by Travis Mateer
I continue to appreciate the actions of City Council member, Daniel Carlino, as he highlights the leverage bestowed on private developers by our elected leaders. The latest move from Carlino, which incensed Jones, was a simple little amendment to extend the fig leaf of affordable housing from 35 years to 70 years. That, according to Jones, was a TERRIBLE deviation from business as usual. Here’s some reporting from Missoula’s favorite propagandist, Gomer Kidston, laying the groundwork for this giveaway (emphasis mine):
Members of the Missoula City Council on Wednesday gave preliminary approval to vacate a sliver of road in the Midtown district to accommodate a residential and commercial project planned by an affordable housing developer.
The $30 million development, proposed by Casa Loma LLC, will include 132 units of housing at the corner of South and Stephens avenues. Given the city’s vacation of public right-of-way, 20% of the rental units within the project must be reserved as affordable housing for a period of 35 years.
“We didn’t want to restrict the entire project, even though our intent is to make this affordable and attainable,” said developer Nate Richmond. “We have to maintain some flexibility for the fluctuating construction market out there right now, materials and labor being the big unknown.”
I bolded the name of the developer because Nate Richmond is mostly known for his development work under name Blue Line. That’s the name of the company that wanted to develop Larchmont Golf Course and the name of the company building the Trinity Apartment complex by the jail. And you better believe Richmond knows how to ENRICH these deals with public financing. I assume this project is no different.
Where you at, Missoula Redevelopment Agency?
The project will also include a handful of for-sale units and 18,000 square feet of commercial space. The Missoula Redevelopment Agency is contributing to the project, which also includes a roundabout, a cycle track and new public infrastructure.
The emphasis is definitely mine because I want to ensure these schemes are properly identified. Now, let’s take a look at the conversation Gwen Jones didn’t want to have:
While the number of units weren’t an issue, Ward 3 council member Daniel Carlino sought to require the developer to subsidize the project’s 22 affordable units for a period of 70 years, not the 35 years requested by the city.
However, his proposed amendment failed on a 9-1 vote and received scrutiny from some peers. Fellow Ward 3 council member Gwen Jones said the city would be setting bad precedent if Carlino’s 11th hour amendment were to pass, potentially scuttling the entire project by altering its delicate financial model.
“It’s bad practice to try to steer a ship of this size in a completely new direction after so much work has gone into it – work that’s all based on solid policy that council has created over the years,” Jones said. “Frankly (Carlino’s amendment) is not based on any type of financial analysis related to the reality of this project. I’m concerned this sends an incredibly bad message to the development community that changes of this magnitude can be made at the last minute.”
I’m excited to see Gwen Jones mention FINANCIAL ANALYSIS because the entire premise of using MRA funding should be called into question, considering the ZOOM BOOM Missoula continues to experience. But that will never happen under the coming reign of Engen’s groomed replacement, the Ice Queen.
I do appreciate Carlino doing his best to expose these schemes, especially right now. Why? Because we have a VERY convenient article that shows what happens to these properties when developers don’t give a shit about them because poor people live in them. Here’s what a big apartment complex is going to need to stay affordable and NOT falling apart:
A nonprofit that builds and maintains affordable housing in Missoula plans to apply for state tax credits to rehabilitate Creekside Apartments, a facility that plays a central role in the city’s housing portfolio.
Heather McMillan, housing development director with Homeword, said the property is seeing a number of issues arise simultaneously, from failing roofing to deteriorating infrastructure.
She placed the estimated cost of repairs at around $9 million.
Yep, $9 million is now needed because this property is a total piece of shit and might go on the market if MORE MONEY isn’t found to keep the affordable scheme going. To accomplish this, some fancy bond called a CONDUIT bond was used, and more tax credits will be needed. From the link:
The project was built using Low Income Tax Credits in 1996 and the developer took steps toward efficiency in an effort to reduce costs. The period of affordability was set to expire in 2026 and the owner had considered placing the property on the open market at that point in time.
The proposition sent off alarm bells in the affordable housing community. The threat of displacing so many families and losing a key piece of the city’s housing inventory prompted Homeword and the city to secure a conduit bond to purchase the property, which it did in 2017 for roughly $12 million.
“We assessed the property then and it was at risk of going to market,” McMillan said. “We knew a lot of the building materials and building systems would be close to the end of their useful life. We knew we’d have to rehab. We were keenly aware this was going to be an issue.”
Now, McMillan said, the time for “wholesale” rehabilitation has come. Homeword hopes to secure a combination of both 4% and 9% tax credits to complete the work.
Yes, all this additional money will have to be used in order to keep from LOSING affordable housing stock. Fantastic. And this same scenario is being set up with Nate Richmond’s latest development project, which he describes in the first linked article:
Richmond said the industry standard of 35 years is generally tied to the amortization period of conventional financing. At that point time, a property of this size generally needs to be financially restructured to complete significant rehabilitation that generally includes new roofing and a new physical plant.
“In the affordable housing industry, that’s typically when you go back in and re-up the affordability period as well,” said Richmond.
Given the city’s housing needs, council member Mike Nugent said Missoula can’t rely on nonprofits alone to provide affordable housing. Private developers will be key if such housing is produced.
Yes, private developers will be key, but more importantly, YOU THE TAXPAYER will be ESSENTIAL in subsidizing the profits of the private sector because without your tax dollars, these developers wouldn’t dare wade into the affordability racket.
Thanks for reading!