Montana’s Housing Crisis Fix Survives Constitutional Challenge 

With home prices skyrocketing and homelessness hitting record highs last year, improving housing affordability is an urgent topic across the country.

A case winding its way through Montana’s courts illustrates the challenges of enacting innovative policies to address the nation’s housing crisis. In Montanans Against Irresponsible Densification v. State, an association of homeowners who favor single-family residences is claiming laws that increase the number of people able to live in a geographic space are unconstitutional. This month, a state trial judge largely rejected the claims; an appeal is likely.

The scarcity of affordable housing — a problem in all 50 states — is particularly acute in Montana. The median home sales price in the state increased 90 percent between 2018 and 2023, from $266,473 to $505,419. Median household income, meanwhile, rose by only 28 percent over those five years. Montana is the least affordable state in the country for housing, according to the National Association of Realtors.

How to bring down housing costs and increase availability is the subject of fierce debate among scholars and policymakers. One strategy is densification: finding ways for more people to live in the same amount of space, particularly in less dense areas like those currently zoned exclusively for single-family residential housing.

Montana lawmakers in 2023 passed a suite of bills — dubbed the “Montana Miracle”— aimed at doing just that. The legislation included the Land Use Planning Act, the 53-page Senate Bill 382 that required various changes to local planning and zoning processes. Another law, Senate Bill 323, required that municipalities of a certain population allow duplexes in single-family zones. A third, Senate Bill 245, required larger towns to allow “mixed use” and “multiple unit” dwellings in commercial areas. And Senate Bill 528 required all cities to allow “accessory dwelling units” — think garage apartments or granny flats — in single-family zones. That bill expressly disclaimed any interference with restrictive covenants prohibiting such structures.

This attempt to increase housing in Montana’s towns irked some homeowners. Montanans Against Irresponsible Densification, or MAID, an organization of homeowners devoted to maintaining certain residential areas as single-family residences zones, quickly challenged the bills under the state and federal constitutions. It sought a declaratory judgment that if the bills were applied “to displace or supersede” more restrictive covenants (recognizing that the statutory text expressly disclaimed any interference with such covenants) it would run afoul of both the state and federal contracts clauses.

It also brought a state equal protection claim premised on the differential treatment in the legislation for properties burdened by restrictive covenants and properties without such covenants, arguing this distinction was so arbitrary as to fail even the lowest tier of scrutiny. It further argued that the laws violated its members’ rights to a clean and healthful environment; to seek safety, health and happiness; and to protect their property — all encompassed by the state due process clause. It claimed the changes to planning processes in the Land Use Planning Act violated Montanans’ state constitutional right to participate in policymaking and right to know about state governmental activities by “front-loading” public participation, as opposed to allowing project-by-project input. Finally, it argued that the legislation unconstitutionally displaced local power over land use.

Senate Bills 323 and 528 — allowing duplexes and accessory dwelling units — were scheduled to take effect on January 1, 2024. On December 19, 2023, four days after filing its initial complaint, MAID sought a preliminary injunction halting these two bills, and on December 29, the trial court granted it, finding that the laws posed a likelihood of irreparable harm to MAID because once January hit, members of the plaintiff association “could wake up one morning to find that, without any notice, a new duplex or [accessory dwelling unit]” had been erected nearby. According to an affidavit submitted by a homeowner, such a change would negatively impact both property and “moral, aesthetic neighborhood values.”

Last fall, the Montana Supreme Court unanimously reversed the lower court’s injunction, holding that MAID had “offered only generalized fears and supposition about the potential effects” of the laws. The only evidence of harm MAID submitted, the court said, was the affidavit “alluding to ‘the possibility’ of finding ‘a multi-unit building or a duplex, or an accessory dwelling unit’ going up next door.” Given this “thin evidence of imminent harm,” the high court held, the district court’s injunction was an abuse of its discretion. The ruling meant the two enjoined laws immediately went into effect. Meanwhile, litigation against all four pieces of legislation continued in the lower court.

This month, the same lower court judge who issued the injunction upheld in full all the laws except the Land Use Planning Act, which he found did not adequately preserve the public’s constitutional right to participate in land-use decisions. He also declared the laws could not displace more restrictive homeowner covenants.

The assertion that any interactions between state legislation and restrictive covenants would violate the state and federal contracts clauses is a lurking puzzle about which I have written at length. And a declaratory judgment that the legislation does not reach single-family restrictive covenants is particularly interesting. The accessory dwelling unit bill on its face disclaimed affecting single-family covenants, and the state argued that in any event, the applicability of any given covenant must be litigated individually (to see if there is some reason — like waiver — that it may not be enforced). There is something odd about granting a declaratory judgment that a statute does not apply to a category of things it facially excludes.

Some of the judge’s other conclusions this month were less interesting. The rejection of the equal protection claim, for example, struck me as obviously correct. MAID’s suggestion that legislatures cannot draw a distinction between property under restrictive covenants and property without them was, to put it lightly, nonsensical. For one thing, even if these properties are alike because of geographic proximity, they are differentially contractually burdened. And, as the Institute for Justice and local housing non-profit Shelter WF pointed out in their separate amicus briefs before the state supreme court, nothing prohibits those living on land without a single-family restrictive covenants from agreeing on new covenants with their neighbors that would prohibit accessory dwelling units and duplexes.

The argument only grows more bizarre if one takes the contract clause claim seriously: If the state cannot interfere with restrictive covenants, and it cannot differentially treat properties under and without covenants, then there would seem to be either a contract clause issue or an equal protection problem as to every property in an area each time a state legislates on a topic that has been the subject of a covenant. Let’s say that my neighbor and I entered a covenant obligating us both to plant elm trees at our border. The state determines elm trees are diseased and bans them from being planted except where required by a restrictive covenant — to avoid the contract clause problem. Following MAID’s reasoning, could our neighbor across the street now say that there is an equal protection problem because the law allowed elm trees on our side of the street but not hers?

The case has attracted a great deal of attention — and elicited strong emotion — in Montana and beyond. Lawyers from the Pacific Legal Foundation and the Montana League of Cities and Towns joined the state in defending the legislation. The appeal of the injunction garnered over half dozen amicus briefs, including from the state legislature, the Institute for Justice, and a variety of local pro- and anti-density organizations. There was some obvious bad blood among the parties and amici beyond the bare policy disagreements. Many pages of briefing before the state’s highest court, for example, discussed whether the plaintiff engaged in “gamesmanship” in seeking emergency relief over the Christmas holiday. The plaintiff’s lawyer characterized the legislature’s amicus brief as “garden-variety comments on separation of powers at sort of a high-school level.” And the state’s opening brief noted that the plaintiff supports one of its arguments with “a 33-year-old law review authored by its own counsel.”

While most challenges to zoning reform to date have been procedural — with some success — the Montana case is a good window into potential substantive fights ahead.

Maureen (Molly) E. Brady is the Louis D. Brandeis Professor of Law at Harvard Law School.

Suggested Citation: Maureen E. Brady, Montana’s Housing Crisis Fix Survives Constitutional Challenge, Sᴛᴀᴛᴇ Cᴏᴜʀᴛ Rᴇᴘᴏʀᴛ (Mar. 19, 2025), https://statecourtreport.org/our-work/analysis-opinion/montanas-housing-crisis-fix-survives-constitutional-challenge