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Change could allow TIF funds to be used for workforce housing

by HEIDI DESCH
Daily Inter Lake | July 12, 2022 12:00 AM

Kalispell is considering making tax increment finance funds available to workforce affordable housing projects.

In order to do so, the city’s Downtown Urban Renewal Plan and its West Side/Core Area Urban Renewal Plan must be updated to include workforce housing projects as eligible for TIF funds. The Kalispell Planning Board on Tuesday will consider amendments to those plans that make that change. The planning board meets at 6 p.m. at City Hall, 201 First Avenue East.

Kalispell uses TIF funds within the boundaries of both plans as part of the “overall strategy to meet its needs of promoting economic development, improving area employment opportunities, improving area housing opportunities, and expanding the community’s tax base.”

Since both plans were adopted, the planning staff report notes, Kalispell has experienced significant population growth with the city being named the fastest-growing micropolitan area in the nation. To mitigate impacts associated with rapid growth and address blighted conditions, the city is considering including the creation of workforce housing with household incomes of 80% to 120% of area median income in both plan areas.

“Identified workforce housing projects created within both plan boundaries would promote area housing and employment opportunities,” the staff report notes.

State law allows for TIF funds to be used for workforce housing. Once the city includes affordable workforce housing in its plans, then it could allocate TIF funds toward such housing projects within those areas.

WORKFORCE HOUSING is often used to indicate a program targeted at households earning too much to qualify for traditional housing subsidies — those 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.

Based upon 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.

As an example, in the case of a household at 80% of AMI a market rate three-bedroom residential unit at a cost of $2,000 per month would mean a gap of about $400 to be considered affordable. That $400 gap would be eligible for TIF assistance.

Details of each request from a developer would have to be analyzed for accuracy and financial feasibility with each application, planning staff notes. The application would be reviewed by the Kalispell Urban Renewal Agency.

The inclusion of workforce housing as an eligible project is not being mandated, but included as an eligible TIF request for workforce housing within the boundaries of either urban renewal plan.

OVER THE past decade Kalispell rental housing has been below 2% vacancy rate and at or near 0% vacancy rates at certain times, according to the city. Limited availability of housing has driven home prices and rental rates up by double digits such that wages are no longer sufficient to cover housing costs at 30% of household income — housing is considered to be affordable when it is no more than that percentage of the household’s gross income including rent or mortgage payments, utilities, property tax and insurance.

A market study in 2021 conducted for Junegrass Place, a deed-restricted affordable housing project slated for Kalispell’s North Meridian Road, found that all existing income-restricted housing projects in Kalispell are 100% occupied. In addition, all have a waiting list ranging up to 25 names for senior housing and between 40 to more than 100 names on the family housing projects.

That same study found that rent in the area has increased by 18% to 33% from July 2020 to July 2021.

Also on the agenda, is a request from William and Simone Bailey for annexation and initial zoning of R-3 residential for property at 1788 South Woodland Drive. The property that includes a single-family home is about 0.354 acres.

The annexation request is based on a need to connect to city sewer due to a failing septic system. There are existing sewer mains immediately available which would allow for a service connection.

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

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