Trust fund would tap public, private dollars to boost Missoula’s affordable housing stock
Calling housing a basic human right, members of the City Council for the first time on Wednesday considered the creation of a housing trust fund to help boost the stock of affordable housing in Missoula.
The proposal looks to establish a fund of $10 million within five years with contributions coming from tax increment financing, the city’s general fund, and a litany of other revenue sources.
The proposal would go into effect immediately if the City Council moves to adopt it in July.
“We’re at the very first phase of a longer process of establishing a housing trust fund,” said Montana James with the Office of Housing and Community Development. “Establishing a local affordable housing trust fund is an important building block for the rest of the housing policy recommendations.”
The city adopted its larger housing policy last year and staff has been working for months on the framework of the proposed housing trust fund. More than 115 cities across the country have established some form of a housing trust in 33 states.
Revenues held in those funds exceeded $1 billion in 2018. The amount of private and public funds leveraged for every $1 invested into such an account averaged $6 to $14, said James.
“Local housing trust funds present an opportunity to create a flexible, responsive funding source to support housing while leveraging a wide range of public and private funds toward those same goals,” she said.
Those behind the plan wrote an ordinance establishing the trust fund, which sets the fund’s mechanisms and bounds. They also drafted a resolution establishing various funding commitments. The City Council will address both measures as the process plays out.
James said the ordinance and resolution speak to the city’s larger strategy to align resources between its departments while ensuring that everything from transportation to parks are decided through a “housing lens.”
“We feel like these two docs really helped set up Missoula’s local trust fund for success by codifying the basic elements of the fund and also making explicit our larger city strategy for fiscally supporting housing,” James said.
As proposed, the fund could be used to cover the cost of land or infrastructure, helping bring down the cost of the end product. It could also be used to provide gap financing or loan guarantees, or to cover development and permitting fees.
To grow the fund, the policy recommends directing no less than $100,000 each year from the city’s general fund into the trust fund account. It also would direct the Missoula Redevelopment Agency to create a $1 million line item for tax increment financing to feed the fund.
Transportation, infrastructure and road district funds could also be applied. The plan seeks to establish an account of $10 million within five years and anticipates roughly $3 million a year in contributions to the fund.
With the funding mechanisms on the table, City Council member Heidi West questioned why a voter approved bond wasn’t on the list of funding proposals. Such a measure would further tax existing property owners and require voter approval.
“It’s not on the agenda right now and I’m wondering if it should be,” said West.
Eran Pehan, director of the Office of Housing and Community Development, said the trust fund proposal was written to address funding sources within the city’s control. Voters – not the City Council – decide general obligation bonds, making it a questionable funding source.
“We’re really focusing on the sources within our control. As you know, a voter approved initiative is not something the city of Missoula would initiate. That would be a community driven effort,” said Pehan. “We’re focusing on the dedication of city funds and the alignment of city funds, and also acknowledging some of the private investment and private equity that we’ve identified as well.”
The City Council’s Committee of the Whole, which took up the issue for the first time on Wednesday, ran out of time and pushed further discussion off until next week.
Danny Tenenbaum, who called in to support the plan, urged the city to do more. He asked the council to direct $1 million annually to the account from the city’s general fund.
“This is a really exciting tool to help create affordable housing in Missoula,” he said. “It’s not just the housing community that’s excited about it. It’s people like myself who work in the criminal justice field. This will be a fantastic addition that will help the clients we serve on a daily basis.”