The success or failure of a second grant application for portions of the Mullan project in west Missoula could implicate future development costs, and that could impact the area’s price of housing, city officials said Wednesday.
Missoula County last year sought $23 million in a federal BUILD grant to complete a sizable infrastructure project west of Reserve Street in anticipation of future growth. It received $13 million and has submitted a second application seeking the remaining $10 million.
As the application makes its way through Washington, D.C., city and county officials are preparing a number of funding scenarios – each of them based upon the outcome of the new grant.
“If we don’t get additional grant money, we still have to pursue those other funding mechanisms,” said Jeremy Keene, director of Public Works for the city. “It may be a combination of these things. It’s a long-term strategy.”
Earlier this month, a special committee ranked 10 projects included in the BUILD grant on a number of factors, from public safety and traffic to shovel readiness and economic development.
With $13 million on hand, not all projects will be funded.
“We just got our 20% design estimates last week,” said Keene. “We’re working through those to understand where our costs are on this. Tentatively what I think we’re looking at right now is that these first four projects will be funded, and then we have a couple on the bubble.”
Projects that will likely see funding in the initial round include the construction of Mary Jane Boulevard South and North, Tipperary Way Trail and George Elmer Drive South. The four projects scored highest on the list prepared by the committee.
The next two, including England Boulevard and Mullan Trail, remain on the bubble, Keene said. The remaining four projects – George Elmer Drive North, Flynn Lane, Milwaukee Trail and the restoration of Grant Creek are currently unfunded.
“England Boulevard and Mullan Trail, based upon the costs we saw last week, we may or may not be able to construct in the first round,” Keene told members of the City Council on Wednesday. “We’re still going to be refining those costs over the next few months.”
Without federal funding, the city would typically look to developers to fund roads, trails and utilities as development takes place. Keene said the city has the option of applying development fees, or impact fees, to help construct infrastructure that benefits a wide geographical region.
But that adds expenses to a project and plays a factor in the final cost of housing.
“In a typical situation, development is going to pay for all that infrastructure, and they’d also pay the impact fees and utility fees that are typically charged to development,” Keene said. “But with the $23 million grant, our hope is that we’d be able to build everything. That’s helping reduce the cost of housing and development in the area, and it’s facilitating all that infrastructure that’s required for development.”
Keene said the city could also finance the utilities in the area and construct them ahead of any planned development. As building takes place, the city would charge the impact and utility fees, and collect a late-comers fee as a way of recovering its investment.
With $13 million available, Keene anticipates a blended approach.
“We still think the city would finance the utilities within that portion and development would pay the regular impact fees, plus a special impact fee as a cost share to fund the remainder,” he said. “We’d take that remainder and put that into the last part of the project. Once we had enough money, we’d be able to build the rest of the project.”
But development fees could drive up the cost of housing – a fact that’s not lost on city and county officials. Keeping the fees low with the aid of federal funding is ideal.
“My concern – I’m thinking about the affordability of this area,” said council member Amber Sherrill. “How do you keep some level of affordability in there?”
While the outcome of the second grant application remains uncertain, Keene said its success could help keep the cost of development down. And because the project covers a wide area, it benefits multiple landowners and developers.
Keene believes that will create a more competitive playing field when it comes to the cost of housing.
“The hope that by getting grant money to fund this infrastructure, we’re making housing more affordable in this area,” Keene said. “It reduces the cost of development and that gets passed along. The more grant money we get, the more we reduce the cost of building all that infrastructure.”