By Jack Reaney SENIOR EDITOR
In the May 6 mail-in election, registered Big Sky voters will decide whether to authorize Resort Tax to take out long-term debt to fund the Cold Smoke neighborhood.
Cold Smoke, a proposed development led by the nonprofit Big Sky Community Housing Trust, is planned to include 264 apartments and 125 single-family homes, all deed-restricted with a mix of rent and ownership opportunities.
Cold Smoke would be “reserved exclusively for Big Sky’s workforce and their families, regardless of their employer,” according to a BSCHT press release associated with the Livable Big Sky campaign.
If voters approve, BSRAD will bond up to $60 million for the project—up to $15 million for horizontal infrastructure, and up to $45 million to acquire the near-100-acre project site from Lone Mountain Land Company. Recently, the passage of Senate Bill 172 added flexibility for resort tax communities by allowing “1% for infrastructure” collections to fund workforce housing projects such as Cold Smoke.
“[SB 172] allows us to leverage resort tax to make a large investment in land without having any impact at all on annual grant collectors,” David O’Connor, executive director of the housing trust, said in a previous interview with EBS. “Because the 1% is completely separate from the 3%.”
O’Connor believes Cold Smoke will be an important step toward addressing local housing needs. He answered questions on a panel at an April 1 voter education event, Ballots and Brews with Explore Big Sky.
The full event, including presentations for each ballot initiative, can be viewed on YouTube.
Explore Big Sky: What are the biggest challenges you’re finding in educating voters for this upcoming local election.
David O’Connor: I think first and foremost, the misperception that it will raise property taxes… [that] if they vote for it, they’ll have to decide, is that something their family budgets can handle.
I think, for the housing trust specifically, the acquisition of the land has been probably a bigger challenge. The value… it’s [potentially] the biggest single Resort Tax spend we’ve ever made. And I think that’s making people pause, as well it should. It’s a significant amount of money, and you should be concerned about that.
My best answer to that is, I didn’t value that myself. I went and asked folks with licences and that appraise within this community very regularly. So that’s where we came up with that number.
EBS: Can you tell us more about the missing middle? What does that term mean… I also want you to provide some color to why, in Big Sky, does the middle extend up to an income of more than $230,000 to be able to afford market rate housing?
DOC: Income levels are averages that are issued by county. So there’s a Gallatin County average income that’s issued every year, for every county in the country. 100% of area median income, for a household of two in Gallatin County for 2024, is about $87,000.
… If you think of a whole spectrum across all Big Sky paychecks, right, there’s a low end, a high end, and a middle. And the middle part is really where we don’t have a lot to offer… There’s this thing that you may be familiar with, we call ‘the Big Sky Boogie,’ it’s when you move seven times in two years. Some of us laugh, and some others say, ‘we live that. We live that every day.’ and that causes tremendous amounts of stress, and uncertainty, and all sorts of negative impacts that… kind of manifest throughout the community.
And really, this is the middle of our workforce. This is kind of the core. These are the folks that are here full-time, year-round, building our businesses, building our community… So that’s really what we think of as that ‘missing middle.’ In this community, at the beginning end of the income stream, [it’s] probably employer-attached housing, and that’s your dorms … and we recognize the importance of those… that’s not what we do… and at the other end, more power to you, if you’ve been so successful and you’re career is taking off and you’re able to buy a home or a condo, that’s great—system works.
It’s everybody in the middle, in between, for whom it’s not working, and I think we’re all paying the price for that.
EBS: Great. And one point of confusion that I think we’ve heard is regarding who will be eligible to live in Cold Smoke, whether that’s apartments or homes—I think some people maybe think it’s related to your employer… Can you just clarify what would make you eligible to live in Cold Smoke?
Editor’s note: The specific eligibility guidelines are visible on the housing trust website, stating that Cold Smoke is restricted to any “full-time member of Big Sky’s workforce, regardless of their employer,” while additional details vary between rent and ownership.
DOC: Sure. We don’t have a business license, or a city limits—as I think we’re all keenly aware—so we need to define, ‘what is a Big Sky business?’ … so we use [Resort Tax registration] as a convenient definition of, ‘what is a Big Sky business?’
If you are drawing a full-time paycheck … I think it’s 1,580 hours a year, that allows for full-time employment with two months layoff to allow for seasonality, that will define you as a full-time employee.
If you have worked for a Big Sky business for a number of years, and it varies by project, and are now retired, you count as workforce.
EBS: One more thing I’m hearing in the community, and this one’s a point of tension… Roughly $45 million purchase from Lone Mountain Land Company certainly has people talking around town. How are you addressing that tension as you go and promote this bond?
DOC: Sure, and there’s a couple different things there. Certainly there’s trepidation with purchasing a very large asset from a company that we all perceive to be pretty well-heeled already.
And the other part of that, I think, is, what is the intrinsic value of that land? We are a community of real estate agents and developers, there’s certainly lots of familiarity with how land is valued… for me, as I sort of said, I try to sidestep that. I am not a real estate agent, or a developer, or a broker, or any of those things. And I don’t have a strong sense of the intrinsic value of the land. But much as I would do with my own home, if I wanted to sell, or I wanted to go buy another one, I go to an appraiser, and lean really heavily on what that [appraisal] is. And that is not just a guy driving by, and going, ‘eh, I think it’s $45 million.’ There is a significant amount of pretty complex math it takes into account—comparable sales over previous times, and lots and lots of other data points that may factor into that.
… In terms of the seller itself, I mean, the first thing I have to acknowledge is, Lone Mountain Land has been a fantastic partner of the housing trust. We purchased the land under RiverView from them at about a 12% discount off appraisal, and then we co-developed that site together… They’ve been proven partners of ours. I certainly do recognize that there’s a lot of opinions about how development happens, and the pace that it happens… I’m kind of trying to stay out of that a little bit. Because to me, it’s all about the checklist, and the appraised value. And if the United Way owns it, great. If Montana State University owns it, great.
EBS: So $220 million, roughly, in total. Just $60 from Resort Tax—although I say ‘just 60 million’ as if it’s not a huge number—where does that remaining $160 million come from?
DOC: Sure, from that point again, we sort of follow a model that looks like any other construction project, we’re just trying to remove those first two layers—of the land, and the infrastructure—from that.
Once we get past that, the biggest part of the financing to go vertical would be commercial financing. We’ve got good partnerships with philanthropy… we anticipate pretty robust participation by philanthropy as well.
While there are not really government sources in the form of grants, or things like that, there are some low-interest loans that Montana has available, that we’ll be looking to avail as well. So, at that point, we’re really operating a lot more like a traditional construction project, and money costs money, so we’re looking for the least expensive [funding sources] as we can.
Banks will be, by far, the majority of that. Banks, plus phased construction, which allows you to use the proceeds from the sales of the initial units to then finance the construction to build subsequent units.
EBS (audience question): What amount will Boyne, CrossHarbor, Lone Mountain Land Company, Yellowstone Club, Spanish Peaks Club, One&Only/Moonlight, contribute to Cold Smoke?
DOC: Sure, those are all good questions. I don’t have specific asks or needs of employers. My worry with that is if an employer contributes a significant amount into this project, we’re going to end up right back where we started with employer-attached housing.
That contribution is going to come with an expectation that there’s some reservation, or provision of housing, for a certain amount of their employees. And for me, that’s exactly what I’m trying to get away from. To avoid that.
So while we are extremely well-supported by… the Yellowstone Club, and Lone Mountain Land, along with Resort Tax pretty much funded the down payment assistance program for MeadowView, for example. Lone Mountain [Land Company] is our single largest cash contributor every year… You probably just saw Boyne auctioned off those Explorer lift chairs, and the housing trust was a beneficiary of that.
So we feel pretty well supported by them. I’m pretty reluctant to tie that directly to product, because I don’t want to imply that I’m going to give something I’m not.
EBS: (audience question): … Can you speak to the quality of homes that we are inadvertently supporting with this bond?
DOC: Sure, that’s not an uncommon question with any project that looks like this in any community, and I think with very good reason.
So there are a couple regulatory layers of protection built in, in terms of the county approvals and subdivision, but other than that, we’re in a small-ish community. We will build the highest quality that we can, at the affordability level that we’re trying to sell for.
I would love to be able to build something that looks like a Spanish Peaks home or something like that, and sell it for $400,000, and I don’t think I will be able to pull that off. But the best I can say at this point—we are premature for designs, so I don’t have specific answers for you about materials.
[The housing trust doesn’t] even own the land yet, and I’m presumptuous by even saying ‘yet,’ I guess. So we’re just not quite there yet in the process. We’ve got over a year’s worth of infrastructure to install as well. But these are issues that are extremely important to us. I’ve lived here 35 years. I have no desire, personally, to see things diminish from the community that we’ve all worked so hard to build.
So, unfortunately, I don’t have a super definitive answer today. There will be lots of eyes looking on what gets built there… Again, I’ve been here a long time, and the last thing I personally want to do is force something on the community it doesn’t want, because I plan on living here the rest of my life. And that being said, we will do the absolute best we can with the funds that we’ve got.
EBS: (audience question): And a quick two-parter for you. Of the 125 homes, are they deed-restricted. And can they be rented by owners?
DOC: So, anything that the housing trust does is gonna be deed restricted. Anything that uses the housing-specific water, the housing trust wouldn’t endorse use of that water without being deed restricted. So that’s the world we live in, and everything that we do has some layer of legal protection on it.
It varies a little bit by project, because we’re trying to build that ladder again, so there’s different requirements for different goals. But there is a legal structure under everything, and there will be, that we do.
Would they be able to be rented? Easy answer: short-term rented, absolutely not, under no circumstances ever… Would it be able to be rented long-term? Like, if you own it, would you be able to rent that out to another full-time, year-round employee? Probably not, those rules again, we haven’t really written that yet because it’s just a little bit premature.
In MeadowView, for example, the owner must reside in MeadowView. They are allowed to rent out another bedroom, as long as they are still qualifying workforce. But the owner must reside.
Our Good Deeds program, we do allow an owner to own a property and rent it, as long as it’s to workforce, not short-term, minimum one-year lease, all that stuff.
But my guess… is that we’ll probably run a lot like MeadowView.
Editor’s note: The following questions are audience submissions that EBS asked after the Ballots and Brews event. Becky Brockie, program and communications director with the housing trust, provided written answers.
EBS (audience question): What do wetlands studies indicate about the land that would be used for the Cold Smoke development?
Becky Brockie: Gallatin County will require an environmental assessment and probable impacts as part of its subdivision application and approval process; the county will require the development to adjust accordingly.
EBS (audience question): What is the expected impact of Cold Smoke on the Big Sky Water and Sewer District? Have SFEs been allocated for this development? I am concerned about our water supply.
BB: Big Sky County Water and Sewer District previously set aside the SFEs that the housing trust intends to use for the Cold Smoke neighborhood. Voters required this of the district in 2020 when they elected to set aside 600 SFEs of the new treatment plant’s capacity to develop new workforce housing.
The Big Sky County Water and Sewer District will also require the housing trust to own the land before granting it the use of these SFEs. If the bond fails, the project is ineligible for the SFEs because the housing trust will not have funds to purchase the parcel.
EBS (audience question): How will groundwater pumped out of the Meadow Village aquifer impact the health of Big Sky’s streams?
BB: Annexation into the Big Sky Water and Sewer District is necessary for the Cold Smoke neighborhood. The water and sewer district has authority over both water supply and wastewater.
EBS (audience question): How current are the three appraisals and what were each of the appraisals’ final dollar amount?
BB: Three different independent appraisers with experience in Big Sky assessed the value of the land. Resort Tax received its appraisal of $44.7 million in March 2025. The housing trust received its appraisal in November 2024 for $45 million. LMLC received its appraisal in June 2024 for $48 million.
EBS (audience question): Why 125 homes versus more apartments—denser and away from the river?
BB: The 2023 Housing Needs Assessment demonstrates that Big Sky needs 598 apartments to catch up with its current deficit. Additional rental inventory will stabilize the market and help the many locals who face homelessness every lease renewal cycle.
The 2023 assessment also shows a need for 433 affordable homes for purchase. The housing trust hopes to address both needs with the Cold Smoke neighborhood.
EBS (audience question): What other parcels, if any, were considered alongside the LMLC parcel? Were multiple smaller parcels considered as an option?
BB: The housing trust has been tracking about 20 parcels in various sizes around the community for the potential creation of year-round housing for locals. While continuously analyzing larger parcels, the housing trust successfully built on two smaller plots, which did not require bonding: MeadowView and RiverView, for a total of 78 homes.
For larger-scale creation of homes for locals, the housing trust seeks various criteria: proximity to the water and sewer district, developability, access to services and amenities, and independent valuation, among other factors. The Cold Smoke parcel offers the easiest access to the water and sewer district while also achieving the greatest number of the other criteria.
Regardless of the outcome of the May 6 vote, the housing trust will continue to pursue access to projects on smaller parcels, such as the partnership they hope to complete with the Lone Peak Veterinary Hospital, with groundbreaking in 2025 on five new apartments in Town Center. BSCHT can pursue small-scale projects with existing funding sources.
EBS (audience question): What impacts would the development have on the already heavily-trafficked MT 64 (Lone Mountain Trail)? What plans are in place to ensure that the road remains passable as future Cold Smoke residents access MT Highway 64?
DOC: The current Community Housing Needs Assessment shows a deficit of 1,100 below-market homes to catch up with the needs of the current workforce. The Cold Smoke neighborhood would address the need presented by current jobs as opposed to future growth.
Therefore, it is expected that the majority of Cold Smoke residents are already a part of the overall traffic pattern in Big Sky and along U.S. 191. As more locals live near where they work, while the Cold Smoke entry point will impact traffic along MT 64, commuter traffic along U.S. 191 could be reduced.
Jen Clancey contributed reporting to this Q&A.
