After more than a year of work, a steering committee plans to release its draft recommendations to the city next month, detailing policies that could expand Missoula’s housing stock and begin to tip the scale on pricing.
This week, Eran Pehan of the city’s Office of Housing and Community Development offered members of the Consolidated Planning Board a sneak peek of those recommendations and fielded broader questions on one issue in particular, that being regulations and city code.
“The city creates more checklists that take a lot of time and money,” said board member Andy Mefford. “We’re up to a scroll of checklists to do anything in this community anymore. It adds time, money and complexity. We continue to mound the regulations on and every time we mound them up, it adds costs, and it all compounds pretty significantly.”
Pehan didn’t disagree and said the working group assigned to review regulations and code took a deep dive into the issue, meeting with nearly two-dozen private developers for feedback on the housing policy’s emerging recommendations.
The results will be released next month when the steering committee releases its draft report to the public, and members of the development community will be watching.
“It is a focus of our recommendations on regulation and code to remove unnecessary regulations that do increase costs, and to determine how we can incentivize affordability,” Pehan said.
“We’re looking at both ways to incentivize the market by removing unnecessary regulatory barriers and providing some infrastructure support, and also, how we can address a more targeted population that the market typically won’t touch.”
The challenges facing Missoula’s housing market are now clear, with home and rental prices rising faster than local incomes. If a solution isn’t found, economists have warned, the issue could cripple Missoula’s larger economy and see qualified workers leave for more affordable communities.
As Pehan said, housing touches every element of society across most income levels.
“The factors that lead to a constrained housing market are often complex,” Pehan said. “Rental prices continue to increase, but wages for low- and middle-income households have not. This has forced more families to spend large portions of their annual income on housing, leaving less money for needs such as child care, food, health care and other needs.”
Pehan said 69 percent of Missoula’s renters earning less than $35,000 a year are considered cost burdened, meaning they pay more than 30 percent of their income on housing. Put another way, a single renter earning $17 an hour struggles to pay their rent.
What’s more, she said, a family must earn more than $70,000 a year to buy a median-priced home in Missoula. But the current median family income is just $66,000. And while families close to that income may still qualify for a $300,000 home – the median price – those homes aren’t easy to come by.
“We still have those homes today, but unless we take some action, we won’t have those homes in the foreseeable future,” Pehan said. “Tighter standards for mortgage loans and high home prices have made it impossible for many people to buy homes, causing more people to remain renters, further clogging and creating low vacancy rates among our rental market.”
To address the range of challenges, several focus groups began working last year on different policy measures, including education and outreach, innovation, funding and revenue, and regulations and code.
It was the latter issue that drew most of the questions from the Planning Board, including what board member Jamie Hoffman suggested was the city’s interference with the Legislature’s intent when it permitted Townhome Exemption Developments.
One such development, Hillview Crossing, a 68-unit development in 34 buildings, has been mired in a City Council committee since December. No hearing date has been set to pick up discussions.
“We haven’t seen a lot of townhome developments as a result in this community,” said Hoffman. “There’s things that could be done. It’s low-hanging fruit and would be easy to do. But politically, it just doesn’t seem to want to happen, and that’s regretful.”
While the committee explores policy actions that could roll back some costly regulations, Pehan said, it’s also exploring ideas around funding and revenue. That could either incentivize private projects to help hit certain price points, or create public investment in affordable housing projects.
Early recommendations range from creating a housing trust fund to making targeted use of tax increment financing. They could also include a social impact bond, a voter-approved initiative, or larger private investment.
“That’s a larger conversation the community really needs to have, how we see ourselves investing in our housing goals,” Pehan said. “We will be presenting an incentive framework that would incentivize development of housing at different price points. To incentivize that, we hope to be able to offer a suite of tools or subsidies to developers to assist them in meeting those price points.”
While a draft of the policy was expected this month or last, Pehan said it will come in April. Added time was needed to canvas certain neighborhoods for feedback and to complete elements of the work.
“We had hoped to have a draft policy released last month, but we decided to slow down and extend our timeline so we could engage in those canvasing efforts and a public process that was more robust and inclusive than the standard city process,” she said.
“There’s tremendous urgency around this work, but we’re deeply committed to doing it right, and we feel like having that inclusive process will ensure that we do that.”