Council hashes through proposal on workforce housing funding

After parsing through the details of a proposal that would allow for workforce housing projects to apply for city tax increment financing funds, Kalispell City Council on Monday still appeared split on the best course of action moving forward.

The city is looking at whether to update two of its urban renewal plans to specifically allow for tax increment financing (TIF) funds to be made available for projects with workforce housing, which is a term often used to indicate a program targeted at households earning too much to qualify for traditional low-income housing subsidies.

Council used Monday’s work session to ask questions regarding the proposal brought forward after members showed interest in making the change. Some Councilors argued that the income target included in the plan should be broadened to include a lower threshold for incomes, while others suggested there should be no income guidelines to provide flexibility. Still, some said TIF funds already can be used for infrastructure on a housing project so the change is unnecessary.

Council is set to vote on the plan at its Sept. 6 meeting.

Councilor Ryan Hunter said the city should not exclude households that make a lower amount of income, noting that those households also contribute to the community by filling jobs and spurring the economy by spending money here.

“We want to define workforce housing as broadly as possible to give the most opportunity for housing,” he said. “By defining so narrowly we’re unnecessarily shutting out certain groups that need access to as many funds as possible.”

City staff suggested that the program focus on workforce housing for households in the 80% to 120% of area median income or AMI range. In Flathead County, the estimated area median income for a four-person household is $80,300. To be considered at 80% AMI, the same size household would need to earn $63,500. To be at 120% AMI, the household would be earning $95,300.

Councilor Sid Daoud pointed out that thousands of housing units not yet constructed have been approved so that will change the future housing market. He went on to suggest that if the city were to define the type of housing too specifically that could hamper the process.

“If we do define this then that will restrict the developer into something in that range,” he said. “It seems like an advantage to not define workforce housing.”

Mayor Mark Johnson pointed out that developers can already apply with the city for TIF funds to be used on infrastructure for a project, which would in turn lower the cost of the project thus resulting in lower housing costs.

“Why are we naming it,” he said. “A dollar is a dollar no matter where it is defined. It’s already available for housing. We’re just waiting on that developer to step forward and ask for funds.”

STATE LAW allows for the use of TIF funds for workforce housing, but the proposal would look to specifically call that use out in the city’s Downtown Urban Renewal Plan and the West Side/Core Area Urban Renewal Plan, along with providing income parameters.

City Manager Doug Russell said workforce housing fits within the parameters of what TIF funds can be spent on regarding the city’s urban renewal plans once they are amended to include housing.

“When you’re talking about urban renewal we’re talking about the revitalization of an area through economic development and commerce, which is there to generate revenues,” he said.

“So it’s only natural that you would want to have a workforce there to be able to work in that environment.”

Jarod Nygren, city development services director, said Kalispell’s urban renewal plans don’t allow for the use of TIF dollars for affordable housing projects and that should be rectified before spending money that way.

He said the income range at 80% to 120% AMI was suggested as it is considered a common range for affordable workforce housing.

“This goes to what’s known as the missing middle,” he said. “There are subsidies in place for those below 80% even if there’s not enough. What we’re looking at is the missing middle – nurses, teachers, police, firefighters, city employees – that is the demographic.”

Based upon the income range and guidelines of affordability, a four-person household at 80% AMI would be able to afford $1,587 per month for total housing costs. The same household at 120% AMI, would be able to afford $2,382 per month.

A search of rental listings in Kalispell shows that a two-bedroom apartment rents for about $1,500 per month, while rent for a three-bedroom house is around $3,000 per month.

“That alone shows a roughly $500 subsidy is needed at 120% AMI for a four-person household,” Nygren said.

A developer would have to apply for TIF funds with the city going through review by the Kalispell Urban Renewal Agency and then be approved by Council.

PUBLIC COMMENT on the proposal was mixed but mainly focused on the need for housing.

Cassidy Kipp, deputy director of Community Action Partnership of Northwest Montana, was blunt in assessing the conversation, taking particular issue with some Councilors seeking information about housing from websites and wondering about the housing inventory.

“We are the people who have the information,” she said. “I’d love to share this information with you, but we aren’t invited to the table. I can tell you what housing inventory is currently available rather than you wondering.”

“This feels a lot like lip service,” she added.

Mandy Gerth shared her struggles with finding housing. She said she spent six months looking for housing and put in 120 different applications for apartments.

“My first apartment was 80% of my income,” she said. “Luckily I know people in the community that helped me find housing and with another job I got that to 70%.”

She pointed out that even with a master’s degree and as a former small business owner who makes in the $40,000 range, finding housing for her and her three children has been difficult.

She suggested that the city focus on lower income housing because that would have the potential to free up housing spots.

Shannon Freix said she’s optimistic about the conversations being had around affordable housing, but asked that the city look at options for assisting with homeownership.

Mayre Flowers, with Citizens for a Better Flathead, questioned the city’s use of TIF funds for housing, pointing out that projects that use TIF are supposed to contribute directly back to the tax base from where the funds originated.

“I know we need affordable housing, but I’m not sure this is the way to do it,” she said. “I understand TIF funds being used for sidewalks and sewer lines, but I’m not sure about that money going toward housing.”

Features Editor Heidi Desch may be reached at 758-4421 or hdesch@dailyinterlake.com.