Bozeman has many attributes that make it a desirable place to live and work. It’s not surprising, then, that Bozeman’s population increased from 39,800 in 2013 to 57,300 in 2023. Such massive growth highlights two major challenges Bozeman faces: water supply and affordable housing. The Bozeman Water Adequacy municipal ballot initiative (Initiative) is unique, and seeks to address both challenges. The Initiative’s goal is to help conserve the City of Bozeman’s finite water supply while also helping provide much-needed affordable housing for rent and for sale to Bozeman residents. The Water Adequacy for Residential Development (WARD) working group recently submitted the Initiative to the Gallatin County Elections Department (County) and City of Bozeman (City) for review. If both the County and City approve the Initiative for signature-gathering, WARD will have 90 days to collect signatures from 15% of Bozeman’s registered voters to place the Initiative on the City’s November 2025 ballot.

What is the Bozeman Water Adequacy Ballot Initiative?
The Initiative seeks to amend the Bozeman Municipal Code to allow developers to pay cash in lieu of water rights only if a development includes 33% or more of affordable dwelling units for rent or for sale. In the Initiative, affordable is defined as dwelling units offered for rent at 60% or less of area median income (AMI) or offered for sale at 120% or less of AMI. All affordable dwelling units would be deed-restricted for at least 99 years, be required to be of the same size and quality as those rented or sold at market rate, and be evenly distributed among and within all buildings and floors of a development. The Initiative would apply to any residential development with three or more units.

Bozeman’s rapid growth means the demand for water could exceed supply within 20 years, while new market-rate and luxury developments remain unaffordable to most working people. This Initiative is about our community deciding how we allocate Bozeman’s finite water supply, adding an affordable housing tool to our toolbox, and perhaps slowing gentrification within the city.

What is Cash-in-lieu of Water Rights?
Typically, when a community’s water usage increases, water rights can be purchased from nearby water sources. The City currently has water rights in Bozeman, Hyalite, and Lyman creeks. However, Bozeman is in a closed basin, meaning all water rights in the Gallatin Valley have been appropriated; hence, the City cannot readily purchase more water.

Whenever there is a new development in Bozeman, developers must demonstrate they have enough water to support that development. With no new water rights available, developers typically opt to pay cash-in-lieu of water rights (CILWR) to the City. Paying CILWR means a new development will take from the City’s established finite water supply (rather than introducing new water), and the cash given to the City can be used to buy water rights (if such rights become available) or explore alternative water sources such as groundwater wells or large- scale water transfers via pipelines.

The City estimates a demand of around 1,000 new dwelling units per year over 10 years for 2024 to 2033. The City anticipates having enough water rights to support growth and development for the next 10 to 15 years, but Bozeman’s finite water supply is particularly vulnerable to climate patterns. Warmer temperatures mean earlier snowmelt in the spring, which means less water available for the drier and hotter summers.

With the proposed Initiative only allowing CILWR for developments with at least 33% affordable units, we can ensure new developments are helping chip away at the City’s lack of affordable housing. Fully non-affordable developments can still be built if developers can bring new water rights to the table. The Initiative also seeks to repeal the ability of residential developments to demonstrate water adequacy by implementing offsite water efficiency or conservation measures.

WARD Initiative Compared To Current Affordable Housing Strategies
The City is trying a variety of strategies to incentivize more affordable housing, and allocates money from its general fund to support some affordable housing projects. However, any development meeting code is approved and allowed to pay CILWR, regardless of how expensive the rentals or for-sale units will be.

The City’s revised Affordable Housing Ordinance (AHO) offers incentives to developers, such as reduced parking requirements or increased building height in exchange for some percentage of affordable units. “Type A” incentives are granted for developments with 95% market-rate, non-affordable units (i.e., 5% affordable units). Projects seeking “Type B” or “Type C” incentives must include 50% affordable units in exchange for deeper incentives, such as parking requirements reduced to one space per four units or getting two additional stories beyond the allowed maximum. Meanwhile, there are ongoing efforts at the Montana State Legislature to remove parking requirements and increase density and height allowances in all zoning districts, which could reduce the City’s ability to use Type A, B, and C incentives to bargain for affordable housing.

The City has some limitations on what it can require of developers. For example, the City once used inclusionary zoning, in which a small percentage of all new dwelling units were required to be affordable. However, in 2021, the Montana State Legislature banned the use of inclusionary zoning. If the Initiative were to pass, only residential developments of three or more units opting to pay CILWR would be required to provide affordable dwelling units.

According to the City’s AHO Open House Presentation, there are 16,600 total renter households in Bozeman and Belgrade, and 45% of renters earn at or below 60% AMI. According to 2024 numbers for Gallatin County, 60% AMI means a family of four earning $65,400 a year or an individual working full-time earning $22 an hour. Meanwhile, there are only 1,517 units of income-restricted housing being developed or completed. This means there are nearly 6,000 renter households that do not have access to affordable units. Even though the City has issued building permits for on average over 1,600 new dwelling units each year since 2020, the AHO incentives have resulted in no affordable units constructed and 375 units under construction.

According to a recent Gallatin County Housing Needs Assessment, only 4% of home sales in Bozeman in 2023 were affordable to people making 120% AMI or less. In Gallatin County, 120% AMI means a family of four earning $130,800 a year or an individual working full- time earning $44 an hour.

In 2024, Bozeman had a rental vacancy rate of 10% and average rent of over $2,000 a month, which suggests an oversupply of market-rate and luxury units and a lack of affordable housing. Working people who make Bozeman “run,” as well as long-time residents living on fixed incomes, are struggling to find affordable housing options, and are being pushed out of Bozeman. Given the City’s finite water supply and high vacancy rate, we as a community need to do more to ensure that new housing being built is serving our community’s affordable housing needs and creating more of a balance between luxury development and affordable housing.

Conclusion
Bozeman is likely to remain a desirable place to live and work, largely because it has a thriving downtown core with tree-lined neighborhoods; easy access to public lands; a variety of recreational, cultural, and medical resources; and a college-student body who helps keep the city “forever young.” As such, we as a community have a responsibility to help conserve the City’s finite water supply and help ensure that residential developments being built include sufficient affordable housing for Bozeman’s workforce and those living on fixed incomes. The WARD working group thinks the Bozeman Water Adequacy municipal ballot initiative will help the City do just that. 

Daniel Carty, Lorre Jay, Nico Ludkowski, and Natsuki Nakamura are members of the Water Adequacy for Residential Development (WARD) working group. WARD is a grassroots, multi-generational group of Bozeman residents who are cooks, bakers, biologists, beekeepers, teachers, students, and others who care deeply about Bozeman and work to ensure it is an environmentally sustainable and affordable place to “live where you work.” For more information and a copy of the Initiative, go to https://www.wardbzn.com

Photo Credits: Hyalite Creek, Daniel Carty; Five-Unit Naturally Occurring Affordable Housing, Natsuki Nakamura