Missoula County defines "workforce housing" for TEDs by requiring higher density and smaller units, not direct subsidies

Missoula County staff said a 2025 Montana legislative change permits tax‑increment financing mechanisms, including TEDs, to be used to support "workforce housing," but the statute leaves the term undefined. County staff led a local policy process to set practical criteria that align with how TEDs can be used.

"They did not define what workforce housing is," Andrew Hegmire said of the legislature’s approach, and County staff — led by housing policy staffer John Wilkey — convened nonprofit and for‑profit developers to design a workable local policy. Hegmire said the County concluded that because TED money pays for public infrastructure rather than vertical construction, the most effective lever is to lower development costs by providing roads, sewer and water and to require developers who use TED support to increase housing quantity and reduce per‑unit size and finishes.

Under the local approach described on the podcast, developers seeking TED infrastructure support will be asked to increase density above minimum zoning (Hegmire discussed an illustrative shift from about 11 units per acre to roughly 15 units per acre), build smaller units with modest finishes, and prioritize unit mixes and lot sizes intended to produce lower per‑unit costs over time. Hegmire emphasized the County’s goal is “more units, more volume” rather than direct subsidies to developers for vertical construction.

Hegmire said the County initially considered requiring permanently affordable housing but found the math did not work: tax‑increment funds pay for roads and utilities and do not plug the capital gap required to fund permanently affordable units. Instead, the County is pursuing a density‑ and design‑based approach intended to produce naturally occurring workforce housing that remains durable without the County entering permanent income monitoring.

The policy decisions were described as a local implementation choice that the County tailored to Missoula’s housing market: staff engaged nonprofit housing operators and for‑profit affordable housing developers when drafting the guidance, Hegmire said. How the policy will affect specific projects will depend on developers' proposals, TED revenue levels and subsequent permitting and infrastructure schedules.

County staff say this approach leverages TEDs to reduce the infrastructure barrier to building workforce housing, while relying on local zoning and developer agreements to influence unit mix and finishes rather than funneling TED funds into a project's capital stack.