Water Adequacy for Residential Development

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On November 4, Bozeman voters will see a ballot question related to water and residential development on their ballot. The WARD citizen special interest group initiative would change the city of Bozeman’s development code, requiring developers of three or more residential units to pay cash-in-lieu of water rights to the city only if the development designates 33% or more of the units as affordable. If the developer does not include 33% affordable units, they are responsible for securing water rights, which, because of state water rights processes, could take 5-8 years. The WARD initiative also removes the ability for developers to meet the water demand of their development through off-site water efficiency or conservation measures. Check out the full description of the initiative. The Initiative was not developed by the City of Bozeman. The City is, however, providing educational information on the Initiative.

Get the Facts on Our Water and Housing:

  • Since 2022, we have 1777 affordable units built, under construction, or in the pipeline

  • Since 2022, $120M has been spent in subsidies on those projects

  • Bozeman residents continue to excel in water conservation, using 188 gallons of water per household per day compared to 314 GPHD in other arid Western states

Get the Facts on Our Water:

Bozeman is not at risk of running out of water. When new housing is proposed, the city ensures there is enough water to support it. Based on the 2024 water use numbers, in a normal water year, the city only uses about 43% of its available supply, and even in a drought year, that number rises to just 60%. Bozeman’s water comes from three main sources—Lyman Spring, Bozeman Creek, and Hyalite Creek, with the Hyalite Reservoir. 

To carefully manage demand, the city uses a Water Supply & Optimization Tool that monitors current usage, projects future needs, and tracks available resources. This tool is critical to ensure the city continues to develop new supplies to meet the needs of our growing community. New water supplies are being developed as prioritized in the City’s Integrated Water Resources Plan. In addition, Bozeman continues to strengthen its long-term water sustainability by developing new conservation measures and following its 2023 Water Conservation Plan.

Get the Facts on Affordable Housing:

Building affordable housing is costly because of rising land, labor, material, and lending expenses. A city study found that developers can typically only make about 5% of their units affordable, as higher percentages aren’t financially viable. 

To address this, the city is partnering with public, private, and nonprofit organizations and shaping policies based on local data and community input to balance affordability, growth, and neighborhood character.

Get the Facts on the Impacts of the WARD Initiative:

The WARD Initiative’s requirement that housing developments of three or more units ensure 33% of units in new developments are affordable in order to access the city’s cash-in-lieu of water rights could limit housing supply. 

Even in housing projects that receive significant government subsidies, developers depend on a balance of market-rate and affordable units to cover construction costs. The result is that WARD’s high affordability requirement (33%) could make it harder for a developer to secure financing, resulting in less interest in building housing in the city. If developers choose not to build in Bozeman, demand for housing in the city may rise without the housing supply to match, driving up prices. Some may instead build in surrounding areas like the County, which could increase commuting and harm the environment.

Additional Information:

This website and related City efforts to educate voters on this initiative are not intended to advocate for or against the initiative; rather, the educational effort is to bring to light how the initiative will affect city operations, including how the City works to accommodate the development of new housing in our community and the City’s effort to provide our community the water it relies on.

We invite all to use our Question-and-Answer feature on this page to learn more.

On November 4, Bozeman voters will see a ballot question related to water and residential development on their ballot. The WARD citizen special interest group initiative would change the city of Bozeman’s development code, requiring developers of three or more residential units to pay cash-in-lieu of water rights to the city only if the development designates 33% or more of the units as affordable. If the developer does not include 33% affordable units, they are responsible for securing water rights, which, because of state water rights processes, could take 5-8 years. The WARD initiative also removes the ability for developers to meet the water demand of their development through off-site water efficiency or conservation measures. Check out the full description of the initiative. The Initiative was not developed by the City of Bozeman. The City is, however, providing educational information on the Initiative.

Get the Facts on Our Water and Housing:

  • Since 2022, we have 1777 affordable units built, under construction, or in the pipeline

  • Since 2022, $120M has been spent in subsidies on those projects

  • Bozeman residents continue to excel in water conservation, using 188 gallons of water per household per day compared to 314 GPHD in other arid Western states

Get the Facts on Our Water:

Bozeman is not at risk of running out of water. When new housing is proposed, the city ensures there is enough water to support it. Based on the 2024 water use numbers, in a normal water year, the city only uses about 43% of its available supply, and even in a drought year, that number rises to just 60%. Bozeman’s water comes from three main sources—Lyman Spring, Bozeman Creek, and Hyalite Creek, with the Hyalite Reservoir. 

To carefully manage demand, the city uses a Water Supply & Optimization Tool that monitors current usage, projects future needs, and tracks available resources. This tool is critical to ensure the city continues to develop new supplies to meet the needs of our growing community. New water supplies are being developed as prioritized in the City’s Integrated Water Resources Plan. In addition, Bozeman continues to strengthen its long-term water sustainability by developing new conservation measures and following its 2023 Water Conservation Plan.

Get the Facts on Affordable Housing:

Building affordable housing is costly because of rising land, labor, material, and lending expenses. A city study found that developers can typically only make about 5% of their units affordable, as higher percentages aren’t financially viable. 

To address this, the city is partnering with public, private, and nonprofit organizations and shaping policies based on local data and community input to balance affordability, growth, and neighborhood character.

Get the Facts on the Impacts of the WARD Initiative:

The WARD Initiative’s requirement that housing developments of three or more units ensure 33% of units in new developments are affordable in order to access the city’s cash-in-lieu of water rights could limit housing supply. 

Even in housing projects that receive significant government subsidies, developers depend on a balance of market-rate and affordable units to cover construction costs. The result is that WARD’s high affordability requirement (33%) could make it harder for a developer to secure financing, resulting in less interest in building housing in the city. If developers choose not to build in Bozeman, demand for housing in the city may rise without the housing supply to match, driving up prices. Some may instead build in surrounding areas like the County, which could increase commuting and harm the environment.

Additional Information:

This website and related City efforts to educate voters on this initiative are not intended to advocate for or against the initiative; rather, the educational effort is to bring to light how the initiative will affect city operations, including how the City works to accommodate the development of new housing in our community and the City’s effort to provide our community the water it relies on.

We invite all to use our Question-and-Answer feature on this page to learn more.

Q & A

Please use this part of the website to ask us any questions you have about WARD and its impacts!

Want to learn more before you ask a question? View our presentation here:

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  • Share How will WARD affect the City’s ability to provide water? How will WARD lower the production of all housing types above and beyond what current policy has lowered? Please provide evidence for these claims. on Facebook Share How will WARD affect the City’s ability to provide water? How will WARD lower the production of all housing types above and beyond what current policy has lowered? Please provide evidence for these claims. on Twitter Share How will WARD affect the City’s ability to provide water? How will WARD lower the production of all housing types above and beyond what current policy has lowered? Please provide evidence for these claims. on Linkedin Email How will WARD affect the City’s ability to provide water? How will WARD lower the production of all housing types above and beyond what current policy has lowered? Please provide evidence for these claims. link

    How will WARD affect the City’s ability to provide water? How will WARD lower the production of all housing types above and beyond what current policy has lowered? Please provide evidence for these claims.

    Lorre Jay asked about 1 month ago

    It is difficult, if not impossible, for most individual development projects to secure useful water rights for a municipal, potable water supply. Further, water rights must be developed in conjunction with infrastructure. Combining this reality with the economic analysis provided by Root Research, the affordability targets in WARD of 33% may not be feasible without additional financial subsidies. Subsidies are difficult to obtain for even housing projects that are targeted to be 100% affordable, so it may be unlikely housing developers or the City will be able to obtain subsidies for all housing projects.  

    The City is required to provide potable water to residents and businesses. WARD will affect the City’s ability to provide water to development in several ways: 

    • If each multi-household market-rate development must establish its own water supply, it takes a minimum of 3-5 years to develop the water rights and at least 2 years to build the water supply infrastructure for a total of 5-8 years to develop a new water supply. Further, given the uncertainty of projects going through the State water rights process, there is no certainty that those projects would obtain a water right at the end of that application process. Given the time and uncertainty of the water rights process and the subsequent risk associated with that process, new residential market-rate developers may choose to seek development opportunities outside city limits in the county or other nearby communities.  

    • If a market-rate housing project were to attempt to bring usable water rights, those water rights must be developed in conjunction with infrastructure. The City develops municipal water rights and infrastructure projects for 1,000 gallons-per-minute (gpm) or more. A 1,000-gpm potable water supply is the equivalent of annual water use for approximately 6,500 single-family homes or 13,000 multi-family units. If a 5-acre development with 50 multi-family units did not use the cash-in-lieu of water rights option and sought to build a water supply well, water treatment system, pump station, and develop water rights, it could result in an increase in the amount of water infrastructure, operations, and maintenance for a relatively small amount of water supply. Currently, the City has two points of potable water supply (the Sourdough Water Treatment Plant and the Lyman Water Treatment system), and experienced licensed water operators maintain those systems and sample for water quality to ensure a safe and drinkable water supply (the City took over 5,000 water quality samples last year). If every multi-family market-rate development had to bring its own water rights and infrastructure, this would reduce the economies of scale associated with larger water supplies and may impact affordability within the City. The economy of scale of the larger infrastructure projects makes water supply development, operations, and maintenance much more cost-effective and economically feasible, which not only makes the affordability of potable water in the City better for new residents but also for existing residents. 

    • If developers decide to pursue water rights development for market-rate housing in Bozeman, those developers would then be competing with the City for the same water in the Gallatin Valley. That competition may drive up prices for water rights acquisition, possibly making water rights development for use of the cash-in-lieu program more expensive and driving up housing costs for projects that attempt to meet the WARD thresholds. Currently, nearly every development pays the City cash-in-lieu of water rights. If that option goes away, the City will have more competitors for water rights acquisitions for the same water. 

    • The City’s infrastructure systems benefit from additional customers in the system due to economies of scale which help keep costs down for existing customers. Without the benefits of increased economies of scale, affordability for existing customers may decrease. In turn, this will reduce the ability of the City to provide new water supply or conservation programs without further increasing water rates.  

    With regard to housing, when the City created the affordable housing ordinance (AHO), we hired a housing economics firm, Root Policy Research, to help us understand the amount of affordable housing that could feasibly be provided by a developer if they used the density bonuses in the AHO. Root analyzed four different development scenarios and then tested the financial feasibility of each scenario when the developer was provided with a density bonus. The four prototypes were small 800 square foot housing units in different forms: multiunit rentals, stacked flat condos, townhomes, and single unit detached homes. They found the maximum number of units a developer could designate as affordable (60% AMI for rentals and 120% AMI for sale), including the use of AHO density bonuses, was 5% for multi-unit rentals, stacked flat condos for sale, and townhomes for sale. No amount was feasible for single household dwellings for sale. Root’s analysis can be found in the documents section of this site. While WARD, like inclusionary zoning, requires affordability, it does not change the economic inputs that drive housing costs, including land, labor, lumber (construction materials), and the costs relate to financing a housing development. If, as has been pointed out, it may be difficult for individual projects to secure useful water rights for the city, we may expect that all multi-family housing projects would need to designate 33% of their units as affordable under WARD, since developers can no longer pay cash-in-lieu as 99% of housing projects do now. Since the proposed 33% target is higher than the maximum 5% Root found as feasible under the AHO, WARD could make market-rate, or unsubsidized housing infeasible without a dramatic change in the input costs for housing development.  

Page last updated: 18 Sep 2025, 09:04 AM