According to a Commission Memorandum from Martin Matsen, Director of Community Development dated June 10, 2017, the Bozeman City Commission is prepared to enforce Ordinance 1922 as of July 12, 2017 that mandatory inclusion of affordable housing units in new residential subdivisions and site planning be enforced.

That means unless you build a few crappy houses around the good ones, you don’t build any.

According to the memorandum effective July 12, 2017, a subdivision with a minimum number of homes would have to be constructed and sold as “affordable” as defined by the ordinance.

Under the old affordable housing Ordinance 1954 — if a builder has 14 affordable single-family detached homes and townhomes planned between June 2016 and June 2017, 10 would be sold between $160,000 to $260,000 to family incomes between 81 percent and 100 percent of the area median income (AMI).

In addition, at least four of those homes would be sold to families making incomes between 65 percent and 80 percent of the AMI. These homes or townhomes would be priced between $120,000 and $215,000, depending on the buyer’s income, household size and number of bedrooms.

According to the Matsen Memorandum, “The June 12, 2017 date has now passed and my office has no other verified information that would indicate that the contingencies as laid out in ordinance 1954 have been satisfied. (Homes built and sold at the prices demanded by the ordinance)— My staff will therefor proceed with the implementation and enforcement of Ordinance 1922 beginning July 12, 2017.”

What Part of Free Market Does The Commission Not Understand?

First of all, homes should be built based on what the market can bear. There are vacant lots in Bozeman selling in excess of $300,000. That’s just for the lot — no home on it. That’s affordable to someone.

No question Bozeman is an expensive place to live. It’s a really nice place. But I see a host of problems:

  • What happens if the homeowner isn’t poor anymore? Is he or she thrown out if their incomes increase?
  • When the time comes to resell this property, will the realtor and property owner be restricted in the asking price?
  • What effect will the lower cost homes have on the value of the homes near them? $350,000 for a three-bedroom but $260,000 three doors away?
  • What about those that qualify but inventory is insufficient? What are they supposed to do — rent? Sit on a waiting list like a liver transplant patient? Live in their car?
  • How often will the application or waiting list have to be revised, as some people will move up the income ladder and no longer qualify?
  • What about insurance? Usually the bank gets paid but what about maintenance of the home and grounds? Are those costs included in the agreement? What happens if the homeowner is too poor to maintain the property?
  • What’s to prevent the homeowner from just walking away if times get tough? As they did during the recession. Would a sheriff’s auction only be available to the poor?

Let’s Take This Full Circle

Why stop with affordable housing? Why not take this to Main Street? Get an “I’m poor” card from the city and you get an affordable discount on all your purchases. That would make housing more affordable.

How about an ordinance that gas can’t be sold for more than a dollar a gallon? That would make housing more affordable.

Does this entire scenario sound ridiculous?

No more ridiculous than what the city commission’s proposing.

Some Final Thoughts

The free market is an ecosystem. Screw around with it and bad things happen to good people.

Price fixing has never worked. There are just too many unintended consequences.

The free market is like Jello. Push it too far it pushes back. Push it in any direction and it returns to where it wants to be. So will the housing market in Bozeman.

This is a serious accident waiting to happen. I hope the city will rethink going down this rabbit hole. What do you think?

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