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First Security Bank announced this week an investment fund aimed at producing workforce housing in the Bozeman and Gallatin Valley area.

Bozeman public officials and housing experts consistently beat the same drum when it comes to talking about solutions to the region’s housing crisis: There are limited options available due to restrictions in state law.

So, Deputy Mayor Terry Cunningham said during a Bozeman Area Chamber of Commerce event Wednesday, “we are truly on our own.”

First Security Bank President Jim Ness said that is part of the reason they are pursuing a private investment fund, which has an initial goal of raising $10 million.

Ness announced during the chamber event Wednesday that First Security was putting down the first $1 million, and would pony up another $1 million if the fund reaches $10 million, and then expand their goal to $20 million. Ness said he has kicked the idea around for a few years, and originally thought to focus instead on down payment assistance.

But with limited supply and high prices, Ness explained Thursday, down payment assistance doesn’t really do much for those struggling with the region’s housing crisis.

“Really we need to work on supply, that’s really what we’re after. It’s a numbers game at this point,” Ness said during the chamber event. “It’s our problem, and it’s ours to solve — there’s nobody coming here to the rescue.”

Ness worked with Cunningham, the Human Resources Development Council, the One Valley Community Foundation and NeighborWorks Montana on the Community Housing Impact Fund. The fund is aimed at workforce housing production and preservation and could be used by both for-profit and nonprofit developers, investors and organizations.

At the chamber event, presenters framed the issue as a labor market problem.

Employees struggling to live in Bozeman are deciding to leave the area or cycle to higher paying jobs.

Bridget Wilkinson, president of the One Valley Community Foundation, shared data showing home sale prices increased 9.5% per year from 2015 to 2020 and rental rates by 5.2% per year, while wages only rose by 4.1% per year in that same time frame.

“But as businesses and business owners, we can’t necessarily raise the wages to … to keep pace with this housing cost increase,” Wilkinson said. “The gap between incomes and housing costs is simply too wide.”

Ness said he hopes the housing fund could be part of a solution.

The proposed $10 million fund would be split into two buckets. The first would be a $3 million grant and deferred loan pool aimed partially at helping people purchase homes with down payment assistance or establishing community land trusts.

The second would be a $7 million loan pool that Larry Phillips, a credit analyst with NeighborWorks Montana, said could be used to help new developments or preserve existing affordable homes, or supporting the purchase of manufactured homes.

Ness said Thursday he doesn’t have a timeline on when the fund might be ready to start doling out investments, but that he hopes to get to the $10 million mark by the end of this year.

With affordability in mind, Ness said the fund may mean low returns on investments.

“I certainly don’t think this is the silver bullet that is going to cure all of our problems, but I think it’ll help,” Ness said.

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Nora Shelly can be reached at or 406-582-2607.

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