Martin Kidston/Missoula Current

A year after acquiring a low-income housing complex, members of the Missoula City Council this week approved an agreement with BlueLine Development to manage the property while exploring potential redevelopment opportunities.

The city bought the Bridge Apartments, located on West Broadway, last September from Western Montana Mental Health for $2.1 million. The property was poised to go on the open market, raising concerns that its 20 low-income tenants would be displaced.

“The mayor and staff pursued acquisition based on the very real reality that this property would transition to market rentals, and these tenants would be at risk of being displaced in a very tight rental market, increasing the chances that they would end up in our shelter system or on the street,” said Eran Pehan, director of the city's office of Community Planning, Development and Innovation.

After the city purchased the property, it partnered with Zillastate realty to provide temporary management. It also partnered with the Missoula Housing Authority to place Housing Choice Vouchers on the site for all eligible households.

The vouchers are provided at the federal level and ensure each household never pays more than 30% of its adjusted gross income. Every tenant pays a different rental amount based upon that calculation, Pehan said.

With the vouchers in place, the city issued a request for proposals seeking a long-term property manager that could purchase the site at a discounted rate and ensure the units remained reserved as low-income housing.

But in today's market, Pehan said that wasn't possible. The city spoke with six different affordable housing managers, and all of them passed on the project, saying they couldn't make it work financially.

“Based on the current cost environment, all of them articulated to us that they couldn't submit a competitive proposal, so they declined to submit anything at all,” Pehan said. “The unpredictability of managing the differed maintenance, pared with the revenues needed to keep the property as affordable housing didn't pencil.”

While the original plan called for the city to resell the property as affordable housing, the city was forced to change course and has partnered with BlueLine Development on a plan that achieves the same outcome, Pehan said.

The developer, who is also behind the Trinity and Villagio affordable housing projects in Missoula, will manage the Bridge Apartments while the city retains ownership for the next five years.

During that time, both BlueLine and the city will explore the ways to redevelop the site.

“BlueLine has proven expertise with Low Income Housing Tax Credits and the pairing and leveraging of those federal sources with private financing,” Pehan said. “That will be important as we outline and explore the redevelopment of this site.”

Pehan said that could include a basic update to the property, which was built in 1997, or a total redevelopment project that would create more income restricted housing, as well as a community space, which is currently lacking.

If redevelopment emerges as an option, Pehan said the tenants would be relocated to a unit of their choosing during the process and retain their housing voucher. They would also have the option of moving back in once the work is done.

Members of the City Council approved the agreement on a unanimous vote.

“I know this isn't quite what was envisioned when this was purchased, but I appreciate the flexibility in coming up with something that allows us to maintain these units as affordable units in Missoula,” said council member Heidi West. “It's a plan that really reflects the challenges that many developers are having in our community, especially those developing affordable units.”