Solving Missoula's Affordable Housing Puzzle, Part I

Missoula’s Community Cost of High Housing Prices

By Dana Green, 6-07-06

	Bentley Park, a 48-lot development off Reserve Street, built by developer Collin Bangs and partners. Photo by Mark Maher.

This is the first in a two-part series on Missoula's affordable housing issue.

The problem of spiraling housing costs has been plaguing cities across the West for years, and Missoula is no different.

But recent City Council decisions in Missoula have brought the issue of affordable housing -- and the related hot-button issues of density and infill -- into sharper focus.

Just this spring, in a tight vote, the Council lifted an 18-month moratorium on planned neighborhood clusters, or PNCs, a subdivision tool allowing single-family dwellings on smaller lots.

The Council's planning and zoning subcommittee is also taking a hard look at developing town lot standards, which would set guidelines to create attached single-family dwellings.

Both address rising housing costs -- and both offer flexibility from zoning, which has been highly controversial.

The problem of affordable housing is simple math -- as housing costs have skyrocketed over the last two decades, median income has grown more slowly.

As the gap between wages and housing widens, more low- and moderate-income Missoula residents are finding it impossible to purchase a home.

The average Missoula home is priced at $185,000 to $195,000, depending on who's crunching the numbers.

Even with a small 4 percent down payment, a family of three needs to make $55,000 in annual income to afford that home.

But the median income for a family of three is $48,600.

Single people do even worse -- with a median income of $37,400, home ownership is even further out of reach.

Right now, citywide, Missoula is hovering at 50 percent homeownership. The national average is about 67 percent.

For Bob Oaks, director of North Missoula Community Development Corporation, a nonprofit that runs several homeownership and community development programs, that statistic is unacceptable.

"It's pretty dismal," Oaks said. "It's hard for anyone middle income or lower to buy a house here."

And it is worse in some neighborhoods than others, he said.

In the Westside neighborhood, a working-class cross-section of homes just off the railroad tracks, homeownership rates plunged from 44 percent to 33 percent during the last decade.

That means a lot more people renting -- and in turn, a lot more rentals being built, Oaks said. The number of multiplexes and apartment buildings built skyrocketed in recent years, changing the face of Missoula's neighborhoods.

Oaks doesn't believe that's a good thing for neighborhoods like the Westside.

Fewer families with children in the neighborhood school. Fewer people with time to volunteer or get involved in neighborhood politics. More people having to live outside of town and driving in to get to work.

"It creates a more transient community," Oaks said.

Peter Hance, director of the Missoula Housing Authority, believes the issue is about more than just home ownership.

It's about whether low-income wage earners have a real chance to achieve the American dream, he argues.

The Missoula Housing Authority, a public nonprofit, was established in 1978 to help provide federally funded public housing for low-income Missoula residents.

A whopping 70 percent of MHA clients are under 20 percent of median income, Hance said. For a family of three, that's $14,580 -- making home ownership an unreachable goal.

Service and retail workers in Missoula aren't making enough to rent -- let alone buy, Hance said.

"On a $180,000 home with $40,000 down, you still need to make $19 an hour combined to make it work," he said. "It just doesn't add up."

Equity in a home can make a difference between just surviving or truly prospering, in Hance's view.

But most low-income residents don't have time to come to City Council meetings -- they are busy working two or three jobs to put gas in the car and food on the table, Hance said. They are invisible to many policy makers.

When asked to describe the problem, Hance draws a picture of an hourglass in the air -- showing the middle class in Missoula being squeezed slowly out of existence.

Instead, the bulges are at the top and bottom -- where some are getting wealthier, while more and more Missoulians drop down into "low-income" status.

"That's what's happening in Missoula," Hance said. "The middle class is being squeezed out."

Most of these folks either continue to rent -- or they buy in communities like Lolo or Florence, creating traffic problems that impact every resident in Missoula.

But what can the city do about it?

That question brings up two major political hot potatoes in Missoula -- infill and density.

Most developers, housing advocates, and planning officials agree that density -- smaller homes on smaller lots, close to city services and infrastructure -- is the key to affordability.

The average cost for a residential lot in Missoula doubled in price in the last five years. In some neighborhoods, a city lot can sell for $150,000 or more.

In 1999, city officials, taking a hard look at the lack of affordable housing, passed two subdivision tools to help tackle the high cost of bare land: planned neighborhood clusters, or PNCs, and density bonuses.

PNCs allowed flexibility in lot size and setbacks to encourage single-family dwellings on a lot that would formerly allow only a multiplex or apartment. Density bonuses allowed greater density than zoning allowed if certain design standards were met.

But in the last few years, the two tools have caused an uproar among some city residents.

Neighborhood groups vigilantly attended public meetings to protest such projects in their backyards. A lawsuit was filed against the city over one PNC project, calling a halt to construction.

As a result, City Council repealed density bonuses, and placed a six-month moratorium, extended by another year, on planned neighborhood clusters to rework the ordinances.

Looking back, developer Collin Bangs, who completed three PNC projects within city limits, acknowledged there were some glaring misuses of the two tools -- primarily density bonuses.

"There were more abuses … the design standards were not as strict," Bangs said.

But throwing out PNCs entirely hurts affordability -- and called a halt to some good projects getting done on the ground, he argued.

In 2002, Bangs and partners created Bentley Park, a 48-lot development off Reserve Street. After hearing neighbors' desire for less noise and more open space, developers were able to build townhomes that blocked the sight of Reserve -- and tripled the size of the park in the development, Bangs said.

"Without the PNC, we couldn't have done those things," Bangs said. "And we couldn't do townhomes -- only duplexes."

PNCs are a vital homeownership tool, Bangs argues.

If the Council can improve design standards, PNCs can work even in established neighborhoods, he believes.

"There are ways to make PNCs fit in one-story neighborhoods," he said. "The PNC didn't have the teeth to make (projects) fit in a neighborhood, but it can be done."

Mike Barton, administrator at the Missoula City/County Office of Planning and Grants, agrees the PNC was a vital tool for getting more affordable housing in Missoula.

The Human Resource Council, using cluster development, created 25 units for first-time homebuyers priced at $150,000 or less, Barton said. Overall, about a dozen PNC projects broke ground each year since the ordinance was enacted.

"It's a way to get in a starter home," he said. "Reduce the cost of land, and you do reduce the cost of housing."

Barton believes many angry residents confused PNCs with boundary line relocations -- which allowed lot owners to build houses on alleys without a public hearing.

Lot line adjustments have been tightened, requiring more to now go through a hearing, he said.

But the Council should take a unified stand clarifying that affordable housing is a city priority -- and back that up with policy, Barton believes.

"There has not been a unified message coming from policy makers," he said.

City Councilwoman Heidi Kendall, whose term began in 2004, agrees that there has not been a unified voice from the Council.

That is because the group is deeply divided over infill -- with few moderate voices being heard.

Kendall believes the coming months will require a committed, in-depth community discussion on how to create desirable infill -- and provide affordable housing for Missoula without sacrificing neighborhood character.

"Our job is going to be to find creative ways to address that," Kendall said.

But first, affordable housing must become a top concern for city officials -- if real action is going to take place, Kendall said.

"It's not nearly as high a priority as it should be," she said. "(But) like any elected body, we tend to try to shoot for the middle."

Tomorrow: Some possible policy solutions to the affordable housing dilemma in Missoula, including inclusionary zoning and community land trusts.

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