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January 1994

State Roundups
Montana

High-tech clusters spur growth in western Montana

With the state's natural resources industries struggling in recent years, western Montana has gained some respite from a relatively new sector: technology-based businesses.

Most of those companies are clustered in just a few cities, and local officials say that their impact is significant. The university towns of Bozeman and Missoula—along with Kalispell, Butte, Great Falls and Helena—are the main beneficiaries of this technological growth. For example, 20 new technology-based companies in Bozeman (population, 22,600) since the late 1980s has greatly improved that city's economic prospects, says Dixie Swenson, executive director of the Gallatin Development Corp.

In Bozeman, about eight companies are engaged in research or production of laser optic equipment, and Rebecca Mahurin, director of intellectual property at Montana State University (MSU), Bozeman, says much of that work is based on research that originated at the university. Often such research is sponsored by a business, which then retains the first option to license the product, Mahurin says.

There are also about 12 bio-tech companies in the Bozeman area, conducting research for products in the food, health care, pharmaceutical and environmental industries. Like the laser optics industry, many of these companies have benefited from MSU's technology transfer program, according to Mahurin. "The root of the expertise is found at the university," she says.

Similar expertise exists in Missoula at the Montana Biotechnology Center, which is housed at the University of Montana and funded by the Montana Science and Technology Alliance, a state agency that provides start-up capital for technology-based businesses. Ron Klaphake, executive director of the Missoula Economic Development Corp., recently produced a directory of biotech resources that describes the state's public and private research and development efforts. He says that the greater awareness that industry participants have of the state's entire resources, the larger the industry will grow.

While part of Klaphake's job is to lure companies to the Missoula area, he says that the emergence of the technology sector (Missoula also has a growing software engineering industry) has occurred largely on its own. Development officials from the state and other communities agree: Montana is a nice place to live, says Jon Noel, director of Montana's Department of Commerce, with a strong university system, qualified labor force and attractive natural amenities. Besides, he adds, there is no need for many of the new companies to locate near a particular industrial or transportation base; many new products are information-based and are transferrable via electronic means, and others—like biological products or software—are quickly shipped by plane.

The president of a Missoula biotech company, Nurture Inc., which employs 13 at its research center, echoes those ideas: "Nurture Inc. is located in Montana for a variety of significant reasons, paramount among which are low cost of research and development and ready access to the resources of the University of Montana system," writes Richard Potter in Klaphake's biotech directory, Montana's Biotech Connection.

—David Fettig

Housing demands stretch supply

During the summer people lived in campgrounds for lack of affordable housing in Bozeman, and some University of Montana students camped out in lounges and dorm basements until housing could be found for them in Missoula last fall.

Housing stock is in short supply across Montana: Available rental housing stands at less than 1 percent in Bozeman and in Billings, and in Missoula the overall vacancy rate is less than 2 percent.

The current real estate boom is a complete turnaround for some communities that experienced a glut of housing in the 1980s. There was a housing surplus in Missoula as recent as 1989, according to Nancy Leifer, coordinator of the Missoula Housing Task Force. In Billings, "the '80s were pretty devastating" says Lucy Brown, executive director of the Housing Authority of Billings. "The market has miraculously reversed itself in four years," Brown says.

Still there is uncertainty about the future. Brown says Billings' lenders are a little reticent to invest in rental housing projects because they were stung in the '80s, and the future rental market is hard to assess.

The rental housing shortage is fed by an overall scarcity of affordable single-family homes. In Bozeman the average price of a single- family home is $118,000, but the median income in the city is $27,000. "That makes coming up with a down payment near impossible," says James Goehrung, neighborhood coordinator and grants person for Bozeman. In addition, land costs are high in Bozeman: An average residential lot runs from $35,000 to $50,000.

"People are looking for everything in Billings," Brown says. Property values have increased dramatically, and as a result, some single-family home owners who previously rented their properties are selling them. Brown says this cuts out a source of rental housing for large families.

The single-family home picture is worse than the short supply of rental housing in Missoula, Leifer says. "My sense of what's happening in Missoula is that it's becoming the Boulder, Colo., of the '90s," Leifer says. In the price range of $83,000 and below, fewer than 20 units appeared in the multiple listing in August. According to Leifer, based on population and income figures, the city needs 400 homes in that price range to meet the housing demand.

All three cities have task forces to cope with their new-found popularity. The Bozeman areawide housing task force is attempting to project future housing needs for the city's growing and changing population. In the meantime, two low- and moderate-income projects are planned: 50 units of owner-occupied and rental housing, and a coalition of local churches plans to build a nine-unit apartment complex.

In Billings two private multi-family housing projects, which will create 180 additional units, are on the drawing board. The Housing Authority is also looking at developing a smaller complex.

The Missoula task force was formed two years ago after University of Montana students began the school year living in tents on the university mall. Since then the task force has spurred the development of 450 new units of rental housing. About 220 units are university housing to accommodate the growing student population, which has increased by at least 1,000 since 1989, according to Leifer. And a non-profit community group is building a mobile home court run as a cooperative—the first of its kind in Montana.

At a recent statewide housing conference, Leifer says, reports of housing shortages came not just from the cities, but from small towns as well. "We've been discovered here," Goehrung says.

—Kathy Cobb