City considers sizeable affordable home development, growing housing trust fund
After hinting at the possible sale of city-owned land for a significant housing development, approval for the sale could come this week, providing what city officials are describing as the largest affordable home ownership project in Montana.
While approval moves forward and the sale closes, the city’s Office of Housing and Community Development continues to peck away at establishing an oversight committee that will ultimately direct Missoula’s new Affordable Housing Trust Fund.
Montana James said the committee should be in place this year and will work to establish bylaws, policies and other issues needed to navigate the fund.
“There’s a lot of coordination going to get applications for that body and to work through the appointment process,” James said. “We’re working into the spring to really seat that committee. That group is key to all the other programmatic work the trust fund will take on in the next year.”
The City Council approved the trust fund during last year’s budgeting cycle and provided $750,000 in seed funding to get it established. By resolution, the city is now required to provide an annual minimum contribution of $100,000.
At that rate, it would take decades for the fund to reach its $10 million goal. But other funding sources will help it grow, including federal grants and proceeds from the sale of city-owned property, which could be significant.
The city currently owns a number of prized properties, including the old library block in downtown Missoula, several blocks on West Broadway that include the Sleepy Inn and Public Works, and several acres on the MRL Triangle in the Midtown district.
It also owns 19 acres off Scott Street, which the city purchased last year for $6.5 million. The City Council is expected to authorize the mayor to approve the sale of 10 acres located on the property’s eastern half this week.
It’s there where Ravara Development LLC plans to build roughly 70 homes available to income-qualified residents. Details of that project are expected out this week.
Eran Pehan, director of Community Planning, Development and Innovation, said any sale of city-owned property will feed the Affordable Housing Trust Fund. While the price of the Scott Street sale hasn’t been listed, a city memo places it at $7.30 a square foot.
It could provide Missoula’s housing trust with a significant boost.
“That is potentially a source that may come sooner, depending on how we chose to develop city owned property like MRL Triangle, the Payne Block and Scott Street,” Pehan said. “If there’s a sale of any of those properties to a private developer, those funds would go into the affordable housing trust fund. It’s another source we anticipate on the horizon.”
James said her office is also working to align the trust fund with other revenue sources, including HOME and Community Development Block Grants. Doing so would expand the type of housing programs the city could fund, from construction to rehab and consumer education.
“The idea of connecting it to those federal funds is so we can more strategically commit funds to projects and what those funds can be used for,” James said. “The trust fund can compliment those funds and be used for projects that maybe aren’t a great fit for those federal funds.”
With housing costs rising, Missoula adopted a housing policy in 2019 in an effort to better meet Missoula’s diverse housing needs. The city identified the barriers to affordable housing as the cost of land, the lack of innovative housing models and a significant lack of inventory, among other things.
While work to reduce costly and burdensome regulations on developers is moving forward, establishing an Affordable Housing Trust Fund was also seen as a unique approach. The eventual goal is to establish a $10 million fund that can provide both grants and loans.
“There’s a calculation there in deciding what percentage goes out as grants versus loans,” said James. “The ultimate goal would be able to grant or loan on an annual basis $1 million to $3 million a year, based on our estimate for needs and for a community our size.”