The Flathead County Commissioners appear ready to pass on a $9 million investment in affordable housing, despite Flathead County’s status as one of the most expensive places to live in Montana.
The 2023 legislature enacted the Montana Community Reinvestment Plan through House Bill 819 to allocate $56 million in state funding to provide homebuyer assistance to low- and middle-income residents.
More than 40 counties, including 11 of the 12 most populous, have already opted into the program, or scheduled a vote to do so.
Butte-Silver Bow commissioner Hattie Thatcher said at a committee meeting earlier this month that the program was a great use of the state’s surplus funds. “I think denying it would be absolutely absurd,” she said.
Flathead County is an outlier.
The Daily Montanan reports the Flathead County Commissioners have yet to schedule an agenda item to consider approving the funding before the state-imposed deadline, and earlier this week, business and nonprofit leaders in the community said the county is virtually giving away money that could support some of the county’s low- and middle-income residents.
“I’m hopeful they will not cheat the community of the Flathead Valley out of $9 million of potential investment in housing. It seems like the fair thing to do is to have an honest conversation about it,” Kim Morisaki, executive director of the Northwest Montana Community Land Trust, told the Daily Montanan.
But at least two members of the commission remain doubtful.
“HB 819 proposes a socialized program because it is taxpayer funded and government regulated,” Commissioner Randy Brodehl wrote in an email to the Daily Montanan. “I support slowing down or stopping the socialization of county government.”
Community Reinvestment
Housing affordability in Montana has been a growing problem in recent years as the state has experienced a population boom while housing inventory has stagnated, trends that worsened with the COVID-19 pandemic.
According to Zillow’s Home Values Index, the median home price in Montana has increased from $271,726 in January 2020 to a record high $452,050 last month.
The growing housing crisis prompted Republican Gov. Greg Gianforte to create a Housing Task Force in 2022, aimed at providing future legislatures a roadmap to begin tackling the problem.
House Bill 819, passed by the 2023 legislature with bipartisan support, created several programs designed to address housing issues across the state. One of those, the Montana Community Reinvestment Act, created a deed-restricted housing program funded with $50 million of state money that will be allocated proportionally to counties based on their GDP.
An additional $6 million is set aside for counties near state-owned facilities that house at least 100 inmates — Deer Lodge, Custer and Powell counties — as a state workforce housing incentive.
The bill requires counties to affirmatively opt in to the program and designate a Community Reinvestment Organization — a federally recognized charitable organization or certified economic or housing development organization — as a partner to oversee the program and its funding. Partner CROs are also responsible for matching the state funds with private investment, doubling the total pot of money to $112 million.
Three organizations applied to become CROs through the state — Housing Authority Billings, now known as Homefront, NeighborWorks Montana, and its partner organization NeighborWorks Great Falls. Both Homefront and NeighborWorks have decades-long histories working in the realm of housing education and counseling, homebuyer assistance and affordable housing solutions, including administering federal programs.
Under the homebuyer assistance program, residents who make from 60% to 140% of the area median income qualify for interest-free loans up to 30% of the total purchase price for a home. The program also caps monthly payments for the home at 30% of gross income, providing a limit to what homebuyers can purchase.
Homes purchased under the program become deed-restricted, and homeowners can only realize a 1% per year increase in value if they choose to sell their home — the difference between the 1% cap and the home’s total appreciation goes into the CRO’s revolving fund to perpetuate the program.
“It’s a really limited equity cap. Home buyers are going to get out essentially what they put in, and maybe have a little bit of extra. What this really does is allows for stability, and it’s not that they’re coming away from this program with nothing,” said NeighborWorks Montana Homeownership Director Hanna Tester. “This is sort of an interim mechanism between renting and home ownership.”
The Montana Department of Labor and Industry lists Bozeman, the Flathead Valley and Missoula regions as the state’s most expensive areas with median home prices out-matching median incomes by nearly a factor of 10. County commissioners in Gallatin and Missoula counties were swift in opting into the homebuyer program, and local political leaders said it will make a difference.
“This will create homeownership opportunities for Missoulians where those opportunities do not exist today because of the high-priced market,” Missoula Mayor Andrea Davis, a former affordable housing nonprofit executive director, said in a statement to the Daily Montanan. “These are people working, learning and retiring in our community. A pathway to homeownership allows families to build equity and pass on generational wealth. This is a solid step in the right direction.”
However, the program isn’t the right fit for every county.
On the state’s far east side Fallon County, with around 3,000 residents, had a state allocation of $145,000 before the CRO match. The county commissioners at their Dec. 9 meeting unanimously voted against opting into the community reinvestment program.
“We could really see the design of that program was for urban counties, it wasn’t for rural counties,” Commission chairperson Steve Baldwin told the Daily Montanan. “I get it if we could allow $2 million for our county, but ultimately the final number didn’t make sense. It could maybe help one or two people — and that would be great for those two people — but it’s not going to solve our housing problem, and we’ve had housing issues forever.”
Sweet Grass County also voted against the program and its $225,000 share.
Across the rest of the state, at least 44 counties have signed resolutions to opt in to the program, or have made verbal intentions to sign with a CRO, as of Dec. 12. Some, like Butte-Silver Bow, intend to opt in, but have yet to choose which CRO to partner with.
The Daily Montanan was unable to confirm the status of 7 counties, while at least two county commissions — Valley and Sanders — were unaware of the program and its impending deadline.
Disbelief in the Flathead
Morisaki, with the Northwest Montana Community Land Trust, was one of several community members who spoke at a Flathead County Commission meeting on Tuesday, requesting they add a discussion and potential vote on the community reinvestment funding to the agenda before the holidays.
“The world has changed drastically in the last 10 years, and we need to be creative in how to solve housing,” Morisaki told the Daily Montanan. “The Legislature was elected and passed this bill. It’s not for us to second guess at this point. It’s another tool in the toolbox, and we deserve to be able to access the whole toolbox.”
Daniel Sidder, executive director of Housing Whitefish, also spoke to the county commission and in a phone call to the Daily Montanan called the lack of affirmative action a “disservice” to local taxpayers.
“They’re paying for a program through their taxes, but they aren’t going to be eligible to participate in the community benefits,” Sidder said. “This feels like a place where personal beliefs — on taxation, on the role of government and how funds are used — could lead to a decision that will have a negative impact on constituents. Personal philosophies are getting in the way of solutions that are bipartisan in nature, at least at the state Capitol level. It feels disconnected from our communities on the ground.”
The three Republican Flathead County Commission often talk about their pride in running a fiscally conservative county, and feel strongly about their responsibility to limit the use of taxpayer money.
That’s one reason commissioner Randy Brodehl is struggling with HB 819, which he has “not completely closed the door on.”
“I am hung up on whether it is the right thing to do for our tax-paying citizens,” he wrote in an email. “Because the legislature and governor approved spending taxpayer money in this way, doesn’t mean that I should agree that it is the right thing to do.”
He also believes that private investment is the best option for addressing the housing crisis because “it isn’t based on taking from one person to benefit another person.” Government funding, like HB 819, is a “shifting of risk off a small number of new, lower income (less than $140,000) first-time buyers, onto the backs of a larger group of taxpayers who are often stressed to their tax limits already.”
HB 819 funding has already been allocated by the legislature, although half of Flathead County legislators opposed the bill. It would not lead to an increase in taxes, and the funding allocated to a county that decides not to participate will be redistributed to the rest of the state.
Brodehl says those arguments are “likely true. But, if it is the wrong thing to do, [it] doesn’t make it any more OK for me to support it.”
Lorraine Clarno, CEO and executive director of the Kalispell Chamber of Commerce, pushed back against the claims of socialism to the Daily Montanan.
“We are fiscally conservative, we favor small government, but we don’t view this as an entitlement or socialism. This money came about legitimately under Montana tax rates — and the state surplus existed because of growth in our communities,” Clarno said. “It’s our elected officials’ responsibility to use that extra funding to improve our quality of life and help with that growth.”
She added that the commissioners’ reluctance to push the funding through is “just remarkable to me. I don’t understand it.”
Clarno said that factoring in the 30% homebuyer assistance, and a home priced at $400,000 to $500,000, the funding allocated to Flathead County could make a difference for 60-70 families.
“We have so many folks, whether in manufacturing, teachers, firefighters, sheriffs … it’s those folks who will qualify for this,” she said.
Of course, housing prices in the Flathead Valley, and in much of Montana, remain at or near all-time highs, which could limit the reach of even a large investment.
The median home price in Flathead County this year was around $650,000, with the average home price $896,000.
“That's unattainable for me, maybe for you, certainly for most of the people in this room. An $896,000 house as your first house, it's not doable. Even 600,000 isn’t,” Morisaki told the commissioners at their meeting.
“This program would make a $400,000 house basically a $280,000 mortgage for somebody. That's doable. That's good for people who work in your courthouse, people who work at the city water department, the mechanic down at Toyota, your young sheriff with a wife and two kids — this program is for them.”
A commission out of lockstep
Flathead County Commissioner Brad Abell, who was elected to his first term in 2020, supports the funding but has been unable to convince his colleagues of his position.
“I share some of their concerns about government’s role in all of this, but the money’s already spent. That decision was made before it got to us,” Abell told the Daily Montanan. “At this point, there’s nothing to be gained by turning it down.”
Abell said he has concerns about the deed restrictions built into the program, as it will limit the benefits that the homeowners can reap, but he understands there’s a tradeoff to getting help on the front end.
“When you have the choice between no homeownership and a reduced ability to reap the rewards … well if they’re renting, they won’t reap any rewards either,” Abell said. “I think everybody just needs to go in with their eyes wide open.”
Abell said that he routinely hears from constituents who are facing the difficult decision whether to move out of the Flathead due to rising unaffordability, and housing is one component of that.
“I really think this would be a benefit to citizens here, even though I see the pitfalls of it,” Abell said. “We need pathways to homeownership.”
The third Flathead County Commissioner, Pam Holmquist, told the Daily Montanan she’s still in the information gathering stage. She said she feels the bill was poorly written and is vague on procedure and she has a lot of questions she needs answers to.
“I don’t know if it’s the right thing to do,” Holmquist said. “If I put my name to it and I bless it, I’d better believe in it. I was put here to look at these things and do my due diligence. It will reflect back on the commissioners no matter what we do.”
Counties have until Dec. 31 to opt in to the housing program and select a CRO to partner with.
Daily Montanan is part of States Newsroom, a nonprofit news network supported by grants and a coalition of donors as a 501c(3) public charity. Daily Montanan maintains editorial independence. Contact Editor Darrell Ehrlick for questions: info@dailymontanan.com.
