The 'Montana Miracle' Vindicated in Court
On Monday, a Montana judge roundly rejected homeowners' legal challenge to new laws allowing duplexes and accessory dwelling units in single-family areas.
Happy Tuesday, and welcome to another edition of Rent Free. This week's stories include:
- One major victory (and one defeat) for private property rights in Montana.
- DOGE-inspired termination of federal grants to fair housing groups.
- A new report on the promise of single-stair reforms.
In Montana, One Victory for Private Property Rights…
On Monday, a judge in Gallatin County, Montana, roundly rejected single-family homeowners' legal challenge to a suite of four new zoning and planning reforms passed in 2023 to increase housing production.
The reforms, dubbed the "Montana Miracle", received wide bipartisan support in the Montana Legislature and were enthusiastically championed by Republican Gov. Greg Gianforte.
But they attracted the opposition of some single-family homeowners organized under the group Montanans Against Irresponsible Densification (MAID), who sued to stop the implementation of the new laws in late 2023.
Rent Free Newsletter by Christian Britschgi. Get more of Christian's urban regulation, development, and zoning coverage.
By preempting local zoning restrictions on accessory dwelling units (ADUs) and duplexes but leaving similar private covenants in place, MAID alleged that the new laws violated the Montana and U.S. Constitution's Equal Protection guarantees.
The group also claimed that the state violated substantive due process protections by arbitrarily lifting local zoning restrictions without any legitimate government interest in mind.
In a 55-page decision, Gallatin District Court Judge Mike Salvagni rejected most of MAID's arguments.
The state's decision to reform local zoning codes while leaving private covenants untouched did not violate Equal Protection guarantees given the inherent differences between local laws and private contractual relationships, he ruled.
"A covenant is a contract and an ordinance is not," wrote Salvagni. "A restrictive covenant is not a provision of a zoning code."
This is a surprising reversal on Salvagni's part. In December 2023, he granted MAID's request for a preliminary injunction against Montana's ADU and duplex laws on the grounds they would likely succeed on their equal protection claims.
The Montana Supreme Court reversed that injunction in September 2024 while still allowing the lawsuit to go ahead.
Contra MAID's claims that the new laws were completely arbitrary, Salvagni ruled that "clearly, housing affordability is a legitimate governmental concern and the new laws at issue relate to that concern."
Salvagni did side with MAID's challenges to Montana's new planning law, which limits citizens' ability to challenge local approvals of individual projects and site plans. Those limitations violated the Montana Constitution's public participation guarantees, he ruled.
Supporters of Montana's zoning reforms cheered Salvagni's Monday decision.
"Today's ruling by Gallatin District Court to uphold critical pro-housing reforms is a victory for all Montanans striving for affordable, attainable housing," Gianforte said in a post on X.
My statement on the pro-housing district court ruling out of Gallatin County: pic.twitter.com/KmpnmVXxw0
— Governor Greg Gianforte (@GovGianforte) March 3, 2025
While MAID's lawsuit was playing out, the rest of the state was generally moving ahead with the 2023 reforms.
Local governments in places like Missoula, Montana, have been incorporating the changes into local laws.
That allowed David Kuhnle, a Missoula landlord whose ADU project had been stalled by Salvagni's initial decision enjoining the ADU and duplex laws, to move ahead with his development.
"We have walls, and the truss is on last week," says Kuhne, who with the help of Pacific Legal Foundation had intervened on the side of the state in the MAID lawsuit.
"We're all facing these problems of housing costs and housing affordability. Hopefully, it helps having more options for more people," Kuhnle adds. "I think the whole NIMBY approach was just a bunch of curmudgeon people that didn't want to share in the view that we have more people in the world every day and they have to live someplace."
…And One Defeat
In less happy news, a bill that would have protected Montana property owners from all manner of zoning restrictions narrowly failed in the Legislature.
In a narrow 24–26 vote in mid-February, the Montana Senate failed to advance the Private Property Protection Act, sponsored by Sen. Becky Beard (R–Elliston).
The bill would have required that any property use restriction adopted by any unit of state or local government be "demonstrably necessary and narrowly tailored to fulfill a compelling governmental interest in public health or safety."
Private property owners would be entitled to sue a government body that tried to impose or enforce use conditions that weren't narrowly tailored to achieving some health or safety goal.
In effect, this would have created First Amendment–strength protections for private property owners from zoning laws.
Kendall Cotton of the Frontier Institute (which had been instrumental in passing the state's "Montana Miracle" reforms) says that he's hopeful the Legislature will take up the bill again in the 2027 session.
DOGE Slashes HUD Grants to Fair Housing Groups
The Associated Press reported on Friday that the U.S. Department of Housing and Urban Development (HUD) has begun canceling hundreds of "private enforcement" grants awarded to fair housing groups. The cancellations are coming at the direction of President Donald Trump and the Department of Government Efficiency (DOGE).
The groups use these grants, which typically total $425,000, to investigate landlords for violations of the Fair Housing Act, as well as to file administrative complaints and civil lawsuits against landlords to enforce the law. About three-fourths of fair housing complaints are initiated by private parties.
According to the Associated Press, nearly half of the 162 active private enforcement grants have been canceled so far. HUD told grantees that their awards are being canceled as part of DOGE's efforts.
As Reason has reported, fair housing groups have a history of using these grants to fund investigations and litigation with the goal of effectively creating new housing regulations.
The text of the Fair Housing Act explicitly prohibits landlords from discriminating across a range of protected characteristics, including race, sex, national origin, and disability.
Court decisions and federal regulations have reasoned that facially neutral real estate practices that have a "discriminatory effect" or "disparate impact" can also amount to Fair Housing Act violations.
These grants have funded investigations, complaints, and lawsuits alleging that landlords' policies of not renting to people with criminal convictions or past evictions have a discriminatory effect and are therefore illegal.
In these suits, fair housing groups will claim as damages the federally funded work they put into establishing that a real estate practice has a discriminatory effect.
In 2022, the real estate listing company Redfin agreed to pay $4 million to settle a lawsuit alleging that its policy of requiring homes they listed be above a minimum price had an illegal discriminatory effect on black homesellers.
Critics argue these lawsuits raise costs for housing providers while exposing landlords to nebulous liability.
"There's no way to really know that you're going to be facing potential liability down the road," attorney Ethan Blevins of the Pacific Legal Foundation told Reason back in 2023. "It does put landlords in a really tough position, and it's tough to know what a court will find legitimate."
Study Finds Single-Stairway Apartment Buildings Safe, Affordable
The Pew Charitable Trusts has a lengthy new report on single-stairway apartment buildings, a form of housing that's common in much of the developed world but comparatively rare in the U.S., where building codes typically require multi-unit buildings to have two staircases.
The exhaustive report's topline finding is that "single-stairway buildings as tall as six stories are at least as safe as other types of housing. And allowing the construction of such buildings could provide much-needed housing, including homes for people with modest incomes."
Reforms that would allow larger apartment buildings to be built with just one staircase are under consideration in over a dozen states and localities.
Colorado Gov. Jared Polis championed these reforms in a recent interview with Reason.
Read the whole report here.
Quick Links
- Some systems are even more restrictive than zoning. A new report from the pro-housing Centre for Cities in the United Kingdom urges England to ditch its discretionary planning system (where officials have the ability to deny any development) for a more predictable and permissive by-right zoning regime.
- The Trump administration has axed the Affirmatively Furthering Fair Housing rule, which required federal housing grantees to produce lengthy reports showing that they were taking actions to further fair housing. The administration's new rule will allow grantees to self-certify that they are furthering fair housing.
- Speaking of self-certification, a new California bill would allow homeowners to defer mortgage payments if they claim they've been financially impacted by the recent wildfires.
- Boston zoning officials have blocked a neighborhood birthing center from moving ahead in the city's historic Moreland District. Who says that NIMBYs just don't want more people around?
- In New Mexico, a Senate committee has advanced a bill that would allow cities to adopt their own rent control policies.
