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A nonprofit that builds and maintains affordable housing in Missoula plans to apply for state tax credits to rehabilitate Creekside Apartments, a facility that plays a central role in the city's housing portfolio.

Heather McMilin, housing development director with Homeword, said the property is seeing a number of issues arise simultaneously, from failing roofing to deteriorating infrastructure.

She placed the estimated cost of repairs at around $9 million.

“What we're finding now is that the vinyl siding is failing. The roof is having shingles blown off. People are putting foil insulation in their windows because they're not designed for today's energy codes,” McMilin said. “We need to build durably from the start so things last longer.”

Creekside includes 14 buildings containing 161 living units. It currently houses around 300 individuals and is open to households earning at or below 60% of the area median income, which is currently $48,900 for a family of four.

The project was built using Low Income Tax Credits in 1996 and the developer took steps toward efficiency in an effort to reduce costs. The period of affordability was set to expire in 2026 and the owner had considered placing the property on the open market at that point in time.

The proposition sent off alarm bells in the affordable housing community. The threat of displacing so many families and losing a key piece of the city's housing inventory prompted Homeword and the city to secure a conduit bond to purchase the property, which it did in 2017 for roughly $12 million.

“We assessed the property then and it was at risk of going to market,” McMilin said. “We knew a lot of the building materials and building systems would be close to the end of their useful life. We knew we'd have to rehab. We were keenly aware this was going to be an issue.”

Now, McMilin said, the time for “wholesale” rehabilitation has come. Homeword hopes to secure a combination of both 4% and 9% tax credits to complete the work.

“Now that costs are so high, we're looking at over $9 million in work. We're talking about wholesale replacement of roofs, siding, windows, water heaters, mechanical units – all those things that are coming to a crown in which they're failing at the same time.”

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Creekside isn't the only affordable housing property in Homeword's portfolio, and other projects will need similar repairs at some point in time. Some properties were built with durable materials are expected to last longer, but others have a shorter lifespan and will cost money to repair.

The issues could prompt a deeper look into how affordable housing projects are rehabilitated and how Homeword arranges its budget. While the up-front costs of durable materials may be more, the savings will come over time through reduced energy use, less waste and a longer lifespan.

“As a community, we need to be intentional about not reacting, but being proactive in managing our affordable housing portfolio,” McMilin said. “There is a point in time where we need to think about infusing money to maintain that affordability. These projects are critical. We can't lose any of them.”

While Homeword was successful in purchasing Creekside in 2017 and keeping the units affordable, those days have since passed for other properties, McMilin said.

The organization, along with others, have attempted to purchase other properties around the state but haven't been successful. The market has changed, she said, and it currently tilts in favor of market-rate prices.

“If this had happened in the last two years, we would never have competed. We've gone after six different projects around the state. We've competed against market-rate developers, maxed our debt and tried to go as far as we could to acquire, and we're still coming up short by $3 million to $5 million,” McMilin said. “Outside investors are buying these properties, knowing they can hold them, take a loss for 3 to 5 years, then take them to market for market-rate prices.”

Given the state's rapidly rising housing costs and its lack of affordable housing, McMilan said Creekside's residents would be hard pressed to find another place to live if they were to lose their current housing.

Homeword will learn in October if its tax credit applications are successful. If they are, the organization plans to replace Creekside's vinyl siding with Hardie Board, its tar roofing with metal to withstand the Hellgate wind, and more efficient windows, among other things.

“Homeword develops with sustainable methods in construction. It shows over time with less maintenance,” said City Council member Mirtha Becerra, who once served as a Homeword board member. “Not having to use those funds allows other developments to use those funds. I appreciate the methods used by Homeword.”

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