Homeword set to buy Creekside Apartments as affordable housing
A Missoula nonprofit has arranged the financing needed to purchase the Creekside Apartments on East Broadway in an effort to keep the units on the market as affordable housing.
Homeword, which most recently built and opened 27 units of affordable housing at Sweetgrass Commons in the Old Sawmill District, will seek a tax-exempt conduit bond from the city to close on the property this month.
“We know that rentals are in high demand here and there’s a significant need for these types of homes in our community,” said Andrea Davis, executive director of Homeword. “That need has only increased as the demand has skyrocketed over this past year.”
The Creekside Apartments are currently rented to those earning 60 percent of the area median income, or roughly $27,000 a year.
But that income restriction expires in 2026, after which the units would likely have been converted to market-rate rentals. Given their proximity to the Clark Fork River, the University of Montana and downtown, that rate could have been substantial, Davis said.
“The property location alone screams of increasing rent,” said Davis. “This would have made them prime for rent increases that would have likely caused the majority of the residents to find another place to live at a lower rate.”
According to the latest housing report by the Missoula Organization of Realtors, a two-bedroom unit in a multiplex development, such as Creekside, rented for roughly $750 a month last year, slightly down from 2015.
But that study included all rentals across the entire county. Davis said Homeword's most recent market study in the city of Missoula found that a two-bedroom unit rents for $905 per month on average. Under the affordable housing rule, a two-bedroom unit and all utilities at Creekside run around $700 a month.
“Creekside was listed for sale in May and you could tell from the way the offer was made that they were marketing the property more toward market-rate owners,” said Davis. “There is a restricted covenant, but by law that could expire in nine years. There was a real risk of losing these units.”
The property's 160 units were built in 1996 using tax-exempt bonds and housing credits. While building codes and styles have changed, Davis said, organizations such as Homeword would no longer be able to finance the construction of 160 units in a single development.
Davis placed the purchase at more than $12 million, though it equates to just $85,000 per unit.
“When you look at a per-unit cost, there's no way you can compete with that with new construction,” Davis said. “We couldn't pull together the financing to build 160 units today.”
Homeword has asked the city to approve a tax-exempt conduit bond with Homeword as the borrower. First Security Bank has agreed to purchase the bond.
“There's no risk to the taxpayer, because it's not a general obligation bond,” Davis said. “We had to get aggressive with our timeline and offer. There's a lot of money out there looking for real estate right now.”
Homeword currently owns 179 units of affordable housing in Missoula. Once the organization closes on Creekside, that number will climb to 339. The City Council will consider the bond on Aug. 21 while the deal is set to close on Aug. 31.