Missoula housing policy unveiled; proposes subsidized construction, less regulation

Eran Pehan, director of Missoula’s Office of Housing and Community Development, and Dale Bickell, the city’s CAO, discuss elements of the city’s new housing policy, released on Wednesday afternoon. (Martin Kidston/Missoula Current)

Reducing the barriers to development and subsidizing construction of affordable housing – including the donation of city land and possible taxation through a bond or levy – emerged among the recommendations in the city of Missoula’s new housing policy.

Unveiled on Wednesday, the 95-page document offers a suite of recommendations intended to address the cost of housing and ensure that “a slow emergency doesn’t become a full-blown crisis.”

“This is an extraordinarily heavy lift and it’s not an issue that solves itself,” Mayor John Engen said. “This is a dramatic step forward in finding solutions to a problem I think the lion’s share of citizens in our community believe we should tackle head on.”

Wednesday’s midday hearing drew a large crowd, including concerned citizens and city officials who pledged their support for the recommended policies. With housing prices rising across the West, including Missoula, affordability has become an issue and a potential drag on the local economy.

A city survey conducted in 2017 found that nearly 93 percent of respondents believe housing in Missoula is too expensive. Efforts to draft a policy has been years in the making.

The policy encourages the city to establish a housing trust fund, and it offers a number of potential sources of revenue. They include the city’s general fund, a mill levy, a bond, and seeking out private equity.

Eran Pehan, director of the Office of Housing and Community Development, said the fund would operate as a revolving loan with a competitive application process. Such a fund “is essential to provide the consistency and predictability” that enable long-rang planning and multi-year housing projects to move forward.

But the city doesn’t have a large amount of discretionary revenue to allocate toward a trust fund. Rather, it points to a perpetual mill levy and a voter-approved bond as the “optimal approach.”

Pehan said housing trust funds have been established in other communities in the Rocky Mountain West. Some have also tapped into private equity with success.

“While we can make significant progress in being more strategic in the deployment of resources already at our disposal, to meet our goals we’ll need to find other ways to capitalize a trust fund,” Pehan said. “We plan to approach this initially by looking at ways to use private equity rather than relying on tax revenue or federal subsidies alone.”

The policy also looks to lower barriers and ensure they align with community goals around infill, including the Missoula Development Guide. Subsidizing development costs, reviewing permits more quickly, and reducing setbacks and parking restrictions could help lower costs.

And while the policy doesn’t recommend that single-family zoning be changed to multi-family housing, the policy does lean strongly on infill development and accessory dwelling units. The City Council created its ADU policy in 2013, though use of the tool hasn’t taken off.

Just 13 ADUs have been permitted in the six years since the ordinance was adopted. Pehan attributed lack of awareness, a shortage of financial resources and code requirements that drive up costs as barriers to the program.

“The wider availability of ADU development represents a housing development approach that strongly aligns with the city’s focus inward growth policy by creating invisible infill distributed around the city while utilizing our already existing infrastructure,” Pehan said.

Any changes to existing city code would require review by the City Council and a public hearing.

City department heads, including those leading Parks and Recreation and Development Services, pledged their support for the policy recommendations. So too did the Missoula Redevelopment Agency, which will play a role in achieving some of the goals around affordable housing.

Properties ripe for development within the city’s urban renewal districts include areas around Southgate Mall, the current public library site, and parcels off both California and Scott streets, among others.

“We have a lot opportunity,” said Ellen Buchanan, director of MRA. “We need to figure out where we want to prioritize and where we spend our resources, but all of those are in urban renewal districts, and a lot of them are in opportunity zones.”

While the goals within the policy are ambitious, advocates contend, they’re also achievable. Some could have immediate impacts while others could take time to deploy.

But together, they reflect what backers described as a realistic projection of city resources and the opportunities at its disposal.

“Nearly everyone wants to contribute to solving this problem,” said Daniel Werwath of Werwath Associates Community Development Consultants, which helped write the policy. “All these tools can build and grow over time. Cities can’t solve this problem alone.”

Two open houses are scheduled: May 30 at 11 a.m. in City Council chambers and June 4 at 6:30 p.m. at Russell School. A second public hearing is slated for June 24.