The city's push to boost affordable housing by building a trust fund earmarked for the cause received a $1 million annual funding commitment from the Missoula Redevelopment Agency this week.

MRA's Board of Commissioners committed $1.3 million to one affordable housing project during Thursday's meeting, essentially meeting its commitment for the coming Fiscal Year. But the agency said contributions to affordable housing projects in various urban renewal districts could accede $1 million in any given year.

“If there were four more affordable housing projects to come in front of us in FY 21 and there was capacity to do them, then we would bring all of them,” said MRA Director Ellen Buchanan. “We're not limiting this to $1 million. We're committing a minimum of $1 million a year.”

The Missoula City Council this week began hearing a proposal to establish an affordable housing trust fund – a tool that was identified in the city's new housing policy to help boost the stock of affordable housing by underwriting certain costs associated with building it.

The proposal looks to establish a fund of $10 million within five years with contributions coming from a variety of sources, including the city's general fund and tax increment financing committed by MRA.

But tax increment managed by MRA is constrained by state law and it can only be used to fund elements of certain projects located in certain parts of the city. Those uses generally include improvements to public infrastructure ranging from sidewalks to utility upgrades. It can also be used to help cover deconstruction costs or purchase property under limited circumstances.

On Thursday, MRA committed $1.3 million in tax increment from the North Reserve-Scott Street Urban Renewal District to help fund utility upgrades associated with the Villagio – a 200 unit affordable apartment complex set to open in 2022.

“We have leeway in certain instances, like the way we participated with Sweetgrass Commons because it was permanently affordable housing,” said Buchanan. “In the case of Villagio, it's a publicly owned building at the end of the day, so we were able to help with making that site useable for that use.”

MRA played a hand in crafting the city's housing policy, which the City Council adopted last year. Buchanan said it was always assumed that tax increment would play a part in building a housing trust fund.

The agency will budget $1 million a year as a contingency line item, though it will not place funds directly into the trust fund. Rather, it's contribution will come in the form of tax increment assistance to affordable housing projects that qualify under state law.

“We've been talking about contributing more to affordable housing, but we're not building affordable housing,” said MRA Commissioner Nancy Moe. “We can't do that with our funds. The use of our funds is constrained by statute. It's defined by statute.”

But the City Council has more flexibility and will work to place revenue from its general fund into the housing trust fund account. The current proposal would commit the city to direct no less than $100,000 a year into the account.

That amount could grow, depending on how the city's annual budget shapes up in any given year.

“It's how we're changing our priorities,” said city CAO Dale Bickell. “Not only are we talking about a general fund allocation, listed at $100,000, but hopefully we'll put more in this approaching budget. Our general fund is so constrained that's difficult.”

Bickell described the trust fund as a basket of funding sources that add up over time. Contributions from various city departments would be included as they begin to align their respective areas of focus though the lens of affordable housing, from the sidewalk program to parks and water and how such infrastructure is deployed.

“All of those sources of funding we use now for projects, we're adding an affordable housing context,” Bickell said. “This will be an entirely new capital improvement screening tool we'll be introducing in this budget process. While the new resources related to a general fund deposit may be small, we'll see more of our resources in general focusing on affordable housing.”

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