by William Skink

Missoula’s housing crisis garnered two stories in today’s Missoulian, one about community pushback against townhomes, and the other about cost-prohibitive regulations that make developing tiny homes onerous to build.

The first story represents the NIMBY (not in my backyard) resistance to increasing density with new development. In this conflict residents say the character of their neighborhoods are being destroyed. While people may understand, intellectually, why a town with limited room for growth needs to increase density, it becomes a different issue when the actual construction begins.

The second story represents how creativity and innovation are killed by regulation. In this conflict developers trying to maximize profit have no incentive to take a risk by developing tiny homes.

Nicholas Cole, the architect responsible for this project of 8 tiny homes being built in East Missoula, is learning the hard way that innovation and creativity are cost prohibitive with Missoula’s current regulatory environment. From the link:

Cole and his business partner are in the process of finishing up construction on eight 495-square-foot single-bedroom, one-bathroom homes on a small lot in the 200 block of Speedway Avenue in East Missoula. The little dwellings are on foundations and each includes high-efficiency heating and cooling, Ikea furnishings and a window layout that’s designed for both privacy and lots of sunlight.

But as the first person to actually construct the type of village that’s gaining traction across the country and in Missoula as a possible way to solve the housing affordability/shortage crisis, Cole feels like there are a lot of kinks to work out before tiny homes truly catch on.

That’s because, due to county regulations, he says he was forced to spend roughly $40,000 in building permit fees and had to dedicate almost twice the amount of space on his lot to parking as he did to living space.

It’s ironic that a town like Missoula–which pushes alternative transportation every chance it gets–enforces inflexible regulations requiring this 8 home project of 500 square foot homes to include space for 16 vehicles. A variance sought by Cole was turned down.

I used to be more weary of developers complaining about regulations. They just want to make as much money as possible, was my thinking. While I still think that’s mostly accurate, this story highlights how much additional cost is put on projects by permitting and other regulatory requirements.

Cole emphasizes these homes aren’t being built to be affordable. The rent he is planning on charging people to live in one of these 8 sheds is $1,000. Cole explains how his approach is different than other developers:

Cole, who owns NC Design Studio, says he paid about $3,600 for each of the eight homes for the sewer impact fees, plus an additional impact fee.

Cole said all his permit fees are built into the cost he has to charge for rent and is quick to point out that he doesn’t consider his homes low-income at all.

“A lot of these rentals in town are run down,” he said. “A lot of developers come and they build the cheapest thing possible, and we’re trying not to be like that. But also our rent is going to reflect that. Our rent is higher than a lot of people are charging. I think we’re going to be $1,000 a month plus some utilities. I bet if I put these for rent on Craigslist, I’d have all of them rented out in a day. We’ve already had people asking about them.”

He said he could have built a multiple-story block of apartments, but as an architect he wanted to design something unique that fit in with the neighborhood of single-family, one-story homes. He believes he found the reason why more developers aren’t building tiny homes: It’s cost-prohibitive.

Personally, I’ve had some recent exposure to how absurd regulations can be. We’ve been talking to contractors about walling in a space to create another bedroom in our home for one of our kids. The way the project is shaping up, the room won’t be officially considered a bedroom if/when we decide to sell. While we were initially disappointed about this, the contractor explained why it’s actually a good thing. If the room was considered another bedroom, he said, we would be forced to spend between $30,000-$40,000 on sewer upgrades. For us, that would definitely make the project cost-prohibitive as it would more than double the cost.

All this reminded me of what Kim Olson, aka the Empanada Lady, had to deal with to make her delicious empanadas. Her story is what first got me thinking about regulation differently. This is from a 4&20 Blackbird post from 2012:

The “empanada lady” wasn’t on the agenda, but she and Steve McGregor, of McGregor Mobile Foods, showed up to say that an odd rule is keeping them from using the kitchens they rent.

Officials approved the kitchen she uses at Bear’s Brew sometime in the past two years, she said. But when a business changes hands, the building needs to meet code.

And in this case, that means putting in a thousand-gallon underground tank to catch grease, Olson said. But she said she produces – at the most – just 2 cups of grease a week.

There’s another problem, too, said McGregor. That’s the high cost of one of those grease traps, at some $80,000.

The rule is meant to keep grease from going into the wastewater system, but McGregor said it also puts a severe hurt on small businesses.

“For the local guy, it doesn’t work very well,” he said.

I still think regulations are necessary, but now I also think regulations can be maddeningly inflexible, financially cost-prohibitive, and ultimately a deathblow to creativity and innovation. With all the factors fueling Missoula’s housing crisis, this is one area that definitely needs some serious scrutiny.