MISSOULA – Missoula County recently made a generous donation of land for an affordable housing project being planned by the City of Missoula.
Plans are in the works to build 130 homes on land off of Mullan Road near the Missoula County Detention Facility.
While that donation made the project possible how is the rest of the project being financed?
Missoula Housing Authority Executive Director Lori Davidson says one big financing factor for the project is the 4% tax credits compared to 9%.
The 4% tax credit option is noncompetitive compared to the 9% tax credit, meaning that if you can qualify for a 4% it more likely that you will get it compared to competing for a 9% option.
These are two of the biggest tax credit projects in Missoula and developers are always looking for the opportunity to put a big enough project together to qualify for that 4% option.
Funding for the project comes from a couple of different places but tax increases are not one of those options. That means that no one should see any tax increase from the project.
“There is no tax increment financing in this project its not in a TIF district. We plan to use funds like home grants that will come through the city and our the state,” Missoula Housing Authority Director Lori Davidson said.
“Those are already funded by taxpayers, it’s not anything new. The 4% credits do not come through taxpayers — they are a credit that is given to the investor who benefits from it which is why they give us the capital up front to build the project. The tax-exempt bonds have no effect on the taxpayers,” she added.
Due to Montana’s small population and relatively low rental costs, it’s difficult to put one of these types of projects together. In fact, there are only a handful of such projects in the state.
Davidson also explained states like Washington, Colorado and California take advantage of the 4% option a lot because of densely populated areas and high enough rent costs.