[MissoulaGov] Committee Update 3-2-11
BJaffe at ci.missoula.mt.us
Wed Mar 2 21:43:06 MST 2011
The main item for me today was the rezone request for 217 Catlin Street. http://www.ci.missoula.mt.us/DocumentView.aspx?DID=5591 This is the property across the street from the housing authority project on Catlin behind the Good Food Store. The parcel runs the full width of the block between Catlin and Garfield. The current zoning allows for 16 units per acre at a height of 35 feet. The developer is requesting to rezone the property to 43 units per acre at 45 feet. It is a 2+ acre parcel that could yield about 94 units at the proposed density. The developer’s stated intention is to build a complex of multi-family buildings with a total of 72 one bedroom units.
As one may expect, the neighbors to the project are unhappy. They say that they welcome development of the parcel, but not at two or three times the currently allowed zoning. Unhappy is probably an understatement. Some of them are passionately displeased.
This is the first controversial development proposal we have seen in quite some time. Possibly it’s a good omen for the economy.
The issues are that we have various growth policies and transportation plans and visions for the future that all promote the virtues of infill and compact development near the urban core in proximity to services. But where is the limit? A few years ago we approved the UFDA plan (Urban Fringe Development A??). This document built off the premise that the historical growth in Missoula has been about 2% per year. So if we project out the next 20 years or so we figure we need so many additional units to be constructed. Then through some semi-scientific process figure out how many of those units should be absorbed in each section of town. Then we can look at the zoned potential of parcels that currently have an assessed land value that exceeds the assessed improvements value. This represents readily developable land.
In this particular section, Russell to Reserve, the zoned potential of developable land can hold twice the number of units that we anticipate needing. So one may question why we would even consider allowing such a dramatic upzone when the current zoning supports adequate development for our long term growth plans.
What we are being told is that even though the zoning density supports our growth plans, it does not support the cost of development. The developer’s representatives, Jamie Hoffman and Ken Jenkins, told us that you can not build at 16 units per acre and make money. Jamie said that of the nearly 30 multi-family projects he has been involved in over the years only a few have been less than 20 units/acre. Generally they get built in commercial zones not encumbered by density limits.
If this is indeed the case, then we have a bit of a problem. I know we have gone over this before but it has been a while. It would be nice if someone in the development community could do a little presentation on the economics of real estate development. Here are my wild ass guesses on this project: $400,000 for the land. I would hope there is some economy of scale when building something like this so lets say $90 per foot. 72 one bedroom units. Let’s guess 500 feet each. That comes to $3,640,000. Round it up to $4 million with parking, landscaping, and whatever else may be involved.
Then you figure brand new one bedroom units will rent for something like $600. So that works out to $518,400 per year in income at full occupancy. Take out $75,000 in management and maintenance and you get $443,400 in income per year. Does that pencil for a $4,000,000 investment? I’m not sure.
When a developer looks at a project and says that doesn’t pencil, they must be using some rough numbers like I just did. It seems like this is the sort of thing we should be privy to as policy makers. From what we are being told, our policy is based on a reality that no longer exists in this community. I think we need to get to the bottom of this.
The public hearing on the rezone will be Monday night.
In other news, we heard an update from the fire department on all that they do. They have concerns about loss of grant money but all is well. We also approved a project to improve the pedestrian crossings into the University and had a lengthy discussion about proposals from the Bike Pedestrian board. The most actionable amongst them a request to form a subcommittee to develop options for how we will finance sidewalk projects in the future.
Thanks for your interest,
Missoula City Council Ward 3
1225 South 2nd West
Missoula, MT 59801
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