[MissoulaGov] Committee Update 6-3-09

[Ryan Morton]

On the PAZ hearing:
 
A TDR or TDC tool would need to be tailored to Missoula.  It could be done,
but there are other tools we can use for ag preservation.  I look forward to
seeing Lyn Hellegaard's referral about funding a study for Missoula.  MBIA
is also looking to fund a study.  Perhaps this would be an opportunity for a
public-private partnership to make figure out how to make Missoula an even
better place to live.
 
Cost-plus versus market rate:  Existing housing stock certainly gets sold
based on what the seller can get in the market (profit to the developer is a
non-issue, however).  Custom homes are cost-plus and the customer is
basically invoiced for the construction and the lot (if the buyer hadn't
already purchased the lot).  I assume, Bob, that you're speaking more about
speculation homes.  In that case, I think Jim McGrath gave you an
appropriate response.  Demand and the possibility of profit will drive the
production of housing of that kind of housing.  
 
Further, I think you forget that most of the costs Nick and others refer to
are "up-front costs" to the developer.  As risk adverse economic agents,
higher up-front costs without higher demand willing to pay will push
producers away from production.  His complaint is premised on when
developers DO take that risk, they must recover all costs with a profit to
survive as a business.  Thus, costs get pushed to consumers who can pay.
Profit for a developer is their paycheck to cover their homes, taxes, food,
utilities, insurance, health care, etc.  Would you like the government
constantly messing around with your paycheck?  I have a fixed wage based on
hours worked and that is secured as long as I work.  A developer for
speculation housing risks making no profit or even losing money.  Nothing
for a speculation developer is secure and the magnitude of potential loss is
quite high to the tune of hundreds of thousands to millions of dollars in
expenses.
 
I suppose your assumption is that developers make more money than God and
that developers can absorb any cost you place on them because their profits
are astronomical.  Reality is quite different.  Developers are unable to
absorb all costs including fees, labor, materials, and professional
services.  In Missoula, new home prices didn't really go down during the
housing bust, but construction company layoffs certainly went up.  If they
could absord lower profits, they would not have laid off so many workers.
 
Ryan Morton
Government Affairs Director
Missoula Building Industry Association
406.543.4423 or 406.546.0902 (cell)
ryan at buildmissoula.com
 

  _____  

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Bob Jaffe
Sent: Wednesday, June 03, 2009 10:43 PM
To: missoulagov at cmslists.com
Subject: [MissoulaGov] Committee Update 6-3-09



Greetings,

This morning we considered a request to ask council members to sign onto a
letter to the State of Montana to approve a grant to fund the Salcido
Center.

The center got started with a $120,000 grant. They are trying to get it
funded again for $175,000 to carry them for 16 months.  The discussion was
mostly about the services they offer, their budget, and if there is any data
to document their impact. At this time they are not able to provide any
specific data as to the level of services being offered. But there is plenty
of anecdotal information as to the use of the facility. There were some
concerns about whether any other organizations in Missoula were seeking the
same funding. Folks were a little worried about pitching for one of our
local organizations over another. We had received some public comment to
this affect that resonated.  

Mr. Hendrickson asked if they had a sense of whether the clients they were
serving were "home grown" homeless folks or outsiders coming to take
advantage of Missoula's generosity. The answer was not very specific but I
think she said that they serve plenty of folks who travel through but most
are locals. Renee made some kind of statement suggesting that people choose
to be homeless and facilities like this enable them.  In fact, the man the
facility was named after was homeless by choice. The ladies doing the
presentation didn't throw anything at her or even show any sign of being
irked by the comment. They said that when people "choose" to be homeless,
this is usually a response to some other trauma or dysfunction in their
lives that make a traditional lifestyle inaccessible. Everyone signed on to
the letter except Renee and Lynn, who is out of town. 

 

In Conservation we rejected the bids for the project to do some preliminary
grading work out at the new Fort Missoula park. The estimates were based off
of the idea that there was high trade value in the gravel that is still on
the site. At the moment gravel is not in very high demand so this didn't
work out. There is no rush so we will try again another time.

 

In PAZ we had a presentation on the Transfer of Development Rights program
in Gallatin County.  We had Greg Sullivan, the former planning director in
Gallatin County and current Bozeman City Attorney do the presentation.
There was a lot of food for thought. I was expecting to find their program
more relevant to our situation but it was a lot different from anything we
would want to do here. The Commissioners were also present but made a point
of staying out of the discussion. I invited them to the table at least three
times but they declined. What they have is a growth area triangle between
Bozeman, four corners, and Belgrade. This is roughly equivalent in size to
the Missoula valley urban growth area. The TDR program is just in the county
outside of city limits. In the growth "donut" area, they zoned it to about 2
per acre. But you can buy development rights from the surrounding open space
to go up to about four per acre. 

 

In Gallatin County they are trying to preserve the surrounding ranches. Some
of which are thousands of acres. The vast majority of the open lands in
Missoula County outside of the growth area are public or owned by Plum
Creek. In Missoula, the discussion has mostly been about how we can preserve
relatively small open space tracts within the urban growth area. The model
they set up is for a 40 year development restriction rather than permanent.
They worked out a formula for how many development rights the different
parcels would have. Then established how many development rights would need
to be purchased to get the density bonus in the receiving zone. The price
for development rights would be determined by the market. 

There was also a component where the county would provide some kind of
funding match to the developer where whatever they spent on development
rights the county would spend on infrastructure that provided public
benefit. No funding mechanism had been worked out for how that was going to
be financed. Possibly a general obligation bond of some sort.

 

Nick Kaufman of WGM Group commented on how he liked the public participation
part of it. He thought it was problematic that we heap the costs of our
community ideals on new development because that translates into the cost of
the homes which means the future homebuyers (our kids, new comers, etc.) are
bearing the full cost.  If these are community ideals we should all
participate in the cost.  I sort of agree with this. I probably need to go
through the MOR cost of development presentation again but I'm pretty sure
that the price of homes is based off of what people can get for them, not
what they cost to build. The difference is the profit of the developer. If
the cost goes up I don't see why that is entirely absorbed by the new home
buyer. Isn't there any elasticity in the developer's profit? I assume that
when the market supports greater profits they take them regardless of
whether their costs stay the same.

 

Next was A&F. We learned about the Neighborhood Stabilization Program (NSP).
Montana got $19.6 million to assist with foreclosed homes. We can use the
money to buy foreclosed homes and do something with them that helps people
up to 120% of median income. The good news is that we really don't have a
lot of foreclosures around here. The bad news is that makes it hard to get a
piece of this new federal pie. It can also be used to demolish qualifying
blighted properties. We have identified a few of those. 

Note to Realtors: If you know of foreclosures OPG may be able to put a deal
together to buy the homes.

 

Another cool piece of business today was approving a contract between the
city and the downtown business improvement district (BID) to take care of
trash pickup from the cans on the sidewalks.  Currently we pay Allied Waste
$17,000 per year to do it. They empty them three times per week during the
busy season, twice a week in the winter.  The BID will be hiring a full time
person to deal with the trash, clean graffiti and power wash messes from
sidewalks. They are also planning to take on plowing the alleys and other
miscellaneous tasks that can be billed to business owners to further offset
the cost of the position.  A while back we received a grant from Coca Cola
for some recycling bins. We haven't implemented them downtown because we
couldn't work out a deal to get them emptied. It is likely this can be
rolled in to this deal with the BID. The BID will be able to be much more
responsive to the changing trash can collection needs downtown like the
markets and festivals.

 

Lots of little items in Public Works. Most notable for me was the traffic
calming project on Pattee Creek Drive.  They had finally worked out the
details and are installing four of these speed cushions which are like long
speed bumps with a space in the middle so a fire truck can go through. The
cost will be about $350 for each of the 50 or so home owners in the project.

 

In BCOW we heard the parks and public works budgets. There was talk of
moving some money between departments. We may yet find something to fight
about in this year's budget. 

 

 

Thanks for your interest,     

 

Bob Jaffe

Missoula City Council, Ward 3

1225 South 2nd West

Missoula, MT 59801

(406) 728-1052

 

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