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UM economist: State not making use of federal housing programs

An economic research conducted two years ago by the University of Montana’s Bureau of Business and Economic Research highlighted affordable housing as an increasingly severe challenge for many Montana municipalities.

Many lower-income families were being priced out of housing markets throughout the state due to a scarcity of affordable dwellings and an ageing housing inventory.

 

According to Patrick Barkey, head of the Bureau of Business and Economic Research, not much has changed in the last two years.

 

“There are over 23,000 housing units funded by one or more affordable housing programmes in Montana right now,” he added. “While this is a significant amount, it is obviously a small sector of the market when compared to the state’s total housing stock of over 510,000 units.”

In recent years, housing activists in Missoula have confronted these problems as they try to raise the funds needed to create affordable homes in a cost-constrained market.

 

Developers working on the Villagio, a $54 million complex in north Missoula, faced financial hurdles in keeping the 200 homes affordable. The project was supported by the 4% Low Income Housing Tax Credit, non-competitive bonds, and other sources of finance.

It wasn’t a simple task to put this project together.

“We chose this path because it is less competitive than Montana’s 9% credit,” Blueline Development’s Keenan Whitt said at the time. “That’s a complicated tax credit that’s not guaranteed, and if you ask throughout the state, they’ll tell you Missoula has gotten its fair share of the 9% credit.” We didn’t want to be in a competition.”

 

The Trinity project, which will open next year and offer another 130 units of affordable and low-income housing around the city, is also under development. That project, like the Villagio, had financial difficulties and needed special subsidies to get started.

 

Missoula County, for example, provided property to the developer, eliminating one expensive obstacle. The project also necessitated the issue of tax-exempt bonds by the city. The public subsidies saved the developer approximately $700,000 in expenditures when combined with Low Income Housing Tax Credits, enabling them to pass those savings on to future renters.

 

Heather McMilin, the home development director of Homeword, recently said, “That helps alleviate a lot of our fiscal difficulties.” “It increases the viability of the project we’re working on.” It contributes to the project’s total budget.”

 

According to Barkey, the state hasn’t made adequate use of federal monies focused at affordable housing during the last decade. Montana has only used the 4% Low Income Housing Tax Credit to fund 717 affordable housing units since 2012.

 

Montana, meantime, has left over $950 million in tax-exempt private activity bonds on the table, he claims. A state or municipal government issues these bonds for a private project.

 

Due to a shortage of resources, an average of $62 million in petitions for the 9% Low Income Housing Tax Credit are refused each year, according to Barkey.

 

“These developments would have greatly increased Montana’s affordable housing inventory,” he added.

 

Communities around the nation are struggling to find affordable homes. It’s mostly determined by supply and demand in Missoula. Housing prices grew 21.3 percent in Missoula, 13.1 percent in Billings, and 12.3 percent in Great Falls, according to the BBER’s 2022 report. Gallatin County has witnessed a 30 percent spike in property values, with a median home value of approximately $700,000.

 

Barkey, on the other hand, does not anticipate expenses will continue to rise at the same rate, for a variety of reasons. However, this does not imply that the issues will be resolved quickly.

 

“When housing becomes expensive, it puts costs on whole communities,” he said, “but the most disadvantaged in society face the brunt of those expenses.” “Housing affordability is expected to be a concern for Montanans in the next years, and as such, it ought to be discussed publicly.”