City: Current programs will pad Affordable Housing Trust Fund

Martin Kidston

(Missoula Current) The city's efforts to boost its stock of affordable housing has expanded across a number of fronts since it created the Affordable Housing Trust Fund, but one council member wants funding to play a greater role in the city's annual budget.

Council member Daniel Carlino on Wednesday introduced a referral that would direct the city to invest $200,000 annually into the trust fund. The city currently invests $100,000 to the fund, which has helped propel a number of initiatives in recent years.

“I say we put more money toward this and get more affordable housing in Missoula,” Carlino said. “I think it needs to be more of a budget priority for the City of Missoula. This is the biggest issue in our community, but it's currently not the biggest funding priority by the city.”

The City Council established the Affordable Housing Trust Fund in 2020 as part of its housing strategy. In doing so, it recommended an annual contribution of $100,000, though funding levels very each year based on the annual municipal budget.

Carlino said increasing that allocation to $200,000 shouldn't be viewed as a tax increase. But some council members questioned that philosophy and with the budget season still open, concerns over another likely tax hike are looming large.

City officials said Wednesday that this year's budget will likely push Missoula up against its property tax limitations.

“The general fund was never intended to be the main funder of that trust fund, because the general fund has such constraints on it,” said council member Gwen Jones. “We're living in an era of very high property taxes.”

Bigger programs with greater funding potential

Carlino's referral ultimately failed on a 5-4 vote in committee, and while all council members praised the trust fund for its achievements, they said other tools implemented by the city have a greater potential to pad the fund.

As part of its housing strategy, the city in recent years has started to bank land to meet its future housing needs. By partnering with private developers, the city can request that any project built on city land includes a certain number of affordable units.

But proceeds from the sale of city-owned land must also be directed into the Affordable Housing Trust Fund, which could infuse the account with millions of dollars. If not “squandered” by the city, one council member suggest that such a large account could generate interest, feeding the fund in perpetuity.

“We have a number of other sources where we're getting closer and closer to being able to put that money in there,” said council member Amber Sherrill. “The sale of city property is going to be a big influx when that happens into the trust fund.”

Since the founding of the trust fund, the Missoula Redevelopment Agency has emerged as the fund's largest investor. It allocates roughly $1 million annually toward affordable housing each year and it recently adopted a new workforce housing program intended to feed the trust fund.

Under that program, a private developer who receives tax increment for a project that doesn't include affordable housing must direct 10% of the increment into the trust fund.

“We are making progress in getting more housing on the ground,” said Sherrill. “That's made a big difference in our community. The trust fund is just one piece of our strategy around affordable housing in this community.”

Montana James, deputy director of Community Development, said other tools are also available to the city to boost affordable housing. Among them, the city is working to reform is zoning and development codes – a process expected to incentivize affordable housing and make it easier to bring to the market.

She said federal housing funds also help, and community partners are piloting new programs.

“It makes sure we're covering the full spectrum of the subsidized need in our community, from the very low-income folks with our federal funds all the way up through the workforce housing program at MRA,” said James. “The trust fund was just the first step in that strategy.”

Carlino agreed that affordable housing was a city priority and that funding was tight. But he said that by investing an additional $100,000 into the trust fund each year, the city could demonstrate its sincerity.

“The free market is never going to make sure everyone has housing,” he said. “I understand the importance of doing code reform and allowing free-market developers to build and help build enough housing where the costs come down, but it's still going to leave people out.”