DNRC-backed bill would let department partner with developers to turn trust land near towns into housing

Representative Larry Brewster presented House Bill 379 for the Department of Natural Resources and Conservation (DNRC). The bill would allow DNRC to use a commercial joint-venture approach: leasing trust land to developers who would install infrastructure and subdivide property, then selling resulting residential lots through the land-banking process so the state and developer could share risk and reward.

Diedra (Deidra) Kloberdans, DNRC real estate bureau chief, described existing authorities: a commercial leasing program (created in 2003) that can support multifamily housing, and a land-banking program that sells parcels and reinvests proceeds to buy replacement land for beneficiaries (with a 250,000-acre statutory cap on total sales). DNRC said the change would primarily modify definitions to allow single-family home-site development under a commercial lease and would remove a statutory requirement that land-banking sales be conducted via auction at the county courthouse, replacing that with a public sale process that the department said could run more like modern, online sales.

Deidra Kloberdans said the department would continue to require environmental review, competitive request-for-proposal processes for leases, and land-board approval at multiple stages. She said the state would reappraise property before sale and would reinvest proceeds into replacement lands tied to the same trust beneficiary, so sale proceeds continue to benefit the intended trust (for example, common schools).

Habitat for Humanity of Gallatin Valley’s development director, Gale (Gail) Heidey, testified in support, saying the proposal could make certain developments feasible for nonprofit builders by reducing initial capital barriers and allowing the state to capture increased value after infrastructure is added. “Selling lands close to developed areas, which would likely be at a profit to the state, seems like a win-win to both the state and the local communities,” Heidey said, noting local housing price/income gaps.

Committee members pressed DNRC on constitutional obligations to obtain full market value for trust land, whether removing courthouse auctions would reduce competition, and whether proceeds would still flow to the beneficiary trusts. Kloberdans said appraisals and the land-board approval process would remain central and that online or modern auction approaches have produced higher participation in other DNRC programs. She noted any sale would require land-board approvals and replacement lands would be purchased for the same trust beneficiary under the land-banking framework.

Members also asked whether certain parcels (for example, university or land-grant parcels) were included; DNRC said it would confirm trust status of specific parcels outside the hearing. Representative Brewster closed by saying the bill would provide a practical mechanism to develop trust parcels in the path of growth while preserving trust-value protections.

No opposition testimony was recorded in the hearing transcript; DNRC provided written handouts and the department said it would work with committee members on any requested amendments.