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Could encouraging small, cottage-style homes in clustered neighborhoods be a way for Bozeman to provide residents with affordable, modest homes?

That’s the hope behind a proposal winding its way through the city’s review process, set for discussion by city commissioners Monday, June 27.

The aim, said city planner Chris Saunders, is to encourage the construction of smaller, cheaper homes with building patterns that make economical use of land, which is scarce enough inside city limits that lot prices have become a hurdle to bringing cheaper homes to market.

He also said the proposed cottage housing ordinance will provide another option for property owners looking at doing infill development, which can be tricky given the city’s layout requirements for traditional subdivisions.

Home sizes in Bozeman have increased even as the average household size has shrunk, Saunders said, contributing to the affordability challenge.

“They’re about double what they were in the 1950s,” he said, “yet the number of people we have living in those houses has dropped by also half.

“We’re building a lot more house per person,” Saunders said.

A third of Bozeman’s homes have one resident, the U.S. Census Bureau estimates, and only 29 percent house three or more people.

Even so, most detached homes being brought to market in Bozeman are fairly large, with a study by city housing consultant Daniel Werwath last year reporting that new homes being built in the city averaged 2,300 square feet.

“This exceeds the average in most other similar markets,” Werwath wrote, “and is far higher than the typical size of new entry-level homes.”

Example of cottage development layout

Examples of cottage-style development layouts.

The ordinance would generally encourage cottages with 1,000 to 1,200 square feet and limit homes to 1,500 square feet.

It would allow the construction of cottages in groups of four to 24, encouraging clustered development. Cottage projects could be built at double the unit density allowed for traditional homes in their zoning districts, but would have to meet additional design and height requirements.

The size requirements, Saunders said, mean that cottage-style projects could fit more housing units per acre, but would be able to develop a square footage roughly equivalent to what’s permissible under existing standards for detached homes.

“On the one hand, it’s double the density — on the other, not really,” he said. “It won’t feel twice as much.”

Projects developed under the ordinance would also be required to meet affordable housing requirements set by the city, providing either at least a single unit for sale at a price point considered affordable to lower-income families, or at least three at prices affordable to middle-income buyers.

In an April report, Saunders cited the Annie Street Cottages, at the intersection of Annie and Hanson streets in northwest Bozeman, as an example of the type of development that could be encouraged by the ordinance.

However, he said, the city’s existing cottage-style housing, like the Annie Street project, has been developed as condominiums — meaning buyers own the structures but not the land beneath them, which can complicate the process of getting a mortgage to buy a property.

In contrast, the proposed ordinance is intended to allow the development of cottages on distinct lots, streamlining the financing process for potential buyers.

In addition to consideration at the June 27 City Commission meeting, which begins at 6 p.m. in City Hall, the proposal will be discussed by city Planning Board and Zoning Commission members this coming Tuesday evening, June 21.

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Eric Dietrich can be reached at 406-582-2628 or edietrich@dailychronicle.com. He is on Twitter at @eidietrich.

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Eric Dietrich covers city government and health for the Chronicle.

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