Following task force recommendations, the 2023 Legislature passed laws that legalized homeowners’ ability to offer accessory dwelling units and duplexes in cities across the state, legalized multifamily construction in commercial zones and streamlined permitting. The policy success was dubbed the Montana Miracle, delivering hope for new housing supply in a state desperate for it. When the Legislature reconvened in 2025, it may have been reasonable for them to pause on housing reform and see what the effects of the 2023 changes would be.
Instead, they saw that more remained to be done to legalize housing supply in Montana. They came back with a housing reform package just as impressive as the 2023 wins.
Montana’s experience highlights some common themes as states look to limit localities’ restrictions on building housing: First, big changes often take more than one session to achieve. Second, one reform may reveal the need for additional reforms to make housing feasible to build. Third, pro-housing reforms may be subject to lawsuits, but statewide limits on local zoning authority are on strong legal ground.
Highlights of the 2025 Reform Package
The 2025 bills include some expansions of the prior session’s package. For example, while a 2023 law legalized accessory dwelling units, a new law will expand this right to unincorporated areas. Where a 2023 law legalized multifamily housing in commercial zones, a new law specifies that localities must allow buildings in many of these zones to be up to 60 feet tall.
Another important new law streamlines permitting for new manufactured housing parks. These developments don’t involve subdividing land into individual parcels for each home, but nonetheless have sometimes been required to go through the state’s notoriously onerous subdivision review. The law clarifies that this needn’t apply to manufactured housing parks, making it easier to add the least expensive type of new home to Montana’s housing supply.
Removing More Barriers to Housing
In Montana, local government leaders have been working in tandem with state policymakers to reduce barriers to housing construction. For example, in Bozeman, policymakers are working on updates to the city’s unified development code, including reforms that go beyond statewide mandates, calling for multiplexes to be allowed across residential zones on small urban lots.
This effort is at odds with standard U.S. building codes that require any apartment building over three stories to include two staircases, a requirement in place long before safety innovations including sprinklers and fire-rated materials made new apartment buildings much safer than their older counterparts. On many Bozeman lots where the draft ordinance would otherwise allow four-story apartment buildings, a prohibitively large chunk of the site would have to be dedicated to staircases. Following other states, this session, Montana legislators allowed buildings up to six stories to include just one staircase, complementing Bozeman’s local efforts.
Prior Victories Upheld in Court
These 2025 gains were won in the shadow of a legal challenge to the 2023 housing reforms. A new organization called Montanans Against Irresponsible Densification sued the state, challenging state authority to set limits on local authority to restrict land-use construction. However, as in all states, Montana localities get their authority to regulate land use because the state has delegated it to them. Based on the state’s clear role in determining the extent to which localities may implement exclusionary zoning rules, a Montana District Court upheld most of the 2023 package, including all zoning pre-emption components.
Not only do state policymakers have the authority to limit local zoning rules, they have an obligation to do so when these restrictions cause statewide affordability problems. At the local level, the costs of new housing are salient. New residents may mean more traffic, more people parking on the street, and the inconvenience of construction. At the state level, these highly localized costs can be weighed against the widespread benefits of population growth, job growth and affordability improvements that construction can bring.
And while anti-housing politics can win in the public meetings where land-use decisions are often made by a small group of similarly minded people, state-level policymakers who reform this system have maintained and gained popularity by representing a broader and more diverse constituency.
There’s been some frustration among housing observers that states can’t pass just one housing bill to fix their problems. The Montana experience shows why it’s often necessary to come back and pass cleanup bills to achieve policymakers’ initial intentions. In some cases, it’s not clear that a rule like the aforementioned two-staircase requirement is such a problem until zoning reform makes apartment buildings on small lots possible to build.
Zoning and building code regulations have a 100-year history of making it more difficult to build housing over time. Unwinding this morass will take time as well.
Governing’s opinion columns reflect the views of their authors and not necessarily those of Governing’s editors or management.
