Bozeman commission re-adopts annexation policy after debate on affordability limits

The Bozeman City Commission voted unanimously Tuesday to replace and readopt the city’s annexation policy, continuing the policy first adopted in 1984 and formally replacing Resolution 5,076.

The updated policy, presented by Chris Saunders of Community Development, keeps existing priorities—favoring contiguous annexations and clarifying procedural language—while updating cross-references to the city’s parks and transportation plans and modernizing administrative language. "Annexation is the legal process where property comes into the city. It's a delegation from the state to the city," Saunders told the commission.

The policy governs landowner-initiated annexations only; staff and Saunders emphasized that the resolution does not change city-initiated annexation authority. City Manager Webb said the revision contains no substantive policy changes from the 2019 version but was brought forward to improve clarity and public usability.

The commission used the discussion to revisit long-running questions about whether annexation can be used to require affordable housing. City Attorney Sullivan said the city "usually does not require affordable housing at annexation" and cautioned that a 2021 change in state law limited local inclusionary zoning powers. Sullivan and other staff noted that developers can voluntarily opt into local affordable-housing incentives, but that requiring affordability as a condition of municipal services is legally risky under current state law.

Commissioners pressed staff on several practical topics the resolution addresses: timeframes for executing annexation agreements, how the city treats properties with failing septic systems, the relationship between annexation and required zoning, and the city’s water-rights and trail-easement expectations for future development. Saunders estimated the city reviewed 43 annexation applications in 2020–2024 and described a handful of complex historic annexations the policy is designed to manage, including a large Riverside-area annexation and the Walker Properties PUD.

Several commissioners said they supported adoption while flagging a desire to examine whether state law or future legislative change could expand the city’s tools for encouraging affordable housing. Sullivan answered commissioners’ legal questions and noted a bill to reverse the 2021 restriction had been tabled in committee earlier in the session.

"We have to be careful about imposing requirements that the legislature has limited," Sullivan said. "If a landowner wants to opt into incentives or make a voluntary commitment, we can explore that; making it mandatory at annexation is legally fraught."

Commissioner Majickel moved to adopt the resolution; the motion was seconded and passed on a unanimous recorded vote: Commissioner Magick—Aye; Commissioner Boddy—Aye; Commissioner Fisher—Aye; Deputy Mayor Morrison—Aye; Mayor Cunningham—Aye. The commission’s action replaces Resolution 5,076 and keeps existing implementation practices, including the city’s preference for contiguous annexations and the standard review by the Development Review Committee.

The commission and staff agreed the policy clarifies expectations for applicants and provides staff and elected officials a clearer basis for project-by-project decisions. Commissioners suggested the subject of using annexation strategically to advance affordability merits a future work session once the state legislative picture is clearer.

The newly adopted policy will be posted on the city’s website and used in future landowner-initiated annexation reviews.