[MissoulaGov] Committee Update 6-3-09

[Jim McGrath]

The housing authority project will be 37 units - Jamie mis-typed the
number. J

 

From: Jamie Hoffmann [mailto:jamie at jameshoffmann.com] 
Sent: Friday, June 05, 2009 10:28 AM
To: Jim McGrath; Bob Jaffe; missoulagov at cmslists.com
Subject: Re: [MissoulaGov] Committee Update 6-3-09

 

Bob stated that "...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." Yes, the
market place finally determines what the value of housing is, but one is
at peril for ignoring the cost of production. The Housing Authority had
a rental housing study done last October which conluded that the rental
market had a low 3% unoccupancy rate. In the last 10 months only 20
permits for multifamily units (which includes condos) have been issued
(outside of the Housing Authority's own 27 unit tax credit rental
project currently under construction.) Demonstrable demand, little
production because the cost of producing an apartment is too high given
current rents (even though our rents are high relative to income.) The
50% of Missoula that rents are not seeing the production of that which
they need: more apartments. Windfalls in building profit will not be
seen for some time to come, for either for rent or sale property.
Development is an extremely volitle business. Missoula has had an
unusually long and steady economy for 20 years, much more stable than
the rest of the county that has seen recessions come and go over the
same time period. Sometimes there is relatively good profit, sometimes
not. Any profit made has to take care of the not so good times in order
for a developer to survive for 15-20-30 years. What looks like fat
profit today may well be no profit with only hopes of staying in
business tomorrow. 

	----- Original Message ----- 

	From: Jim McGrath <mailto:jmcgrath at missoulahousing.org>  

	To: Bob Jaffe <mailto:BJaffe at ci.missoula.mt.us>  ;
missoulagov at cmslists.com 

	Sent: Thursday, June 04, 2009 7:12 AM

	Subject: Re: [MissoulaGov] Committee Update 6-3-09

	 

	Bob,
	re elasticity
	If the cost of building goes up and the price to buy them
remains the same, developers will wait to build until demand pressure
raises the price. So, in the end, the cost goes into the price.
	Windfalls in building cost typically are used either to lower
the price --faster sale-- or to add additional features.
	
	
	
	-----Original Message-----
	From: missoulagov-bounces at cmslists.com on behalf of Bob Jaffe
	Sent: Wed 6/3/2009 10:42 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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