Please read, review, and familiarize yourself with the Workforce Housing Ordinance.  The task force will be presenting the ordinance to the Commission this Monday, February 12, 2007, at 6:00 p.m.  

It is highly likely there will be an opportunity for public comment directly after our presentation.  If not, there will be an opportunity during the public comment period of the meeting.  It will be most useful for you to bring your public comments in a written form as well as stating them verbally.  Always state your comments first and then give the written document to Brit, the clerk.    

If you have questions, I would be happy to help answer those or direct you to the appropriate task force member.  You can e-mail those questions to me at connie@VerticalMontana.com. 

Currently, the Task Force is working on cost offsets for the builders and developers.  We received comments from SWMBIA (SW MT Building Industry Association) and GAR (Gallatin Association of Realtors).  The Task Force is addressing those comments received.  We have proposed reductions in City fees on a sliding scale and a waiver of City fees for projects that are 100% affordable.  Similarly, we've proposed sliding scales for impact fees.  Additionally, we are looking at passing on the impact fees directly to the buyers of the affordable units.  This topic will be discussed at length when the Task Force discusses pricing of the units.

Other cost offsets include fast-tracking and expedited review from all City departments, zero lot lines, reduced lot sizes, low interest loans, and density bonuses.  SWMBIA proposed adding incentives for projects close to employment, which, as a Task Force, we all agreed is an excellent idea.  The subcommittee working on offsets will likely take that suggestion into consideration. 

The most contentious issue regarding offsets is the reduction in park lands.  The Task Force has worked diligently to share the costs of affordable housing with all sectors of the community and that would include parks.  Currently, the exact amount of a parkland reduction has not been determined.  The Task Force is looking at a reduction of park lands as high as a 21%.  The Task Force appears to be divided on this issue.  Next week, two members of the Task Force are meeting with the Parks and Rec Board.  During this week, members of the Task Force will get together to quantify the costs to the developer and to the public with regard to lost park lands.

Please feel free to post your comments or e-mail me directly.

During last night's meeting, the Task Force received comments GAR.  I was appointed to the task force to represent Realtors, not the association.  From GAR's comments, they also want to make that very clear distinction.  As a representative for the real estate industry, I have made every attempt to talk to as many people as possible, to include other Realtor comments, and to set up a vehicle of communication, which is this BLOG.  To this end, I welcome comments from other real estate professionals, whether those professionals are or are not members of the Association. 

Readers, please understand this distinction.  GAR's position has varied from comments I've received from other real estate professionals.  If you would like to know GAR's position, please contact the president of our association, Donna K., or the executive vice president, Melissa Dulin, at the GAR office.  Realtors that are also members of GAR are in an interesting position.  GAR is a representative body.  I accept comments from anyone.

The BLOG is an information disseminating vehicle for the progress of the Task Force meetings.  Any member of the public is welcome to attend and comment at Task Force meetings, including other real estate professionals. 

Before I get into the meat of Thursday's discussion, please be aware that we are meeting at 6:00 p.m. downstairs at the City Hall on Rouse and Main. 

THOSE THAT LIKE PARKS--READ THIS!  Some members of the Task Force are proposing a 21% reduction in parks requirement!  That means in a 100 acre development, the parks could be reduced by as much as 4 acres, leaving those 4 acres for development of MARKET RATE homes.  NOW..when?  NOW is the time to comment about parks.  This will be discussed this week.

During last Thursday's meeting, the "Methods of Compliance" section was completed and approved by the task force members with just a few word changes.  Below outlines this section.

Any subdivision greater than 10 lots is required to provide lots for construction of Affordable Housing Units (AHU).  Lots sizes for single-family detached housing ranges from 2500 to 3000 sq. ft.  Lot sizes for multi-family attached housing ranges from 1500 to 2000 sq. ft. per unit.  The price of the lots is based on $12/sq. ft. in 2007 with annual increases based on AMI or 4%, whichever is less. 

Density is calculated as follows: 0.4 units x net developable area = required For-Sale AHU; where a fraction is greater than one-half, the developer is required to round up.

Not less than 30% of all AHU must be single-family detached housing.  The remaining 70% can be as the developer chooses.

Deed restrictions include a 1-yr deed restriction on lots and a 6-month deed restriction on final AHU's.  If in 1-year, the actively marketed lot is not sold, the deed restriction is lifted and the developer may sell the lot at market rate.  If in 6 months after construction, the actively marketed house has not sold the deed restriction is lifted and the house can sell at market rate.  Additional deed restrictions include those imposed by the UDO's affordable housing program.

There are 4 ways to meet the ordinance requirements.

1.  The developer can provide the required number of lots, which must be marketed and houses constructed in proportion to market rate housing.

2.  The developer may provide lots off-site within the City of Bozeman.  The developer may also choose to "bank" homes in an off-site location.  Alternative 2 would be used in the case of an upscale development that would not lend itself to affordable housing, such as the Village Downtown, Legends, etc.

3.  An individualized program.  This is where the developer is only limited by imagination.  This can be a "cottage-style" village, housing for very low income folks, rental housing, etc.  Developers using the individualized program are encouraged to be creative.  

4.  Cash in lieu.  The Task Force recommends a cash-in-lieu amount of three times the affordable lot cost, which is currently set at $12/sq. ft. for 2007.  The cash-in-lieu option is again geared towards those high-end developments where off-site housing or lots is not an option. 

Make your comments!  Talk to your friends!  Pass this around to Realtors, Developers, and Builders! 

Feedback is the breakfast of champions!  Together we can create a GREAT ORDINANCE! 

It has come to our attention that not every group that is represented is getting updated.  Pass along this BLOG address to those that may be interested.  Those folks may include developers, builders, SWMBIA members, business owners, Chamber members, low to moderate income persons, Montana's workforce!  

Thank you! 

Please click here to review the latest working copy of the Workforce Housing Task Force.  The items in bold are the final points we are discussing. 

Our work is nearing the end.  We will be meeting tonight, November 30th, at 6:00 p.m., next week, December 7th, and possibly on the following Thursday, December 14th.  We meet downstairs at the town hall located on the corner Rouse and Main.  Please COME and SHARE your thoughts. 

Once we complete our work, the Community Affordable Housing Advisory Board (CAHAB ) will review the ordinance with the City's legal team.  The ordinance is scheduled to go before the commission on January 8th--Elvis' birthday! 

Please check back on Monday to get a progress report after tonights meeting.

Yesterday at the Chambers Eggs & Issues we had the opportunity to Meet the Candidates!  This provided the first chance for many of the candidates to speak in public about themselves and their mission, should they be elected!  For contact information and a list of candidates, click here.

Overall, the democrats are the best public speakers.  This is important.  Those with excellent speaking skills will have the ability to influence and persuade others at the state level.  Two of the democratic candidates did not bother to show up, those are HD#67 and HD#70. 

Larry Jents, SD#32, please remember to turn your phone off during meetings.  Gary Perry, SD #35, please keep in mind that in most cases "we" works much better that "I".

The underlying theme for the day: "Energy" "Education" and "Economy" or the three "e's".  Almost every candidate touched on all three of these issues, while every candidate at least mentioned one.  Republicans will cut taxes to accomplish these goals and democrats will spread taxes around.  Brady Wiseman, democratic candidate for HD#65, said it best "Money works best spread around like fertilizer helping things grow."

My vote for best speaker:  Mike Phillips, HD #66
My vote for the person least likely to waste time: Jim Klug, HD #64
My vote for person most passionate about Bozeman: JP Pomnichowski, HD #63
My vote for the smartest candidate: Loren Acton, HD #69 --we could use a few scientists on our side--

 

Three weeks have passed since the Affordable Housing Task Force began its mission to develop a City ordinance that will provide that 10% of all homes built in Bozeman to be affordable. 

This week concluded our "learning" sessions.  Last week we were educated on the rising costs of land prices and costs of construction.  This week we learned about the subdivision process and infrastructure costs.  Also this week, we had an excellent presentation from Marcia Youngman on what one developer does to keep his prices affordable.  That developer is Chuck Hinesley.  Chuck Hinesley's most recent development is Laurel Glen.  Some of those lots were retained by Mr. Hinesley and many of those lots were sold to individual builders.  Mr. Hinesley builds 8-plex condos on the lots retained and sells those units at affordable prices.  Morgan Creek, his first development near the Michael Grove condos, sold originally for $69,000 per unit.  Those condos today sell for about $135,000.  He will be building 72 units in Laurel Glen to sell between $135,000 to $145,000.  These units are 2 and 3 bedrooms, 2 bathrooms, and each have a one-car garage. 
 
What makes Mr. Hinesley's project affordable is low land costs.  During all of the presentations so far, land costs remains the biggest burden to affordability.  What may have emerged as the second cost burden to affordability is infrastructure costs.  Lastly would be construction costs.  What decreases construction costs is quantity.  Like Mr. Hinesley's projects, multiple units constructed at one time significantly reduces the costs.  Dab suggested building 12-24 units at a time to attain affordability, whether those units are attached or detached housing.  

Next Thursday, we will start to develop the ordinance, keeping in mind what we've learned so far and what our charge is--to provide that 10% of all homes built in the City remain affordable.  We will discuss what the ordinance defines as the role of the developer.  Please click here to review the ordinance again.  We will begin with Section 16.02.010. Purpose and Section 16.02.020. Applicability. 

During our second meeting Karen Roberty of HRDC presented the intent behind the Ordinance along with a brief history of Bozeman's affordable housing issue.  

In 1992, Bozeman conducted its first housing study and as a result the City Affordable Housing Advisory Board (CAHA was formed.  In 1994, the City adopted its first affordable housing policy.  In 1998, recommendations for affordable housing included: density bonuses, fee waivers, infrastructure relaxation, homeownership assistance, and inclusionary zoning.  All of these recommendations were adopted except inclusionary zoning.  In 2003, Bay Area Economics was hired and also recommended inclusionary zoning. 

After the Bay Area Economics study was complete, the Ordinance was written.  It is the intent of the Ordinance to provide affordable housing to Bozeman's workforce.  Workforce is loosely defined as teachers ($36,000/yr), fire-fighters ($43,000/yr), patrol officers ($40,000/yr), and office workers ($22,000/yr).  These professions earn less than 120% of the Average Median Income (AMI) for Bozeman, which is $56,400.  The way the Ordinance does this is to fix sales prices at an affordable amount for the workforce.     

The sales price of affordable units is set using incomes of 80% AMI and allowing 30% of income to be used for housing.  This sets the sales price at approximately $150,000 (depending on household size).  This allows any individual that earns less than 120% AMI the ability to afford to purchase the property.  Those individuals earning less than 80% AMI may be able to afford this property by using other downpayment assistance programs. 

The ordinance then defines how this will be accomplished.  One of the methods is by using inclusionary zoning (IZ).  IZ requires 10% of all developed lots to be affordable (that is, after housing construction, the sales price is set at $150,000) and that those lots are improved in proportion to the rest of the development.  IZ affects land prices, not building prices.  The builder is not required to build a $200,000 house and sell it for $150,000.  The builder is only required to build a $150,000 house.  IZ affects the land price.  To offset this, a density bonus is offered, which basically gives the developer one free lot for every affordable lot sold.  In Bozeman, the developer is usually different from the builder.  The Task Force will look at this.

The ordinance also allow for a cash-in-lieu and allows the developer to come up with its own affordable housing plan.  

The ordinance is not written well with regard to what happens when the affordable units sell; however, the intent was well defined during our presentation on Thursday.  At the time the house is constructed and a wrokforce buyer closes on this house, the house is appraised.  If the house appraises for more than the purchase price, the City takes a second for that amount, which is recorded on the deed.  This prevents the buyer from flipping the house for a profit.  The builder only gets what the purchase price is fixed at, $150,000 (or appropriate fixed price).  When the house re-sells there are two options.  First, the house can remain in the affordable housing pool and sell to another workforce buyer at an affordable price.  (I'm under the impression this is a 4.5% appreciation or market appreciation, whichever is less.)  The second option is that the home can sell on the open market.  If the home sells on the open market, three things happen.  First, the loan is paid off to the bank (1st mortgage).  Second, the seller received their equity, plus 4.5% appreciation or market appreciation, whichever is less.  Third, the City received the remaining appreciation and the second mortgage, if applicable.  The money the City receives is then used for affordable housing.  The City only receives money at the second sale and only if the second sale is at market rate. 

Clear as mud?  I will attempt to explain more as I'm reading through the materials.  If you have specific questions, please ask those so I can post them and get answers to those questions.  Please note that "house" refers to any affordable unit, which can be a house, condo, or townhome.  Please also note that the sales price of $150,000 has a lot of other variables, but is essentially the number we're working with.   

My task this week was to assemble data regarding land prices dating back to when information became available on our MLS system.  For Gallatin County, that is 2003.  Attached here is the report of land prices from 2003 through September 12, 2006.  The data is as comprehensive as possible.  The biggest challenge in presenting the data is interpretation of the available information.  Some assumptions were made and some information was simply omitted because there was not enough information or the information could not be verified.  

In general, land prices have more than doubled since 2003, with the largest increases over the last two years.  It is still less expensive to purchase large tracks of land and subdivide than it is to purchase lots already subdivided with city services.  

The average single-family subdivision lot sold for $63,933 in 2003 and in 2006 the average sold price was $133,250.  

The price per acre ranges from $255,383, if purchased in chunks greater than 5 acres and $568,717 per acre if purchased as a build-able lot (sold price data for 2006). 

The most interesting discovery in my research was Cattail Creek.  About 50 acres sold in Cattail Creek to one developer at a rate of about $35,000 per acre in 2004.  In 2005, subdivision lot sales revealed an average purchase price of $336,000 per acre!  In one year, after subdivision, Cattail Creek increased 860%!  Interestingly enough, Cattail Creek is still one of the more affordable places to purchase condo units. 

If you have any questions, send a comment or post your comments on-line. 

The Task Force met for the first time last night.  All members were present except for Alex Phillips and Chris Budeski.  David Smith was in Helena so Scott, another Chamber representative, stood in for him. 

Ron Brey, the Assistant City Manager, informed us of our duties, those are included here for public review.  The notes on the margin reflect what Ron described as our affordable target price, that is housing units priced from $150,000 to $160,000. 

There was a lot of debate as to the interpretation of the Ordinance, definitions of affordability and workforce, and how the City determined that 10% of all building permits equaled 85 units. 

The agenda items for next week include clarifying the ordinance and determining costs for building, such as construction costs and land costs. 

Each Task Member was asked to pick three components of the Ordinance to improve and suggest improvements to those areas.  Ron indicated that we would be "picking apart" the ordinance and coming up with a viable ordinance for continued affordabilty in Bozeman.