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Gov. Greg Gianforte signed a bill this week banning inclusionary zoning, taking a major part of Bozeman’s affordable housing plan off the table.

House Bill 259, signed into law Monday, prohibits local governments from requiring developers to pay a fee that would go to providing homes at specified prices or for people in specific income levels.

Bozeman’s Affordable Housing Ordinance, passed in 2018, requires 10% of developments of more than 10 homes to be priced affordably. Developers have the option to pay fees in lieu of building homes.

Bozeman City Manager Jeff Mihelich said in a statement Tuesday that it would be an understatement to say the city is disappointed in the new law.

“This is the final action to take away one of the few tools that our city has been successfully using to create more affordable housing in Bozeman,” Mihelich said.

Melody Mileur, city spokesperson, said there are 51 homes approved as part of affordable housing plans and “dozens more under review.” Mihelich said it is unclear how the new law applies to development under review.

“The legislation is riddled with complexity and unknowns.” Mihelich said. “To be clear, this won’t stop the city of Bozeman from continuing to pursue other policies to ensure that every Bozemanite that wants a home can afford one.”

As the bill made its way through the Legislature, representatives from several cities throughout Montana opposed the legislation, including Bozeman, Missoula and Billings. Opponents generally criticized it for encroaching on local control and limiting local officials’ ability to address the affordable housing crisis.

Supporters argued that inclusionary zoning increases the costs of other homes within a development and puts an undue burden on developers to create affordable housing.

A Bozeman developer, Eugene Graf, who supported the bill, said Tuesday there are other ways the city can support affordable housing

“We need to make sure that we continue to encourage the supply to be there to meet the demand ... whether we are encouraging land owners to develop or if we are encouraging the city to approve things at a rate that keeps up with demand,” Graf said. “All of these things need to work together. I don’t know if there’s a one stop solution.”

Brian Popiel, a Bozeman contractor who unsuccessfully ran for the Legislature last year, said he is “cautiously optimistic” that removing inclusionary zoning from Bozeman’s arsenal will force the city to pursue other avenues.

“Inclusionary zoning is sort of a Band-Aid-type solution,” Popiel said.

The city is reviewing its codes guiding development, which will be focused on fostering and speeding the construction and preservation of affordable homes.

Kevin Thane, a member of the Bozeman Community Affordable Housing Advisory Board, said the city will have to build more incentives for affordable housing into the code.

“We have to use more carrots and less sticks,” Thane said.

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Nora Shelly can be reached at nshelly@dailychronicle.com or 406-582-2607.

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