HomeMy WebLinkAbout10-19-26 - Community Development Board - Agendas & Packet MaterialsA. Call to Order - 6:00 pm
B. Disclosures
C. Changes to the Agenda
D. Approval of Minutes
D.1 Approval of Minutes(Ruffalo)
E. Special Presentations
E.1 Northwest Bozeman Area Plan(Naumann)
E.2 Special Presentation - Cash In Lieu of Water Rights Fee Update (Heaston)
THE COMMUNITY DEVELOPMENT BOARD OF BOZEMAN, MONTANA
CDB AGENDA
Monday, October 19, 2026
General information about the Community Development Board is available in our Laserfiche
repository.
If you are interested in commenting in writing on items on the agenda please send an email to
comments@bozemanmt.gov or by visiting the Public Comment Page prior to 12:00pm on the day of
the meeting. At the direction of the City Commission, anonymous public comments are not distributed
to the Board or staff.
Public comments will also be accepted in-person and through video conference during the appropriate
agenda items.
As always, the meeting will be streamed through the Commission's video page and available in the
City on cable channel 190.
For more information please contact Chris Saunders, chris.saunders@bozemanmt.gov
This meeting will be held both in-person and also using an online video conferencing system. You
can join this meeting:
Via Video Conference:
Click the Register link, enter the required information, and click submit.
Click Join Now to enter the meeting.
Via Phone: This is for listening only if you cannot watch the stream, channel 190, or attend in-
person
United States Toll
+1 346 248 7799
Access code: 947 0602 4018
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F. Public Comments on Non-agenda Items Falling within the Purview and Jurisdiction of the Board
G. FYI/Discussions
G.1 Upcoming Items for the November 2, 2026, Community Development Board Meeting
Agenda.(Saunders)
H. Adjournment
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.
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:Trenton Ruffalo
SUBJECT:Approval of Minutes
MEETING DATE:October 19, 2026
AGENDA ITEM TYPE:Minutes
RECOMMENDATION:Approve
STRATEGIC PLAN:1.1 Outreach: Continue to strengthen and innovate in how we deliver
information to the community and our partners.
BACKGROUND:None
UNRESOLVED ISSUES:None
ALTERNATIVES:Approve with Corrections
FISCAL EFFECTS:None
Attachments:
10052026 CDB Minutes.pdf
Report compiled on: October 8, 2026
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Bozeman Community Development Board Meeting Minutes, 10.05.26
Page 1 of 3
THE COMMUNITY DEVELOPMENT BOARD OF BOZEMAN, MONTANA
MINUTES
10.05.26
00:03:13 General information about the Community Development Board is available in our
Laserfiche repository.
A) 00:05:30 Call to Order - 6:00 pm
Present: Joey Morrison, Erik Bonnett, Chris Egnatz, Jason Delmue, Mark Egge, Ben Lloyd, Lauren
Mitro
Absent: None
Excused: None
00:05:30 Member Egnatz arrived shortly after the Approval of minutes was taken
B) Disclosures
C) 00:06:11 Changes to the Agenda
D) 00:06:12 Approval of Minutes
D.1 00:06:16 Approval of Minutes
092126 CDB Minutes.pdf
00:06:21 Motion to approve the meeting minutes from 09.21.26
Mark Egge: Motion
Jason Delmue: 2nd
00:06:40 Vote on the Motion to approve the meeting minutes from 09.21.26 The Motion carried 6 - 0.
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Bozeman Community Development Board Meeting Minutes, 10.05.26
Page 2 of 3
Approve:
Joey Morrison
Erik Bonnett
Jason Delmue
Mark Egge
Ben Lloyd
Lauren Mitro
Disapprove:
None
E) 00:06:55 Action Items
E.1 00:07:02 Consider cancellation of the December 21, 2026 Community
Development Board Meeting
00:07:09 Member Egnatz Arrives
00:07:47 Motion to approve the cancellation of the 12.21.26 CDB meeting
Erik Bonnett: Motion
Mark Egge: 2nd
00:08:07 Vote on the Motion to approve the cancellation of the 12.21.26 CDB meeting The Motion
carried 7 - 0.
Approve:
Joey Morrison
Erik Bonnett
Chris Egnatz
Jason Delmue
Mark Egge
Ben Lloyd
Lauren Mitro
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Bozeman Community Development Board Meeting Minutes, 10.05.26
Page 3 of 3
Disapprove:
None
F) 00:08:33 Public Comments on Non-agenda Items Falling within the Purview and
Jurisdiction of the Board
G) 00:09:03 FYI/Discussions
G.1 00:09:08 Bozeman Creek Vision Plan - Work Session
Bozeman Creek Planning Next Steps Guidance.pdf
00:09:11 Assistant City Manager Jon Henderson presents to the Board
01:41:59 Community Development Manager Chris Saunders addresses the Board
G.2 00:56:21 Community Development Board Question and Answer Opportunity
G.3 02:04:47 Upcoming Items for the October 19, 2026, Community Development
Board Meeting Agenda.
02:04:59 10.19.26 Work Session on the NW Bozeman Plan and the CILWR program update.
H) 02:06:32 Adjournment
This board generally meets the first and third Monday of the month from 6:00 pm to 8:00 pm.
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Memorandum
REPORT TO:Community Development Board
FROM:Chris Naumann - Sanbell
SUBJECT:Northwest Bozeman Area Plan
MEETING DATE:October 19, 2026
AGENDA ITEM TYPE:Citizen Advisory Board/Commission
RECOMMENDATION:Northwest Bozeman Area Plan
STRATEGIC PLAN:4.3 Strategic Infrastructure Choices: Prioritize long-term investment and
maintenance for existing and new infrastructure.
BACKGROUND:The City of Bozeman is mid-way through the creation of the Northwest
Bozeman Area Plan; a long-range planning effort focused on approximately
3,000 acres in the northwest corner of the City’s growth boundary.
Anticipating the scheduled public review date with the Community
Development Board on November 16, 2026, this project update intends to
briefly summarize the process to date and introduce the public draft you will
be tasked to consider and make recommendation to the City Commission in
November.
This planning effort is connected to the proposed Gooch Hill Sanitary Sewer
Lift Station, which will provide infrastructure necessary to support future
development in this area. While the lift station is a separate engineering
project, the Area Plan will guide how this area develops after the lift station
is operational. The Area plan will address potential land uses, transportation
connections, parks and open space, public infrastructure coordination, and
protection of natural resources.
The Northwest Bozeman Area Plan boundary was determined by the
portions of the two drainage basins to be partially serviced by the Gooch Hill
Sewer Lift Station; more specifically, the northern portion of the Aajker
Creek basin and the western half of the Lower Baxter Creek basin. The
planning area is generally bounded by East Valley Center Road to the north,
the eastern and southern boundary align with Durston Road, Oak Street,
Cottonwood Road, Cattail Street, and the potential future extension of
Ferguson Avenue north back to East Valley Center. The western plan
boundary runs north south approximately one-half mile east of Love Lane.
A copy of the draft plan is attached for reference, which summarizes plan
efforts to date.
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UNRESOLVED ISSUES:None
ALTERNATIVES:As suggested by the board.
FISCAL EFFECTS:None
Attachments:
NBAP DRAFT Plan Document October.pdf
Report compiled on: October 5, 2026
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Northwest Bozeman Area Plan
PUBLIC DRAFT 9
2 32026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Table of Contents
Plan Summary ����������������������������������������������������������������������������������������������������5
Introduction��������������������������������������������������������������������������������������������������������7
Area Plan Overview ����������������������������������������������������������������������������������������������������������������������7
Existing Conditions �����������������������������������������������������������������������������������������������������������������������7
Area Plan Location and Jurisdiction ��������������������������������������������������������������������������������������������������8
Planning Context ������������������������������������������������������������������������������������������������������������������������10
Community Engagement ��������������������������������������������������������������������������������������������������������������12
Community Engagement Activities �������������������������������������������������������������������������������������������������13
The Vision ���������������������������������������������������������������������������������������������������������15
Vision Overview �������������������������������������������������������������������������������������������������������������������������15Planning Objectives �������������������������������������������������������������������������������������������������������������������15Plan Themes �����������������������������������������������������������������������������������������������������������������������������16Existing Future Land Use Map �������������������������������������������������������������������������������������������������������20Framework Elements ������������������������������������������������������������������������������������������������������������������20Framework Elements ������������������������������������������������������������������������������������������������������������������22
The Framework �����������������������������������������������������������������������������������������������25
Framework Elements ������������������������������������������������������������������������������������������������������������������25
Natural Resources ����������������������������������������������������������������������������������������������������������������������26
Public Infrastructure �������������������������������������������������������������������������������������������������������������������28
Active Transportation ������������������������������������������������������������������������������������������������������������������30
Complete Framework ������������������������������������������������������������������������������������������������������������������32
Proposed Future Land Use������������������������������������������������������������������������������������������������������������34
Proposed Future Land Use - Natural Resources ���������������������������������������������������������������������������������36
The Plan ������������������������������������������������������������������������������������������������������������39
Recommendations, Themes, Goals, & Objectives ������������������������������������������������������������������������������39
Implementation �����������������������������������������������������������������������������������������������45
Challenges & Constraints �������������������������������������������������������������������������������������������������������������46
Opportunities ����������������������������������������������������������������������������������������������������������������������������47
Planning Process ������������������������������������������������������������������������������������������������������������������������48
APPENDIX A: Bozeman Planning Context ���������������������������������������������������������������������50
APPENDIX B: Future Land Use Suitability Analysis �����������������������������������������������������52
APPENDIX C: Community Engagement Materials �������������������������������������������������������54
APPENDIX D: Community Plan Supporting Data ���������������������������������������������������������56
APPENDIX E: Community Plan Amendment Compliance �������������������������������������������58
APPENDIX F: Montana Land Use Planning Act Compliance ��������������������������������������60
Acknowledgements
City of Bozeman Project Team
• Shawn Kohtz, Director of Utilities
• Nick Ross, Director of Transportation & Engineering
• Chris Saunders, Community Development Manager
• Tom Rogers, Senior Planner
• Takami Clark, Communications & Engagement
Manager
• Emily Kiely, Community Engagement Coordinator
City of Bozeman
• City Commission
Joey Morrison
Douglas Fischer
Jennifer Madgic
Emma Bode
Alison Sweeney
• Community Development Board
• Transportation Board
• Sustainability Board
Gallatin County
• Planning Board
Sanbell Project Team
• John Halverson
• Tom Hansen
• Chris Naumann
• Kendra Piedalue
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4 52026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Collaborate with partners
to ensure alignment with
adopted community plans�
Engage the community to
identify shared values to
be reflected in the Area
Plan
Plan infrastructure to
provide access for vehicles,
bicyclists, and pedestrians
and sufficient capacity for
public utilities
Protect natural resources
and sensitive lands within
the regulatory framework
Promote a mix of land
uses to enhance economic
health and community
vitality
Recommendations
Prioritize natural resource
protection for water
courses, wetlands,
and riparian areas by
minimizing the impacts
of public and private
development consistent
with other requirements and
community priorities.
Plan public infrastructure
corridors for efficient
delivery and long-term
management of streets,
water, sewer, stormwater,
and active transportation
facilities.
Apply future land uses
and zoning that provide
a variety of housing near
employment, commercial
services, and open spaces.
Implement an active
transportation network
that provides connectivity,
efficiency, and safety for
non-motorized commuting
and recreation.
Continue to engage in
cooperative planning
and coordination with
neighboring jurisdictions
and governing agencies.
The Vision
The Northwest Bozeman Area Plan vision is to protect existing natural resources consistent with thoughtful
planning for public infrastructure and private development to meet the needs of a growing community.
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Planning Objectives
Plan Summary
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6 72026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Introduction
Area Plan Overview
The Northwest Bozeman Area Plan serves as a long-
range vision that helps protect public health, safety, and
wellness, stewards natural resources, guides infrastructure
improvements for cost efficiency and effectiveness, and
facilitates land use decisions as growth occurs over time.
In short, the goal of the area plan is to proactively shape
one of Bozeman’s key growth areas before development
occurs.
The area plan is the culmination of a long-range planning
effort focused on approximately 3,000 acres in the
northwest corner of the City’s growth boundary.
The City of Bozeman initiated this planning effort in
connection with municipal infrastructure to facilitate future
development in this area. While the lift station is a separate
engineering project, the Area Plan guides how this area
develops after the lift station is operational. The Area Plan
addresses potential land uses, transportation connections,
parks and open space, public infrastructure coordination,
and protection of natural resources.
The purpose of the Area Plan is to thoughtfull envision
the area’s transition over time as growth continues, not
to maintain the status quo. The Area Plan aligns with
the Bozeman Community Plan and other adopted City
plans to ensure future development reflects community
priorities and city wide goals. The planning area has long
been designated for urban development in the City’s land
use plan, Gallatin County’s Envision Gallatin Plan, and the
Triangle Plan (a collaboration between Bozeman, Belgrade,
and Gallatin County).
The Area Plan provides general guidance and does not
establish regulations. The Northwest Bozeman Area Plan is
not a development plan but rather a long-range vision plan.
The Area Plan does not require property owners to develop
their land. It does not dictate when development will occur.
Property owners retain the right to decide whether, when,
and how they pursue development, subject to applicable
regulations.
Existing Conditions
The Northwest Bozeman Area Plan boundary includes
approximately 3,000 acres south of Interstate 90 between
Bozeman and Belgrade. Most of the planning area is
outside of the current Bozeman city limits consisting of
private property primarily used for agriculture. The planning
area also includes numerous residences along the eastern
boundary including the Valley Center and Northwest
Crossing subdivision.
The planning area contains dozens of natural and man-
made water courses. Most notably, Aajker and Baxter
Creeks traverse this geography south to north with
McDonald Creek crossing the southwest corner of the
planning area. Numerous primary and secondary irrigation
ditches crisscross this area. A significant amount of wetland
and riparian habitat flank these water courses.
The topography is relatively flat, gently sloping from south
to north with elevations ranging between 4,500 and 4,750
feet above sea level. There are several small areas with
slopes greater than 25% along parts of Harper Pucket Road,
Baxter Creek, and a few abandoned railroad spurs.
Very few paved roads bisect the planning area. The primary
north-south roads include North Cottonwood Road, Harper
Pucket Road and Hidden Valley Road. The primary east-
west corridors include East Valley Center Road, Baxter
Lane, West Oak Street, and Durston Road. Almost no City
services for water and sewer exist within the planning area.1
Introduction
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Area Plan Location and Jurisdiction
The Northwest Bozeman Area Plan boundary was determined by the portions
of the two drainage basins to be partially serviced by the Gooch Hill Sewer Lift
Station; more specifically, the northern portion of the Aajker Creek basin and the
western half of the Lower Baxter Creek basin.
The planning area is defined by the existing and future road network. East
Valley Center Road establishes the entire length of the northern plan boundary.
The eastern and southern plan boundary align with Durston Road, Oak Street,
Cottonwood Road, Cattail Street, and the potential future extension of Ferguson
Avenue north back to East Valley Center. The western plan boundary runs north-
south approximately one-half mile east of Love Lane.
Approximately 250 acres of the planning area is currently included in the
Bozeman city limits located northwest of the Cottonwood and Oak intersection.
The remaining 2,750 acres of planning area falls within the jurisdiction of
Gallatin County. Areas within the Gallatin County jurisdiction are both zoned and
unzoned. County zoning designations within the planning area include in order
of prevalence: RR/A, AS, R-MH, and RS.
There are several other overlapping jurisdictions. Most of the planning area is
within the Central Valley and Hyalite Fire Districts. Bozeman Elementary and
Highs School District #7 covers much of the planning area with a small portion
of the Belgrade Elementary and High School District #44 overlapping the
northwest corner.
Legend
Area Plan Boundary
Bozeman City Limits
Belgrade City Limits
Aajker Creek
Lower Baxter Creek
(NOT TO SCALE)
I-90
HUFFINE LNJACKRABBIT LN19TH AVEBOZEMAN
FOUR CORNERS
BELGRADE
OAK STLOVE LNE VALLEY CENTER RD
VICINITY MAP
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The 2020 census was an important milestone for the Bozeman area.
It marked our population exceeding the 50,000-person threshold,
which meant that we were no longer categorized as micropolitan.
This entrance into metropolitan status also meant that we are
federally required to create a Metropolitan Planning Organization,
commonly known by its acronym, MPO.
A large group of partners has come together to form the MPO. These
organizations include: City of Bozeman, City of Belgrade, Gallatin
County, Montana Department of Transportation, and Streamline
Transit.
MPOs are federally mandated transportation planning organizations
comprised of local government organizations that work together
in transportation planning for the area. While MPO status may not
provide additional transportation funding, they can provide more
direct access to federal funds and improve planning coordination.
- Gallatin Valley Metropolitan Planning Organization
The community plan is a policy document guiding further growth
and community development in Bozeman. It sets forth Bozeman’s
policy for land-use and development. It reflects the community’s
shared values and priorities. The Plan helps guide residents, City
staff, and elected officials’ decisions. It brings land use policy
into larger community discussions on many issues addressed by
the City. Its measure of success is continuation of the Bozeman
tradition— a flourishing, safe, healthy, and a vibrant place to live,
work, and raise a family.
- Bozeman 2025 Community Plan
With population growth and fast-paced land development, the
Triangle area of Gallatin County, which is loosely described as
the area between Bozeman, Four Corners, and Belgrade, is
experiencing change. The Planning Coordination Committee
(PCC) has developed the Triangle Community Plan to coordinate
land use development patterns, deliver community services and
infrastructure, and protect important environmental resources,
all in a manner that supports community values and vision while
responding to rapid growth pressures.
- 2020 Triangle Community Plan
Planning Context
The Northwest Bozeman Area Plan geography is included within numerous
planning boundaries including the City of Bozeman Community Plan, the
Triangle Community Plan, and the newly formed Gallatin Valley Metropolitan
Planning Organization.
The primary purpose of the Area Plan is to provide land use guidance when
any of the private properties within the planning boundary are annexed into the
City of Bozeman. Therefore, the Area Plan is primarily based upon the goals of
the Bozeman Community Plan and is subordinate to the current edition of the
Bozeman Community Plan. A complete list of related and referenced plans is
provided in Appendix A.
Community and land use planning in Montana is defined and governed by
the 2023 Montana Land Use Planning Act. A land use plan, commonly called
a community plan, establishes community goals related to land use, housing,
natural resources, economic development, public facilities, and local services.
State law allows for the adoption of area plans that are consistent with the
overall land use plan. The Bozeman Community Plan 2025 establishes the
fundamental vision for guiding the continued growth of the community and
articulates the resident’s priority to maintain Bozeman as “a flourishing, safe,
healthy, and a vibrant place to live, work, and raise a family.”
The Northwest Bozeman Area Plan directly supports and advances the seven
themes established in the Bozeman Community Plan.
1. A Resilient City
2. A City of Unique Neighborhoods
3. A City Bolstered by Downtown and Complimentary Districts
4. A City Influenced by Our Natural Environment, Parks, and Open Lands
5. A City that Prioritizes Accessibility and Mobility Choices
6. A City Powered by its Creative, Innovative, and Entrepreneurial Economy
7. A City Engaged in Regional Coordination.
The Area Plan incorporates by reference the content of the Community Plan for
detailed information and projections relating to socio-cultural demographics,
economic development, and infrastructure planning, in addition to the adoption
and amendment processes. Additional comunity data is provided in Appendix D.
The Northwest Bozeman Area Plan will become a supplement to the Bozeman
Community Plan. As such, the process to formulate and adopt the Area Plan
meets the land use plan requirements established by state law.
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Community Engagement
A comprehensive community engagement effort was
implemented throughout the planning process. The goals
of this effort were to keep the public informed, generate
new ideas, and gather feedback from the local community
to ensure that the plan reflects the values of the area land
owners, residents, and Bozeman community at large.
The planning team employed a variety of engagement
strategies to reach as many individuals as possible. A
project website kept the public updated through the
project’s entirety and provided opportunities for online
feedback. Seven stakeholder meetings were held
with representatives from city and county government
departments, non-profit organizations, large and small
property owners, and private utility companies in June
2026 with 62 total participants. Public open house
events were held June 30 and July 8, 2026, with 120
total attendees. A pop-up event was held at the Bozeman
Farmer’s Market on July 14, 2026, with 47 participants
engaged.
Much of the engagement feedback confirmed the priorities
that the planning team had already identified for the Area
Plan. One overarching sentiment was that proactively
creating a vision is better than having no plan at all. More
specifically, the following common issues emerged from the
engagement process.
1. Wetlands & natural resource protection is widely
supported
2. Transportation network opinions diverge between
maximizing connectivity or protection of natural
resources
3. Trail system includes strong east-west connections but
lacks good north-south routes
4. Rural vs. urban character and density are sources of
stark disagreement
5. Water & sewer capacity and infrastructure were
identified as critical path issues
A compilation of the community engagement efforts and
outcomes are included in Appendix C.
Community Engagement Activities
FOCUS GROUP MEETINGS
6/5/26 Transportation Representatives
6/5/26 Government Representatives
6/5/26 Natural Resources Representatives
6/10/26 Large Property Owners
6/12/26 Large Property Owners
6/12/26 Private Utility Providers
8/25/26 Gallatin Water Collaborative
PUBLIC EVENTS
6/30/26 Public Open House
7/8/26 Public Open House
7/14/26 Pop-Up at Farmer’s Market
WORK SESSIONS
9/8/26 Planning Coordinating Committee
9/23 City Transportation Board
10/13 Gallatin County Planning Board
10/14 City Sustainability Board
10/19 City Community Development Board
10/20 City Commission
PUBLIC DRAFT COMMENT PERIODS
10/06 FIRST DRAFT 30-day public comment period
11/04 FINAL DRAFT 30-day public comment
FORMAL ADOPTION PUBLIC HEARINGS
11/16 Community Development Board
12/15 City Commission
*future dates subject to change
Website Statistics
3,300 TOTAL PAGE VISITS
2,900 UNIQUE VISITORS
450 DOCUMENT DOWNLOADS
*as of 8/31/26
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The Vision
Vision Overview
The Northwest Bozeman Area Plan vision is to protect
existing natural resources consistent with thoughtful
planning for the public infrastructure and private
development to meet the needs of a growing community.
The 2025 Bozeman Community Plan and the 2020 Triangle
Community Plan provide the foundation upon which the
Northwest Bozeman Area Plan was built. These guiding
documents capture the diverse perspectives of Gallatin
Valley residents and articulate the common values around
community resilience, vibrancy, and sense of place.
More specifically, the Area Plan vision is informed by
identifying the planning objectives, reflecting on the
Community Plan themes, determining applicable future land
use designations, and applying the framework elements.
These components are described below and considered in
more detail throughout the plan.
Planning Objectives
The Northwest Bozeman Area plan is structured around
five planning objectives. These objectives reflect
community values and guide future growth in ways that
create safe, resilient, and inclusive neighborhoods. The
following objectives were informed by the initial community
engagement.
1� Collaborate with partners to ensure alignment with adopted community plans
• Considering the numerous overlapping jurisdictions and
planning boundaries, it is imperative that the Area Plan
build upon the preceding planning processes. The goal
is to apply the lessons learned from other plans to this
particular geography.
2� Engage the community to identify shared values to be reflected in the Area Plan
• Community engagement helped guide and inform
the Area Plan vision, planning objectives, and
recommendations. The planning area has unique
characteristics that resonate with the community and
create a strong sense of place.
3� Protect natural resources and sensitive lands within the regulatory framework
• The quantity and quality of water courses, wetlands,
and riparian habitat add ecological, social, and cultural
value to the Gallatin Valley. Impacts to these natural
resources should be minimized to the greatest extent
possible.
4� Plan infrastructure to provide access for vehicles, bicyclists, and pedestrians and sufficient capacity for public utilities
• Future growth and annexation will require constructing
a cohesive multimodal transportation network that
accommodates vehicles, bicyclists, and pedestrians.
Public and private utilities will align with the trans
portation network.
5� Promote a mix of land uses to enhance economic health and community vitality
• The vision is to facilitate a diversity of services and
amenities within or near new residential areas. Having
convenient and proximate access to everyday needs
reduces traffic and environmental impacts.2
The Vision
Community Desires
People who have participated in this Plan
have consistently stated a desire for safe and accessible streets that support and encourage
a variety of transportation preferences including walking, bicycling, transit, and driving. They want to live in walkable neighborhoods where
they have easy access to everyday services, employment opportunities, healthy and
affordable food, recreation, and social gathering places. Housing affordability is a concern; residents of all ages, abilities, and income levels
require a diversity of housing types to meet their specific needs. Open space, parks, trails, and
the preservation of local agricultural lands and view sheds were also priorities.
- 2025 Bozeman Community Plan
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16 172026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
A Resilient City
“Our City desires to be forward thinking, collab-
orative, and deliberate in planning and execu-
tion of plans and policies to enable our commu-
nity to successfully ride the waves of change.”
- Bozeman Community Plan
The Area Plan is a continuation of the long history
of proactive planning by Bozeman, Belgrade,
and Gallatin County. As growth expands to the
northwest, it is incumbent that the community
prioritize natural resource protection, wildfire
preparedness, water conservation, and socio-
cultural well-being. This is a chance to improve
upon the community’s already high quality built
environment in a way that celebrates the area’s
exceptional natural environment.
A City of Unique
Neighborhoods
“Our City desires to be diverse, healthy, and
inclusive, defined by our vibrant neighborhoods,
quality housing, walkability, excellent schools,
numerous parks and trails, and thriving areas of
commerce.”
- Bozeman Community Plan
As Bozeman continues to grow to the northwest,
there is an opportunity to learn from how the
community has changed in the past and apply best
practices and precedents to this new geography.
The Area Plan envisions multiple development
areas with a variety of housing sizes, styles, and
price points to create interesting and diverse
residential fabric. Equally important will be to
strategically incorporate a host of commercial and
civic services along primary transportation corridors.
A City Bolstered
by Downtown and
Complimentary Districts
“Our City is bolstered by our Downtown, Mid-
town, University and other commercial districts
and neighborhood centers that are characterized
by higher densities and intensities of use.”
- Bozeman Community Plan
The Area Plan does not envision a new district that
would resemble or rival Downtown, Midtown or
other existing commercial destinations like North
7th or North 19th. But with the densities and mix
of uses outlined in the Community Plan, this area
will complement other parts of town as it expands
northwest.
Plan Themes
The themes of the Northwest Bozeman Area Plan directly
reflect and support the seven major components of the
Bozeman Community Plan which “describe community-
derived desired outcomes.” The Community Plan explains
that the themes “contain objectives and actions to guide
the City towards its vision and evolve as the City grows.”
Each Community Plan theme has been adapted to apply
specifically the attributes of the Area Plan geography.
Regional coordination creates and maintains
a coherent land use pattern that supports the
needs of existing and future citizens and the
desire to protect community character and
amenities. Belgrade, Bozeman and Gallatin
County will coordinate land use in the Triangle
to achieve:
• Compact, contiguous development and
infill to achieve an efficient use of land
and infrastructure, reducing sprawl and
preserving open space, agricultural lands,
wildlife habitat, and water resources;
• Well-planned transportation systems,
consistent with the overall growth
management vision, support the
development of multi-modal and public
transportation networks;
• Community core that have adequate
transportation, utility, health, educational
and recreational facilities. Residential areas
that provide healthy surroundings; and
• Opportunities for agriculture, industry and
business, while minimizing conflict between
adjacent land uses.
-2020 Triangle Community Plan
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18 192026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
A City Influenced
by our Natural
Environment,
Parks, and Open Lands
“Our City is home to an outdoor-conscious
population that honors and protects our natural
environment and our well-managed open space
and parks system.”
- Bozeman Community Plan
With the anticipated expansion of the city limits
and urban development, public and private
development should carefully evaluate this area’s
natural resources and compliment them with
protected open spaces. Intentionally planning for a
series of interconnected corridors of water courses,
wetlands, and riparian habitat will not only preserve
these critical natural resources but also significantly
enhance the quality of life and sense of place for
nearby residences and mixed-use centers.
A City that Prioritizes
Accessibility and
Mobility
“Our City fosters the close proximity of housing,
services, and jobs, and desires to provide safe,
efficient mobility for pedestrians, cyclists, transit
users, and drivers.”
- Bozeman Community Plan
This area presents an opportunity to connect
every aspect of the community with dedicated
active transportation facilities in conjunction with
the traditional street network. A system of shared
use paths, natural trails, and sidewalks will provide
options to travel for work, services, and recreation.
The Area Plan geography is central to building out
the active transportation network envisioned by the
2021 Triangle Trails Plan and 2024 Parks, Recreation
and Active Transportation Plan.
A City Powered by its
Creative, Innovative,
and Entrepreneurial
Economy
“Our City benefits from and desires to further
an expanding economy that is powered by the
talents of its residents, a dedicated and engaged
business community, and strong regional part-
nerships.”
- Bozeman Community Plan
While most of the future growth will be residential
development, expansion of the community to the
northwest is conducive to a mix of uses that will
bolster the local economy. Commercial uses could
include restaurants and retail stores, professional
services and offices, and health care services. Civic
and institutional uses could include K-12 schools,
recreation and fitness centers, and social services.
Not only do these types of uses provide essential
services to nearby residents, but they would also
bring a significant number of jobs to this part of the
community.
A City Engaged in
Regional Coordination
“Our City, in partnership with Gallatin County,
Montana State University, and other regional
authorities, desires to address the needs of a
rapidly growing and changing regional popula-
tion through strategic infrastructure choices and
coordinated decision-making.”
- Bozeman Community Plan
This area is unique as it represents a transition
between the traditional city limits of Bozeman
and Belgrade. It is no coincidence that so many
collaborative planning efforts have focused on
this geography including the Triangle Community
Plan, Triangle Trails Plan, and Greater Triangle
Transportation Plan. The Area Plan aims to build
upon the legacy of coordination between adjacent
and overlapping jurisdictions and strategic
infrastructure improvement for the benefit of the
entire Gallatin Valley community.
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20 212026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Existing Future Land Use Map
The 2025 Bozeman Community Plan includes a Future Land Use Map that
prescribes general categories of desired development types and densities for
every area of the city. Each future land use is compatible with numerous zoning
designations that implement the intended land uses.
Future Land Use designations are important because they aim to further the
vision and goals of the City through promoting sustainability, citizen and visitor
safety, and a high quality of life that will shape Bozeman’s future development.
The Community Plan utilizes nine future land use categories to illustrate and
guide the intent, type of use, density, and intensity of future development. The
Bozeman Community Plan 2025 proposes ways to meet the communities’ needs
for housing, economic activity, recreational needs, transportation, utilization of
natural resources and efficient use of limited resources.
The current Future Land Use Map has established that the land within the
Area Plan boundary is a mix of three different land use designations: Urban
Neighborhood, Residential Mixed Use, and Community Commercial Mixed
Use. The majority of the Area Plan land is currently designated as Urban
Neighborhood, which allows residential development of various densities
and some low-density commercial uses. The small nodes of Residential
Mixed Use allow integrated development that is residential focused with
some complementary commercial uses. Community Commercial Mixed Use
emphasizes commercial uses supplemented with some residential development.
The Northwest Bozeman Area Plan recommends retaining Urban Neighborhood
as the predominant future land use while moving the Residential Mixed Use
and Community Commercial Mixed Use areas to more appropriate locations
coordinated with other elements of the Area Plan. The Area Plan also considers
the appropriateness of additional future land use designations.
Urban Neighborhood
Allowed zoning districts: R-A, R-B, R-C, R-D, REMU, B-1, PLI
Legend
Bozeman City Limits
Area Plan Boundary
Future Land Use
Urban Neighborhood
Residential Mixed Use
Community Commercial
Mixed Use
Regional Commercial
Services
Traditional Core
Industrial
Maker Space Mixed Use
Public Institution
Parks and Open Space
Present Rural
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RDFERGUSON AVEGOOCH HILL RDLOVE LNResidential Mixed Use
Allowed zoning districts: R-B, R-C, R-D, REMU, B-1, PLI
Community Commercial Mixed Use
Allowed zoning districts: REMU, B-1, B-2, B-2M, PLI
EXISTING FUTURE LAND USE MAP
Acreage Scale160 acres
80
40 20
10 10
19
22 232026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Collaborate
with partners to
ensure alignment
with adopted
community plans
Protect natural
resources
and sensitive
lands within
the regulatory
framework
Engage the
community to
identify shared
values to be
reflected in the
Area Plan
Plan infrastructure
to provide access
for vehicles,
bicyclists, and
pedestrians and
sufficient capacity
for public utilities
Promote a mix
of land uses
to enhance
economic health
and community
vitality
Planning Objectives
Future Land Uses
Urban Neighborhood Residential Mixed Use Community
Commercial Mixed Use
Parks & Open Land/
Space
Framework Elements
Natural Resources Active Transportation Public Infrastructure Future Land Uses
Plan Themes
A Resilient City A City of Unique
Neighborhoods
A City that Prioritizes
Accessibility and
Mobility
A City Bolstered
by Downtown and
Complimentary
Districts
A City Powered by its
Creative, Innovative,
and Entrepreneurial
Economy
A City Influenced
by our Natural
Environment, Parks,
and Open Lands
A City Engaged in
Regional Coordination
Framework Elements
The Northwest Bozeman Area Plan is structured around
four framework elements that inform the alignment
of natural resources, public infrastructure, active
transportation, and future land uses. The purpose of the
framework is to ensure that any future development on this
land will create desirable neighborhoods that will thrive
through a mix of uses, active transportation, unique identity,
and natural resource protection.
The Natural Resources framework element identifies
streams, ditches, wetlands, associated setback areas, and
slopes exceeding 25 percent. These natural resources and
environmental features represent important community
assets within the planning area. Mapping these resources
helps inform where future infrastructure and development
should be directed to minimize impacts and preserve
sensitive landscapes.
The Active Transportation framework element incorporates
a network of shared use paths and natural trails to provide
opportunities for non-motorized recreation and commuting.
Paved shared use paths will typically follow the collector
and arterial street network. Natural surface trails will align
with watercourses and natural areas when possible.
The Public Infrastructure framework element proposes a
system of primary streets, water mains, sewer mains, and
stormwater facilities. These infrastructure corridors are
aligned to provide connectivity and distribution of services
while minimizing natural resource impacts.
The Future Land Uses framework element revises the
Future Land Use Map to appropriately locate the various
land uses. The locations were determined using a suitability
analysis in ArcGIS to collocate the more intense and
commercial oriented land uses along primary transportation
corridors and at major street intersections.
All four element layers are combined and create a
comprehensive framework to guide future development.
Natural resources establish important context. Public
infrastructure creates corridors for travel and utilities while
minimizing impacts. The active transportation system
provides dedicated space and efficient connectivity for
bicyclists and pedestrians. And, finally, future land uses are
designated in the most suitable areas to meet the goals and
objectives of the Bozeman Community Plan 2025.
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24 252026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
3
The Framework
The Framework
Framework Elements
The foundation of the Northwest Bozeman Area Plan is
a framework map made up of various existing and future
layers or elements. The framework elements identify
current conditions including existing development, natural
resources, and existing public infrastructure like roads,
shared use paths, natural trails, water facilities, and sewer
facilities. Additional framework elements map potential
locations for future public infrastructure. These elements
are then combined to ‘net out’ protected natural resources
and the land needed for essential public infrastructure.
The remaining land was then studied using a GIS-based
suitability analysis to define the location, type, and intensity
of potential future development.
Layering the Framework
Active Transportation
Public Infrastructure
Natural Resources
Project Boundary
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26 272026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Natural Resources
The adjacent map illustrates the significant number of natural resources found
within the Northwest Bozeman Area Plan boundary. Wetlands, creeks, irrigation
ditches, and a few large stands of mature trees are prominent across the area.
The Gallatin Valley Sensitive Lands Study was the primary source of this data.
The Area Plan incorporates the required natural resource supporting data by
reference to the 2025 Bozeman Community Plan Appendix B.
Despite considerable impacts from agricultural activities over the last century,
these natural resources are important for a myriad of reasons. Riparian buffers,
including wetlands and stands of trees, stabilize the banks of adjacent water
courses. Dense vegetation also filters surface water of pollutants and sediment
in addition to retaining important nutrients. These areas serve as important
habitats for a diverse array of aquatic species, wildlife, and birds. The water
courses, both natural and artificial, convey legal water rights for irrigation within
the planning area and beyond.
To protect natural resources, the other framework elements have been planned
to minimize the impacts of the proposed public infrastructure corridors, active
transportation network, and future land uses. Impacts cannot be entirely avoided
but with thoughtful planning, intentional design, and responsible construction
most of the natural resources can be preserved.
There is the opportunity to go beyond protection and potentially enhance, and
even expand, the natural resources within the planning area. The prominent
watercourses, such as Aajker and Baxter Creeks, could be candidates for
restoration projects. The Gallatin Valley needs additional wetland mitigation
banking capacity to help offset wetland impacts elsewhere in the Gallatin
watershed. A regional stormwater facility could treat runoff water from the built
environment across several hundred acres and incorporate natural areas, open
space, and parks.
Further analysis is needed to determine whether these restoration or
enhancement projects would be viable in the northwest Bozeman planning area.
These projects would require establishing strong public private partnerships to
engage in planning, funding, construction, and maintenance.
Mandeville Creek Restoration Project
“The Mandeville Creek restoration project used low-tech, process-based
structures, to increase stream function, water quality, and water quantity. The
project has reconnected the stream to its floodplain, developed healthier
riparian and wetland habitats and increased groundwater retention.”
Sacajawea Wetland Mitigation Bank
“The Sacajawea Audubon Society (SAS) is moving forward to establish a Wetland
Mitigation Bank at the Indreland Audubon Wetland Preserve. Our intent is to
provide a local wetland mitigation option to help offset wetland impacts.”
Shiloh Conservation Area Regional Stormwater Facility
“Stormwater runoff is a significant source of water pollution on Billings west end
as it transitions from agriculture to residential and commercial development.
The 66-acre facility provides stormwater treatment and flood control for
approximately 35 square miles.”
Legend
Waterways
Irrigation Ditches
Wetlands & Stream
Setbacks (50')
>25% Slope
Area Plan Boundary
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RDFERGUSON AVEGOOCH HILL RDLOVE LNNatural Resources
22
28 292026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Public Infrastructure
The adjacent map proposes public infrastructure corridors consisting of the City
of Bozeman rights-of-way that would include future streets, water mains, sewer
mains, and stormwater facilities. The following adopted plans informed the
proposed alignments: the 2017 Bozeman Transportation Master Plan, the 2015
Bozeman Water Facility Plan, the 2025 Wastewater Facility Plan, and the 2008
Stormwater Facilities Plan. These recommended corridors are consistent with
the recommendations of the 2022 Greater Triangle Area Transportation Plan.
The Area Plan and the public infrastructure framework element focus on
the three major street classifications: principal arterials, minor arterials, and
collectors. These streets require between 90 and 120 feet of dedicated right-
of-way. Water, sewer, and stormwater facilities are typically collocated within
the same right-of-way as the streets. This approach reduces the amount of land
required for providing these essential public services. Local streets are typically
planned during the annexation or subdivision processes.
Street and utility networks are typically aligned in a grid providing regularly
spaced east-west and north-south streets perpendicularly intersecting one
another. Due to the prevalence of high-value natural resources, a uniform street
grid may not be possible or preferable. The City’s policy of a fully connected
street grid will be influenced by the existence of natural resources and
constraints. Harper Pucket Road bisects the planning area but does not have
the typical east-west or north-due south alignment. Instead, it was built with an
irregular alignment to minimize impacts where it parallels and crosses Baxter
Creek.
The goal of the proposed public infrastructure network is to minimize natural
resource impacts. For instance, certain routes deviate from the typical
perpendicular grid alignment to cross a watercourse or wetland at the narrowest
point. In other cases, street and utility corridors are interrupted and do not
connect across significant wetland areas. These proposed alignments will help
guide additional analysis as part of the update to the Bozeman Transportation
Master Plan in 2027. The street layout shown is conceptual and may change
based on unforeseen conditions, economic considerations, and community
needs.
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RDFERGUSON AVEGOOCH HILL RDLOVE LNLegend
Existing Street
Classification
Principal Arterial
Minor Arterial
Collector
Future Street
Classification
Principle Arterial
Minor Arterial
Collector
Area Plan Boundary
Wetland and Stream
Setbacks (50ft)
Public Infrastructure
2017 Bozeman Transportation Master Plan
GOAL 6: Protect and Enhance Environmental Sustainability, Provide
Opportunities for Active Lifestyles, and Conserve Natural and Cultural Resources.
Not only are impacts to the environment taken more seriously,
but increasingly citizens are demanding a more holistic approach to transportation. The preservation of natural, historic and cultural
resources, as well as promoting a healthy, active lifestyle, are priorities of this TMP and current Federal transportation planning guidance.
Objective 6�2� Coordinate transportation planning activities with appropriate federal, state, and local agencies responsible for land
use management, natural resources, environmental protection, conservation, and historic preservation.
Layout is conceptual
and subject to change.
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30 312026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Active Transportation
The adjacent map proposes an active transportation system of shared use paths
and natural trails for the Northwest Bozeman Area Plan as previously proposed
in the Bozeman Parks, Recreation, and Active Transportation Plan adopted in
2023. This network is also consistent with the recommendations of the 2021
Triangle Trails Plan.
Since shared use paths are intended to provide a variety of transportation
alternatives to single-occupancy motor vehicles. As such, shared use paths are
paved, ranging between 10 to 16 feet wide, and typically parallel collector and
arterial streets within the dedicated right-of-way. Natural surfaced trails ideally
are located within greenways adjacent to watercourses to provide a better user
experience focused more on recreational activities. Where a street alignment is
interrupted by a natural area there may be an opportunity to connect a share use
path or trail especially in conjunction with other underground utilities. With the
advent of micromobility devices and e-assist technology best practices are rapid
evolving and City policies will adapt to meet the mobility needs of its residents.
Natural surfaced trails ideally are located within greenways adjacent to
watercourses to provide a better user experience focused more on recreational
activities. Consideration should be given to the relationship between natural
trails, watercourses, wetlands, and the corresponding regulatory setbacks.
Natural surface trails are currently allowed by the City’s Unified Development
Code within the outer portion of a water course or wetland setback. When
feasible, trails should be located adjacent but just outside such setbacks which
would further reduce impacts and create wider greenway corridors.
As properties within the Area Plan boundary are annexed and developed, the
expectation is that developments will incorporate shared use paths and natural
trails as proposed by adopted plans. But careful design consideration should be
given not only to the location and alignment of new active transportation routes,
but also to incorporating safe path and trial crossings of major streets.
The 2023 PRAT Plan notes that “demand for new facilities to expand the current
network of pathways, trails and bicycle facilities is strong and the network will
need to keep up with the growing community”. Most of the recent plans adopted
by the City of Bozeman, City of Belgrade, and Gallatin County have prioritized
building a more complete, better connected active transportation network.
A more extensive system of shared use paths and natural trails will provide
residents with the opportunity of walk and bicycle more thus reducing vehicle
use. Legend
Proposed Shared Use
Paths
PRAT Plan Proposed
Natural Trails
Existing Paths & Trails
Existing Roadways
Wetland and Stream
Setbacks (50ft)
Area Plan Boundary
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RDFERGUSON AVEGOOCH HILL RDLOVE LNActive Transportation
“Communities that prioritize active transportation tend to be healthier [because they enable] residents to be more physically
active in their daily routines and [because they have] cleaner air to breathe. Active transportation systems also foster economic health
by creating dynamic, connected communities with a high quality of life that catalyzes small business development, increases property values, sparks tourism, and encourages corporate investment that
attracts a talented, highly educated workforce.”
-2023 Parks, Recreation, and Active Transportation Plan
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32 332026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Complete Framework
The framework elements are layered upon one another to create an intentional,
well-planned context guiding growth. The complete framework essentially
establishes the ‘good bones’ of the future community. The Northwest Bozeman
Area Plan envisions places where people can live, work, recreate, and
socialize. Places where not only the ecological functions of natural resources
are conserved but also celebrated as community assets adding value as park
lands and open spaces for people to enjoy. Future residents will benefit from
a thoughtful system of public infrastructure that provides efficient delivery of
transportation, water, and sewer services while minimizing impacts to wetlands
and watercourses. Residents and employees will have mobility choices thanks
to a well-connected and safe active transportation network of shared use paths
and natural surface trails for commuting and recreation.
The proposed future land uses will complement this framework of natural
resources and public infrastructure. A variety of housing types and densities will
provide options for residents based on their needs. Mixed use and commercial
areas will be placed at the intersections of major streets to concentrate traffic
and density appropriately. Other land uses will be incorporated within these
areas including parks, open space, schools, and civic services.
Legend
Existing Street
Classification
Principal Arterial
Minor Arterial
Collector
Future Street
Classification
Principle Arterial
Minor Arterial
Collector
Existing Trails
PRAT Plan Trails
Streams
Wetland and Stream
Setbacks
Area Plan Boundary
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RDFERGUSON AVEGOOCH HILL RDLOVE LNComplete Framework
25
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Legend
Urban Neighborhood
Residential Mixed Use
Community Commercial Mixed
Use
Future Principle Arterial
Future Minor Arterial
Future Collector
Existing Road
Area Plan Boundary
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RD
FERGUSON AVEGOOCH HILL RDLOVE LNProposed Future Land Use
The adjacent map shows the proposed future land uses as Urban
Neighborhood, Residential Mixed Use, and Community Commercial Mixed Use
relocated to more appropriate locations. The Area Plan also proposes that
Parks & Open Space is an appropriate future land use designation but does not
include any specific locations.
With the natural resources and public infrastructure framework established,
residential, mixed use, and commercial land use scenarios were mapped using
a GIS analysis model to determine the most suitable locations and intensities for
future development. More information about the suitability analysis is presented
in Appendix B.
The predominant future land uses of Urban Neighborhood provide opportunities
to create residential communities with a diversity of housing types and price
points. The development encouraged by the Residential Mixed Use future
land use will create vibrant live-work-play neighborhoods. The more intense
commercial development allowed by the Community Commercial Mixed Use
designation will concentrate services and amenities like restaurants, coffee
shops, retail stores, and professional services near the intersections of major
streets.
One potential land use particularly suited for the Area Plan geography would
be community agriculture. The proposed future land uses and corresponding
enabling zoning designations allow for community gardens and urban farms to
be integrated into future neighborhoods.
The Area Plan’s proposed City of Bozeman future land uses align with the 2024
update to Gallatin County’s growth policy, Envision Gallatin. Acknowledging
that there is a concentration of natural resources and significant infrastructure
deficiencies, the County plan identifies the land within the Northwest Bozeman
Area Plan as likely to be developed. The corresponding County future land use
map categorizes the Area Plan geography as either Annexation Holding Areas
“having a high potential to be annexed into a municipality” or as Managed
Growth Areas “suitable for moderate intensities of development”.
Proposed Future Land Use
Community Garden—An area of land managed and maintained by a
group of community members used to grow and harvest food crops and/or nonfood, ornamental crops such as flowers, for personal
or group use, consumption, donation or sale, or for educational purposes.
Urban Farm—A facility where food crops or nonfood, ornamental
crops such as flowers are cultivated, processed, and distributed. Urban farming is generally practiced for profit or food producing
activities.
- Bozeman Municipal Code
Acreage Scale
160 acres
80
40 20
10 10
26
36 372026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
(NOT TO SCALE)
E VALLEY CENTER RD
BAXTER LN
W OAK ST
DURSTON RD DAVIS LNCOTTONWOOD RDHARPER PUCKETT RD
FERGUSON AVEGOOCH HILL RDLOVE LNLegend
Urban Neighborhood
Residential Mixed Use
Community Commercial Mixed
Use
Stream and Wetland Setbacks
Future Principle Arterial
Future Minor Arterial
Future Collector
Existing Road
Streams
Area Plan Boundary
Proposed Future Land Use with Natural Resources
The adjacent map shows the proposed future land uses overlaid with the
existing creeks, wetlands, and associated setbacks. The purpose is to show
the geographical relationship between the proposed future land uses and the
natural resources. If the Bozeman Community Plan Future Land Use Map is
formally revised it will not show the natural resources but rather look like the
map found on the previous page.
Proposed Future Land Use
Acreage Scale160 acres
80
40 20
10 10
27
38 392026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
4
The Plan
The Plan
Recommendations, Themes, Goals, & Objectives
The Northwest Bozeman Area Plan recommendations
represent the vision and planning objectives established in
Chapter 2. These recommendations are intended to guide
more specific planning efforts in the future. Implementing
these recommendations will require further consideration
as properties are annexed into the City, public infrastructure
is designed, and private developments are reviewed for
compliance with adopted regulations.
Future development requires a series of design, review,
and entitlement process to ensure federal, state, and local
regulations are met. These development steps can include
annexation, subdivision, master site planning, and site
planning.
Each recommendation aligns with one or more themes,
goals and objectives of the 2025 Bozeman Community
Plan as noted, which demonstrates compliance with the
Montana Land Use and Planning Act.
Bozeman’s high rate of growth and changing
economics, the rapid development in
surrounding Gallatin County, and state law
mandating that community plans be kept up
to date, all make it necessary for Bozeman to
update its community plan. Without guided
growth and development, the community’s
identity and overall quality of life could be
diminished by lack of housing and jobs,
congestion, reduced services, and pollution.
The City has had seven community plans
dating back to 1958, the most recent being its
2020 plan. Each plan builds upon the others,
reflecting the community’s characteristics, vision
and needs over time.
-Bozeman 2025 Community Plan
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40 412026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Recommendation No. 1
Prioritize natural resource protection for
water courses, wetlands, and riparian areas
by minimizing the impacts of public and
private development consistent with other
requirements and community priorities.
Recommendation No. 2
Plan public infrastructure corridors for efficient
delivery and long-term management of
streets, water, sewer, stormwater, and active
transportation facilities.
Recommendation No. 3
Implement an active transportation network
that provides connectivity, efficiency, and safety
for non-motorized commuting and recreation.
●COMMUNITY PLAN THEME 4 | A CITY INFLUENCED BY OUR
NATURAL ENVIRONMENT, PARKS, AND OPEN LANDS
o Goal EPO-1: Prioritize strategic acquisition of parks to provide a
variety of recreational opportunities throughout the City.
⊲EPO-1.5 Work with partner organizations to identify and
reduce impacts on at-risk, environmentally sensitive
areas that contribute to water quality, wildlife corridors, or
wildlife habitat, specifically wildlife habitat as we continue
outward growth.
o Goal EPO-2: Work to ensure that development is responsive to
natural features.
⊲EPO-2.1 Where appropriate, activate connections to
waterways by creating locations, adjacent trails, and
amenities encouraging people to access them.
⊲EPO-2.3 Identify, prioritize, and preserve key wildlife
habitat and corridors.
●COMMUNITY PLAN THEME 7 | A CITY ENGAGED IN REGIONAL
COORDINATION
o Goal RC-3: Collaborate with Gallatin County regarding
annexation and development patterns adjacent to the City to
provide certainty for landowners and taxpayers.
⊲RC-3.1 Work with Gallatin County to create compact,
contiguous development and infill to achieve an efficient
use of land and infrastructure, reducing sprawl and
preserving open space, agricultural lands, wildlife habitat,
and water resources.
●COMMUNITY PLAN THEME 3 | A CITY BOLSTERED BY
DOWNTOWN AND COMPLEMENTARY DISTRICTS
o 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-2.1 Coordinate infrastructure development, land
use development, and other City actions and priorities
through community planning.
⊲DCD-2.6 Evaluate and pursue joint mitigation of
development impacts across multiple developments.
●COMMUNITY PLAN THEME 5 | A CITY THAT PRIORITIZES
ACCESSIBILITY AND MOBILITY CHOICES
o Goal M-1: Ensure multimodal accessibility.
⊲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.
●COMMUNITY PLAN THEME 7 | A CITY ENGAGED IN REGIONAL
COORDINATION
o Goal RC-3: Collaborate with Gallatin County regarding
annexation and development patterns adjacent to the City to
provide certainty for landowners and taxpayers.
⊲RC-3.1 Work with Gallatin County to create compact,
contiguous development and infill to achieve an efficient
use of land and infrastructure, reducing sprawl and
preserving open space, agricultural lands, wildlife habitat,
and water resources.
●COMMUNITY PLAN THEME 3 | A CITY BOLSTERED BY
DOWNTOWN AND COMPLEMENTARY DISTRICTS
o Goal DCD-3: Ensure multimodal connectivity within the City.
⊲DCD-3.1 Expand multimodal accessibility between
districts and throughout the City as a means of promoting
personal and environmental health, as well as reducing
automobile dependency.
●COMMUNITY PLAN THEME 5 | A CITY THAT PRIORITIZES
ACCESSIBILITY AND MOBILITY CHOICES
o Goal M-1: Ensure multimodal accessibility.
⊲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-1.2 Make transportation investment decisions that
recognize active transportation modes and transit as a
priority.
⊲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.).
●COMMUNITY PLAN THEME 7 | A CITY ENGAGED IN REGIONAL
COORDINATION
o Goal RC-3: Collaborate with Gallatin County regarding
annexation and development patterns adjacent to the City to
provide certainty for landowners and taxpayers.
⊲RC-3.1 Work with Gallatin County to create compact,
contiguous development and infill to achieve an efficient
use of land and infrastructure, reducing sprawl and
preserving open space, agricultural lands, wildlife habitat,
and water resources.
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42 432026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Recommendation No. 4
Apply future land uses and zoning that
provide a variety of housing near employment,
commercial services, and open spaces.
Recommendation No. 5
Continue to engage in cooperative planning
and coordination with neighboring jurisdictions
and governing agencies.
●COMMUNITY PLAN THEME 3 | A CITY BOLSTERED BY
DOWNTOWN AND COMPLEMENTARY DISTRICTS
o Goal DCD-1: Support urban development within the City.
⊲DCD-1.9 Promote mixed-use developments with access
to parks, open space, and transit options.
⊲DCD-1.11 Pursue annexations consistent with the future
land use map and adopted facility plans for development
at urban intensity.
o Goal DCD-2: Encourage growth throughout the City, while
enhancing the pattern of community development oriented on
centers of employment and activity.
⊲DCD-2.5 Identify and zone appropriate locations for
neighborhood-scale commercial development.
●COMMUNITY PLAN THEME 5 | A CITY THAT PRIORITIZES
ACCESSIBILITY AND MOBILITY CHOICES
o Goal M-1: Ensure multimodal accessibility.
⊲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.
●COMMUNITY PLAN THEME 6 | A CITY POWERED BY ITS CREATIVE,
INNOVATIVE, AND ENTREPRENEURIAL ECONOMY
o Goal EE-1: Promote the continued development of Bozeman as
an innovative and thriving economic center.
⊲EE-1.3 Continue to facilitate live/work opportunities as
a way to support small, local businesses in all zoning
districts.
o Goal EE-2: Survey and revise land use planning and regulations
to promote and support economic diversification efforts.
⊲EE-2.1 Ensure the future land use map contains adequate
areas of land for anticipated diverse users.
●COMMUNITY PLAN THEME 7 | A CITY ENGAGED IN REGIONAL
COORDINATION
o Goal RC-1: Improve communication and coordination with
Gallatin County, the City of Belgrade, public schools, and other
regional public entities regarding community planning and
associated matters.
⊲RC-1.2 Coordinate planning activities to promote
consistency throughout the region for parks,
transportation, bus service, and other community
infrastructure.
o Goal RC-3: Collaborate with Gallatin County regarding
annexation and development patterns adjacent to the City to
provide certainty for landowners and taxpayers.
⊲RC-3.1 Work with Gallatin County to create compact,
contiguous development and infill to achieve an efficient
use of land and infrastructure, reducing sprawl and
preserving open space, agricultural lands, wildlife habitat,
and water resources.
30
44 452026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
5
Implementation
Implementation
Numerous factors will guide and impact when and how
the Northwest Bozeman Area Plan vision may be realized.
Formal adoption of the Area Plan does not obligate the
City of Bozeman to implement the public improvements
referenced or recommended in the plan. Likewise, the Area
Plan does not stipulate when or if private property owners
develop their land. Every property owner within the Area
Plan boundary (and beyond) retains the right to decide
whether, when, and how they pursue annexation into the
City and subsequent development.
Beyond recognizing the intended future land uses, the
Area Plan does not project more detailed development
patterns, specific development types, or estimated
potential densities. Specific development scenarios will
be determined in the future and as allowed by the City’s
land planning processes and development regulations.
The applicable regulations and standards are primarily
established in the Bozeman Unified Development Code
(UDC). The UDC prescribes minimum dwelling units per
acre for each residential zoning designation. Both the
residential and commercial zoning designations regulate
building scale and mass with specific standards for property
line setbacks, lot area coverage, and maximum building
heights. The UDC also mandates minimum amounts of
open space and parkland for residential developments
in addition to required amounts of pedestrian-oriented
open space for commercial developments. The City has
invested considerable time and resources updating these
land use and development policies to accomplish the vision
and goals of the Community Plan, and thus the UDC is a
regulatory reflection of the community’s shared values.
Regulations can do many things to ensure
adequate physical facilities and a visually appealing and functional development of sites.
They provide a framework within which people
may pursue dreams of their own homes and businesses. For all they can accomplish, there
are some things they cannot do. They do not prevent change or guarantee that change will
happen in the way any particular person prefers.
-Bozeman Community Plan
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46 472026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
Implementation of the Area Plan will take years if not
decades to materialize. The evolution of the area northwest
of Bozeman will be dependent on continued community
participation, building upon existing partnerships, and
establishing new collaborative relationships to address the
challenges and realize the opportunities outlined below.
Challenges & Constraints
City planning documents, land use policies, and
development regulations govern how growth can occur, but
other challenges and constraints also influence property
development. As Gallatin County’s growth policy, Envision
Gallatin, notes that the area northwest of Bozeman has
development constraints including natural resource value,
some steep slopes, and a lack of public services. The
ability to accommodate growth with public and community
services will play a pivotal role in the future of the
Northwest Bozeman Area Plan geography.
Natural Resources
As clearly documented, the Area Plan geography
contains a significant number and acreage of natural
resources. Watercourses, wetlands, and riparian areas
present numerous challenges to the alignment of public
infrastructure corridors and private development. Climate
change is impacting historic patterns of precipitation
and warming seasonal temperatures that are impacting
hydrology. Another set of challenges are regulatory as local,
state, and federal rules govern if, how, and to what extent
wetlands and creeks can be impacted by development.
Considering the shared common values that communities
place on natural resources, they also present numerous
opportunities.
Transportation Network
The biggest mobility challenge associated with the Area
Plan is the lack of a connected transportation network
across this part of Gallatin Valley. Growth northwest of
Bozeman will require a tremendous investment in designing
and constructing a multi-modal system of streets, shared
use paths, and natural trails. These improvements and costs
will be shared between the City’s Capital Improvements
Plan (CIP) process and private development. The CIP
identifies high-priority public infrastructure projects to be
funded with municipal dollars over a rolling five-year period.
Private development projects are required to design and
construct public infrastructure immediately adjacent to the
associated property which accounts for the majority of new
public improvements.
Public Utilities
Currently most of the plan area is not served by municipal
water, sewer, or stormwater facilities which typically are
collocated under or adjacent to City streets. Like streets,
public utility improvements are constructed either as part
of City CIP projects or private development projects. An
example of a City public utility CIP project is the proposed
Gooch Hill sanitary sewer lift station which was a key factor
in initiating the Area Plan. The lift station was identified as
an essential public infrastructure improvement and was
included in the City CIP which allocated funding for design
and construction over several years.
Community Services
Another important element that does not currently
exist within the plan area is essential public and private
community services. Public services typically include those
provided by fire and police departments. Currently Gallatin
Sherrif’s Department provides law enforcement for the
plan area outside the City limits. Likewise, fire protection
services are provided by Hyalite and Central Valley Fire
Districts. But as property is annexed into Bozeman the
City Police and Fire Departments will need to extend their
services to the northwest. Bozeman School District engages
in long-term planning for future schools that may be
needed as the community grows to the northwest. Typically
parks and open spaces area required to be provided as
part of private development projects, but the City Parks and
Recreation Department services will subsequently need to
be provided. A host of private community assets like health
care and social services usually are introduced after a
significant amount of development occurs in a new area.
Opportunities
The Northwest Bozeman Area Plan poses important
opportunities that, if acted upon, would benefit the entire
Gallatin Valley. The fact that the plan area is mostly
undeveloped creates the opportunity to proactively craft a
thoughtful plan and intentionally implement a purposeful
vision. The very purpose of planning is to learn from and
build upon the past to enable a better future. As suggested
above, the plan area’s inherent challenges pose exciting
opportunities.
Natural Resources
The Area Plan focuses on the importance, and therefore
the opportunity, to preserve and enhance the diversity
of natural resources. Perhaps most significant are
opportunities to enhance the intrinsic ecological function of
the creeks, wetlands, and riparian areas within the planning
boundary. There are few places that have the concentration
and volume of these natural resources to utilize them
on a scale to benefit the environment and the adjacent
communities.
As highlighted in Chapter 3, the unique opportunities
include stream restoration projects, establishing a wetland
mitigation bank, and creating a regional stormwater
management park. These visionary projects will require
leveraging partnerships at every level from ideation to
design to implementation. Fortunately, there are amazing
potential community partners including Gallatin County, City
of Belgrade, City of Bozeman, Montana State University,
Gallatin Watershed Collaborative, Sacagawea Audubon
Society, property owners, private developers, and
philanthropists.
Transportation Network
The Area Plan provides an opportunity to align future street
corridors, and corresponding utilities, in a way that not
only provides efficient delivery of public services but also
minimized negative impacts to wetlands, riparian areas, and
watercourses. This approach has become more prevalent
over the last decade, and the plan area offers a chance to
further prioritize low-impact public infrastructure design and
construction. It is important to recognize that minimizing
natural resource impacts necessitates some tradeoffs in
terms of efficiency and convenience. For instance, not
fully connecting Oak Street, Gooch Hill Road, or Cattail
Streets will disrupt the traditional transportation grid, but
the protection of the corresponding natural resources
justifies the compromise. There may be an opportunity to
span these street grid gaps with shared use paths or trails,
especially if it is necessary to connect public utilities across
sensitive areas. Active transportation facilities could be co-
located with utility corridors which would provide bike and
pedestrian connectivity with considerably less impact than
a street.
There is a tremendous opportunity to implement a safe and
well-connected active transportation network across the
plan area. Dedicated bike and pedestrian facilities have
become an integral part of the multimodal transportation
system over the last fifteen years. Now more than ever
shared use paths and natural trails are highly valued by
the community and required essential infrastructure as the
Gallatin Valley continues to grow. The Area Plan reinforces
the active transportation network envisioned in the adopted
2023 Bozeman PRAT Plan. With the continued partnerships
between the City of Bozeman, Gallatin County, Montana
Department of Transportation, and the Gallatin Valley Land
Trust this vision can become a reality.
Future Land Use
Building upon the future land uses established in the
Bozeman Community Plan, the Area Plan has taken
the opportunity to refine the locations of the mixed-use
designations northwest of the city limits. The intent is to
thoughtfully identify places suitable for gentle increases in
density and mixed commercial and residential uses. The
Area Plan proposes higher densities of mixed use and
commercial development to be concentrated along major
roadways and intersections. This allows higher intensities of
use to be facilitated by higher-capacity public infrastructure.
Correspondingly, the Area Plan recommends a variety
of housing to be thoughtfully developed adjacent to and
within walking distance of natural resource areas.
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48 492026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
There are multiple benefits of this future land use approach
including proximity between residential areas and everyday
commercial services; diverse and vibrant mixed-use districts
that offer live-work-play opportunities; safe multimodal
connectivity between various areas and services; and
reasonable concentration of development to reduce natural
resource impacts.
Planning Process
The City of Bozeman has a variety of planning documents
that work in conjunction to guide the growth of the
community. The 2018 Bozeman Strategic Plan envisioned a
“well planned city” that engages in “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”. Several local and
regional plans influence and relate to one another while
guidelines, policies, and regulations govern future growth.
Land Use Planning
Private land development involves a series of sequential
planning processes. Each step described below has a
finer scope and more detailed design requirements than
the previous one. Several of the development entitlement
processes provide additional opportunities for public
engagement.
1. Area Plans apply the goals and objectives of the
Community Plan to a more specific geography.
2. Annexation formally incorporates private property into
the City limits subjecting it to Bozeman’s regulations
and providing access to municipal services.
3. Master Site Plans are often required for large
developments. A Master Site Plan outlines the phased
development of a particular property.
4. Subdivision allows for private property to be divided
into smaller parcels which can be individually sold or
developed.
5. Site Plans are required for each development project
and for each phase of an approved Master Site Plan.
6. Public Infrastructure Plan is required to design, improve,
and construct new public streets, water mains, sewer
mains, and stormwater management systems.
7. Building Permit is required to construct each building or
component of an approved Site Plan.
Related Plans
A wide variety of local and regional planning documents
are germane to the Northwest Bozeman Area Plan. They
most notably include the 2025 Bozeman Community Plan,
2023 Parks, Recreation, and Active Transportation Plan, and
2017 Bozeman Transportation Master Plan. Likewise, some
Gallatin County and regional plans have influenced this Area
Plan including the 2020 Triangle Community Plan, 2021
Triangle Trails Plan, and 2023 Gallatin Valley Sensitive Lands
Plan. A complete list of related and referenced plans is in
Appendix A
Next Steps
The Northwest Bozeman Area Plan was created to conform
with the Montana Land Use and Planning Act per Montana
Code Annotated Title 76 Chapter 25 Part 2 which stipulates
that it may be adopted as an amendment to the Bozeman
Community Plan. If adopted, the Area Plan will conform to
the implementation requirements stipulated by the Montana
Land Use and Planning Act as set forth in Chapter 4 of the
Bozeman Community Plan. Subsequently the Community
Plan and any area plans must be reviewed every five years
to determine whether an update should be completed.
Future updates can modify any aspect of the Area Plan
including but not limited to the plan boundary, planning
objectives, framework elements, and recommendations.
Appendix E outlines the Community Plan amendment
process. Compliance with the Montana Land Use Planning
Act is documented in Appendix F.
Page Intentionally Left Blank
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50 512026 Northwest Bozeman Area Plan 2026 Northwest Bozeman Area Plan
APPENDIX A: Bozeman Planning Context
A
Bozeman Planning Context
TO BE ADDED TO NEXT PUBLIC DRAFT
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APPENDIX B: Future Land Use Suitability Analysis
B
Future Land Use Suitability Analysis
TO BE ADDED TO NEXT PUBLIC DRAFT
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APPENDIX C: Community Engagement Materials
C
Community Engagement Materials
TO BE ADDED TO NEXT PUBLIC DRAFT
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APPENDIX D: Community Plan Supporting Data
D
Community Plan Supporting Data
TO BE ADDED TO NEXT PUBLIC DRAFT
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APPENDIX E: Community Plan Amendment Compliance
E
Community Plan Amendment Compliance
TO BE ADDED TO NEXT PUBLIC DRAFT
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APPENDIX F: Montana Land Use Planning Act Compliance
F
Montana Land Use Planning Act Compliance
TO BE ADDED TO NEXT PUBLIC DRAFT
39
Memorandum
REPORT TO:Community Development Board
FROM:Shawn Kohtz, Director of Utilities
SUBJECT:Special Presentation - Cash In Lieu of Water Rights Fee Update
MEETING DATE:October 19, 2026
AGENDA ITEM TYPE:Citizen Advisory Board/Commission
RECOMMENDATION:Special Presentation - Cash In Lieu of Water Rights Fee Update
STRATEGIC PLAN:6.1 Clean Water Supplies: Ensure adequate supplies of clean water for today
and tomorrow.
BACKGROUND:Resolution 4095, passed March 17, 2008, establishes the City’s currently
effective cash in lieu of water rights (CILWR) fee rate at $6,000/acre-foot.
New developments must satisfy the City’s water adequacy code, set forth at
BMC 38.410.110, prior to final development approval. Compliance through
payment of CILWR to offset a development’s municipal water use has been
the primary compliance method chosen by the vast majority of development
applicants because the alternative method of obtaining new municipal water
rights under state law is highly complex, takes multiple years to complete,
and has no guaranteed outcome. The water adequacy code provides
authority for the City Commission to establish the CILWR fee by resolution.
Technical and economic analyses supporting an updated CILWR fee have
been performed and summarized in the attached CILWR fee update study.
The report recommends increasing the fee to the $13,050/acre-foot
midpoint of the $11,600 - $14,500 range derived by the 3-pronged valuation
methodology explained in the report. This work was completed by
WestWater Research as a specialty subconsultant to the City’s on-call water
rights consultant HydroSolutions. WestWater Research is an industry leading
water economics firm specializing in water rights valuations, water markets,
and transactional support throughout the western U.S.
City staff brings this CILWR fee update to the CDB as a special presentation
because of the role CDB holds in the development review process. No action
is requested or required of the CDB. Stated connections between the CILWR
fee and Community Plan Goals follow:
Goal R-2: Pursue community decisions in a manner that supports
resilience. Essential to community resilience is its water supply. The
CILWR provides funding for municipal water rights thus supporting
40
community resilience.
Goal N-3: Promote a diverse supply of quality housing units. CILWR
provides funding to obtain new municipal water rights, which will
supply water to diverse and quality future housing developments.
Goal DCD-1.13. Pursue acquisition and development of diverse water
sources and resources. CILWR provides funding to obtain new
municipal water rights from different sources such as groundwater.
Water source diversity promotes community resiliency as the City’s
current municipal water rights are entirely surface water dependent.
UNRESOLVED ISSUES:None.
ALTERNATIVES:N/A.
FISCAL EFFECTS:The recommended fee midpoint of $13,050/acre-foot is over double the
current fee rate of $6,000/acre-foot. If so resolved by the City Commission at
the recommended midpoint, the City will receive revenue at a level
commensurate with securing new municipal water rights within the current
market environment, as well as revenues for changing existing water rights
to a municipal purpose. For a newly constructed single-family residence, the
updated CILWR fee midpoint imparts a cost of $3,050 onto the purchase
price of a home; for a new multi-family residential unit, a $1,620 fee results.
Attachments:
Bozeman CIL Update_FINAL-2026.10.01.pdf
Report compiled on: October 13, 2026
41
City of Bozeman Cash-In-Lieu Update
Methods, Assumptions, Results, & Recommendations for Updating
the City of Bozeman’s Water Rights Cash-In-Lieu Fee to 2025
Prepared for:
HydroSolutions
303 Clarke Street
Helena, MT 59601
Prepared by:
WestWater Research, LLC
205 S. Meldrum St.
Fort Collins, CO 80521
October 1, 2026
42
City of Bozeman Cash-In-Lieu Update
Page i
Executive Summary
Purpose & Framework
This report documents the work of WestWater Research, LLC (WestWater) in developing an updated
water rights cash-in-lieu fee (CIL) recommendation for the City of Bozeman. The City's current CIL of
$6,000 per acre-foot (AF) was established in 2008. The update follows American Water Works
Association M1 system development charge guidance and the rational-nexus principle: the fee
should recover the City's investment in existing water rights, provide a revenue stream adequate to
acquire new water rights at fair market value, and account for the cost of changing existing water
rights to municipal or mitigation purpose. The analysis is intended to be defensible to ratepayers,
proportional to actual cost, consistent with regional practice, and easily updated at regular intervals.
Valuation Perspectives
Independent valuation perspectives are developed and reconciled in this report. Full cost recovery,
calculated from seven volume-weighted historical Hyalite Share transactions adjusted to 2025
dollars, yields a Consumer Price Index–adjusted value of approximately $11,560/AF and a cost-of-
capital-adjusted value of approximately $14,240/AF of reliable yield. WestWater’s opinion of fair
market value of reliable yield held in the City’s portfolio is $9,000–$15,000/AF, based on western
Montana water right transactions, Bozeman-area land value differentials, and change case costs.
The cost of acquiring new water rights under the City’s water rights alternatives, on a water rights
only basis, ranges from approximately $4,900 to $10,000/AF. The perspectives are reconciled rather
than averaged, because they measure different things. The first two describe water rights already in,
or equivalent to, the City’s municipal portfolio. The third describes the cost of new supply acquired
from agriculture, which Appendix A posits has been suppressed by the City’s own purchase history.
Bozeman’s Supply Position
Bozeman's existing supply portfolio—comprising the Hyalite, Sourdough, and Lyman Creek
watersheds—is sufficient to meet projected demand under most growth and conservation scenarios
in the near term, with a reliable surplus on the order of 4,800 AF over 2024 demand. However, the
baseline scenario in the City’s 2023 Water Conservation and Efficiency Plan, which assumes no
conservation program, projects a deficit of roughly 1,330 AF by the end of the planning horizon
(2040), and the water rights alternatives in this report are sized to that conservative scenario in order
to establish an upper bound on the cost the CIL fee should accommodate. Lower-demand scenarios
would proportionally reduce the volume of new water rights required.
Recommendation
This report recommends a CIL fee in the range of $11,600–$14,500/AF of reliable yield, with a
midpoint of $13,050/AF (see Figure ES-1). This is equivalent to about $3,050/home,1 or roughly 0.4%
of Bozeman’s 2025 median home price. The lower bound reflects full cost recovery of the City's
historical water rights investments, while the upper bound falls between the cost-of-capital-
adjusted recovery value and the high end of fair market value. The cost of new water rights under the
City’s alternatives falls below this range, suggesting that the recommended fee is sufficient to fund
future acquisitions. The methodology is structured so that the fee can be re-evaluated on a three- to
five-year cycle as costs, water rights values, and demand projections evolve.
1 City of Bozeman single-household residential demand of 0.234 AF per year per unit, Administrative Order 2013-07,
Section III.A. See Section 5.1.
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City of Bozeman Cash-In-Lieu Update
Page ii
Figure ES-1: CIL Recommendation & Contributory Cost Aspects ($1,000/AF, 2025$)
Mountain West Peer Comparison
Comparison with eleven other Mountain West municipalities confirms that the recommended range
is consistent with regional practice. As a share of single-family home median sale price, the
proposed Bozeman CIL falls well below the cross-jurisdictional average of approximately 1.6% (see
Figure ES-2), reflecting both Bozeman's relatively high home prices and the disparate nature of
Western water markets in their maturity, demand pressures, and institutional constraints.
Figure ES-2: CIL Fee Estimate & Median Home Sale Price; Selection of Western Cities
Figure Notes: Home sale prices through May 2025 (Realtor.com). CIL fee per home based on 0.234 AF/home for all municipalities, the City of
Bozeman single-household residential demand standard under Administrative Order 2013-07.
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City of Bozeman Cash-In-Lieu Update
Page iii
Acronyms & Abbreviations
Acronym or
Abbreviation Description & Definition (if needed)
AF Acre-foot
ARM Administrative Rules of Montana
ASR Aquifer storage and recovery
BEF Bozeman Experiment Farm weather station
CAGR Compound annual growth rate
CFS Cubic feet per second
CIL Cash-in-lieu of water rights fee
CoC Cost of capital
CPI Consumer Price Index
CU Consumptive use
DNRC Montana Department of Natural Resources and Conservation
EDU Equivalent dwelling unit
ET Evapotranspiration
FCWSD Four Corners Water and Sewer District
FMV Fair market value
GVFDC Grass Valley French Ditch Company
GVH Grass Valley Holding, LLC
HCU Historical consumptive use
M&I Municipal and industrial
M1 Manual American Water Works Association, Principles of Water Rates, Fees, and Charges,
Manual of Water Supply Practices M1
MCWUA Middle Creek Water Users Association
NASS National Agricultural Statistics Service, USDA
SDC System development charge
USDA U.S. Department of Agriculture
WCEP Water Conservation and Efficiency Plan, City of Bozeman (2023)
WestWater WestWater Research, LLC
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Table of Contents
1 Introduction 1
1.1 Background & Purpose ....................................................................................................... 1
1.2 CIL Industry Standards, Best Practices, & City Objectives .................................................... 2
2 Description of Updated CIL Methodology 5
2.1 Ensuring Full Cost Recovery of Water Rights Expenditures ................................................... 5
2.2 Accommodating Future Supply Expansion Costs ................................................................. 5
2.3 General Approach .............................................................................................................. 6
3 Water Supply & Demand Analysis 7
3.1 Assessment of Existing Water Supply Portfolio .................................................................... 7
3.2 Growth Expectations & Future Demand Projections ............................................................. 9
3.3 Water Rights Alternatives .................................................................................................. 10
4 Valuing Current & Future Water Rights 15
4.1 Cost Recovery for Current Water Rights Portfolio ............................................................... 15
4.2 Fair Market Value of Current Water Rights ......................................................................... 16
4.3 Cost of Water Rights Alternatives ...................................................................................... 16
5 Recommended CIL Determination & Conclusions 21
5.1 Volume Basis for the Per-Home Comparison ..................................................................... 22
5.2 Comparison to CIL of Other Mountain West Municipalities................................................. 23
6 Appendices 24
Appendix A. Gallatin Valley Water Rights Market Assessment & Value Perspective ................. A-1
Appendix B. Storage Rights – Preliminary Decree ................................................................... B-1
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Tables
Table 1: Current Water Supply ...................................................................................................... 7
Table 2: Bozeman Population Projections based on Historical Census Data ................................... 9
Table 3: Bozeman Water Demand Projections ............................................................................... 9
Table 4: Estimated Consumptive Volume Available to Change on Sourdough & Hyalite Creeks ..... 12
Table 5: Storage Rights 10-Year Diversion Scenario ..................................................................... 13
Table 6: Calculation of 2025 Full Cost Recovery for Known Water Rights Acquisitions .................. 16
Table 7: Hyalite Share Purchase Cost Estimate for Supply Expansion ........................................... 17
Table 8: Water Rights Alternative Cost Results ............................................................................ 20
Table 9: CIL Cost Aspect Summary of Results ............................................................................. 21
Table 10: CIL Fees as a Proportion of Home Sale Price for a Selection of Western Cities ............... 23
Figures
Figure 1: Diversion Availability Under the Water Reservation Storage Right ................................... 13
Figure 2: CIL Recommendation & Contributory Cost Aspects ($1,000/AF, 2025$) ......................... 22
Figure 3: CIL Fees & Median Home Sale Price; Selection of Western Cities ................................... 24
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1 Introduction
This study documents the theory, procedures, and proposed determination of an updated water
rights cash-in-lieu fee (CIL) for the City of Bozeman, Montana (Bozeman or the City). Additionally,
and in support of the CIL analysis, this study provides a quantitative overview of the City’s current
water supply portfolio, current and projected water demands, and potential
development/acquisition options to bolster supply in anticipation of future growth. Finally,
Appendix A provides a preliminary-level market assessment and valuation of Gallatin Valley water
rights to support the CIL analysis.
1.1 Background & Purpose
The City requires that developers either dedicate adequate water rights to supply any new
development or pay a CIL fee, which allows developers to buy into the City’s existing water rights
portfolio and provides funds for new water supply acquisitions. An appropriately determined CIL can
serve to finance the cost of acquiring new water rights and ensure cost recovery for the existing water
rights portfolio. The current CIL fee of $6,000 per acre-foot (AF) was established in 2008 and has not
been updated in the intervening years.2
The City maintains an on-call water rights consulting contract with HydroSolutions, to whom it
expressed an interest in updating the CIL. In turn, HydroSolutions has contracted with WestWater
Research, LLC (WestWater) to lead the CIL revision effort. WestWater is uniquely qualified and well
positioned to conduct this CIL revision. The firm has extensive experience and familiarity with
Montana’s water markets, and routinely analyzes supply, demand, competition, and price trends for
clients in the Gallatin Valley and surrounding areas. In recent years WestWater has completed CIL
revisions for two of Colorado’s largest and fastest-growing municipalities and conducted multiple
valuations of water rights in Montana’s Gallatin Valley.
The overall objective of this study is to recommend a defensible and well-supported CIL fee update
to the City. In support of this objective, this report:
• Summarizes industry standards and best practices for CIL determinations.
• Describes and supports the methodology employed by WestWater.
• Provides a quantitative overview of the City’s current water rights portfolio.
• Conducts a water supply and demand analysis for the Gallatin Valley.
• Investigates and develops preliminary cost estimates for water supply expansion options.
• Provides a preliminary-level market assessment and valuation of Gallatin Valley water rights.
These contributing elements are reconciled to determine an updated CIL that aligns with Bozeman’s
cost recovery and growth goals. The final recommendation is stated as a unit-cost range in dollars
per AF.
2 Bozeman City Commission Resolution No. 4095 (2008).
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1.2 CIL Industry Standards, Best Practices, & City Objectives
This section reviews the legal foundations and industry standards for system development charges
(SDCs),3 and best practices and recommended objectives for CIL fees specifically.
1.2.1 Industry Standards for System Development Charge Derivation
There are many accepted practices and methodologies for development of a cost-based SDC like
the CIL fee. The American Water Works Association’s Manual of Water Supply Practices, M1 (M1
Manual) describes three basic, common approaches for calculation of fees like the CIL: the buy-in
approach, the incremental cost approach, and a combined approach.4
The M1 Manual describes these approaches primarily in the context of water system infrastructure,
but the approaches are equally applicable to raw water supply expenditures, such as water rights
acquisitions. The language in the definitions below has therefore been adapted to more cleanly fit
the City’s request that raw water supply be prioritized in CIL determination.
• The buy-in approach is based on the value of the existing water supply portfolio. This
approach is often used where the portfolio’s existing firm yield is sufficient to serve existing
customers and reasonably anticipated growth. The resulting fee is equivalent to acquiring a
unit of capacity within the system.
This approach ensures cost recovery of the past expenditures incurred to develop the
existing portfolio (assuming some adjustment for inflation), generally resulting in a lower CIL
reflective of past prices paid.
• The incremental cost approach is centered around the cost of expanding the existing water
supply portfolio to serve future customers. This approach is often used when the portfolio’s
existing firm yield has limited or no capacity for new development and new or incremental
capacity is required to serve new development. The resulting fee is representative of the per-
unit cost of future capacity.
This approach captures the expense of expanding the portfolio based on anticipated
acquisitions in the near- and medium-term—generally resulting in a higher CIL reflective of
current and forecasted fair market value.
• The combined approach is exactly as it sounds, acknowledging that new development will
use a combination of existing and future water supply portfolio holdings. This approach is
best used where some capacity is available, but new or incremental capacity is required in
the foreseeable future.
This approach blends the two former approaches and generally returns a CIL falling within
the edge conditions created by the buy-in and incremental cost approaches.
3 System development charge, or SDC, is the broad category of one-time charges paid by a new water system customer
for system capacity. Other commonly used names include impact fees, system capacity charges/fees, development
fees, among others. SDC terms specifically associated with raw water supply acquisition (sometimes inclusive of certain
infrastructure elements) include water resources acquisition fees, tap fees, and CIL.
4 Principles of Water Rates, Fees, and Charges. Manual of Water Supply Practices, M1. Seventh Edition. American Water
Works Association (2017). (link)
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The City set its current fee in 2008 to reflect what it would cost to acquire new water rights at the
prevailing market price, rather than the cost of using rights it already held.5 Because the fee has not
been updated since, it no longer reflects either current acquisition costs or the City’s past
expenditures in 2025 dollars. WestWater has generally recommended the combined approach for
its implicit balance between cost recovery and future price expectations.
1.2.2 CIL Fee Best Practices & Common Objectives
Based on reviewing and determining CILs for western municipalities, WestWater has compiled a set
of best practices and a list of commonly expressed objectives. Generally accepted best practices
for the determination of a CIL fee are that it be:
• Defensible: The generally accepted approaches for CIL fee development are bounded by
those methods based on cost recovery (generally the low bookend) and those based on
current and near-term replacement value (generally the high bookend), both of which are
acceptable and economically sound.
• Proportional: The concept of rough proportionality means that the fees assessed to an
individual property are roughly consistent with that property’s expected impact on the water
system. With regard to raw water supply, this is implicitly satisfied if the CIL is charged on a
unit basis (such as per-AF) and the unit requirement is tied to anticipated demand (e.g., three
AF per acre of developable land).
• Consistent & Predictable: Annual changes to a CIL fee should be incremental—
approximating a continuous function rather than a severe step function. This can be
accomplished through the amortization of significant one-time capital expenditures and
ensuring the fee calculation is structured to accommodate and moderate severe swings in
water market pricing. The methodology should be stress-tested with extreme, but possible,
scenarios to determine its suitability if such a scenario comes to pass. The logic behind the
calculation should be clear and defensible.
• Financially Sustainable: At a minimum, a CIL fee should recover past water asset
expenditures in real (i.e., adjusted for inflation) dollars. Additionally, some portion of debt
service related to a water asset acquisition should be recovered through the CIL.
From an economic standpoint, the City’s opportunity cost might be considered. There is an
opportunity cost to the City in tying up significant capital in water acquisitions and this cost
can be recovered by an approximation of the City’s cost of capital for the duration of an
asset’s holding. Opportunity cost can be approximated by the interest-earning potential of
the capital tied up in the water asset.
5 City of Bozeman, memorandum from the City Engineer to the City Commission, “FYI – Updating the Amount Charged for
Cash In Lieu of Water Rights,” October 15, 2007, attached to the staff report for Resolution No. 4095, adopted March 17,
2008 (link). The fee was previously based on the City’s annual payments to MCWUA for Hyalite Reservoir water. The
memorandum cites a consultant range of $4,000–$6,000 per acre-foot for Montana water at that time.
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WestWater has compiled a set of common (though not universal) objectives expressed by
municipalities in support of their review/determination of a CIL, which include:
• The fee should be competitive with regional municipal peers.
• The methodology should ensure that the City is ahead of the need for new growth/demand.
• The methodology should be consistent, easily updated, and accessible.
• The methodology can be potentially implemented within or linked to a currently maintained
water supply or financial model.6The insights provided above are for informational purposes
only, and the CIL determined for Bozeman will not necessarily satisfy all of the objectives
expressed by other municipalities, which are subject to unique sets of hydrological and
market constraints.
1.2.3 Bozeman’s Objectives, Constraints, & Guidance for CIL Update
The City has provided specific objectives, constraints, and guidance to WestWater in the CIL
determination methodology.
• Constrained to a focus on water rights.
• Specific to additional legal supplies and water rights for municipal and industrial use (M&I).
• Provide a CIL recommendation that maintains a bright line with the Water Impact Fee
program—this is a different fee/revenue stream that is currently allocated to capacity-
expansion improvements for water supply, treatment, and distribution facilities.
• Recover past water rights expenditures and provide a forward-looking informational
evaluation of cost recovery for conceptual raw water supply alternatives.
• The methodology should be easily updated every three to five years.
The City has requested that the updated CIL be based primarily (if not exclusively) on water rights
and should omit, where possible, any cost recovery associated with existing raw water storage and
treatment or conveyance infrastructure. Certain new raw groundwater supply scenarios evaluated
require new infrastructure elements such as wells and aquifer recharge to develop or utilize the
additional raw water supply. In such cases, the infrastructure complement is evaluated for
information purposes in this CIL determination.
6 Bozeman’s Water Supply Optimization and Management Tool might be considered such an example.
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2 Description of Updated CIL Methodology
Consistent with the City’s objectives, the methodology applied to determine an updated CIL
recommendation ensures full cost recovery of the City’s water rights expenditures, accommodates
future pricing expectations, and omits infrastructure costs currently accounted for in the City’s
water impact fee program. The methodology described can best be categorized as a combined
approach, as it accounts for buying into the current water rights portfolio while collecting sufficient
revenues to accommodate future water rights acquisitions.
2.1 Ensuring Full Cost Recovery of Water Rights Expenditures
The minimum CIL to be charged to ensure full cost recovery is the nominal amount spent on the
water rights adjusted to real dollars—thereby countering inflation’s diminishment of the purchasing
power of a dollar over time. This is accomplished by escalating any known water rights purchases
from the year of acquisition to a 2025 price level using the Consumer Price Index (CPI).7
Full cost recovery is alternatively calculated by including an estimate of the opportunity cost to the
City attributable to the water right acquisitions. The City incurs an opportunity cost to tie up the
capital expended on a water asset acquisition that might not be allocated for many years in the
future. It is advantageous for the City to have this capability, as it accommodates bolstering the
water supply portfolio when an asset can be purchased at a low price, regardless of near-term
demand expectations. However, this opportunity cost is a real cost incurred by the City, best
approximated as the cost of capital (generally prevailing bonding rates in the case of a municipality)
and should be recovered. The yield-to-maturity for a 30-year investment-grade municipal bond in the
year of acquisition is used as an estimate of the City’s cost of capital.8
Note that bond yields are market driven and implicitly account for inflation expectations (i.e., a
potential bond purchaser will make a selection based on a yield they consider high enough to meet
or exceed inflation through maturity). The cost-of-capital (CoC) value adjustment therefore implicitly
accounts for inflation, and no independent inflation adjustment is made to avoid double counting.
Both the CPI- and CoC-adjusted volume-weighted price paid are calculated and contribute to a
reconciled unit price range for full cost recovery.
2.2 Accommodating Future Supply Expansion Costs
Making additional water rights purchases to the portfolio will often be more expensive, in real dollars,
than equivalent past purchases. The cost recovery calculation will necessarily lag water asset
expenditures, perhaps by a decade or more, and leaves the City ill-prepared to finance future water
asset acquisitions. The current fair market value (FMV) of the existing water rights portfolio and the
cost of potential replacement of raw water assets (or expanding raw supply through project
development) are therefore a better indicator of future price expectations. The FMV of the existing
portfolio and the estimated cost to acquire or develop additional equivalent raw water supply are
therefore considered in the CIL methodology.
7 U.S. Bureau of Labor Statistics. Consumer Price Index for All Urban Consumers: All Items in West. (link)
8 S&P Municipal Bond Index: Investment Grade (link).
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In a high-growth environment, the existing water rights portfolio is exhausted more quickly, and
higher-price water is purchased sooner. This can be reflected by a higher weight assignment to the
supply expansion cost aspect. Under a low-growth scenario, the existing portfolio lasts further into
the future and higher-price water purchases can be deferred longer. This is reflected by a lower
weight assignment to the supply expansion cost aspect.
2.3 General Approach
A water supply and demand analysis is conducted in Section 3 to quantify the City’s water balance
and determine if/when any supply shortage might be expected. As explained above, future demand
projections can play a role in the weighting of the CIL-contributing components. The section
concludes with an overview of raw water supply expansion alternatives.
Section 4 presents the calculation of the cost recovery, FMV, and supply expansion cost financial
metrics that contribute to the CIL evaluation. Finally, Section 5 reconciles these financial metrics
into an updated CIL recommendation and provides comparisons with other known CIL fees in the
Mountain West region.
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3 Water Supply & Demand Analysis
This section summarizes the City’s current municipal water supply portfolio, recent water
acquisition history, and future demand projections. Quantifying these metrics is important for the
accurate calculation of price paid for existing supply, the timing for future water
acquisitions/development, and for estimating the absorption rate by new development.
3.1 Assessment of Existing Water Supply Portfolio
The City derives its municipal water supply from a portfolio of owned
surface water rights and Montana Department of Natural Resources
and Conservation (DNRC) contracts. The City reports three quantity
metrics for its supply: reliable yield, average yield, and maximum yield.
These are defined below and summarized by watershed in Table 1.9
• Reliable Yield – The annual volume of water that the City’s
water rights produce, on a given source, in a 1-in-50-year
drought condition (i.e., a 2% non-exceedance probability).
• Average Yield – The annual volume of water that the City’s
water rights produce, on a given source, in a 25-in-50-year
drought condition (i.e., a 50% non-exceedance probability).
This is considered the normal hydrologic condition.
• Maximum Yield – The total legal volume of the respective
water right. In total, Bozeman estimates its municipal water
supply portfolio to have an annual reliable yield of 11,920 AF,
an average yield of 13,330 AF, and a maximum yield of 16,517
AF. As shown in Table 1, the Hyalite Creek Watershed (both
direct flows and DNRC contracts) accounts for the highest
proportion of the City’s supply by any quantity metric among
the three watersheds (44%–48%). The Sourdough Creek
Watershed provides the second highest proportion (29%–
34%), while the Lyman Creek Watershed provides 18%–26%.
The critical quantity metric for supporting new development, and
therefore in CIL determination, is reliable yield. The rationale is that a
home should not be developed with the expectation that it receives
water in an average year, but rather that it will receive sufficient supply
in the driest years. The CIL is charged on each AF of a development’s
average annual demand under Administrative Order 2013-07. Stating
every unit cost in this report per AF of reliable yield matches each AF of
demand charged with an AF of supply available in a 1-in-50-year
drought. In 2024, municipal consumption was 7,100 AF, or about 60%
of the City’s reliable supply, leaving a reliable yield surplus of 4,820 AF.
The three watersheds and the City’s associated water rights are described in the sections below.
9 Volumes reported in Table 1 and quantity metric definitions for reliable, average, and maximum yield were provided
by the City in a July 9–16, 2025, email correspondence with WestWater.
Table 1: Current Water Supply
†Reliable = 2% non-exceedance probability
Average = 50% non-exceedance probability
Maximum = total legal volume of right
Source: Input from City (see footnote 9).
Watershed &Acre-Feet % of
Quantity Metric†(AF)Total
Hyalite Creek/Res.
Direct Flow
Reliable 1,145 10%
Average 1,238 9%
Maximum 1,631 10%
DNR Contracts
Reliable 4,580 38%
Average 4,655 35%
Maximum 5,819 35%
Hyalite Totals (Direct Flow + Contracts)
Reliable 5,725 48%
Average 5,893 44%
Maximum 7,450 45%
Lyman Creek
Spring
Reliable 2,127 18%
Average 2,980 22%
Maximum 4,307 26%
Sourdough Creek
Direct Flow
Reliable 4,068 34%
Average 4,457 33%
Maximum 4,760 29%
TOTALS
Reliable 11,920 100%
Average 13,330 100%
Maximum 16,517 100%
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3.1.1 Hyalite Creek Watershed
Hyalite Creek (also known as Middle Creek) originates in the Gallatin Mountains south of Bozeman,
flows into the Gallatin Valley, and takes a northward course to Bozeman’s east, eventually joining
the East Gallatin River northeast of Belgrade. The creek is impounded by Middle Creek Dam, a DNRC
state project which was completed in 1951, creating Hyalite Reservoir. Hyalite Dam was raised in
1992 and expanded reservoir storage from 7,850 AF to the current volume of 10,184 AF. DNRC
conveyed 109 contracts for use of Hyalite Reservoir water to irrigators and the City, while DNRC
retains ownership of the underlying water rights.10 The water units transacted by the DNRC contracts
are commonly referred to as Hyalite Shares. Each share is a contract for 1 AF of reservoir water,
which is its maximum yield. Its reliable yield is about 0.79 AF and its average yield about 0.80 AF,
based on the City-supplied yields in Table 1. The City currently holds 5,819 Hyalite Shares, and 4,365
Hyalite Shares remain in irrigation and recreation.
From 2007 to 2021, Bozeman purchased DNRC contracts from irrigators to expand its municipal
water supply with additional Hyalite Shares. In 2021, DNRC interjected, asserting that any Hyalite
Share sale revenue between shareholders should be allocated to DNRC to reserve for operation,
maintenance, and replacement purposes for the Middle Creek state project. This effectively created
an indefinite moratorium on the City’s ability to engage directly with irrigation shareholders through
arm’s-length transactions as irrigators now lacked any incentive to sell their contracts. If DNRC
allows shareholders to transact Hyalite Shares in the future, Bozeman plans to resume its
purchasing to expand municipal supply.
Bozeman also owns surface water rights in Hyalite Creek (i.e., direct flows) amounting to 1,145 AF of
reliable yield.11 These rights are unrelated to Hyalite Shares. Hyalite Creek is considered fully
allocated, so it offers no opportunity for new appropriation; additional reliable yield from the creek
would come through purchase and change of existing decreed rights.12
3.1.2 Sourdough Creek Watershed
Sourdough Creek (also known as Bozeman Creek) originates in the Gallatin Mountains south of
Bozeman and one drainage east of Hyalite Creek before flowing through Bozeman and entering the
East Gallatin River near the intersection of East Griffin Drive and Bridger Drive. Bozeman owns
several surface water rights in Sourdough Creek with priority dates ranging from 1865 to 1985 which
contribute 4,068 AF of reliable yield.13
3.1.3 Lyman Creek Watershed
Lyman Creek originates from springs in the Bridger Mountains northeast of Bozeman before flowing
southwest into Bridger Creek (a tributary of the East Gallatin River) near Bridger Canyon Road.
Bozeman owns two surface water rights on Lyman Creek with priority dates of 1864 and 1861
respectively with a combined maximum diversion of 4,307 AF annually.14 Lyman Creek currently
supplies Bozeman with 2,127 AF of reliable yield.
10 https://dnrc.mt.gov/_docs/water/middlecreek_factsheet.pdf
11 Montana Department of Natural Resources and Conservation (DNRC) Water Rights Query System. (link)
12 DNRC Basin Closures. (link)
13 DNRC, op. cit. (n. 11).
14 Maximum legal volume as provided by City (see footnote 9). DNRC reports annual volume at 4,346.2 AF (op. cit. (n. 11)).
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3.2 Growth Expectations & Future Demand Projections
Bozeman is one of the fastest-growing cities of its size and has grown by more than 2.6% per year
since 2010.15 Bozeman expects population growth to continue, though updated growth projections
are lower than they have been in the past. Since 2020, growth in Bozeman has slowed to 2.09%
annually, which is the rate used in this model to project moderate growth through 2040. A low
bookend of 1.5% is used to model a low-growth scenario, and the 2004–2024 growth rate of 3.13%
is used to model a high-growth scenario.
Growth in Bozeman and Gallatin County will depend on a variety of factors, but a moderate growth
scenario would put Bozeman’s population at about 80,500 in 2040. Relevant growth projections
based on historical Census data are provided in Table 2.
Table 2: Bozeman Population Projections based on Historical Census Data
Projection Rationale Growth Rate 2040 Population
Low Growth Scenario Low Bookend 1.5% 73,500
Moderate Growth Scenario 2020–2024 Growth Rate 2.09% 80,500
High Growth Scenario 2004–2024 Growth Rate 3.13% 94,800
Bozeman’s 2023 Water Conservation and Efficiency Plan (WCEP) projected water demand at 13,250
AF in 2040 under a baseline scenario, but the City plans to institute a water conservation program to
limit the use of potable water for irrigation and landscaping.16 With the conservation program in
place, the City projects water demand at 8,820 AF in 2040. If water use grows in line with population
at 2.09% annually, projected 2040 demand is 9,890 AF. With conservation savings in place, Bozeman
is projected to retain a significant water supply surplus in 2040 even without acquiring additional
water. Relevant demand projections are provided in Table 3.
Table 3: Bozeman Water Demand Projections
Projection 2040 Demand Reliable Supply
Surplus
Conservation Program Implemented 8,820 3,100
Mid Scenario (2.09% CAGR) 9,890 2,030
Baseline (2023 WCEP) 13,250 (1,330)
It is expected that Bozeman will continue to grow. Though Bozeman may not need to expand water
supply to meet demand in the near term, strategies and scenarios for expanding water supply are
discussed in Section 3.3 of this report for long-term planning.
15 https://www.census.gov/quickfacts/fact/table/bozemancitymontana#
16 Water Conservation and Efficiency Plan. City of Bozeman (2/15/2023). (link)
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3.3 Water Rights Alternatives
Bozeman shared several water rights alternatives currently under consideration to provide
additional legal water supply for long-range needs. The alternatives are listed in order of likely cost-
effectiveness and ease of integration into the existing raw water supply system.
1. Hyalite Shares – Resume purchases of Hyalite Reservoir contract water.
2. Decreed Water Rights Purchase & Change – Acquire Sourdough Creek and Hyalite Creek
decreed water rights from willing sellers and obtain DNRC change approval for municipal use.
3. Aquifer Storage & Recovery – Obtain DNRC change approval for the existing unperfected
municipal surface storage water rights owned by Bozeman (Sourdough Reservation and Mystic
Lake water rights) to change the place of storage to aquifer storage and recovery (ASR).
4. Groundwater Water Right Permit & Aquifer Recharge Mitigation Plan – Obtain DNRC
approval of a groundwater water right permit and an aquifer recharge mitigation plan.
These alternatives are not mutually exclusive, though the success of one might preclude the need
for the others, depending on the reliable yield generated by the alternative and growth in municipal
demand. The following sections describe each water rights alternative. Costs are estimated for each
in Section 4.3.
3.3.1 Hyalite Shares
As detailed in Section 3.1.1, Hyalite Reservoir is a DNRC water storage project that allocates 10,184
AF of water represented in 109 contracts for municipal or irrigation uses. The City currently owns
5,819 Hyalite Shares, and 4,365 Hyalite Shares remain in irrigation. Hyalite Shares represent the
easiest and most cost-effective means of expanding Bozeman’s municipal water supply for the key
reasons outlined below:
• Bozeman already owns and operates necessary treatment and delivery infrastructure due to
its existing portfolio of Hyalite Shares.17
• The cost of acquiring Hyalite Shares is known to be affordable for Bozeman based on
previous purchasing history.
• Hyalite Shares have a reliable yield, are decreed for municipal year-round use, and may be
used within the City’s municipal supply system without DNRC change approval.18
• Hyalite Shares provide stored supply, which is the most flexible supply available because
reservoir releases can be made as needed to meet demand.
• Buying Hyalite Shares financially benefits irrigators who no longer wish to use their water.
According to conversations with the City, DNRC changed its policy on Hyalite Share sales in 2021,
effectively declaring that any revenue from Hyalite Share sales belonged to DNRC. This policy
negated the incentive to sell on the part of irrigators and effectively shut down the market for Hyalite
Shares. If not for the new policy, the City would prefer to continue purchasing Hyalite Shares as the
primary method of expanding municipal supply.
17 Bozeman 2024 Water Quality Report. (link)
18 Middle Creek Project Original Right. (link)
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There are ongoing conversations between the Middle Creek Water Users Association (MCWUA),
DNRC, and the City. According to the City, the market for Hyalite Shares will be reinvigorated upon
resolution of the share transfer issue between DNRC and MCWUA.19 Some of the details that need
to be worked out by the parties include who gets compensated for the transaction and at what rate.
The City expects resolution within the next 12 to 18 months, with share transactions between willing
sellers resuming thereafter. The total theoretical reliable yield of Hyalite Shares not currently held by
the City is 3,436 AF.20
3.3.2 Decreed Water Rights Purchase & Change
Bozeman can expand its water rights portfolio by acquiring decreed water rights on Sourdough Creek
and Hyalite Creek from willing sellers and changing their purpose of use to municipal. Unlike Hyalite
Shares, a decreed right acquired from an irrigator cannot be used within the municipal system until
DNRC approves a change application.
Both sources carry substantial acquisition opportunity. DNRC records 116 water rights on
Sourdough Creek, 77 of them decreed to irrigation purpose, and 137 rights decreed to irrigation
purpose on Hyalite Creek.21 All but three of the Sourdough Creek rights and all but one of the Hyalite
Creek rights are held by parties other than the City.
Only the consumptive portion of a decreed irrigation right may be changed to a new purpose.
Historically diverted water in excess of consumptive use remains with the source. The volume
available to the City is therefore materially smaller than the decreed diversion volume, and the
consumptive volume across the irrigable place of use is the relevant measure.
WestWater estimated the consumptive volume that could be changed to municipal purpose on each
source from these records. The estimate applies the historical consumptive use (HCU) of alfalfa hay
in the Gallatin Valley, approximately 1.36 AF per acre, to the irrigated acreage recorded against each
right decreed to irrigation purpose. This is the same HCU conversion applied in the land price
differential analysis presented in Appendix A. Rights held by the City are excluded. So is the Middle
Creek Ditch Company right, whose recorded 6,178 acres correspond to the Hyalite Share pool
addressed above and would otherwise be counted twice. On this basis, decreed irrigation rights
carry consumptive volume on the order of 4,000 AF on Sourdough Creek and 10,000 AF on Hyalite
Creek.22 Table 4 sets out the derivation on each source.
These figures are an upper bound on the physical resource and do not describe an acquirable supply.
Three limitations apply. Acreage is recorded against each water right, so ground served by more than
one decreed right appears more than once; the estimate removes that overlap where DNRC parcel
identifiers permit, which covers 81% of the Sourdough Creek acreage and 58% of the Hyalite Creek
acreage, and applies the observed overlap rate to the remainder. The acreage recorded is the
decreed maximum rather than the acreage historically irrigated, and DNRC determines historical
19 July 15, 2025, call between Bozeman, WestWater, and HydroSolutions to discuss CIL study updates.
20 Of the 10,184 total shares available, the City holds 5,819. The remaining 4,365 shares are estimated to have a reliable
yield of 3,436 AF based on the reliable yield factor of 78.71% used by the City in assessing its current holdings.
21 WestWater analysis of DNRC Water Rights Query System records for Sourdough Creek and Hyalite Creek (op. cit. (n.
11)), retrieved September 2026.
22 WestWater analysis. Consumptive volume is estimated as the irrigated acreage recorded against each right decreed to
irrigation purpose, reduced to remove acreage recorded against more than one right, multiplied by 1.36 AF per acre. The
rate is the alfalfa historical consumptive use (HCU) derived in Appendix A. Results are rounded to the nearest 1,000 AF.
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use in a change proceeding at a volume that is ordinarily lower. The estimate also assumes willing
sellers, on which the record is silent.
Table 4: Estimated Consumptive Volume Available to Change on Sourdough & Hyalite Creeks
Derivation of Consumptive Volume Sourdough Creek Hyalite Creek
Water rights decreed to irrigation purpose 77 137
Irrigated acres recorded 7,251 17,826
Less: acres on rights held by the City (2,664) (800)
Less: acres on the Middle Creek Ditch Company right† — (6,178)
Less: acres served by more than one right‡ (1,763) (3,825)
Net irrigated acres 2,824 7,023
Consumptive volume at 1.36 AF/acre§ 3,840 AF 9,551 AF
Estimated volume available to change, rounded¶ 4,000 AF 10,000 AF
† The Middle Creek Ditch Company right, 41H 119964 00, records 6,178 acres across 86 places of use on five ditches. Its
consumptive volume corresponds to the Hyalite Share pool addressed in Section 3.3.1 and is excluded here so that the
same water is not counted twice.
‡ Acreage is recorded against each water right, so ground served by supplemental rights is recorded more than once. The
deduction removes that overlap where DNRC parcel identifiers permit, covering 81% of the Sourdough Creek acreage
and 58% of the Hyalite Creek acreage, and applies the observed overlap rate to the remainder.
§ Historical consumptive use of alfalfa hay in the Gallatin Valley, as derived in Appendix A.
¶ Rounded to the nearest 1,000 AF. These are upper bounds on the physical resource and do not describe an acquirable
supply.
3.3.3 Aquifer Storage & Recovery
Another option that Bozeman is currently investigating for additional water rights is ASR. Bozeman
holds two unperfected surface storage water rights on Sourdough Creek for municipal purposes: a
609-AF water reservation with a 1985 priority date and a 6,000-AF volume claim to Mystic Lake
reservoir with a 1901 priority (the Storage Rights). Bozeman would need to obtain DNRC approval to
change the place of storage from a surface reservoir to the valley aquifer and build an infiltration
gallery or injection wells to deliver surface water into the aquifer for later withdrawals. The City would
then be able to store water underground during spring runoff and use wells to pump out of the aquifer
when needed.
Bozeman’s Storage Rights are junior priority rights on the creek and can only divert during spring
runoff—a concept commonly referred to as free river. Bozeman’s ability to change the Storage Rights
for ASR is contingent on DNRC approval. ASR is a legally recognized beneficial use of water in
Montana. DNRC has not processed an ASR change or permit, however, and has adopted no
regulations governing this use. It is therefore unknown how the agency will approach review and
approval of such an application.
Since Bozeman can only divert during free river, its ability to divert and store water under the Storage
Rights is dependent on sufficient flows being available in priority. Using DNRC water rights data,
WestWater determined that there are 74.42 cubic feet per second (CFS) of water rights on Sourdough
Creek that are senior to the 1985 priority water reservation Storage Right.23 Figure 1 shows that,
23 February 10, 2022, Memorandum from Jacobs to City of Bozeman. Subject: Direct Flow—Reliable Yield Evaluation.
Emailed to WestWater from HydroSolutions June 2, 2025.
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based on the available data, sufficient flow is available to create free river conditions in seven of 10
years.24 This is depicted in the figure as the instances where streamflows are greater than cumulative
water rights senior to the water reservation.
Figure 1: Diversion Availability Under the Water Reservation Storage Right
Taking all 10 years into account, the average annual volume that Bozeman could divert under the
Storage Rights is about 2,500 AF. In some years, however, no water will be in priority for diversion,
and therefore not available. Dropping the three low water years from the average provides an
estimate of the available water during free river. An example 10-year diversion scenario is depicted
in Table 5.
Note that under the City’s 2% non-exceedance probability criterion for reliable yield, this supply
expansion alternative provides zero reliable yield in any given year. However, when paired with
effective year-to-year rollover storage through use of an infiltration gallery, the limited dataset
indicates that a reliable yield of around 2,000 AF could be achievable. A longer hydrological record
and additional operational details are needed to draw any definitive conclusions regarding reliability.
Table 5: Storage Rights 10-Year Diversion Scenario
Year 1 2 3 4 5 6 7 8 9 10 Avg.
Avail. Diversion (AF)† 3,581 3,581 0 3,581 3,581 0 3,581 3,581 0 3,581 2,507
† Annual volume is calculated based on the flow instances and duration of such instances where flows exceed 74.42 CFS over the
10-year period 2016–2025. The table average of 2,507 AF accounts for the 3-in-10 years of flows insufficient for City diversion.
3.3.4 Groundwater Water Right Permit & Aquifer Recharge Mitigation Plan
The Gallatin Valley overlies significant groundwater resources within various hydrogeologic
structures. If Bozeman develops wells in the valley alluvium, any adverse effects from surface water
24 DNRC Sourdough Creek Gage. (link)
0
50
100
150
200
250
2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025Sourdough Creek Flow (CFS)Average Flow (CFS)Available for Diversion Rights Senior to the Storage Right
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depletions caused by groundwater pumping must be offset through a mitigation plan in accordance
with Montana water law.25
The Upper Missouri River Basin (of which the Gallatin watershed is a part) is closed to new surface
water rights.26 While the surface water closure does not preclude new groundwater appropriations,
it does require a higher standard to be met in order to avoid injury or adverse effects to surface water
users. All new groundwater appropriation applications in the Gallatin River Basin must include a
hydrogeologic report that examines whether the new appropriation will cause depletions to surface
water supplies and, if depletions will occur, whether they will cause adverse effects to current
surface water users. If the new appropriation causes adverse effects, the applicant must then
submit a mitigation plan that prevents injury to existing users by replacing depletions.27 A mitigation
plan typically involves decreasing diversions at appropriate points, often by fallowing fields owned
by the applicant,28 or purchasing water rights and changing the use to mitigation so that they will be
left instream. If cessation of diversion will not provide adequate mitigation in amount, timing, and
location, aquifer recharge can be used. Because municipal use occurs continuously throughout the
year, other continuous use rights such as those for fisheries and stockwater purposes must also be
mitigated continuously. Water rights available for mitigation change are typically seasonal irrigation
rights, and seasonal rights can provide continuous year-round mitigation through aquifer recharge.
Aquifer recharge is the controlled addition of surface water to the aquifer to offset stream depletions
at the correct time, location, and amount. An existing water right must be acquired and DNRC
change approval obtained to change that right’s purpose to aquifer recharge. DNRC will not approve
a new groundwater water right permit in the closed Upper Missouri River Basin without also
approving a complementary mitigation plan. Where the mitigation plan relies on aquifer recharge,
the change to aquifer recharge purpose must be completed before the permit will issue.
The most straightforward procedure for mitigating surface water depletions caused by wells would
be purchasing water rights from irrigators. Most large surface water diversions in the Gallatin Valley
are owned by corporations known as ditch companies. A ditch company is made up of shareholders,
with each share representing an equal portion of the ditch company’s water rights portfolio.
Bozeman could pursue a strategy of purchasing shares from irrigators and changing the nature of
use of the underlying water right to mitigation or aquifer recharge to replace depletions caused by
municipal wells.
The reliable yield under this alternative might be limited by any of four variables:
• The willingness of ditch companies or individual water right owners to change their water
rights to mitigation or aquifer recharge purpose.
• The amount of mitigation water ditch companies or individual water right owners would sell
to the City.
• The amount of seasonal storage developed.
• The unique characteristics of the aquifer and its physical capacity to receive surface water
for aquifer recharge purposes.
25 https://archive.legmt.gov/content/Committees/Interim/2007_2008/water_policy/staffmemos/waterlawsummary.pdf
26 https://archive.legmt.gov/bills/mca/title_0850/chapter_0020/part_0030/section_0430/0850-0020-0030-0430.html
27 As the Gallatin is a closed basin, depletion will necessarily result from pumping a well, and mitigation is always required.
28 Mitigation by fallowing requires permanently retiring acres to provide sufficient flow rate and volume to offset usage
under a new permit. Due to the change in purpose of use (and likely place of use) a change application is required.
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4 Valuing Current & Future Water Rights
This section presents the calculation of full cost recovery for the City’s water rights portfolio and of
forecasted future water rights costs. Appendix A of this report provides a preliminary-level market
assessment and valuation of Gallatin Valley water rights to provide a general perspective of FMV of
water rights equivalent to those held, and those that might be procured, by the City.
4.1 Cost Recovery for Current Water Rights Portfolio
The City’s water rights portfolio holds 11,920 AF of reliable yield. Price paid is known for 275.6 AF of
that total, contributed by the purchase of 350 Hyalite Shares the City made between 2007 and 2021.
Those purchases are the basis for the full cost recovery unit cost developed in this section. At the
City’s direction, the analysis covers contemporary purchases only, meaning those completed after
the Middle Creek state project rehabilitation and dam raise in 1992. The City considers earlier
acquisitions historical, and their costs fully recovered. All known purchases postdate 1992, so this
scope does not alter the calculated values.
Given the City’s direct flow rights in Lyman, Sourdough, and Hyalite creeks along with 5,819 Hyalite
Shares, Bozeman possesses adequate water supply to meet its current needs. However, the City’s
reasonably foreseeable future water needs, as documented in the 2013 Integrated Water Resources
Plan, require additional water rights to keep pace with projected population growth through 2062.
Amid rapid growth in 2007, Bozeman renewed its strategy of purchasing additional Hyalite Shares to
expand municipal water rights and ensure sufficient capacity for continued growth. From 2007 to
2021, Bozeman purchased 350 Hyalite Shares. In total, the purchases added 275.6 AF of reliable
yield to Bozeman’s municipal supply. The City paid $6,000 per share in five of the seven purchases,
the same figure as the $6,000/AF CIL it set in 2008.29 Because a share’s 1 AF contract volume yields
about 0.79 AF in a 1-in-50-year drought, $6,000 per share is equivalent to about $7,620/AF of reliable
yield. The share price and the 2008 CIL therefore coincide per share but not on the reliable yield basis
used throughout this report. That difference in volume basis, about 27%, accounts for part of the
increase from the current fee, separate from inflation. Transaction details can be found in Section
A.1.1 of Appendix A.
Table 6 summarizes the calculation of full cost recovery for known contemporary water rights
acquisitions held in the current water rights portfolio. The minimum value to ensure full cost recovery
is represented by the CPI-adjusted (CPI-Adj.) values, which state the City’s past expenditures in real
dollars. The cost-of-capital-adjusted (CoC-Adj.) values in the table report the City’s known water
rights expenditures inclusive of an estimate of opportunity cost based on municipal bonding rates in
the year of acquisition (see Section 2.1 for additional details). As shown in Table 6, the CIL fee
required to ensure full cost recovery ranges from $11,560–$14,240/AF of reliable yield.
In this case, the volume-weighted average is the most meaningful statistic, as it is the precise value
that must be charged for each AF of reliable supply to ensure full cost recovery. Were the CIL set to
the median value, the City would come up short in total reimbursement. Note that the three earliest
29 The City has described its purchases in the same terms. Its April 6, 2020 staff memorandum on the R Lazy J Ranch
assignment treats 90 shares as 90 AF of MCWUA contract water, prices them at $6,000/AF, notes that the price is
identical to the CIL fee, and sizes the purchase to serve 384 single-family homes, or about 0.234 AF/home (link).
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transactions are three of the four largest in volume and the highest unit cost in adjusted dollars. They
therefore have a significant impact on the volume-weighted average unit prices reported.
Table 6: Calculation of 2025 Full Cost Recovery for Known Water Rights Acquisitions
Purchase
Year
Shares Total Price Paid Reliable
Yield (AF)
$/Reliable AF
Acquired Nominal CPI-Adj.† CoC-Adj.‡ CPI-Adj.† CoC-Adj.‡
2021 90 $540,000 $638,500 $589,800 70.8 $9,000 $8,310
2021 17 $102,000 $120,600 $111,400 13.4 $9,000 $8,310
2015 10 $55,000 $76,900 $75,900 7.9 $9,740 $9,610
2010 25 $150,000 $230,500 $233,700 19.7 $11,700 $11,860
2010 58 $348,000 $534,800 $542,200 45.7 $11,700 $11,860
2008 50 $300,000 $464,300 $687,600 39.4 $11,780 $17,450
2007 100 $700,000 $1,121,200 $1,684,600 78.7 $14,250 $21,410
Totals 350 $2,195,000 $3,186,800 $3,925,200 275.6 — —
Volume-Weighted Average $11,560 $14,240
Median $11,700 $11,860
†Adjusted to 2025 price level by the Consumer Price Index (CPI) for West, All Items.
‡Adjusted for the City’s cost of capital through 2025—estimated as 30-year municipal bond yield-to-maturity.
4.2 Fair Market Value of Current Water Rights
Confidently assigning a current FMV to the existing water rights portfolio would require a
comprehensive valuation of the underlying water rights, which is beyond the scope of this study.
However, WestWater conducted a preliminary market assessment and perspective of value for
Gallatin Valley water rights based on updates to past regional analyses and some limited additional
analysis, which can be found as Appendix A to this report.
As explained in Appendix A, Bozeman is the dominant price-maker in the Gallatin Valley water rights
market, and therefore the pricing for regional supply has closely tracked the City’s own purchase
activity. Complementing the City’s purchase history with a selection of other comparable sales and
adjustments to regional agricultural water values for change case costs and seasonality finds an
estimated FMV range of $9,000–$15,000/AF.
4.3 Cost of Water Rights Alternatives
The water rights alternatives provided by the City involve a mix of water rights acquisition,
administrative change of existing water rights, and new water rights permitting. Bozeman is actively
investigating all of the alternatives described, and each is at a different stage of maturity. Certain
hydrological, legal, and cost details are yet unknown. This analysis uses the best data provided by
the City, HydroSolutions, and past project experience to arrive at the cost estimates presented.
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4.3.1 Hyalite Share Purchases Resumption
This study assumes that Hyalite Share purchases resume and that shares transact at market rates.
On that basis, the water asset is estimated at a cost of $7,800/Share or $9,900/AF of reliable yield.30
These calculations are summarized in Table 7.
Table 7: Hyalite Share Purchase Cost Estimate for Supply Expansion
Unit Cost & Adjustments Per Share
($/Share)
Reliable Yield
($/AF)
2021 Purchase Price (Nominal $) $6,000 $7,620
CPI-Adjusted to 2025 price level (2025$) $7,090 $9,000
Additional Transaction Costs (+10%) (2025$) $7,800 $9,900
4.3.2 Decreed Water Rights Purchase & Change
Costs under this alternative comprise the purchase price of irrigation water rights on Sourdough
Creek and Hyalite Creek, plus a DNRC change case for each acquisition. Appendix A provides the
agricultural water rights valuation that underpins the acquisition component. Because only the
consumptive portion of a right may be changed, the acquisition cost must be expressed per AF of
changed consumptive volume rather than per AF of decreed diversion.
The acquisition component is bounded on both sides by evidence in Appendix A. The value of
irrigation water in its current agricultural use, estimated through the Gallatin County land price
differential at approximately $3,600/AF of consumptive use, sets the price below which an irrigator
has little reason to sell. Unchanged agricultural water right sales elsewhere in western Montana, at
approximately $1,900–$2,400/AF of consumptive use, fall below that figure and support it as a
conservative floor for the Gallatin Valley. The Hyalite Share price sets the ceiling. A Hyalite Share is
stored, decreed for municipal use, and requires no change application. The City would not rationally
pay more per AF of reliable yield for a decreed direct flow right than for a Hyalite Share, estimated at
$9,900/AF of reliable yield in Table 7.
The change component is estimated at $50,000–$60,000 per change case, the typical cost reported
by HydroSolutions (see Section A.1.2). The City’s $250,000 estimate in Section 4.3.3 reflects the
novelty of the ASR change and does not apply to a conventional change from irrigation to municipal
purpose. Change case cost is largely indifferent to the volume changed, so it is expressed here
against a representative acquisition of approximately 100 irrigated acres (136 AF of consumptive
use), whether a single right or several supplemental rights serving the same ground and changed in
one proceeding. The City would be expected to target acquisitions of this size or larger. The median
decreed irrigation right on either source records 40 acres or fewer and would carry a change cost per
AF more than twice as high.
Consumptive volume is converted to reliable yield at 90%, consistent with the ratio of reliable to
average yield for the City’s own direct flow rights on Sourdough and Hyalite Creeks shown in Table
1. Acquired rights will generally be junior to the City’s, so this ratio likely overstates their reliable yield
and biases the unit cost toward the low end. At the floor, the acquisition price plus 10% transaction
30 WestWater states the CIL per AF of reliable yield. The per-share column is shown because Hyalite Shares transact by
the share, each a 1 AF contract.
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costs, as applied in Table 7, and a change case at $60,000 return approximately $4,900/AF of reliable
yield.31 This alternative is therefore estimated at $4,900–$9,900/AF of reliable yield.
4.3.3 Aquifer Storage & Recovery
The ASR alternative entails the cost of completing change authorizations with DNRC for the existing
surface storage rights the City holds on Sourdough Creek, being the Reservation and Mystic Lake
rights. The alternative acquires no new water and, under the fee basis adopted by the City, carries
no infrastructure component.
Since the ASR water right change authorization that Bozeman would seek is unique and uncommon,
costs are projected to be significantly higher than those of a standard change application. The City
estimates that a change application would cost $250,000 to complete. A change application is
required for each water right, so a total change cost of $500,000 could be expected. That figure is the
City’s estimate rather than an observed market or historical cost. For the ASR change only, it
supersedes the $50,000–$60,000 typical change case cost previously provided by HydroSolutions,
and it is deliberately conservative: the ASR change is novel in Montana, the Water Use Act authority
has never been tested by an application, DNRC has no implementing regulations, the City expects
objections given the volume involved, and the figure carries outside water rights counsel through
objections, potential administrative contested case, and possible appeal.32
On a water rights only basis, the cost of this alternative is the two change applications alone. Against
the reliable yield of 1,500–2,000 AF shown in Table 8, the $500,000 total returns approximately $250–
$330/AF of reliable yield. That figure is an order of magnitude below every other alternative, for two
reasons.
1. The City already holds the Storage Rights, so the alternative acquires no new water and carries
no acquisition price.
2. Its reliable yield depends on year-to-year rollover storage through an infiltration gallery, which
is infrastructure funded through the impact fee program rather than the CIL.
Without that storage, the alternative provides no reliable yield under the City’s 2% non-exceedance
criterion. The unit cost is therefore reported for completeness but is not treated as a cost of acquiring
new water rights. It is excluded from the summary statistics in Table 8 and from the reconciled cost
aspect.
4.3.4 Groundwater Water Right Permit & Aquifer Recharge Mitigation Plan
This alternative entails purchasing ditch shares or other individual water rights and changing the
purpose of the underlying rights to aquifer recharge, in order to mitigate year-round stream
depletions caused by continuous municipal well pumping. Aquifer recharge and municipal well
31 The consumptive volume applies the 1.36 AF per acre HCU of alfalfa hay derived in Appendix A, which reflects the DNRC
management factor for the post-1973 period. The decreed irrigation rights on both sources are recorded as statements
of claim, which are pre-1973 rights. Under the same DNRC methodology in Administrative Rules of Montana (ARM)
36.12.1902, the pre-1973 management factor of 73.5% returns an HCU of approximately 1.08 AF per acre. At that rate
the consumptive volume per acre falls by about 20% while the price paid per acre does not, so the lower bound of this
alternative would rise to approximately $6,200/AF of reliable yield, and the volumes in Table 4 would fall proportionally.
32 Bozeman-ASR-concept-cost-est-20250729. Microsoft Excel Spreadsheet prepared by HydroSolutions. Emailed to
WestWater July 29, 2025.
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infrastructure are typically sited in proximity to one another. On a water rights only basis, costs
accrue to the three elements below.
1. Groundwater Water Right Permit Application: Preparing a groundwater permit application in
a closed basin is a substantial technical effort. It requires hydrogeologic modeling, test well
drilling, and aquifer testing to obtain the data needed for a correct and complete application
to DNRC. The expense of professional consultants and attorneys engaged in preparing the
application is therefore significant. An attorney specializing in Montana water law is essential
to an affirmative permitting outcome, because the application deals with property rights,
entails complex decision and appeal processes, and is subject to public notice and
objection. Data collection costs are funded through the impact fee program at the City’s
direction. For the legal and consulting cost of preparing and prosecuting the application,
WestWater applies the $50,000–$60,000 typical change case cost reported by
HydroSolutions as a proxy, since an application of this type follows an established DNRC
process.
2. Aquifer Recharge Mitigation Plan: The water right permit application must include a
complementary aquifer recharge mitigation plan. The plan must demonstrate that stream
depletions from continuous municipal well pumping are offset through aquifer recharge at
the proper time, location, and amount, so that no adverse effects occur to existing surface
water uses. Preparing an aquifer recharge mitigation plan is technically challenging and
expensive and requires the engagement of professional consultants and attorneys. The
same $50,000–$60,000 proxy is applied to the preparation of the mitigation plan.
3. Aquifer Recharge Water Source Acquisition & Change Application: Implementing the
mitigation plan requires that an existing surface water right with the proper legal and physical
characteristics be identified and acquired, then taken through a DNRC change application
to change its purpose to aquifer recharge. The right must have physical and legal conveyance
from the source to the location of the recharge infrastructure. Costs pertain to acquiring the
recharge water right and completing the change application and may also accrue to
acquisition of conveyance easements where none exist. Acquisition and change costs for
the recharge water follow the Decreed Water Rights Purchase & Change alternative in
Section 4.3.2, at $4,900–$9,900/AF of reliable yield. The cost of any conveyance easement is
site-specific and is not estimated here.
The alternative is sized at 1,400 AF of reliable yield, sufficient to cover the deficit projected under the
2023 WCEP baseline scenario, which assumes no conservation program (see Section 3.2).
Mitigation is assumed to offset pumping one for one. That assumption is conservative, because
return flows to the aquifer would reduce the depletions to be mitigated. On that basis, the recharge
water costs $6.9–$13.9 million and the permit application and mitigation plan add $100,000–
$120,000. Dividing by 1,400 AF returns a unit cost of approximately $5,000–$10,000/AF of reliable
yield. The recharge water accounts for more than 98% of the total, so the result is insensitive to the
estimates for the two filings.
4.3.5 Summary of Water Rights Alternative Costs
Table 8 summarizes the water rights alternatives on a water rights only basis. Three of the four fall
within a band of $4,900–$10,000/AF of reliable yield. Hyalite Share purchases, at $9,900/AF, remain
the City’s preferred source and sit near the upper end of that band. Decreed rights purchased and
changed on Sourdough and Hyalite Creeks cost $4,900–$9,900/AF, bounded by the agricultural
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value of irrigation water and by the price of the Hyalite Shares they would substitute for. The
groundwater permit alternative is priced almost entirely by the recharge water it must acquire, and
so tracks the decreed rights alternative at $5,000–$10,000/AF. The ASR alternative, at $250–
$330/AF, is reported but excluded from the summary statistics for the reasons given in Section 4.3.3.
The water rights alternatives cost aspect is therefore set at $4,900–$10,000/AF of reliable yield, with
a midpoint of approximately $8,300/AF, being the average of the three alternatives’ midpoints. That
range is carried to Table 9.
Table 8: Water Rights Alternative Cost Results
Reliable Supply
Water Rights Alternative Yield (AF) Unit Cost ($/AF)
Hyalite Share Purchases Resumption 2,000–3,000+ $9,900
Decreed Water Rights Purchase &
Change Up to 12,000† $4,900–
$9,900
Aquifer Storage & Recovery 1,500–2,000 $250–$330‡
Groundwater Water Right Permit & Aquifer
Recharge Mitigation Plan 1,400 $5,000–$10,000
Summary Statistics
Minimum 1,400 $4,900
Maximum Up to 12,000 $10,000
Average — $8,300
† Upper bound on the physical resource, being approximately 13,400 AF of consumptive volume
before rounding from Table 4 at a reliable yield ratio of 90%. It does not describe an acquirable
supply.
‡ Excluded from the summary statistics. The City already holds the Storage Rights, and the
reliable yield depends on rollover storage funded through the impact fee program.
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5 Recommended CIL Determination & Conclusions
Table 9 summarizes the contributory cost aspects derived for the CIL determination. The minimum
CIL fee required to ensure full cost recovery of the known purchased water rights assets in the
current portfolio ranges from $11,560 to $14,240/AF of reliable yield, while the FMV analysis for
Gallatin Valley rights equivalent to the current supply—that is, changed for municipal or mitigation
purpose, have year-round usability, and are quantified on a reliable-yield basis—indicates a CIL fee
of $9,000–$15,000/AF (see Appendix A). The cost of the water rights alternatives, excluding ASR,
ranges from $4,900 to $10,000/AF.
Table 9: CIL Cost Aspect Summary of Results
Reliable Supply ($/AF)
CIL Contributory Cost Aspect Low Mid High
Full Cost Recovery of Current Water Rights $11,560 $12,900 $14,240
FMV of Mitigation Rights Equivalent to Current Supply $9,000 $12,000 $15,000
Cost of Water Rights Alternatives $4,900 $8,300 $10,000
Average $8,490 $11,070 $13,080
Median $9,000 $12,000 $14,240
The three aspects do not converge on a single band, and the reason is structural. Full cost recovery
and FMV describe water rights already in, or equivalent to, the City’s municipal portfolio. The water
rights alternatives aspect describes the cost of acquiring new rights from agricultural sellers, on a
water rights only basis. Its lower end rests on the agricultural value of irrigation water. Its upper end
rests on the Hyalite Share price, which the City has held at or near $6,000/share since 2008 and
which Appendix A shows has held down regional water values. The alternatives aspect is therefore
a floor on the cost of new supply rather than a forecast of it.
The recommendation does not follow a simple average of the three aspects, which would return
approximately $8,500–$13,100/AF. The City holds a reliable surplus on the order of 4,800 AF over
2024 demand in the near term, so new connections will be served largely from water rights the City
has already purchased. A CIL below full cost recovery would charge those connections less than the
City paid for the water that serves them, and leave the difference to existing ratepayers. Full cost
recovery therefore sets the lower bound. The upper bound falls between the cost-of-capital-
adjusted recovery value of $14,240/AF and the FMV high of $15,000/AF. The water rights alternatives
aspect confirms that a CIL within this range would fund the acquisition of new supply under every
alternative considered, with margin for the price recovery that Appendix A anticipates once the
Hyalite Share market reopens.
Based on this analysis, WestWater recommends an update of the City’s CIL to $11,600–$14,500/AF
of reliable yield, with a midpoint of approximately $13,050/AF. The range and midpoint by aspect,
and the reconciled CIL recommendation, are depicted graphically in Figure 2.
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Figure 2: CIL Recommendation & Contributory Cost Aspects ($1,000/AF, 2025$)
5.1 Volume Basis for the Per-Home Comparison
This report determines the CIL on a per acre-foot basis. Expressing that result per home requires a
volume basis, and the City sets that basis by administrative order.
The City requires an applicant to offset the entire estimated increase in annual municipal water
demand attributable to a development before final approval. The offset may be satisfied by
transferring water rights to the City, by water efficiency and conservation measures, or by paying
cash-in-lieu for the remainder. The City determines the estimated increase, and the code authorizes
the city manager to adopt administrative procedures that include the standards used to calculate
it.33
Those standards are set out in the City’s Water Adequacy Requirements Administrative Procedures
Manual, adopted by Administrative Order 2013-07.34 The Manual requires water rights or cash-in-
lieu in an amount equal to the anticipated average annual water demand of the fully developed
property. For a single-household residential unit, meaning any living unit on its own parcel, whether
a detached home or an attached townhouse, it sets that demand at 0.234 AF per year.35
The per-home figures in this report therefore use 0.234 AF per home per year. Because the Manual
assesses water rights or cash-in-lieu against average annual demand, this is the volume on which a
new single-household unit pays the CIL. The per-home figures show the fee as a developer would
pay it for that unit. Multi-household units are assessed at 0.124 AF per year per unit under the same
Manual and are not shown.
33 City of Bozeman Municipal Code § 38.410.130, Water Adequacy. Adopted by Ordinance No. 2043 (September 17, 2020)
and amended by Ordinance No. 2155 (May 14, 2024).
34 City of Bozeman, Administrative Order 2013-07, Adoption of Water Adequacy Administrative Procedures Manual
(November 2013), Section III.A. Adopted pursuant to BMC § 38.23.180.D as then codified. Confirmed by the City as the
effective standard for CIL purposes, September 24, 2026.
35 Derived by the City from its water billing records for 2000 to 2010, together with its GIS database and Montana
Department of Revenue building records (op. cit. (n. 34)).
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5.2 Comparison to CIL of Other Mountain West Municipalities
Western water providers have widely varying rate and fee structures for raw water and water
infrastructure. While many municipalities have explicitly stated CIL rates,36 many others either
bundle their CIL into other fees or do not charge CIL at all. CIL is a critical factor for homebuilders to
consider as an input to building cost. Higher CIL fees will impact developers’ margins and thus their
incentive to build. A selection of Western cities’ CIL fees as a proportion of home sale price
(normalized to the City’s 0.234 AF/home single-household demand standard described above),
among other metrics, is reported in Table 10, while Figure 3 provides a graphical comparison of
select metrics by municipality. This is strictly provided for informational purposes and is not a
representative sample of Mountain West CIL fees overall.
As shown, Bozeman’s current CIL is the second lowest of the 12 listed municipalities, the very lowest
being Phoenix, AZ, at $5,662/AF. Conversely, Bozeman’s median home sale price is the third highest
of the list, behind only Steamboat Springs, CO, and Scottsdale, AZ. The average CIL/home as a
proportion of home price from this sample (Bozeman excluded) is 1.6%. A CIL based on 1.6% of
Bozeman’s median home sale price returns approximately $11,450 per home at 0.234 AF/home, or
$48,950/AF. The $/AF result is unchanged by the volume basis, because the same basis is applied
to every municipality in the comparison.
Table 10: CIL Fees as a Proportion of Home Sale Price for a Selection of Western Cities
Municipality Population†
Median
Household
Income‡
Median Home
Sale Price§
CIL Fee [primarily 2024] $/Home as
% Median
Sale Price¶ $/AF $/Home¶
Fort Collins, CO 169,810 $81,883 $597,000 $68,200 $15,959 2.7%
Greeley, CO 108,795 $63,526 $435,000 $51,500 $12,051 2.8%
Steamboat Springs, CO 13,224 $100,156 $1,052,203 $17,922 $4,194 0.4%
Firestone, CO 16,381 $83,215 $479,000 $80,850 $18,919 3.9%
Longmont, CO 98,885 $82,984 $585,000 $48,500 $11,349 1.9%
Four Corners, MT 5,901 $111,474 $705,000 $21,203 $4,962 0.7%
Billings, MT†† 117,116 $67,028 $376,500 N/A N/A N/A
Boise, ID 235,684 $79,977 $480,000 Not Stated N/A N/A
Phoenix, AZ 1,608,215 $79,664 $460,000 $5,662 $1,325 0.3%
Scottsdale, AZ 241,361 $106,058 $966,100 $11,696 $2,737 0.3%
Goodyear, AZ 95,294 $105,160 $465,495 $19,634 $4,594 1.0%
Bozeman, MT 53,213 $79,903 $736,600
Existing $6,000 $1,404 0.2%
Proposed (range midpoint) $13,050 $3,050 0.4%
†2020 Census Data.
‡American Community Survey, 5-year estimates: 2023.
§Realtor.com: Home sale prices through May 2025.
¶ Applied as 0.234 AF/home for all municipalities; the Bozeman single-household residential demand standard (op. cit. (n. 34)).
††Bundled with infrastructure costs.
36 CIL fees are commonly referred to as Raw Water Fees, Water Resource Fees, System Development Fees, and Tap Fees
among other names.
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Figure 3: CIL Fees & Median Home Sale Price; Selection of Western Cities
Figure Notes: Home sale prices through May 2025 (Realtor.com). CIL fee per home assuming 0.234 AF/home for all municipalities, the City of
Bozeman single-household residential demand standard under Administrative Order 2013-07.
6 Appendices
• Appendix A. Gallatin Valley Water Rights Market Assessment & Value Perspective
• Appendix B. Storage Rights – Preliminary Decree
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Appendix A. Gallatin Valley Water Rights Market
Assessment & Value Perspective
This appendix summarizes the preliminary-level market assessment and perspective of value
conducted in support of the City of Bozeman Cash-In-Lieu Update. A comprehensive market
consultation and valuation of Gallatin Valley water rights is beyond the scope of the CIL update.
Rather, this appendix provides a range of the fair market value of water rights in the Gallatin Valley.
There are a variety of approaches available to estimate water right value. The selection of the
appropriate valuation technique(s) is determined by the characteristics and nature of a specific
water right as well as the availability and quality of information. Two valuation approaches are
employed for this appraisal and are meant to capture the range of FMV for Gallatin Valley water rights
representative of those currently held in the City’s portfolio and those that might be acquired in the
future. The two approaches are briefly described below.
• Comparable Sales Approach: This approach compares the subject water rights with similar
water rights that have been sold to determine market value. A reasonable number of sales
are often required to make accurate comparisons. Where necessary, adjustments should be
applied to account for differences in physical and legal characteristics and market
conditions between the comparable sales and the subject water rights. This is the preferred
valuation methodology when comparable information is available.
• Land Price Differential Approach: This approach compares prices of agricultural land with
water rights to agricultural lands without water rights. The price differential between irrigated
and non-irrigated land represents the value that can be attributed to the presence of water
rights.
For the purposes of this appendix and for consistency and applicability to the greater study, an AF of
consumptive use (CU) is considered as the basis for unit values presented herein.
A.1 Comparable Sales Approach
This approach is used to determine the total value of the subject water right through an analysis of
the Montana water rights trading market, focusing on permanent water transactions separate from
land. Comparable sales should ideally be within the same market and involve similar water rights.
There are no recorded purchases of groundwater rights in the Gallatin Valley. However, several water
asset purchases have been recorded in the greater western Montana area. Additionally, in both
Bozeman and Four Corners, developers are required to pay a CIL fee. As municipal use is considered
to be the highest value use of water in the Gallatin Valley, these CIL fees reveal a reasonable
approximation of developers’ willingness to pay for water rights. Note that “revealed preference”
(i.e., a record of what was actually paid) generally does not approach the upper bound of willingness
to pay.
A.1.1 City of Bozeman Water Right Transactions
The City of Bozeman has been an active participant in the Gallatin Valley water market. In particular,
the City purchased shares between 2007 and 2021 in the MCWUA, which supplies water out of
Hyalite Reservoir. Through a comprehensive research process that included a review of Gallatin
County recorded documents, Bozeman City Commission documentation, and conversations with
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local water users, seven purchases by the City of Bozeman were identified. These seven transactions
are shown in Table A-1. Recall that one Hyalite Share carries a contract volume of 1 AF and a reliable
yield of approximately 0.79 AF. Both unit metrics are portrayed in the table; however, the section will
primarily focus on value from a reliable yield basis for consistency with other valuation techniques
and the greater report. Additionally, for the purposes of this section, the term “AF” implies “AF of
reliable yield.”
Table A-1: City of Bozeman Hyalite Reservoir Water Rights Acquisitions
Acquired Units Unit Price Metrics
Seller Transx.
Year
Beneficial Use Shares Reliable
Yield (AF)
$/Share $/AF Reliable Yield
Previous New Nominal$ 2025$† Nominal$ 2025$†
R Lazy J 2021 Agricultural Municipal 90 70.8 $6,000 $7,090 $7,620 $9,000
Kraft 2021 Agricultural Municipal 17 13.4 $6,000 $7,090 $7,620 $9,000
Barkow 2015 Agricultural Municipal 10 7.9 $5,500 $7,690 $6,960 $9,740
Patterson 2010 Agricultural Municipal 25 19.7 $6,000 $9,220 $7,620 $11,700
Labert 2010 Agricultural Municipal 58 45.7 $6,000 $9,220 $7,620 $11,700
Lindvig 2008 Agricultural Municipal 50 39.4 $6,000 $9,290 $7,620 $11,780
Lane 2007 Agricultural Municipal 100 78.7 $7,000 $11,210 $8,890 $14,250
Totals 350 275.6 — — — —
Volume-Weighted Average — — $9,105 $11,560
Median 50 39.4 $9,220 $11,700
†Adjusted to 2025 price level using the West US CPI.
The earliest purchase in 2007 was also the largest purchase at 78.7 AF at a price of $8,890/AF
($14,250/AF in 2025 dollars). Subsequent purchases were priced at $7,620/AF with the exception of
a 2015 purchase at $6,960/AF ($9,740 in 2025 dollars). All purchases are for water from the MCWUA,
which is the water right most valued by the City of Bozeman due to the City’s already large holdings
in the MCWUA and its ability to utilize the water right without needing change authorization approval
from DNRC. As the City does not need change approval to utilize MCWUA shares, it is able to utilize
the full volume of these transactions within its system. In effect these seven purchases are
equivalent to the purchase of fully consumptive water.
The City of Bozeman is one of the largest non-agricultural water users in the Gallatin Valley and
purchased water rights regularly until Hyalite Share transactions stopped in 2021. It is clear that the
City’s CIL (described in more detail in Section A.1.4) is the dominant price-setting influence on the
regional water market. As the City’s contract purchase price, and related CIL, did not change in
nominal dollars since its inception in 2008, adjusting for inflation necessarily indicates a downward
trend in price. The most recent purchase price of $7,620/AF in 2021 ($9,000/AF in 2025 dollars) might
be considered a reasonable indicator of current FMV, but there is no evidence that the willingness to
pay in real dollars has decreased since 2008, and there is reason to believe that the price has only
stayed as low due to the City’s position as the regional market price setter. The CPI-adjusted price
the City paid in 2008 per AF of reliable yield, $11,780/AF, supports the position that a 2025 market-
clearing price could be at least this high.
A.1.2 Western Montana Water Right Transactions
The City of Bozeman has paid a higher unit price than other buyers in western Montana. Removing
Bozeman’s transactions provides a better picture of pricing in regard to the greater market. Table A-
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2 summarizes the western Montana permanent sales market from 2005 to 2022 with the seven
purchases by the City of Bozeman omitted. The average price is $1,195/AF with a median of $964/AF,
with all transactions representing agricultural-to-agricultural transfers of water rights on a diversion
basis.
In order to compare these transactions to those that can be utilized for M&I purposes, the average
and median prices must be converted to a CU basis and incorporate the costs of a change case. A
rough estimate of the value on a CU basis can be estimated by the assumption that 50% of diverted
volume is consumed, yielding a value of $2,389/AF CU for unchanged irrigation water rights.
Correspondence with HydroSolutions indicates that a typical change case has associated costs of
$50,000–$60,000, which is indifferent to volume being changed. A change case applied to the
median transaction—a volume of 48.1 AF—increases the finished value by greater than $1,000/AF.
The listed transactions and stated treatments indicate a value range for M&I-ready water supply at
approximately $3,500–$4,500/AF.
Table A-2: Western MT Permanent Sales, 2005–22 (Excluding City of Bozeman)
Metric Price
($/AF)†
Adj. Price
($/AF CU)†‡
Volume
(AF)
Average $1,195 $2,389 406.8
Median $964 $1,927 48.1
Minimum $127 $254 0.7
Maximum $4,746 $9,492 4,615.1
Standard Deviation $1,140 $2,281 950.9
Count 26 26 26
† Adjusted to 2025 price level using the West US CPI.
‡Unit price adjusted 2x to reflect 50% CU assumption.
A.1.3 Grass Valley French Ditch Water Bank
In 2015, DNRC approved a water rights change on behalf of the Grass Valley French Ditch Company
(GVFDC) near Missoula to allow company shareholders to sell shares historically used for irrigation
as mitigation for municipal, industrial, or other purposes.37 This effectively created a water bank in
which potential housing developers can buy mitigation water to offset depletions caused by
municipal wells. A similar water bank could be created in Bozeman if a ditch company in the Gallatin
Valley desires to change its water rights to add “Marketing for Mitigation” as a legal use.
It is worth noting that changing a water right to allow for mitigation sales does not affect a
shareholder’s ability to use their shares for irrigation. Shareholders who are not interested in selling
simply continue to operate as they have previously. The added use does, however, provide an
opportunity for irrigators to receive compensation for some or all of their water if they decide to scale
back or retire their farm.
In 2024, Grass Valley Holding, LLC (GVH) bought 58 shares (roughly 65 AF) in GVFDC to mitigate
depletions caused by municipal wells to be drilled in the Clark Fork River alluvium. The development
is planned to be built outside of Missoula city limits and therefore cannot rely on Missoula’s
municipal water supply. GVH paid $4,588/AF of mitigation water, which is roughly equal to the
37 www.grassvalleywaterbank.com/news
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estimated value of changed agricultural water estimated by the Land Price Differential approach
(see Section A.2 of this appendix). The price paid for GVFDC mitigation water represents the value to
municipal users of water that has already been changed for mitigation use and does not need to be
taken through a lengthy and expensive DNRC process.
Notably, conversations with City of Missoula staff indicate that Missoula has a significant water
supply surplus and is not currently in the market for new water supplies. This indicates a significantly
less competitive water market relative to the Gallatin Valley, where Bozeman would compete with
private developers and proximate municipalities for mitigation supplies. Therefore, the $4,588/AF
paid by GVH is likely well below the market value for equivalent mitigation water in the Gallatin
Valley.
A.1.4 Cash-In-Lieu Fees
Multiple water providers in the Gallatin Valley charge developers and new users CIL fees to cover the
cost of water rights. A comparison of CIL fees is shown below in Table A-3. The City of Bozeman has
a CIL of $6,000/AF—unchanged since 2008. The City of Belgrade does not accept cash-in-lieu of
water rights and requires dedication of water rights appurtenant to a property being developed.
Developers and new users in the Four Corners Water and Sewer District (FCWSD) must pay a fee
equivalent to a CIL of $3,800 per equivalent dwelling unit (EDU), which converts to $21,203/AF, to
Utility Solutions, LLC. Bozeman and Utility Solutions CIL fees are discussed further below.
Table A-3: Comparison of Gallatin Valley Cash-In-Lieu Fees or Equivalent ($/AF)
City of Bozeman Utility Solutions City of Belgrade
$6,000 $21,203 None
A.1.4.1 City of Bozeman
The City of Bozeman requires that developers either provide adequate water rights to supply any new
development or pay cash-in-lieu of adequate water rights. The cash-in-lieu rate was set by the City
of Bozeman in 2008 at $6,000/AF by Resolution No. 4095 and has not been updated since. It is the
same figure as the per-share price the City was then paying for Hyalite Shares. To make a
determination as to how much water is required for a development, the City will first calculate the
estimated overall water use of the development. The resulting use that is not offset by adequate
water rights transfer or reduced by the implementation of water conservation measures and non-
potable irrigation sources is then charged to the developer at $6,000 per acre-foot of annual
demand.
As described above in Section A.1.1, Bozeman is the regional price maker, and therefore its CIL has
paced the market for water rights in support of development. Although developers in the Four
Corners area cannot presently dedicate water rights to FCWSD, many of the irrigation company
ditches that convey irrigation water rights into the City divert in the Gallatin Gateway and Four
Corners area. As such, Bozeman’s CIL of $6,000/AF has created an artificial ceiling of value for water
rights in the Utility Solutions municipal water right service area, and the Gallatin Valley in general.
The stagnant CIL also provides an indicator of developers’ willingness to pay for water supply in real
dollars and as a proportion of home sale value. Consider that Bozeman’s median home sale price in
2008 was $308,850. Applying the City’s current 0.234 AF/home single-household demand standard,
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described in the body of this report, to both years, the CIL calculates to $1,404/home to the
developer, or approximately 0.5% of the sale price.38 This same calculation in 2021, when median
home sale price was $700,000, indicates that the CIL was about 0.2% of the sale price. For the CIL
to comprise the same share of median home sale price in 2021 (still at 0.234 AF/home) it would have
needed to be set at approximately $13,600/AF ($16,000/AF in 2025 dollars). This figure does not
depend on the volume basis, because the same basis applies to both years. Likewise, the CPI-
adjusted CIL paid by developers in 2008 of $9,290/AF supports the position that developers’
willingness to pay is not exceeded by this amount in real dollars, as this represents equivalent
purchasing power in 2025.
A.1.4.2 FCWSD/Utility Solutions
In 2015, the FCWSD purchased the water system in Four Corners from Utility Solutions for $22.6
million. This purchase included sufficient municipal water rights for existing users but did not include
any water rights for new users. Utility Solutions retained water right permit 41H-30046241 which it
had received in 2011 to service new growth. New water users in the FCWSD system are required to
pay a fee to Utility Solutions of approximately $3,800 per EDU, which converts to $21,203/AF.39
Albeit having some similarities to a CIL, the fee charged by Utility Solutions is not a true cash-in-lieu
fee. While the City of Bozeman collects a CIL to pay for the future purchase of water rights, Utility
Solutions collects its fee in return for the sale of a portion of municipal water rights it already owns.
Also, developers and new users in the City of Bozeman have the option to purchase and dedicate
water rights to the City—an option not available within the FCWSD. Finally, this fee is not collected
by the water provider, but by a third party. Utility Solutions is functionally a municipal water bank,
selling the water right piecemeal at retail rates.
The relationship between new municipal water users, FCWSD, and Utility Solutions can be
characterized as a largely captured market. New municipal water users essentially have no choice
but to buy from Utility Solutions unless that new user develops a municipal water system all its own.
The lack of other municipal water systems in the Four Corners area allows Utility Solutions to charge
prices beyond what an open water rights market would support for wholesale purchases.
Therefore, the Utility Solutions fee is not an indication of the wholesale FMV of regional water rights,
but rather a retail rate charged by a municipal water bank and therefore negating its direct use as
comparable sales data. The fee can be used as the basis for the income approach to valuation
through a discounted cash flow analysis—essentially unwinding the retail water-banking aspect of
the operation. However, this is beyond the scope of this analysis.
A.2 Land Price Differential Approach
An alternative valuation method for irrigation water rights utilizes the price differential between
irrigated and non-irrigated agricultural land. If the only difference between the irrigated and non-
irrigated land can be assumed to be the presence of irrigation water rights, the price differential can
be attributed solely to the value of the irrigation water rights.
38 City of Bozeman single-household residential demand, Administrative Order 2013-07, Section III.A. The Manual
postdates 2008, so the 2008 figure applies the current standard retrospectively.
39 Utility Solutions does not publicly disclose its fees. $3,800 per equivalent dwelling unit is based on a call with the Four
Corners Water and Sewer District.
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A.2.1 Transition of Water Demand in the Gallatin Valley
The U.S. Geological Survey publishes water use data by county every five years. Figure A-1 shows
the water usage for Gallatin County, Montana, in 2015, the last year for which data are presently
available. Irrigation is by far the largest use of water in Gallatin County with nearly 97% of all water
diverted from surface water or pumped from groundwater for irrigation purposes. Municipal usage
accounts for only 2.5% with domestic, industrial, and stockwater usages together less than 1%.
Although the proportion remains small, the percentage of water diverted for municipal usage has
increased from 1.6% of overall diversions in 2000 to 2.5% in 2015. In contrast, irrigation water
diversions have fallen 3.2% over the same period. This growth in municipal water use and decline in
irrigation water use mirrors the high growth seen in all local municipalities and Gallatin County in
general.
Figure A-1: Gallatin County Water Use, 2015
A.2.2 Calculating a Land Price Differential
The National Agricultural Statistics Service (NASS) releases annual per-acre values for sales of
irrigated and non-irrigated land on a per state basis. In 2023 the average price of irrigated land in
Montana was $3,910/acre whereas the average price of non-irrigated land was $1,010/acre. NASS
also releases annual lease values for irrigated and non-irrigated agricultural lands on a state and
county basis. In 2023, the last year for which information is available, the State of Montana had an
average lease rate per acre of irrigated land of $98 with a non-irrigated lease rate of $30. Gallatin
County had an average lease rate per acre of irrigated land totaling $150 and a non-irrigated lease
rate of $39.
In order to determine a price differential for irrigated and non-irrigated land in Gallatin County,
average sale prices for irrigated and non-irrigated lands in the County must be calculated. These
values can be calculated by applying a capitalization rate as determined by land sales and leases
across the State of Montana in 2023. The capitalization rate is used to determine the rate of return
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that can be expected to be generated by a property and is calculated as the property’s net operating
income divided by its current market value. The capitalization rate for irrigated land in Montana in
2023 is 2.506% and for non-irrigated land is 2.970%.40
These capitalization rates can then be applied to the lease rates observed by NASS in Gallatin County
to determine permanent sale values. This results in a value of $5,986 per irrigated acre and $1,313
per non-irrigated acre. These values are not necessarily representative of all irrigated and non-
irrigated land values in Gallatin County but are thought to be representative of the agricultural value
of land in the County outside of any development potential or amenity value as they are driven by
agricultural lease rates, a market driven solely by agriculture.
The differential between the calculated irrigated and non-irrigated land values is $4,673/acre
($4,901/acre in 2025 dollars). This is the value of irrigation water rights on a per-acre basis in Gallatin
County. The single most widely grown crop in the Gallatin Valley is alfalfa hay,41 which has an HCU
of approximately 1.36 AF/acre.42 Applying this value to the differential of $4,901/acre returns a value
of $3,600/AF CU for Gallatin Valley irrigation water.
As with the unchanged irrigation water right transactions evaluated in western Montana (see Section
A.1.2), the value derived in this section should be adjusted for the costs associated with a change
case. Applying an equivalent adjustment, the land price differential approach indicates a value range
for M&I-ready water supply at approximately $4,500–$5,500/AF of reliable yield.
A.3 Summary of Value Perspective
Bozeman has been the dominant market participant, and consequently the market price maker,
since 2008. The City’s most recent purchase of Hyalite Shares in 2021 at $7,620/AF of reliable yield
($9,000/AF in 2025 dollars) is therefore a grounded indicator of current market value. However, there
is strong evidence that the City maintaining its purchases at $6,000/share (and CIL at $6,000/AF) has
stunted potential price growth, as the surrounding economy and home values have climbed
markedly in the same period. Holding the CIL at its 2008 share of median home sale price indicates
approximately $14,300/AF at Bozeman’s 2025 median home sale price of $736,600, or about
$16,000/AF when the 2021 result above is carried forward to 2025 dollars. Likewise, adjusting for the
purchasing power of the dollar, a 2025 CIL equivalent to that charged in 2008 would be about
$9,300/AF. Both values are well shy of the $21,203/AF charged by Utility Solutions, though as
described above these fees are not wholly comparable.
The analysis of non-Bozeman permanent water rights transactions between agricultural users in
western Montana, after accounting for CU adjustments and change case costs, indicates a unit-
value range of $3,500–$4,500/AF. The land price differential analysis, also rooted in agricultural
40 98/3,910 = .02506; 30/1,010 = .02970
41 U.S. Department of Agriculture (USDA), 2022 Census of Agriculture, Gallatin County Profile. (link)
42 Based on seasonal evapotranspiration (ET) data derived from the Bozeman Experiment Farm weather station (BEF), as
identified in the DNRC standardized methodology for estimating HCU under ARM 36.12.1902. Using the USDA Natural
Resources Conservation Service Irrigation Water Requirements program (Dalton, 2003), the BEF yields a seasonal alfalfa
ET of 16.84 inches for flood, wheel line, and hand line irrigation systems—the irrigation method column applicable to the
Gallatin Valley's historical practices. Applying the DNRC management factor of 73.5% for the pre-1973 period per ARM
36.12.1902 yields an HCU of approximately 1.03 AF/acre/season. For water rights established or evaluated under the
post-1973 permit framework, the applicable management factor is 92.1%, yielding an HCU of approximately 1.29
AF/acre/season (DNRC, 2012). Finally, Section 17 of the rule accounts for irrecoverable losses at the field by an additive
5% for flood irrigation, returning a final HCU of 1.36 AF/acre/season.
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water value, returned a unit-value range of $4,500–$5,500/AF for changed water. Note that to utilize
these rights for year-round municipal mitigation some storage aspect would be required to account
for seasonality. Both results are consistent with the GVH mitigation water purchases at $4,588/AF
in 2024. These estimates, and the GVH purchases, are based in areas outside of the Bozeman
market region and with considerably less development pressure on water supply. While the
combined range of $3,500–$5,500/AF provides an ultimate value floor for the Gallatin Valley and
surrounding area, it is afforded less weight in an assessment of Gallatin Valley water values than the
Hyalite Share and CIL fee analyses.
WestWater’s preliminary value assessment indicates a value of water rights fit for the City’s
acquisition and reasonable year-round use to support M&I activity at $9,000–$15,000/AF. The lower
bound is the City’s 2021 Hyalite Share purchase price in 2025 dollars. The upper bound is set
between the two home price indicators above, approximately $14,300/AF and $16,000/AF.
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Appendix B. Storage Rights – Preliminary Decree
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Memorandum
REPORT TO:Community Development Board
FROM:Chris Saunders, Community Development Manager
Erin George, Community Development Director
SUBJECT:Upcoming Items for the November 2, 2026, Community Development Board
Meeting Agenda.
MEETING DATE:October 19, 2026
AGENDA ITEM TYPE:Citizen Advisory Board/Commission
RECOMMENDATION:Information only, no action required.
STRATEGIC PLAN:4.1 Informed Conversation on Growth: Continue developing an in-depth
understanding of how Bozeman is growing and changing and proactively
address change in a balanced and coordinated manner.
BACKGROUND:The following items are presently scheduled for the upcoming November 2,
2026, Community Development Board meeting:
1. Northwest Bozeman Area Plan, public hearing, Application 25643, Engage
Bozeman website
2. Downtown Urban Renewal Plan update public meeting per 7-15-4213
MCA
Comment related to these items may be submitted at
comments@bozemanmt.gov. No discussion or action will be taken until
November 2, 2026.
UNRESOLVED ISSUES:N/A
ALTERNATIVES:N/A
FISCAL EFFECTS:No budgeted funds are expended with this item.
Report compiled on: July 27, 2026
83