Whitefish Opposes Bill to Abolish Affordable Housing Program

As legislation advances to prohibit inclusionary zoning laws for workforce housing, city representative speaks in opposition

By Tristan Scott
Housing in Whitefish. Beacon File Photo

Given his role as a general contractor building custom homes in Whitefish, Ben Davis wasn’t eager to stake out a position that’s at odds with his professional colleagues in the building industry, many of them eager to ease their trade’s regulatory burdens.

Likewise, as a licensed real estate agent in the Flathead Valley, Davis isn’t going to win any popularity contests by taking a firm stance against legislation his fellow realtors say will remove market obstructions stanching the intake of new housing inventory.

But as a member of the Whitefish City Council who’s spent years helping craft a program to solve the affordable housing crisis in his community — a program that a new piece of proposed legislation would prohibit — Davis decided the consequences were too high for him not to speak up.

“This is the wrong thing to do, and it is bad policy,” Davis told members of the House Local Government Committee on Feb. 2, when state lawmakers heard from stakeholders on both sides of a piece of legislation, HB259, that would abolish Whitefish’s affordable workforce housing program by prohibiting its “inclusionary zoning” ordinance, a statute requiring that a share of some new residential construction — that requiring a discretionary permit, such as a conditional-use permit — be designated affordable for people with a certain income.

The inclusionary zoning ordinance serves as the centerpiece of the Whitefish Legacy Homes Program, which at about 18 months old remains in its infancy, and has produced little in the way of tangible development. But the program is designed to help working residents with moderate incomes enter the housing market who otherwise couldn’t, a challenge that in Whitefish and communities like it is becoming increasingly prevalent.

But supporters of the program, like Davis, stress the need to take the long view on an issue as complex of affordable housing, and that the program needs more time, and perhaps refinement, before Whitefish realizes its benefits.

That incubation period could be cut short under draft legislation introduced by House Majority Leader Rep. Sue Vinton, R-Billings, who co-owns a construction firm along with her husband, and says inclusionary zoning “is the wrong tool for the job.”

“It seems some local governments find inclusionary zoning attractive because they can say they’ve done something by passing off the burden to an entire industry,” Vinton told committee members, singling out Bozeman’s program specifically.

Under HB259, the Whitefish Legacy Homes Program would lose its inclusionary zoning enforcement ability, rendering the program ineffective, and prompting supporters to urge local control on an issue that varies from community to community.

Davis voiced his opposition to the measure on behalf of the entire Whitefish City Council and the city’s top administrators, even as the full weight of Montana’s building industry has come out in support of the legislation, including the powerful Montana Building Industry Association and the Flathead Building Association.

Although Davis said he didn’t come to the decision lightly, he’s “first and foremost a citizen of Whitefish,” and would have been remiss if he didn’t take a stand on statewide legislation that would undo the local, homegrown efforts of a community reeling from an affordable workforce housing crisis.

“This is not an abstract or distant problem,” Davis told lawmakers. “I’m talking about friends and peers who have no means of owning their own homes in our town because of the disconnect between real estate prices and local income.”

The main argument against inclusionary zoning is that it shifts the cost of housing subsidies onto builders and developments, raising the costs of the project and reducing the margin for profit, and often reducing the number of units that are built — a net result that tends to aggravate housing shortages and further accelerate prices rather than increase inventory and moderate prices.

Abigail St. Lawrence, speaking on behalf of the 1,500 businesses that make up the Montana Building Industry Association, said the state’s affordable housing crisis is “a multi-dimensional problem that calls for a multi-dimensional approach,” while ordinances like inclusionary zoning place the financial burden squarely on builders and developers.

Proponents of the bill also said there’s little evidence that inclusionary zoning serves its intended purpose, singling out the nascent programs in cities like Bozeman and Whitefish as examples.

In Whitefish, the 18-month-old housing program is just the latest undertaking in a series of regulatory steps by the city to build out the local inventory of affordable housing, a scarcity of which has priced out many middle-income, working-class residents, leaving them with few options for finding cost-effective living arrangements.

Whitefish City Manager Dana Smith said the local program differs from Bozeman’s as it relates to income levels, the percentage of affordable housing units required, the types of developments to which the zoning requirements apply, as well as incentives.

“Inclusionary zoning isn’t a one-size-fits-all solution and should be tailored to the needs of each community, especially ones like Bozeman and Whitefish that are seeing rapidly increasing housing prices and the wage gap is so significant,” Smith said. “The city opposes any legislation that would eliminate inclusionary zoning since it is one of our only tools to address affordable housing as a community.”

“Before adopting our Legacy Homes Program, the city went through an extensive public process that included input from builders, workers and business owners,” Smith added, noting that Whitefish’s program is for affordable workforce housing, not low-income housing.

According to a workforce housing needs assessment released in December 2016, middle-income residents have limited options when it comes to finding housing, a problem that is displacing locals and forcing them to live outside their chosen community — 56% of Whitefish’s workforce lives in neighboring communities, 34% of whom would prefer to live in Whitefish.

The assessment identified a need for 980 total housing units to accommodate employee households through 2020, or 580 rentals and 400 ownership units. The assessment noted that only 70% of Whitefish homes were occupied by locals, which marked a 10% decline from 2000.

“The city of Whitefish has spent years of time and many tens of thousands of dollars and enormous energy getting this passed,” Davis said. “If this legislation passes, we will have to go back to drawing board and start over, resulting in a complete waste of taxpayer resources. There’s no reason that a local issue like this should be legislated at the state level.”