MISSOULA — The developers behind a nine-acre housing project off Scott Street in Missoula’s developing Northside Neighborhood are working through the permitting process and plan to start laying foundations this fall, they told members of the city’s Affordable Housing Resident Oversight Committee this week.
Ravara, which entered into a contract with the city last year to develop the project on what once was city-owned land, is also working through the details that will govern the community land trust portion of the project, which covers around three acres.
“I’ve spent all week trying to get the first draft of the ground lease for the community land trust. It’s complicated,” said Dawn Mcgee with Ravara. “There are so many things that go into this.”
When negotiating the deal, the city asked Ravara to provide 70 units of permanently affordable housing offered to buyers between 100% and 120% of the area median income.
Current plans would provide for more than 70 units in a blend of condominiums and townhomes. The land trust would provide different opportunities for ownership depending on the unit type. Both a condo association and a homeowner’s association will govern the future residential units.
“It’s complicated but we’re trying to make it as plain English and comprehensive for people who want to purchase as possible,” said Mcgee. “The price point per the agreement with the city is that all the units will be 100% to 120% of the area median income at the time of sale.”
According to project partners, that would mean a price range from roughly $250,000 for a studio or small one-bedroom condo to $450,000 for a larger four-bedroom townhome on three levels. The project will provide a blend of housing types within the three-acre land trust.
The city’s ownership of the property, its agreement with Ravara, and the land trust are all intended to keep the project affordable to qualified buyers. But there are other pieces that are still being developed, such as the rules governing the land trust, particularly around future resale and equity.
“We haven’t worked on what those limitations are going to be. There’s an inherent tension in the resale for the person who buys it in the first instance and resells it over time. Our commitment is to keep these unit prices as affordable as we can,” said Mcgee.
The challenge, according to Mcgee, is permitting a buyer to gain equity over time but keep the resale value below that of the open market, where prices have increased 20% in Missoula over the last year. If such a price increase were permitted in the land trust, then the units would quickly become unaffordable to the next buyer.
“There should be a cap on how much per year that price can appreciate,” said Mcgee. “But if you put the (first buyer) in a hole and home costs continue to go up 20% on average ever year, you basically make it so that family can never move out of the community land trust house, and never move into anything affordable if prices are increasing at 20% a year.”
Mcgee added, “We’re going to be trying to figure out where on teeter-totter of tension is the fair point to bookmark for price appreciation. We’re negotiating that.”
The units should become available in late 2023 or early 2024. The project also includes an additional six acres that will include market-rate apartments and other amenities, including 20,000 square feet of retail space.
The project has been dubbed the largest of its kind in the state, though it’s still being developed as construction nears.
“There are many complex moving parts. Our teams are meeting regularly and sorting through these many complexities,” said Missoula Mayor John Engen. “But having a partner like Ravara convinces me that we’ll get a project on the ground and it will be meaningful for the community, and a place where people want to live.”