[MissoulaGov] Committee Update 6-3-09

[Nick Kaufman]

If you are interested in the discussion of economic benefits of new home
construction.  I have attached a 2007 paper prepared by Dr. Ann L. Adair
of the Center for Applied Economic Research, Montana State University,
Billings.
 
Best,
 
Nick
 
Nick Kaufman
Vice President , Principal Planner
WGM Group, Inc.
http://www.wgmgroup.com <http://www.wgmgroup.com/> 

 

________________________________

From: missoulagov-bounces at cmslists.com
[mailto:missoulagov-bounces at cmslists.com] On Behalf Of Ryan Morton
Sent: Thursday, June 04, 2009 12:57 PM
To: missoulagov at cmslists.com
Subject: Re: [MissoulaGov] Committee Update 6-3-09


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

 

-------------- next part --------------
An HTML attachment was scrubbed...
URL: <http://www.cmslists.com/pipermail/missoulagov/attachments/20090605/7c594c3b/attachment.htm>
-------------- next part --------------
A non-text attachment was scrubbed...
Name: The Economic Impact of Home Construction On Montana Counties- 2007 Update.pdf
Type: application/octet-stream
Size: 1025255 bytes
Desc: The Economic Impact of Home Construction On Montana Counties- 2007 Update.pdf
URL: <http://www.cmslists.com/pipermail/missoulagov/attachments/20090605/7c594c3b/attachment.obj>