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Home My WebLink About10-06-26 Public Comment - N. Stein - Headwaters Comment __ 10_6 Work SessionFrom:Nathan Stein To:Joey Morrison; Douglas Fischer; Jennifer Madgic; Emma Bode; Alison Sweeney Cc:chuck.winn@bozeman.net; Brian Guyer; Brit Fontenot; David Fine; Jesse DiTommaso; Bozeman Public Comment Subject:[EXTERNAL]Headwaters Comment // 10/6 Work Session Date:Tuesday, October 6, 2026 11:40:00 AM Attachments:image.png261005 Housing Levy Commission Letter.pdf CAUTION: This email originated from outside of the organization. Do not click links or open attachments unless you recognize the sender and know the content is safe. Commissioners and Staff, thank you for the opportunity to provide a comment ahead of tonight's work session. I've attached a written comment and will be there this evening to provide an abbreviated comment in person. Please let me know if you have any questions ahead of or following this evening's session. Thank you, Nathan Nathan Stein Executive Director | Headwaters Community Housing Trust 406.922.9554 | nstein@headwatershousing.org www.headwatershousing.org Book time to meet with me Thank you, Commissioners and Staff, for the opportunity to weigh in on an important work session as you consider several vital community needs, from public safety, to transportation, to housing, and take on the difficult work of funding them with limited resources. I have the privilege of serving as the Executive Director of Headwaters Community Housing Trust, a local community-led non-profit organization focused on powering community vibrancy and economic opportunity through permanent housing affordability. I also had the opportunity to chair the Regional Housing Coalition working group that produced Bridging the Gap, a report that aimed to provide a roadmap for policymakers looking to address our community’s critical challenge of housing affordability. I’m writing (and will be commenting in person this evening) to encourage the continued consideration and study of a dedicated levy or general obligation bond to fund housing as vital community infrastructure. A healthy local economy requires housing at every price point. A healthy housing market matches people to their point-in-time housing needs, and allows them to move up the ladder as their lives and careers advance (and down the ladder as their needs and preferences change). When the next rung of the housing ladder is out of reach for an individual or household, they will leave for communities that can better meet their housing needs. When this happens at scale, a community risks losing vital segments of its workforce and culture. Last fall, Headwaters commissioned a poll and presented it to this Commission – the key finding of that poll was that half of Bozeman voters say that the lack of housing they can afford makes it hard to envision a long-term future in this community. A shortage of homes that are affordable to moderate and middle-income households is a binding constraint on economic growth and community vitality. Bozeman's housing market has seen significant changes since the worst days of the pandemic-era housing crisis. The market response to the price shocks we experienced at the start of the decade has mostly taken the form of market-rate and LIHTC multifamily development, with thousands of the former and hundreds of the latter delivered in recent years, with more in the pipeline. Still, many households in the Gallatin Valley remain cost burdened and struggle to retain stable and safe housing. There are two critical gaps in the supply of new homes that neither the private market nor existing federal programs like LIHTC have been able to address to date: deeply affordable rental, shelter, and transitional housing for lower-income households, and entry-level homeownership for working households. Today, the median home price (inclusive of condos and townhomes) in Bozeman is $780,000, which is affordable to a 3-person household earning twice the median income (200 AMI). According to the 2025 Gallatin Valley Housing Report, there are nine cost-burdened households for every subsidized rental unit in our community. The reason that these gaps have not been addressed is simple – the market cannot produce the homes we need at the price points that people can afford. High land and development costs in our community mean that the cost to create a home is greater than the price that a middle-income household can pay. This difference is called The Capital Gap – and to create a home affordable to a middle-income household today in the Gallatin Valley, that gap must be closed with some combination of philanthropy and public investment. Depending on the project (typology, construction, affordability level), capital gaps in our community can range from $50,000 to $250,000 per unit. The existing tools our community has to bridge the Capital Gap are undersized to the scale of the problem. Bozeman gets ~$400,000 a year in CDBG funds, which can’t be used for middle-income housing. The Affordable Housing Ordinance incentives have yielded a pipeline of 3 middle-income ownership units (in the Bozeman Yards project). Contributions of public-owned land for affordable housing, like the Fowler or Hidden Creek projects, are meaningful and real, but limited to rare cases in which local governments own a parcel suited to development. Headwaters is working to grow our community’s pipeline of permanently affordable homes, but scaling our community response requires additional community resources. Bozeman shares affordability challenges with other Western amenity communities like Big Sky, Jackson, Boulder, Bend, and others – but unlike them , we have no dedicated local or state-level public funding source for permanently affordable housing. None of these communities have “solved” housing, but they have harnessed – and created – resources that have allowed them to make meaningful strides towards affordability. • Big Sky: A 3% resort tax, levied since 1992 and renewed by voters through 2065. In May 2025, voters approved bonding against resort tax revenue to acquire land for Cold Smoke, a planned neighborhood of nearly 400 homes stewarded by the Big Sky Community Housing Trust. • Jackson/Teton County: Voters approve a one-cent Specific Purpose Excise Tax project by project. In 2022, all five housing measures, totaling about $80 million, passed. • Boulder: A dedicated affordable housing property tax since 1991 (about $3 million a year), plus commercial linkage fees and cash-in-lieu. Every home the city’s housing fund supports must remain permanently affordable. In 2025, Boulder made its largest one-year housing investment and added 242 affordable homes. • Bend: Oregon’s state-bond-funded LIFT Homeownership program makes 0% deferred loans for homes affordable at or below 80% AMI, and requires a shared- equity model such as a community land trust. Two recent Bend projects, Rooted at Simpson and Woodhaven, received $20.7 million in LIFT funding for 146 homes, plus $2.2 million in state general funds. Bozeman isn’t powerless to address the problem – we have essentially three options (which aren’t mutually exclusive): ask Helena either for funding or for the option to levy our version of a resort tax, allocate more City general fund dollars (perhaps at the expense of other programs), or raise additional funds ourselves, from ourselves, through a dedicated levy or GO bond. This isn’t the first time in recent years we’ve had this conversation. The 2021 Affordable Housing Levy failed by only 276 votes – the good news is that we understand the challenge better, and we can articulate a better case on the need, how funds would be deployed, and the return on investment for the community. The City could require that funds go to projects that provide permanent affordability through a Community Land Trust (CLT) ground lease or deed restriction. It could target funds to specific gaps in the market, with a mandate to assess those gaps and refine priorities on a regular schedule (3-5 years). It could narrow the ask to voters by proposing a sunset on the program, placing the onus on the City to articulate the impact of funds before asking voters to renew the program. At tonight’s work session, this Commission should direct staff to continue the legwork for a potential November 2027 ballot question for a housing levy. Staff should prepare a memo on the levy amount, mill math, governance and eligible uses, and present findings and recommendations at a future meeting. Headwaters is of course available as a thought partner in the development of an initiative, and as a resource for our community in understanding the challenge and potential solutions. Thank you for your consideration and hard work. In partnership, Nathan Stein Executive Director Headwaters Community Housing Trust