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Cities, Housing Officials Support Infrastructure Fund

Building water and sewer projects is expensive, but a $200 million proposal in Gov. Greg Gianforte’s budget could easily support thousands of affordable housing units across Montana.

That’s an estimate from Mike Veselik, economic development program manager for the city of Bozeman. Veselik said the costs of providing water and sewer systems can make housing unaffordable. He brought up a general example.

Say a former commercial property is being turned into apartment buildings, going from maybe five or six people using the facility to 100 apartments. Upgrading water and sewer lines to accommodate hundreds of people can cost hundreds of thousands, if not millions of dollars, Veselik said.

“That’s where these grants and loans will be really effective,” he said. As Montana lawmakers prepare for the 68th Legislative Session, they expect a budget surplus of more than $1 billion. Gov. Greg Gianforte has proposed $200 million of that be used to pay for water and sewer infrastructure to support municipal growth.

The details of how the money would be awarded are still being determined, but the sentiment is that this money is meant for growing Montana cities.

Some programs have already helped cities support more functional or basic infrastructure upgrades but there’s a need for more, supporters said. Dave Smith, executive director of the Montana Contractors Association, said when the first call went out two years ago for proposals to use federal COVID-related money, cities and counties added money to existing infrastructure projects, deciding to replace lines that might have been 100 years old because they finally had the money. The state ended up allocating $450 million for community water and sewer projects then, he said.

Kelly Lynch, executive director of the Montana League of Cities and Towns, said this $200 million would be best used for areas that are growing because few funding opportunities exist for increasing the capacity of or extending a sewer system.

Growing cities need money for increasing water and sewer capacity to support more people and this $200 million provides the funds for that, Lynch said.

That’s money the developer won’t have to spend on such systems, allowing them to pass the savings onto buyers.

“This really is just one area where there really is kind of a lack of access for funding,” Lynch said.

This idea stemmed from the governor’s Housing Task Force, which focused on municipal development, expanding where “the bones” are already there.

Valery Stacey represented the Montana Environmental Health Association on the Housing Task Force. She sees a connection between sprawling development, wastewater infrastructure and affordable housing. The challenge, she added, often comes down to figuring out how to fund municipal wastewater expansions without placing the cost on the developer.

Stacey said some of the development patterns seen in Montana come from the fact that it’s usually cheaper to build outside city limits. If infrastructure can be publicly funded, “(w)e might start seeing denser development in areas we want to see it instead of the sprawl,” she said.

The $200 million for water and sewer in the governor’s proposed budget is also a way to address affordable housing, Stacey said. Affordable housing doesn’t only consider the cost of the house, she said, but also addons like energy or water and sewer costs.

“If we can find public dollars to expand municipal infrastructure, that is one of the most important tickets to building more affordable housing units,” she said.

Veselik agreed, saying developers must provide funds for upgraded infrastructure in housing proposals. If Bozeman had extra money to offset those costs in exchange for encouraging the building of homes for workers, that could be a good use of taxpayer dollars, he added.

“It’s going to be very measurable,” he said. “We’ll be able to see every dollar that’s invested in one of these projects.”

The finer details of this money – like who would award the money and how applications would be ranked – will be parsed out during the upcoming legislative session.

Meanwhile, the governor’s Office has said that to be eligible for funds, certain requirements would need to be met, like the intention to increase density, which could mean allowing accessory dwelling units on a lot or taller apartment complexes.

“I think every community could benefit from this,” Veselik said.

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