MISSOULA — The Missoula Redevelopment Agency’s Board of Commissioners on Thursday approved $1.3 million in tax increment to help finance a $54 million affordable housing project on the city’s north side.
Villagio is expected to open in 2022 and will offer rents at roughly half the Area Median Income and include 32 rental vouchers. The development is expected to house 769 people in 200 units, each offering multiple bedrooms.
The buildings and the land will be tax-exempt and won’t contribute to the North Reserve-Scott Street Urban Renewal District.
“It’s a complex project, both from financing to ownership to design,” said Chris Behan, assistant director of MRA. “Very few funding sources are able to take on a project like this. It’s a complex financing methodology.”
MRA’s contribution covers utility upgrades, improvements to the public right of way and infrastructure related to the project, including a retaining wall that’s required due to terrain.
The development sits at the corner of Otis, Shakespeare and Scott streets and will be developed and managed by the Missoula Housing Authority. It also includes other financing partners and targets what MRA described as essential workers and their families.
“We’ll create 200 units of family housing, which has been identified as one of the most critical needs for our population right now,” said Behan. “Right now, there are 2,000 families that would qualify to be in this. It’s a big project and we’re making a big dent, but it’s only a dent.”
Revenue generated by renters should be enough to cover property maintenance and upkeep, though Behan said tax increment is essential to make the development pencil out. The project breaks down to roughly $270,000 per unit and includes roughly 174 underground parking spaces, along with street parking.
MRA intends to finance its contribution by using the funding that’s available in the district, though it could look at other options depending on the timing.
“We do have the residual from the Scott Street Village bond issue, and we’ll likely have a bond issue coming up if we move forward with the purchase of the Scott Street property to the south of this,” said MRA Director Ellen Buchanan. “We could roll this into a bond issue with that if the timing works out, but if we can do this with cash, that would be our preference.”
Nate Richmond, president and CEO of BlueLine Development, said the property presents challenges due to topography and will add to the cost of the project. But given the lack of land available in the city, other properties weren’t available.
“If someone had a perfectly flat 5-acre site to offer us, we’d jump all over that,” said Richmond. “But you’d have to take into consideration that a site would have to be located in a qualified census tract, which drives some of our financing. That site would have to be appropriately zoned and have amenable landowners who were willing to donate the site and own a portion of an affordable housing project for 46 years.”
Placing the project at this location met those needs, he added.
“All those things had to come together and they came together at this particular project,” he said. “It’s an opportunity that’s very unique in this part of the county to put together a 200 unit affordable housing project utilizing tax-exempt bond financing.”