tract of roughly 5,000 acres and roughly 5,700 residents; the case above rests
on tract-wide public value — poverty depth, housing capacity, growth-policy alignment, and fiscal
effect — that stands independent of any single parcel. Disclosure is made so that the argument is
judged on its merits.
Sources: City of Bozeman, Bozeman Community Plan 2020 (adopted growth policy, Title 76 ch. 1,
MCA); Bozeman City Commission meeting record, June 23, 2026; City of Bozeman Development
Viewer; Clarion Partners public announcements (Highmark, Bozeman, 2025); § 15-10-420, MCA;
U.S. EPA Region 8, “Frequently Asked Questions for Redevelopment of the Idaho Pole Co. Super-
fund Site” (June 2020); Montana DEQ / Gallatin Local Water Quality District, Bozeman Solvent
Site (CECRA) record; U.S. Census Bureau, American Community Survey 2020–2024 five-year es-
timates; One Big Beautiful Bill Act (2025), Rev. Proc. 2026-14, and IRS Notice 2026-40; current
commercial mortgage and Treasury/SOFR rate data (July 2026).
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Which Tract Can Actually Deliver? Opportunity Zone 2.0 and the
Choice Between Census Tract 11.02 and Census Tract 6
A brief across every dimension of the decision — fiscal, growth policy, future land use, and the
Commission’s own housing priorities.
The neutral question
Set aside entirely how the June 23 recommendation was reached and who advocated for which
tract. None of that needs to be litigated. There is one question that decides whether the nomina-
tion serves Bozeman:of the two tracts, which can actually host the housing and produce
the public return the Opportunity Zone is designed to create?
An Opportunity Zone designation is worth exactly what gets built under it. It is a capital incentive
— nothing more. It does not annex land, change zoning, build a road, or clean a contaminated
site. It only lowers the after-tax cost of capital for projects that can otherwise clear entitlement,
infrastructure, and the market. So the right test is not which tract sounds preferable in the
abstract; it is which tract’s ground can carry projects at scale that pencil. On that test the two
tracts are not close, and the answer is Census Tract 11.02.
1. Feasibility — can projects at scale actually pencil?
Development happens only when a project’s return clears the cost of building and borrowing by
a margin. At today’s rates and construction costs, that margin is thin, and dense housing — the
most capital-intensive product — sits closest to the line. The Opportunity Zone benefit is decisive
precisely on those marginal deals.
Now apply that to the two tracts. Census Tract 6’s developable ground is the built-up, near-core
area, and its vacant or redevelopable parcels are burdened by a federal Superfund site (Idaho
Pole)and a state Superfund groundwater plume (the Bozeman Solvent Site), and split by
Interstate 90 and an active rail line. Producing housing at scale there means land assembly,
demolition, and environmental remediation stacked on already high per-foot cost. Even with an
Opportunity Zone incentive, those projects struggle to pencil; the incentive cannot close a gap that
large. Census Tract 11.02’s university-corridor land, by contrast, is clean, entitled, and shovel-
ready — the exact profile where the incentive turns a marginal dense project into a financed one.
The consequence of forwarding Tract 6:the incentive lands where projects at scale still will
not pencil. The tool is spent on ground that cannot use it.
2. Zoning and entitlement — the incentive cannot overcome the code
An Opportunity Zone changes financing, not zoning. It channels capital toward parcels that are
already entitled for the density in question. Census Tract 11.02’s South University District is
annexed, master-planned, and zoned for compact, higher-density residential and mixed use, with
services in place. Census Tract 6’s developable parcels face the harder path — assembly, rezoning,
and remediation before a shovel moves. Directing the incentive to Tract 6 asks it to do something
it cannot: overcome the entitlement and site conditions that determine what can be built.
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3. Transit and infrastructure — density needs a place that can carry it
Compact housing only works where the infrastructure and connectivity already exist. Census
Tract 6 is bisected by the interstate and the rail corridor, which sever north–south and east–west
movement and frustrate both a coherent transit and bike network and the assembly of contiguous
developable land. Census Tract 11.02’s corridor sits adjacent to Montana State University, on
established collector and transit routes, with utilities and services present. The tract that can
actually support density at scale is 11.02; the tract where connectivity is broken is Tract 6.
4. Growth policy and the Future Land Use Map — Tract 11.02 is the anti-sprawl
choice
The Bozeman Community Plan 2020 commits the City to “prioritize infill to promote a walkable
community and prevent sprawl,” directing higher-density development to the main corridors and
designated districts, the university district among them. The Future Land Use Map designates
the Kagy Boulevard / South 19th Avenue area — inside Census Tract 11.02 — for Urban Neighbor-
hood and community-commercial mixed use: the compact, higher-intensity categories. Multiple
successive land-use plans, over decades, have placed growth at that corner.
Compact housing at a planned, serviced, university-adjacent node is the definition of the growth
pattern the plan adopted to fight sprawl — not an example of sprawl. And there is a further
irony worth stating plainly: because dense projects are the most capital-intensive and the most
marginal, stripping the incentive makes them harder to finance, which pushes growth outward to
cheaper, lower-density ground. Directing the incentive away from 11.02 in the name of preventing
sprawl produces more of it.
5. Fiscal — where the new tax value actually lands
Under Montana’s levy cap (§ 15-10-420, MCA), new taxable value created inside a tax-increment
district is captured as increment and excluded from the City’s general-fund levy capacity for the
life of the district. Census Tract 6 lies within such a district; new construction there does com-
paratively little for the general fund. Census Tract 11.02 sits in no tax-increment district — new
value there flows straight to the general fund and lifts the City’s levy ceiling. The fiscal return
to the City is materially larger from growth in 11.02. (This is not an argument against Tract 6’s
future: its increment financing is precisely the tool that can prepare its infrastructure for a later
Opportunity Zone round. The right order is 11.02 now, Tract 6 when its own financing has done
its work.)
6. The Commission’s own housing priorities
The Commission adopted its 2026–27 priorities on March 3, 2026 (Resolution 2026-23), including
bridging the affordability gap with a focus on starter homes, and protecting Bozeman’s heritage,
neighborhoods, and natural environment. Both point to 11.02.
Affordable and starter housing carries the thinnest margins, so it depends on incentives most —
and Montana law (House Bill 259, 2021) bars the City from requiring affordability at all; it may
only incentivize it. The City has already accepted this premise: its Affordable Housing Ordinance
rests on it, and the Deputy Mayor has described the approach candidly as the only lever the City
has to shape what gets built. The Opportunity Zone is exactly such an incentive — federal, and
at no cost to the City budget. Placing it where affordable housing can actually be built advances
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the affordability priority; withholding it while still asking for affordability removes the tool that
makes affordability feasible.
And the heritage priority cuts the same way. Census Tract 6 is the near-core, Neighborhood-
Conservation-Overlay-adjacent ground; steering institutional Opportunity Zone capital there
presses redevelopment on exactly the historic neighborhoods the Commission’s first priority
protects. Census Tract 11.02 is greenfield — density there threatens no historic fabric.
What is concretely at stake
This is not hypothetical. Opportunity Zone capital already works in Census Tract 11.02: High-
mark, a 162-home community by the national institutional manager Clarion Partners with Went-
worth Property Company, was built there as an Opportunity Zone investment under the expiring
2017 program. And the pipeline turns on the new designation now — most visibly the Alpen-
glow project at Kagy and South 19th, a roughly $110 million multifamily development
breaking ground September 2026, whose later phases cannot qualify for Opportunity Zone
treatment at all in a 2018-only zone. Real, imminent, corridor-density housing depends on 11.02
carrying an Opportunity Zone 2.0 designation.
The consequence, stated once and plainly
No judgment of anyone’s motives is required to see the problem. On every dimension that deter-
mines whether the program works — feasibility, zoning, infrastructure, adopted growth policy,
the future land use map, the City’s fiscal return, and the Commission’s own housing and heritage
priorities — Census Tract 6 is the harder, costlier, slower, more constrained ground, and Cen-
sus Tract 11.02 is where the plan already directs the housing and where it can actually be built.
The consequence of forwarding Tract 6 and omitting 11.02 is simply this: the tool lands where
it cannot work, and the housing it was meant to finance does not get built. That outcome is still
correctable — and correcting it is the entire point.
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