Martin Kidston/Missoula Current

The city's Affordable Housing Trust Fund awarded more than $1 million in revenue earlier this year to a handful of projects, and it stands poised to see millions of additional dollars flow into its account over the coming years.

The standing of the Trust Fund and the city's ongoing effort to develop housing of all types, particularly affordable housing, was deeply buried in this year's budgeting process. But city officials said the wheels are turning on the housing front and progress stands on the horizon.

“We do have a confident mid-to long-term forecast for the fund,” said Eran Pehan, director of the city's department of housing and development. “We have the sale of two very large city-owned parcels, the Payne Block and Scott Street, and proceeds from the redevelopment of the Sleepy Inn.”

The city was gifted the Payne Block in downtown Missoula several years ago as part of the process around the new public library. The city plans to begin selecting a development partner this summer, and the Missoula Economic Partnership will help vet potential development partners.

The city used a similar process on its Scott Street property. It partnered with Ravara two years ago and developed plans to build around 70 deed-restricted homes and several hundred apartments.

The City Council last year approved the sale of the Scott Street property to Ravara for $1.6 million and expects to see construction begin soon.

“We have properties that are going to be developed in partnership with the private sector,” said Dale Bickell, the city's chief administrative officer. “Under city ordinance, the proceeds from those sales are required to be placed into the Affordable Housing Trust Fund.”

The city holds other property as well, including several acres on Johnson Street, the Missoula Water building and the Sleepy Inn parcel, both on West Broadway. All are eyed for redevelopment, and the proceeds will further feed the Affordable Housing Trust Fund.

Ellen Buchanan, director of the Missoula Redevelopment Agency, said the Sleepy Inn property will likely hit the market later this year.

“We're waiting on the ability to get contractors involved with the Sleepy Inn parcel to do some asbestos and lead-based paint abatement,” Buchanan said. “We're probably looking at mid to late fall before we can get those buildings down, at which time that property will be actively marketed.”

The sale of city-owned land isn't the only tool the city has its disposal to grow the Trust Fund. This year's city budget invested $250,000 into the fund, and the Missoula Redevelopment Agency has contributed more than $1 million to the fund annually.

That investment is dependent upon the success of the city's urban renewal districts and MRA's ability to support large projects that bolster the city's tax base. That's done by pairing public infrastructure with each new development, or offsetting costs that would otherwise fall to the city's general fund.

"MRA has been investing much more than $1 million in recent years, and I expect that trend to continue,” Bickell said.

Pehan said the blend of funding sources marks an intentional effort by the city to diversify the revenue that supports the Trust Fund. Federal Low Income Housing Tax Credits may be the most powerful tool available to the city to pursue more deed restricted and subsidized housing, Pehan added.

The tool was used to build the Villagio and Trinity apartment projects, both of which are under construction. When completed, the two projects will bring 404 units of affordable housing to the market.

Along with the Scott Street project and smaller projects across the city, Pehan added that as many as 500 affordable housing units should come online over the next two years.

“We're pushing at the state level for a state housing trust as well, and that could match and leverage those federal tax credits,” Pehan said. “We're looking at how regulations paired with the subsidy could help us further our goal to get more of those deed restricted units to the market.”

The city also intends to begin reforming its code this year. Doing so could remove some regulatory barriers for construction. Already, Pehan said, housing construction across the city is robust.

“In the last year, we have permitted just shy of 1,400 dwelling units, both single-family homes and rentals, but the vast majority were rental units,” Pehan said. “We should see about 1,100 rental units come online in the next 18 months if all of those projects move ahead at the pace they anticipated when they pulled those building permits.”