Montana Supreme Court Upholds 2023 Housing Reform Laws

The Montana Supreme Court issued a unanimous ruling this week upholding the state’s 2023 housing reform package, preserving a suite of zoning changes intended to increase housing supply.

The decision resolves a legal challenge brought by a homeowner-led group against several measures that loosen single-family zoning rules and require local code updates – reforms that supporters have branded the “Montana Miracle.”

“By upholding the constitutionality of our reforms, it will help bring the American Dream into greater reach for Montanans across our state,” Gov. Greg Gianforte said in a statement.

What the laws do

Lawmakers approved the package in 2023 as Montana communities faced rising home prices and rent growth tied to rapid population gains. Key provisions include:

• Duplexes: Cities with 5,000 or more residents must allow duplexes on any lot zoned for single-family housing.
• Accessory dwelling units: The reforms expand where property owners can build ADUs and limit local design restrictions.
• Multifamily in commercial areas: Cities with more than 7,000 residents must allow multifamily housing in most commercially zoned areas.
• State-directed planning updates: A fourth bill, the Montana Land Use Planning Act (MLUPA), requires larger municipalities to update zoning codes and select from state-prescribed options to meet projected housing needs.

MLUPA also included limits on public participation in zoning decisions – a provision aimed at reducing the influence of “not in my backyard” opposition in local entitlement processes. That element became a central issue in the lawsuits.

Supporters of the reforms said the laws are designed to unwind exclusionary zoning and speed construction of smaller-scale multifamily and entry-level housing in fast-growing markets such as Bozeman, Missoula and Billings.

Local governments backed the reforms

While state pre-emption of zoning typically draws resistance from cities, the Montana League of Cities and Towns helped draft the legislation and later defended it in court.

Legal challenge and outcome

A group called Montanans Against Irresponsible Densification filed suit soon after the bills passed, targeting the duplex, ADU and MLUPA measures.

The group initially won a preliminary injunction in district court blocking the duplex and ADU laws. The Montana Supreme Court later reversed the injunction and sent the case back to the lower court.

The district court ultimately ruled in favor of the pro-housing bills but struck down MLUPA’s original public participation provisions.

Housing advocacy group Shelter WF, which joined the case on the state’s side, appealed the public participation decision alongside the League of Cities and Towns.

In 2025, lawmakers passed a bill revising the public participation language to address the district court’s concerns. Because the statute changed, the Supreme Court ruled that the group’s claims related to MLUPA’s public participation provisions are now moot and should be vacated.

What it means for builders

For builders and developers working in Montana’s growth markets, the ruling reduces legal uncertainty around a set of zoning rules that can materially expand a project pipeline — particularly smaller-scale infill.

• More by-right density on “single-family” land: The duplex requirement opens up additional lot-level yield in cities with 5,000-plus residents. That can improve residual land values on well-located parcels and make small-footprint product pencil in neighborhoods that previously allowed only one unit.
• ADUs become a repeatable infill product: With broader ADU permissions and fewer design constraints, builders can standardize ADU plans, create predictable scopes and timelines, and partner with homeowners or investors on “one lot, two (or more) revenue streams” strategies.
• Commercial-to-residential conversions and mixed-use get a tailwind: The multifamily-in-commercial-zones mandate in cities above 7,000 residents makes it easier to pursue apartments over retail, small mixed-use and workforce housing near job centers — with fewer discretionary zoning fights.
• Local code updates are no longer optional: MLUPA’s planning mandates (and the court’s action that clears the legal overhang) increase the odds that municipalities follow through on zoning code updates that accommodate projected housing needs. For builders, that should mean more consistent rules across jurisdictions and fewer one-off negotiations.
• Entitlement risk shifts, not disappears: Even with state pre-emption, projects will still face site-specific constraints — infrastructure capacity, design review (where allowed), building permits and neighborhood opposition in other forums. But the decision limits a key choke point: local zoning that categorically blocks missing-middle product.

Bottom line: The court’s ruling locks in a more permissive baseline for duplexes, ADUs and multifamily in many Montana cities, supporting faster infill starts and a broader set of feasible deal types — especially for builders focused on entry-level and workforce housing.