State loan program could boost Missoula’s stock of affordable rental housing
A state program announced last week by the Montana Department of Commerce could help developers in Missoula bring more multifamily rental housing to the market, and do so at an affordable price.
The agency began accepting applications to its new Multifamily Coal Trust Homes Program. It provides $15 million from the state's Coal Tax Trust Fund to developers through low-interest loans.
While the city of Missoula won't be applying for the funds directly, Montana James with the Office of Housing and Community Development said it could help local developers who work with the city to bring affordable housing to the market.
“It's more money that could flow into Missoula to support the development happening here, and it's more money projects could leverage – projects that would likely receive funding through our office as well,” James said. “It's another funding source that helps those projects pencil.”
The 2019 Legislature passed a bill supporting the project, marking the first time state funding has been allocated to the development or rehabilitation of affordable rentals in Montana.
The new program can be applied to new multifamily construction, or the acquisition and rehabilitation of existing rentals. It can also help fund the purchase of land for multifamily projects, along with land trusts.
“The city wouldn't be applying for the funds,” said James. “But certainly, it would be a huge boon to the developers here – the nonprofit and for-profit developers who are building multifamily in Missoula.”
The city's recent housing plan cited the need to bring more affordable projects to the market, and its goals have been described as aggressive. The plan strives to bring 590 low-income housing tax credit homes to market over the next five years, along with offerings at other price points.
The addition of the Coal Trust Homes Program could help diversify the funding options, said Andrea Davis, executive director of Homeword.
“It's money dedicated for the development of affordable rental homes,” she said. “That includes new construction or the acquisition and rehabilitation of an existing property. We can also acquire land that will be used for an affordable property. It's another capital source.”
The state believes the loans could support the development of 240 new or rehabilitated rental homes in Montana. As the loans are repaid, the money returned to the state account will be used to fund future projects.
“In Missoula, there's a need for affordable homes at every point on the spectrum in our market,” said Davis. “In Missoula, I see an ability to use this for new construction on smaller projects, or the acquisition of existing properties you want to rehab.
“Every project is going to be a little different in how this program is used.”