Bozeman board adopts revised affordable-housing incentives, raising affordability term to 50 years amid parking and scale debate

The Bozeman Community Development Board, sitting as the zoning commission, voted to adopt a draft amendment to Division 38.380 of the Unified Development Code that rewrites the city’s rental-only affordable housing incentives and raises the required affordability term to 50 years.

The ordinance the board approved Monday (motion adopted 5-2) replaces the current affordable-housing section and keeps the program incentive-based while adding three incentive tiers (type A, B and C), off-site alternatives including a cash-in-lieu formula, and revised parking and height rules. Staff and the public debated parking minimums, historic neighborhood transitions, and how to ensure long-term maintenance of rent-restricted units.

Why it matters: The rewrite aims to make it financially feasible for developers to deliver long-term rental units affordable to area incomes while responding to public concern about building height, parking impacts and loss of “naturally occurring” affordable housing. The changes will move next to the city commission; staff told the board they plan to present a final draft Jan. 28.

City staff framed the rewrite as a response to two years of experience using the existing ordinance, public outreach and direction from the city commission. Susana Montana, community development staff, told the board the draft focuses on rental housing for now and that a separate amendment for for‑sale units will follow. “What we’re bringing before you is a discussion of a proposal to replace the existing affordable housing ordinance, division 38.380 of the Unified Development Code,” Montana said at the start of the item.

David Fine, the city’s economic development and housing manager, explained the three-tier incentive structure and the policy rationale. He said the rewrite keeps the program voluntary and attempts to strike a balance between incentives sufficient to produce affordable units and measures that limit neighborhood impacts. Fine summarized the incentive choices used in the draft and the financial testing that informed them, saying, “all models are wrong, some are useful” and describing how prototype pro formas were used to calibrate the packages.

Key provisions in the draft

- Affordability term: Rent-restricted units under the ordinance would be deed-restricted for 50 years. Staff said that 50 years tracks the term commonly used by the state board of housing for low-income housing tax credit projects and gives projects time for recapitalization.

- Incentive tiers: Type A replaces the former shallow incentives and is aimed at modest infill and missing‑middle forms (examples: smaller single‑household attached units, townhomes). For multi‑household (apartment) developments, Type A offers options such as 5% of units at 60% AMI or 8% at 80% AMI, both for 50 years, depending on the developer’s choice.

- Deeper incentives: Type B and Type C (new approaches replacing the prior silver/gold language) offer larger tradeoffs in parking and building height for more deeply affordable results. Type B includes a minimum parking requirement of 0.25 spaces per unit for multi‑household dwellings and a proposed 36‑unit cap for small apartment buildings using that incentive. Type C requires more affordability (for example, staff described an option where 50% of units would be at 60% AMI for 50 years) and includes higher height bonuses and a 0.5‑space parking minimum for apartments.

- Townhomes/row homes: The draft encourages smaller lot sizes for attached housing and allows exemptions from parking for townhomes and row homes under 1,200 square feet, as a way to promote ‘missing middle’ product types.

- Off‑site alternatives: Developers may donate land or pay a cash‑in‑lieu amount calculated by an affordability‑gap capitalization method. Staff explained the cash‑in‑lieu formula is intended to produce funds that can be leveraged with federal and state subsidies (for example, LIHTC projects) to build more long‑term affordable units than the on‑site requirement might produce.

What the board discussed

Board members and staff spent much of the hearing on three recurring concerns: parking reductions, building height and massing (especially in infill and Neighborhood Conservation Overlay Districts), and long‑term maintenance of deed‑restricted units.

- Parking: Several board members and public commenters said parking requirements are context‑dependent and proposed either requiring project‑specific parking studies or tying parking standards to neighborhood context. Staff and the consultant analysis argued developers will make economic choices about parking when mandates are removed and that parking reductions are one of the primary land‑cost savings that help deliver affordability. David Fine told the board that requiring parking for market‑rate units on a multi‑phase site would eliminate much of the land‑value savings that enable affordable units.

- Height, scale and transitions: Commenters and some board members asked for clearer protections at zone edges and in the Neighborhood Conservation Overlay District (NCOD). Staff said NCOD standards remain in force and that the draft includes additional edge‑transition language in response to public comment; several public speakers urged explicit text that cross‑references NCOD design guidelines to remove any ambiguity.

- Long‑term maintenance: Multiple board members raised concerns that requiring 50 years of affordability without a legally enforceable property‑maintenance tool could mean buildings fall into disrepair after rent restrictions take effect. Staff and the city attorney’s office noted Montana has not adopted the International Property Maintenance Code (IPMC), limiting local authority over maintenance of occupied buildings, and that landlord‑tenant habitability enforcement is constrained by state law. David Fine acknowledged the tension: “there can be a fine line between naturally occurring affordable housing and under maintained, under capitalized housing.”

Public comment

About a dozen residents spoke during the public comment period. Many asked for stronger protections for neighborhood character and NCOD standards, questioned the adequacy of parking and transit, and warned that the program risks displacing naturally occurring affordable housing. Natsuki Nakamura, a Bozeman resident, told the board she “strongly believe[s] this ordinance should be repealed in its entirety and not replaced with a still‑problematic ordinance.” Other commenters, including speakers representing neighborhood associations, asked staff to require clearer step‑backs adjacent to lower‑density zones and to preserve opportunities for local input on specific projects.

Board action and next steps

After roughly two hours of staff presentations, board questions, and public comment, the board voted to adopt the draft ordinance as presented and the staff findings for application 24529. The motion passed 5‑2. Staff said they will forward the ordinance draft and the board’s recommendation to the Bozeman City Commission, with a planned presentation on Jan. 28; staff also said a follow‑up ordinance addressing for‑sale units will return in subsequent months.

The board’s vote begins the legislative record. Any changes requested by the city commission or additional public comment there could alter the final ordinance before adoption.

Ending

With the zoning‑text amendment now recommended by the board, attention will move to the Jan. 28 city commission meeting, where the commission will review the draft and public testimony. Staff told the board they will continue outreach and may adjust text in response to the comments heard at the board hearing.