Martin Kidston

(Missoula Current) A $5 million charitable gift given to the Missoula Economic Partnership earlier this year could grow to $10 million by year's end and begin making loans by spring, with the end goal of boosting the city's housing stock sooner than later.

The Housing Impact Fund launched in October after an anonymous Missoula family made the initial gift. Since then, First Security Bank has committed funding as well, bringing the fund's balance to more than $8 million.

Grant Kier, president and CEO of the Missoula Economic Partnership, said NeighborWorks Montana will ultimately manage the fund. The organization has the ability to provide formal loans and conduct the underwriting needed to manage the loans.

“The number one challenge for us economically, both for businesses and individuals, is housing and housing affordability,” Kier said. “It's been a major priority of ours to take on this challenge. Our goal is to have verbal commitments of $10 million to the fund by the first of the year, and actively available for loans by spring.”

While the fund is still young, it will eventually accept investments from anyone. To grow the balance, Kier said MEP has approached the city's major financial institutions asking them to invest.

With land and material costs high, the Housing Impact Fund will provide low-interest loans to help acquire land, build housing or renovate the city's existing housing stock. Kier added that projects financed by the fund will serve renter households with incomes no greater than 80% of the area median income and home-buyer households with incomes no greater than 150% of the AMI.

“Having access to affordable capital, being nimble and being able to move quickly is really critical,” Kier said. “We don't feel like we need to reinvent the wheel. We're looking to enable the partnerships with those in the community who do this work to do it faster, and ensure they have the resources they need to do it faster.”

Fight for affordability

While the donor of the original $5 million gift remains anonymous, Kier said the family was motivated by the need to act quickly, as housing costs in Missoula have climbed a steep slope over the past decade.

In 2018, the median price of housing in Missoula sat at $290,000, according to the Missoula Organization of Realtors. It currently rests at $569,000. Such prices are out of reach for many potential home buyers in Missoula, and that has dire impacts on local businesses as well, Kier said.

Median home sales as of Nov. 17, 2024. (Missoula Organization of Realtors)
Median home sales as of Nov. 17, 2024. (Missoula Organization of Realtors)
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The price climb has been exacerbated in part by a slowdown in construction more than a decade ago. Between 2008 and 2012, few homes were constructed in Missoula, leading to a housing shortage that remains today.

“We can't afford another delay,” said Kier. “Right now it's really hard to build and every day we wait, we fall further behind and it's harder to get out of this. The faster we can get this (Housing Impact Fund) out the door to deliver housing units, the faster we mitigate the problem and begin to see change.”

While Missoula's fight for affordability could be aided by the city's effort to rewrite its codes and zoning rules, and by regulations coming out of the Legislature, it may also be boosted by the city's existing Housing Trust Fund.

The program was created under former Mayor John Engen several years ago and receives a general fund contribution from the city each year. It's also padded by new policies adopted by the Missoula Redevelopment Agency, and by the sale of land owned by the city.

Missoula Mayor Andrea Davis said the Affordable Housing Trust Fund and the new Housing Impact Fund can work side by side. They can also help leverage private funding from outside sources, such as the state's Housing Tax Credit and the Federal Bank of Des Moines.

“We need both of these funds. They're not in competition. They're working in alignment with one another,” said Davis. “We will be able to work together as the private and public sector on how we leverage these dollars.”

Davis cited a number of working examples, including the public-private partnership on Scott Street that's currently under development. The city purchased the land years ago and worked with a private developer on a housing plan that will include a blend of market-rate and workforce housing, the latter placed under income restrictions.

The city also worked in partnership with local organizations to secure an older apartment building that had served as “naturally affordable” housing. The effort led to the property's conversation from privately owned to a cooperative, where the tenants became homeowners.

“That model is something we absolutely need to pursue, and this fund is something that will help us get there,” said Davis. “The cost of land, the cost of labor and the cost of development means we need to figure out alternative methods for people to be able to acquire a home. There are opportunities out there, but we need the capital to be able to do that.”

As the Housing Impact Fund matures, it will be overseen by an advisory committee. That will include fund investors and a representative from city and county government.

“The fact is that when there's local dollars from the community that go in a project, it makes our projects much more competitive. This will actually make the City of Missoula more competitive in a number of ways. Anything local like this will help bring in private dollars,” said Davis.