BBB provides critical, common-sense investments in housing affordability

On October 28th, President Biden proposed the “Build Back Better Act” framework, providing $150 billion in affordable housing investments. The Build Back Better (BBB) Act’s plan for affordable housing represents a comprehensive approach to tackling our nation’s housing crisis. By expanding rental assistance, increasing the number of homes affordable to households living on low incomes, and supporting local governments seeking to dismantle exclusionary zoning and discriminatory land-use policies, we can significantly impact the housing crisis across Montana. There are many components in the proposed framework, and we highlight several key investments below. 

  • Reduce housing instability and homelessness. The BBB plan provides a total of $26 billion for rental assistance, with $24 billion going towards new Housing Choice Vouchers for households living on poverty level incomes and $7 billion of those dollars directed specifically to households experiencing or at risk of homelessness and survivors of domestic violence and trafficking. (See our latest report on the Housing Choice Voucher program and its importance in Montana.) The $1 billion goes towards project-based assistance. The remaining $1 billion is for the Section 811 and 202 programs for people living with disabilities and seniors, investments that can be used for capital improvements and project-based rental assistance. Providing sustainable, multi-year funding for rental assistance is an essential step to keeping our neighbors housed and secure. 
  • Support public housing capital improvements. Keeping rents levels deeply affordable to households living on very low income can require public subsidies to build. The BBB plan includes $65 billion to repair and rehabilitate the nation’s public housing infrastructure. It provides an additional $15 billion for the national Housing Trust Fund and HOME Investment Partnerships program to construct and rehabilitate more than 150,000 homes affordable to households living in poverty and those experiencing or at risk of homelessness. These investments will have a significant impact in Montana. Our public housing is among the oldest in the nation. For example, in Helena, public housing is 63 years old on average —and in dire need of repairs to remove safety hazards like lead paint and mold, improve accessibility, and raise the quality of living to an acceptable standard for residents.
  • Address housing needs in Indian Country. Tribal communities confront housing shortages, unacceptable levels of environmental hazards in residents’ homes, and critical infrastructure needs. The BBB plan provides $2 billion to expand construction and rehabilitation of housing on reservations, build infrastructure to support housing, such as water and sewer lines, and support energy-efficient, climate-resistant development projects. 
  • Incentivize removing of exclusionary zoning and discriminatory land-use policies. There is a legacy and ongoing practice of communities locking out prospective low-income and BIPOC residents through land-use tactics, like minimum lot sizes, mandatory parking requirements, and restricting multifamily housing. These policies have also increased housing prices and construction costs. The BBB plan provides help to jurisdictions to dismantle these policies and, thus, expand housing opportunities for people who have been intentionally excluded from high-opportunity neighborhoods. The BBB plan creates a $5 billion incentive fund that awards flexible funding to jurisdictions that reduce these barriers that restrict housing production and lockout prospective residents.   
  • Build affordable housing and supportive infrastructure in rural America. Small, rural towns face storages of housing that is affordable for workers living on low incomes and for aging residents with accessibility needs. The BBB plan provides $250 million for a new Main Street Revitalization Programs for grants to small communities. These grants would increase supply of housing as well as revitalize downtown business districts. 
  • Build climate-resistant communities and energy-efficient homes. In an era of climate change, extreme weather events are displacing households across the nation. The BBB plan provides more than $2 billion for a new Community Development Block Grant Program for communities vulnerable to climate change. These grants target low- and moderate-income regions that are at high risk of suffering climate-related disasters. In addition, the BBB provides $500 million in grants and low-interest loans to renovate public housing, making them energy-efficient and resilient against extreme weather events. 

The targeted housing investments and complementary expansion of federal tax credits supporting those investments would provide greater levels of affordability, stability, and opportunity for those struggling to keep a roof over their heads. A failure to invest in housing has led to the crisis we find ourselves in today. In Montana, two out of three households living in poverty must pay more than half their income on rent. About 6,000 children are in families behind on rent payments, and many face eviction. Passing the BBB Act is our opportunity to change course by treating housing as critical infrastructure. Housing is just as important as roads, bridges, and schools. It will ensure everyone has the basic foundations we all need to lead stable and healthy lives.

Governor’s Proposed Use of Federal Funds Misses the Mark

This week, Governor Gianforte submitted a request to legislators to use a portion of federal American Recovery Plan funds to pay out-of-state health workers and pump money into criminal investigations. Like putting a band-aid on a broken leg, the proposed short-term “fixes” will do nothing to address the fundamental issues workers and communities face, like housing shortages and the decimated behavioral health system. While a majority of legislators on the ARPA commission approved these recommendations as-is, there is still the opportunity for the legislature to invest in meaningful system changes that will support communities today and into the future.

The executive’s proposal to address health care worker shortages and rising crime rates fails to look at the systemic issues Montana faces: the lack of housing and a broken behavioral health system. To date, Montana has spent just 4 percent of the federal recovery funds awarded, including less than $18 million of the $906 million in flexible fiscal relief funds. Other funding streams allocated to housing and health services do not scratch the surface of the needs.

Housing shortages in nearly every community result in workers and families unable to find safe and stable housing and small businesses facing workforce shortages. For many Montanans in essential industries, in both urban and rural communities, finding housing located close to their jobs that is affordable is nearly impossible. While we deem our frontline workers essential, workers in these occupations face lower wages on average. Frontline workers come from disproportionately socio-economically disadvantaged groups compared to the overall workforce. This is a result of ongoing racist, oppressive, and discriminatory policies and practices that limit economic mobility. A narrow approach of providing bonuses to recruit out-of-state health workers will do nothing for the Montanans who worked tirelessly throughout the pandemic and continue to experience burnout and economic hardship. They deserve our support first and foremost.

In addition, the executive’s focus on patching holes in the criminal justice system will do nothing to address the structural barriers many Montanans face in finding safe and stable housing and appropriate medical care. Social isolation, economic stress, and persistent lack of access to mental health care put even more strain on systems that support people in crisis. These are the conditions that put people at greater risk of becoming involved in our criminal justice system. Past state budget cuts have decimated supportive services in our communities, leaving local governments, providers, and families with too few options to help. As experts in the field have noted, “the behavioral health system in Montana is in danger of imminent collapse unless it receives immediate relief.”

Montana can invest in solutions that will have a lasting impact on Montana families and support thriving communities. We should invest one-time federal dollars to provide hazard pay and housing support for nurses and other essential workers, increase reimbursement rates for mental health and substance use providers, and fund case management, culturally appropriate diversion and reentry programs, and targeted housing assistance in high-demand communities. Montana needs a multi-prong approach to address housing, including the construction of new housing, expansion of housing assistance programs, and support for local governments to address growing homelessness. We can utilize the historic investment of one-time federal funds to provide meaningful support for families, workers, and communities that will outlast the dollars. Let’s not squander our opportunity to build a strong Montana.

The Housing Voucher Program Should Be Included in Federal Relief Legislation

This week, Montana Budget & Policy Center released a report on the federal Housing Choice Voucher (HCV) program. This program provides rental assistance for 5,628 Montana households living on poverty-level incomes, making an average yearly income of $12,360. These households include tenants living with disabilities, families raising children, and senior citizens who depend on these vouchers so they can afford to keep a roof over their heads. By making housing costs affordable, vouchers can prevent folks from having to pick between paying the rent, putting food on the table, or buying medicine. Rental assistance is proven to lift people out of poverty and improve long-term outcomes for children who get to grow up in stable and safe homes.

However, the HCV program has fallen short of achieving its intended goals. Housing vouchers are not an entitlement benefit. The number of households that qualify for rental assistance far exceeds the number of vouchers available. There are many steps our federal government can take to improve the efficiency of this program. Congress is currently negotiating legislation we hope will make long-term, sustainable investments Americans need to build healthy, secure, and successful lives. This plan should include providing more affordable housing and expanding the housing choice voucher program.

Please read our latest report to learn more about how vital the housing choice voucher program is to so many of our neighbors.

Policy Basics: The Housing Choice Voucher Program

Living in a safe, stable, and affordable home— defined as costing no more than 30 percent of a household’s income— is foundational to individual and public health. The Housing Choice Voucher (HCV) program is the nation’s major housing rental assistance program helping families living on poverty-level incomes, seniors, and those living with disabilities afford their homes. Housing vouchers are shown to lift people out of poverty, improve long-term outcomes for families and children, and reduce racial inequality. Today, housing vouchers support 10,595 Montanans—equivalent to the entire population of Carbon County— in households across the state.[1]

Due to insufficient funding, only one in four eligible households receives housing voucher assistance.[2] Chronic underinvestment in federal rental assistance programs prevents 15 million Black, Indigenous, and people of color (BIPOC) eligible for assistance from receiving it.[3] Expanding the HCV program would be an essential step towards reducing housing instability for households living on the lowest incomes and correcting our nation’s deep racial inequities.

Background

Millions of households living on low incomes must pay too high shares of that income on housing costs.   Of the total 10.8 million renter households nationwide with extremely low-incomes, 70 percent— 7.6 million households— face severe housing cost burden, paying more than half of their incomes for housing.[4] Due to a long history and ongoing practice of racism and discrimination that limits economic and housing opportunities for communities of color, housing challenges, such as severe housing cost burdens, overcrowding, evictions, and the experience of homelessness, disproportionately fall on BIPOC households.[5]

This racial disparity reflects the impacts of historical and ongoing racial injustice and discrimination in housing, employment, and educational opportunities that have systematically disadvantaged people of color. A primary driver of our nation’s racial wealth gap is decades of racial discrimination of real estate agents, banks and insurers, and the federal government prevented people of color from purchasing homes. This took the form of federal housing policy denying borrowers access to credit in Black communities, physical violence, and covenants banning home sales to Black people trying to live in predominately white neighborhoods.[6] Even as our nation ended many of these overtly racist practices, including through the passage of the 1968 Fair Housing Act, insidious forms of discrimination persist and lock communities of color out of building wealth through homeownership, educational attainment, and opportunities to make equitable wages.

Program Summary

The Housing Choice Voucher program was established in 1974 in Section 8 of the repeatedly amended United States Housing Act of 1937. The Section 8 low-income housing program is two programs: the Housing Choice Voucher program, which are portable subsidies that families can use to rent housing of their choice in the private market, and the project-based Section 8 program, which is rental assistance that is attached to a unit of privately owned housing. The Section 8 program began primarily as a project-based rental assistance program.[7] By the mid-1980s, project-based rental assistance came under criticism for being too expensive and not equitably serving Black households living on low incomes by segregating them in high-poverty areas. Due to these concerns, Congress shifted to providing direct rental subsidies so that people could decide for themselves where they want to live.

Today, the Housing Choice Voucher program under Section 8 is the largest federal low-income housing assistance program, providing over 2.3 million households tenant-based rental assistance.[8] The program has three primary goals:

  • To provide affordable, stable, and safe housing for households living on very low incomes
  • To reduce concentrated geographic poverty; and
  • To improve housing and neighborhood choice for families.[9]

The Department of Housing and Urban Development (HUD) and a network of about 2,170 state and local public housing agencies (PHAs) administer the HCV program.[10] PHAs distribute vouchers to qualified households who then conduct their own housing search. An individual must find an available rental that meets quality program requirements and whose landlord accepts vouchers as payment. The household pays 30 percent of its adjusted gross income towards housing costs. The value of the voucher covers the remaining rent balance up to a limit (called a payment standard) set by the local PHA that is based on HUD’s Fair Market Rent estimates.[11]  When a household receives a voucher, it usually has 60-120 days to find an apartment, though extensions are sometimes possible, or it loses the voucher.

Unlike public housing agencies, tribal nations are not eligible to apply for housing choice vouchers since the passage of the Native American Housing Assistance and Self-Determination Act (NAHASDA) of 1996. NAHASDA provides block grant funds directly to tribal nations to provide affordable housing-related opportunities for eligible households living on reservations and in other tribal areas but restricts tribal nations from accessing many other HUD programs.

Funding

The Housing Choice Voucher program receives discretionary funding in annual appropriation bills in an amount determined by Congress. Unlike other federal anti-poverty programs, like the Supplemental Nutrition Assistance Program, the HCV program is not an entitlement program, meaning that not everyone who qualifies and applies for assistance receives it.

Most PHAs receive voucher renewal funding each year, adjusted for inflation. That amount is capped at the total number of vouchers an agency has been awarded since the start of the program and the cost of the authorized vouchers in use during the prior year— not based on need.[12] Congress also funds incremental vouchers, which are new vouchers that specifically address the housing needs of a particular group, as opposed to vouchers that add to a community’s overall voucher pool.[13] Examples include the Veteran Affairs Supportive Housing program for homeless veterans and the Family Unification Program for families for whom inadequate housing has caused or threatens to cause a child to be removed from their family or prevents family reunification.[14]

Eligibility

Housing Choice Vouchers serve households living in deep poverty. HUD sets income limits to determine eligibility for housing vouchers based on estimates of median income and fair market rents in an area. By law, 75 percent of all new vouchers each year must go to households living on extremely low incomes, defined incomes no more than 30 percent of the Area Median Income or the federal poverty line, whichever is higher.[15] In addition, state and local PHAs have the flexibility to set admission preferences for households that meet specific criteria such as veterans, working families, families fleeing domestic violence, or on an applicant’s housing needs such as those experiencing homelessness.

Attributes of Voucher Assisted Montana Households

In Montana, a two-person household can make no more than $17,300 to be considered extremely low income.[16] To put into context, someone making minimum wage in Montana at 40 hours a week earns only $18,200.[17] Even so, the average yearly income of a voucher-supported Montana household falls below this standard at $12,360.[18]

Among households that would most benefit from rental assistance would be the one in four Montanans living on extremely low incomes or incomes at or below the poverty level. Understandably, these households must pay very high shares of their income on rent— 68 percent pay more than half of their limited incomes to afford their homes.[19] Severely cost burdened households in this situation are more likely than others who pay affordable levels of rent, including those living on poverty level incomes, to sacrifice meeting other essential needs like healthy food and medicine in order to pay the monthly rent.

Today, 5,728 Montana households, which include tenants living with disabilities, families raising children, and senior citizens who live in these households, use a voucher. When disaggregated by race, voucher assisted households reflect the state’s demographics, with white and American Indian or Alaska Native (AI/AN) individuals and families making up the largest share. The most recent data shows that 79 percent households receiving HCVs are white, and 14 are AI/AN.[20]

Value of Housing Vouchers

Housing vouchers can be a powerful tool to address persistent poverty and longstanding racial inequity by directly redressing affordability problems.  When properly implemented, vouchers can stabilize families and give them greater choices about where they live, access to higher-opportunity neighborhoods, and meet their legal obligation to reduce the housing segregation of Black households  and concentrated residential poverty. Multiple studies have found that the voucher program can deliver important, tangible outcomes.

  • Vouchers reduced the number of people living in crowded housing by half and reduced homelessness by three-quarters compared to similar households without housing assistance.[21]
  • Families that relocated to lower-poverty neighborhoods with the help of vouchers experienced better health, higher incomes, and increased college attendance for children whose families moved before they were 13.[22]
  • Vouchers substantially reduce the number of families living in poverty, allowing them to spend more to meet other basic needs like food and medicine.[23]
  • Expanding vouchers to all eligible households would lift 9.3 million people out of poverty and reduce racial disparities. These gains would be most significant among BIPOC populations expanding vouchers would cut the poverty rate for Latinx households by a third, Black households by a quarter, and Asian, Pacific Islander, and American Indian and Alaska Native households by a fifth.[24]

Barriers to Program Success

There is evidence that the HCV program has fallen short of achieving its intended goals. The way the program is designed and administered contributes to the housing choice and mobility challenges that vouchers are meant to redress. Inadequate funding, an area’s rental market and availability of affordable housing stock, and quality of landlord relations all factor into current usage barriers.

Voucher Availability

Housing vouchers are not an entitlement benefit and Congress does not appropriate the level of funds needed for housing assistance. The number of households that qualify for housing vouchers far exceed the number of vouchers available. Due to a shortage of resources, most public housing agencies maintain long wait lists or use a lottery to determine which households can join the waitlist. Many PHAs have closed their waitlists because applications far exceed the number of vouchers they can administer. Households placed on a waiting list typically wait years before receiving a voucher. In Montana, the average wait times for people on a waitlist for an HCV is 25 months.[25] There are more than 5,000 people on a waitlist in Montana, as of January 2020.[26] Many other families cannot get on a waitlist. According to one 2016 survey, over half of agencies were not allowing any additional applicants on their waitlists. Thus, the number of people on voucher waitlists and the length of time to receive a voucher are incomplete measures of the unmet need for assistance because many eligible households do not make it onto a waitlist in the first place.

Source of Income Discrimination

The “choice” component of the Housing Choice Voucher program is not fully realized. Even when a household receives a housing voucher, they still must find landlords that are willing to accept a voucher as rent payment before the voucher expires and goes to someone else. Federal law does not prohibit landlords from discriminating against renters based on their source of payment. In the absence of federal protections against voucher holders, landlords routinely discriminate against renters with housing vouchers, particularly landlords in higher-rent areas with high-quality schools, jobs, and transportation.[27] Explicit or implicit bias continue to undermine housing options for BIPOC households. Only 12 states and 87 local governments have passed source-of-income laws prohibiting landlords from discriminating against voucher holders; Montana is not among them.[28] 

Rent remains unaffordable

Another problem is that voucher amounts can be too low to move a family out of high-poverty, racially segregated neighborhoods. Housing Choice Voucher rental subsidies are capped by a payment standard based on the Fair Market Rent of an area. Payment standards based on area Fair Market Rents are often too low to cover rent in neighborhoods with low poverty, low crime, and strong schools, which perpetuates the racial and social segregation vouchers are intended to mitigate.[29] In Montana, for example, Missoula County’s payment standards mean that someone looking for a one-bedroom rental needs to find one for $849 or less, a two-bedroom rental needs to be $1,076 or less.[30] The rental market in the city of Missoula is one of the most expensive in the state, as well as having very low vacancy rates, and it is challenging for someone living on a very low income to find a place where they do not pay more than 30 percent of their income on rent.

Federal Policy Interventions 

All Montanans deserve a safe, affordable, and stable place to call home. The federal Housing Choice Voucher program is an important tool that we can use to achieve that ideal. There are several actions Congress, HUD, and public housing authorities should take to improve implementation of the HCV program. Making these comprehensive reforms will be a critical step towards achieving true housing choice and mobility.

  • Make Housing Choice Vouchers available to all eligible households by setting federal funding levels based on need.
  • Prohibit landlord discrimination against voucher holders by enacting federal Source of Income Discrimination laws, and incentive landlords to accept vouchers.
  • HUD and public housing agencies set voucher payment standards that are consummate with the local rental market.

Kalispell residents speak out about rental costs

KPAX

Finding an affordable place to live is a burden on many in Flathead County where housing prices are 70% more expensive than homes in Missoula County.

“So, my family and I have been living in the same rental for the last four years, we moved in because it was three bedrooms, it had a garage and its large yard — and the price was right. We pay $1,050 which is great,” said Kate Williams who lives in Kalispell and works for Kalispell Regional Healthcare.

But Williams was told by the property owners that she had to move out in order for the owners to remodel the home.

“It’s hard because it’s hard because nowadays to be able to find a three-bedroom home, you can pay upwards of $1,600 to $1,800,” said Williams.

Finding a home in the Flathead Valley within the Williams family’s price range has been difficult.

“And with that amount of money on the market is manufactured homes, which our mortgage we have been approved for does not cover,” said Williams.

According to the Montana Budget and Policy Center during the 2016 Census, 85% of people who are renting are spending more than 30% of their income on housing costs.

Ryan Pokorny, Frontier West Properties owner says that rentals have seen an increase in price, “especially as of late you know, 20 the latter half of 2019-2020 and obviously, I think into 2021 it’s really going up.”

Tayzha Hawk is another resident of Kalispell that has been struggling to stay afloat with the high costs.

“It’s unbelievable how expensive the prices are considering the fact you still have to pay it utilities on top of all the rent,” said Hawk.

Pokorny says the high prices in rent are due to owners increasing the payments due to the growing housing market.

“Owners have been increasing rent to keep up with the market you know, and some tenants may be priced out of the place there,” said Pokorny.

Pokorny says that not all tenants are being priced out but have seen some increases. But Hawk says that she is struggling to save for a home for her and her family.

“By the end of the month we also don’t have many funds that would be put into saving after all the bills and whatnot that we pay already,” said Hawk.

Pokorny says that there are programs for people who are struggling with affording housing, “there’s always the programs like unity action partnership they can start there. There’s a lot of assistance out there,.”

For those struggling you can visit here for more ways to receive rental assistance.

MPBC Announces New Project – Big Sky Brighter Future

Today the Montana Budget & Policy Center announced its new project – Big Sky Brighter Future – a bold agenda providing policymakers with a clear course to prioritize Montana’s families and children as we rebuild our state.

Montana is a place we love to call home. Natural beauty and commitment to community make Montana an extraordinary place to live for many. However, many Montanans face barriers to building the best futures for themselves and their families, and the COVID-19 pandemic has laid bare discrimination in the very programs and systems meant to support workers and families.

To move Montana forward and truly make it a state where we can all live, work, and enjoy all that Big Sky Country has to offer, we must be bold. We need to rebuild our systems and eliminate structural barriers so that we all have what we need. Not just during times of crisis, but every day.

Big Sky Brighter Future includes 35 forward-thinking policies to point Montana toward a brighter future. We developed this plan with an eye toward equity for Montanans who are Black, Indigenous, and people of color. MBPC met with nonprofit organizations, advocates, and experts to develop a plan that includes policies to strengthen families, boost workers, educate for our future, and build resilient communities. Policies, such as investments in early childhood education, support for tribal health services, and paid sick days, are needed now more than ever. You can read the full plan here.

Big Sky Brighter Future also provides a down payment to pay for these policies with ten common-sense proposals that create a tax code that will work for everyone and bring in $241 million in new revenue.

Over the next few months and leading to the 2021 legislative session, we will work with partners, advocates, and families to make sure candidates running for office hear what our state needs. With your help, we can build the support to make this plan a reality.

We hope you will join us by reading our plan on our website at bigskybrighterfuture.org and following us on Facebook, Twitter, and Instagram. You can also sign up to learn more, start conversations in your community, and submit letters to the editor.

Big Sky Brighter Future is charting a clear course with concrete policy solutions to rebuild our state.

There’s a better Montana on the horizon, and we know how to get there.

State Action on Evictions, Foreclosures, and Utilities

This week, Governor Bullock issued an executive order to place a moratorium on evictions in light of COVID-19. We included this recommendation in our report released earlier this week, and it is a step that many other housing advocates are calling for. With thousands of workers facing reduced hours or layoff, families are grappling with how to cover basic necessities, like food, utilities, and housing costs. Enforcing evictions and forcing families into precarious living situations poses a threat to public health, at a time that emergency shelters or other affordable housing are all at maximum capacity.

At least 34 states have issued moratoriums on evictions, either through executive order or by court order. Governors in twenty-two other states (Alaska, Arizona, Colorado, California, Delaware, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Nebraska, New York, Nevada, New Hampshire, New Jersey, Oregon, Washington, and Wisconsin) have issued executive orders providing a moratorium on evictions. Montana’s executive order is consistent with these other orders.

Here is a quick rundown of Governor Bullock’s executive order:

The moratorium applies from March 31 through April 10, 2020, and applies to:

  • Evictions on residential renters when that eviction is tied to nonpayment;
  • Foreclosures on residential homeowners when that eviction is tied to nonpayment; and
  • Shutting off utilities, including electricity, water, telephone, and internet services to a dwelling unit or residence.

The order directs the courts to immediately stay (or halt) pending eviction actions, and prevents new eviction filings or enforcement during the applicable period.

The order prohibits trustee’s sale, sheriff’s sale, or other involuntary sale/foreclosure proceeding of residential property during the applicable period, and directs the courts to stay any pending foreclosure actions during the applicable period.

Landlords are also prohibited from:

  • charging late fees, interest, or other charges related to nonpayment of rent;
  • increasing rent amounts that were not previously agreed to in an existing lease;
  • requesting suspension or termination of utilities; or
  • reporting a tenant’s nonpayment to a credit agency.

The order provides an exemption from this moratorium for evictions and foreclosures that may be related to reasons other than nonpayment (for example, criminal actions or damage to the property).

The order does not apply to evictions or foreclosures of property used for commercial purposes.

We applaud Governor Bullock’s actions that continue to protect the public health and ensure families do not lose their home during this difficult period of time.

Housing Summit to tackle affordable housing issues in Butte and Anaconda Tuesday

Montana Standard

Officials from the Rocky Mountain Association of Realtors say that when it comes to growing and sustaining a workforce in Butte and Anaconda, access to affordable housing is paramount.

This will be the topic of discussion during a housing summit next week, during which economists, government leaders from Butte and Anaconda, and officials from the real estate and related industries will speak on the topic.

The seminar, dubbed the Butte and Anaconda Housing Summit, begins 11 a.m. Tuesday at the Clarion Inn Copper King Hotel & Convention Center and is being organized by Jennifer Shea of Century 21 Shea Realty, Tina West of Berkshire Hathaway HomeServices and Judy Kivela, present of the RMAR and owner of Kivela Real Estate. Shea and West are co-chairing the event. Attendance is free.

According to Shea, housing stock numbers in Butte and Anaconda are low, and the two communities are anything but alone. In fact, Shea said Wednesday, low housing stock is a nationwide trend.

Economists and media professionals alike have speculated what could be driving the sluggish pace of new housing development. Explanations range  from skittishness among developers from the 2008 housing crisis to high development costs due to government regulations.

Patrick Barkey, director of the Bureau of Business and Economic Research at the University of Montana, is the keynote speaker for Tuesday’s summit.

In 2019, BBER’s annual Economic Outlook Seminar took up affordable housing in Montana as a theme.

For the seminar Barkey composed an article, in which he stated that “the resumption of price growth since 2012 has again outpaced income growth … Despite this deterioration, prices relative to income are lower today than they were just before the housing bust 11 years ago.”

“To some people’s way of thinking, there may not be a problem with house prices at all,” he continues, noting the solution to housing affordably depends on one’s view of the problem.

“Certainly in many Montana housing markets the level of prices relative to income falls short of what would be considered unaffordable. But even in the faster-growing areas where prices are much higher, the regulations impacting new construction represent a sort of tax on development, which forces developers to pay the costs incurred for the congestion and inconvenience of construction and density.”

Incidentally, during the Butte portion of the seminar, Barkey took a poll among attendees, asking them what they thought was the leading reason for increased housing prices.

Sixty-two percent of attendees said they felt high housing prices were due to supply and demand. Ten percent said local regulations were driving up prices. Twenty-nine percent said they felt housing prices weren’t high in Butte and Southwest Montana.

Access to affordable housing may be especially problematic for renters living below the poverty line.

According to data released last year by the Montana Budget and Policy Center, a Helena-based nonprofit that specializes in research and analysis on issues affecting low- and moderate-income Montanans, there is not a single county in the state where a minimum-wage worker can afford a rental home at fair market rent.

Montanans making minimum wage need to work 73 hours to afford a two-bedroom unit in their local markets. In Silver Bow and Deer Lodge counties, those workers need to work 67 hours and 64 hours to afford the same units.

The organization’s data also shows that 84 percent of low-income renting families in Silver Bow County are “cost burdened,” spending more than 30 percent of their income on housing. In Deer Lodge County, that number is 71.1 percent.

The market for low-income renters is even worse in Missoula and Gallatin counties, where the percentage of those who are cost burdened is 92 and 88 percent.

In short, while Butte and Anaconda’s homes and rents are much more affordable than in bigger markets in the state, for a portion of renters living below the poverty line, affordable housing is out of reach.

Shea, Kivela, and West said Wednesday that homes under $200,000 are by far the most in-demand properties in the Butte and Anaconda markets, but there is a lack of houses in that range.

As soon as home in this range goes on the market, the three said, it’s quickly snatched up.

Investors taking advantage of Butte and Anaconda prices may also be having an impact.

Kivela said she could remember a time when there was a portion of low-end homes in the Butte and Anaconda market that were around $30,000 to $70,000. Today, those same homes are around $70,000 to $120,000, she said. Meanwhile, some of her clients can only afford homes under $80,000.

“Here we used to have lower-end houses, but people are buying them and redoing them for either investment or rental properties,” said Kivela, noting that the supply of low-end homes has decreased in recent years.

Homes in that range often require costly repairs, she added, which presents a problem for low-income families.

Investors, meanwhile, can afford to make the repairs and flip such homes and put them on the market for twice as much.

When asked what needs to be done to make affordable housing more accessible to working people in Butte and Anaconda, the three real-estate professionals said the answer is simple: Build more houses.

But to get that done, Shea said, more infrastructure in the form of water, electric and sewer lines is needed to create subdivision-type lots that are suitable for modest homes that working people can afford.

West agreed.

“We do need more affordable family homes,” she said.

The three said Wednesday that next week’s summit will also be a good opportunity for home buyers and sellers alike to get educated about buying and selling a home and ask professionals in the industry questions. It will also be an opportunity, they said, for residents to express their opinions in front of local leaders.

“There’s a lot to explain to a home buyer that they don’t really get if they’re new. But if they come to this summit they can see everybody in one place and find out everything they wanted to know about buying or selling a house in one spot for three to four hours,” said Kivela.

End-of-Session Affordable Housing Updates

During the 2019 Legislative session, several bills that would increase access to affordable housing for Montanans attracted significant support and interest. There were two primary pieces of legislation that MBPC supported, House Bill 16 and Senate Bill 18, related to funding the construction and preservation of low- and moderate- income housing.

  • HB 16 will direct $15 million from the permanent Coal Tax Trust Fund to create a loan program for low- and moderate-income multifamily housing developments. This program is targeted towards smaller-scale projects in rural communities, which often go unfunded because developments in rural areas tend to be more expensive to build and maintain, and house fewer residents compared to larger communities. HB 16 successfully passed the legislature and was signed into law on May 10, 2019. It will be a critical resource to overcoming the shortfall in supply of the affordable housing needs in Montana.
  • SB 18 would have established program providing a state tax credit to investors in qualified affordable housing production and preservation. It was designed to match with the federal low-income housing tax credit (LIHTC) program. Given the high cost of construction, long-term rent, and income limitations attached to low-income housing property, developers rely on tax credits to make affordable housing projects pencil out. However, the amount of federal LIHTC is does not meet Montana’s current demand for low-income housing and each year the Montana Board of Housing can only fund about 25% of multifamily rental home projects due to lack of funds. SB 18 garnered bipartisan support, but it was voted down on the Senate floor after being blasted out of committee.

MBPC was among the proponents who provided testimony in support of SB 18 in the Senate Committee on Taxation and provided committee members with county-level fact sheets from MBPC’s interactive housing map, which highlight housing needs in their respective communities. Although SB 18 did not pass, the bill advanced far into legislative process.

The impact of Montana’s 66th Legislative Session goes beyond the number of housing bills that passed. Affordable housing is a more robust part of the policy conversation, and there is momentum to take action. As the housing challenges that face everyday Montanans gain more attention at the state level, we expect future legislative bodies to prioritize housing solutions.

MBPC Presents at Montana Association of Planners Conference: Affordable Housing Trends in Montana and Models for Improving Access

On September 12, the Montana Association of Planners convened its annual conference, inviting land use planners, local officials, and nonprofit professionals to discuss how Montana towns and cities can effectively manage growth and invest in their communities’ future.

Montana Budget and Policy Center was invited to present on the housing affordability crisis facing Montanans who struggle to pay increasingly unaffordable rents, and how an inadequate supply of affordable housing has become a barrier to economic growth. MBPC also demonstrated its interactive Affordable Housing Map, describing how this resource can help people understand the scope of housing needs in each of Montana’s 56 counties.

MBPC explained that securing affordable and safe rental housing is increasingly out of reach for lower-income, working families. Housing costs have outpaced wage growth for years and the cost of rent in Montana is now the 11th fastest growing in the nation, forcing more Montanans to pay a greater share of their monthly income on housing than ever before. Today, over half of households living in poverty are considered “severely cost burdened”- paying 50 percent or more of their monthly income on rent. A worker earning minimum wage would need to work 78 hours a week in order to afford to rent a 2-bedroom in Montana’s private rental market.

Another driver of the housing crisis is there are too few rental homes available and affordable to lower-income households. Montana would need to add 16,467 more units to its housing stock to make up for this shortfall in supply. Despite the high demand, the costs of building and maintaining housing with lower than market rate rents is often impossible without the help of government subsidies. The federal Low-Income Housing Tax Credit program is the single largest funding source for the construction and preservation of affordable housing and this program is responsible for nearly all Montana’s existing affordable housing stock. However, there are twice as many applications for these credits than what is available and, as a result, much needed housing projects are not built due to lack of funding.

The audience at the Montana Association of Planners then heard from panelists Sheila Rice, Chair of the Montana Housing Coalition, and Heather McMilin, Housing Development Director at Homeword. They described three legislative proposals spearheaded by the Montana Housing Coalition that would provide state funding for affordable housing projects, and will be up for consideration during the 2019 legislative session. Heather McMilin went into detail discussing one proposal to create a Workforce Housing Tax Credit program, modeled on the federal Low-Income Housing Tax Credit program, which would provide much needed financing to double the production of affordable housing in the state.

Montana’s affordable housing crisis demands a strong response with an eye toward long-term solutions by our state and local governments. We recognize that the social and economic costs of not investing in housing will be far more expensive than the cost of providing adequate resources to meet the pressing housing needs in our communities today.