Forever affordable: Downtown Missoula townhomes hit the real estate market

Two years ago, a dilapidated home long used as an apartment sat empty on Front Street, its timbers and history exposed for deconstruction. The building had been “red tagged” by the city, unsafe for human occupancy.

But on Thursday, construction crews placed the finishing touches on what's now dubbed Lee Gordon Place, a collection of seven affordable townhomes that replaced the old apartment, once located at 501 E. Front Street.

“We're going to have amazing, safe, affordable houses when we're done,” said Heidi West, a member of the City Council and a community organizer with the North Missoula Community Development Corporation. “It's a drop in the bucket, but for those seven families, it makes all the difference in the world.”

Lee Gordon Place was constructed through a community land trust to ensure the units remain affordable in perpetuity. That's a rarity in Missoula, where the median price of a home now lists for $300,000.

The project includes four two-bedroom units, which are listed for $148,000, and two four-bedroom units priced at $175,000. The single 2-bedroom ADA-accessible unit is listed for $135,000.

Applications are due Feb. 1 and a drawing will follow on Feb. 15. North Missoula CDC is currently qualifying buyers, who must earn 80 percent or less of the area median income. That's $45,050 for a family of two and $50,700 for a family of three.

“We have to qualify someone to make sure they meet our income guidelines,” West said. “We have to make sure they're eligible buyers, and they have to be bankable. We'll have a raffle from eligible buyers. We want everyone to have an equal opportunity to getting these homes.”

The project represents the fourth community land trust development completed by North Missoula CDC. It's an approach that's catching on across the country, and it's expected to hold its place in Missoula's new housing policy when it's released this spring.

The approach separates the land from the home, with the land staying in the trust and the homes sold to income-qualified buyers. In theory, the formula helps make the units affordable now and into the future by eliminating the cost of the land.

“They lease the land from us, which makes them a little more affordable, and when they go to resell, there's a formula that determines their resale price,” said West. “The idea is that it's perpetually affordable. This subsidy is one time and will help people well into the future.”

Estimated at roughly $2 million, Lee Gordon Place included funding from the EPA's Brownfields program, and the Missoula Redevelopment Agency, which paid for deconstruction of the old apartment and needed improvements in the public right of way.

Still, West admitted the project required heavy subsidies, though under the community land trust, it's a one-time deal that should repay itself over time.

“We recover the cost of our construction loan, but there's about $140,000 of subsidy per unit,” she said. “It's important that that subsidy serves more than one family. It's a lot of investment per unit, but having perpetual affordability makes that money go farther. You don't have to constantly resubsidize.”

Hermina Harold, executive director of Trust Montana, said that while Lee Gordon Place includes just seven units, it will serve more than just seven families.

The 42 permanently affordable units held in various community land trusts in Missoula have served 99 families since 2002. Harold believes more land-trust projects would take place if support were available.

“There are plenty of opportunities if we can get more support locally, which I know the city is trying to look into with its new housing policy,” she said. “If we had local funding sources that weren't tied to federal HUD regulations, it would make things a lot easier, and we'd be able to provide housing to people who are above 80 percent of the median income as well, which is a need in Missoula.”

Housing prices have emerged as a pressing issue in Montana, including Bozeman and Missoula. In each of the past few years, economists have listed housing costs as a potential threat to Missoula's economic growth.

A single person who earns $39,450 a year in Missoula still represents 80 percent of the area median income. To qualify for a median-priced home of $300,000, the Missoula Organization of Realtors has said, an individual would need to earn nearly $70,000 a year.

“Even people who make 100 percent of the area median income, or 120 percent, are still having trouble buying homes,” said Harold. “That's actually clogging up the rental market. If we can move some of those people from rentals into home ownership, it would help the whole vacancy rate in Missoula and even out the situation for everyone.”

Across the country, 250 community land trusts have formed, though they remain rare in Montana. Trust Montana, headed by Harold, is modeled off the success of the North Missoula CDC, and it's working on a project in Red Lodge while eyeing new opportunities in Helena and Belgrade.

Trust Montana also has partnered with Homeword in Missoula on its Montana Street Homes project near the Missoula Food Bank. That includes six homes transferred from the Bakken and placed on property held in a trust by Trust Montana.

“Even more subsidy in general is necessary to make more projects like this possible,” said Harold. “Development is really expensive and $140,00 per unit in subsidy isn't a sustainable thing to have to keep doing as a nonprofit. We just need more support.”