News from the Knoff Group

Consultant recommends affordable housing action for Bozeman – BDC

The housing affordability issue is becoming a hot button issue in Bozeman.  The City has hired a consultant to give them suggestions – and a summary of their ideas is contained in the below article.

The ideas will be presented to the Bozeman City Commission on Monday, February 9 at 6pm.

A few of my thoughts on this – who is to say what defines affordable for most buyers?  It is an intangible word much like sustainable.  I’m seeing communities just outside the city limits of Bozeman benefit from Bozeman’s growth – the prices sit below Bozeman’s and buyers looking for lower priced homes, condos and townhomes are moving to these areas and driving these markets into health.

There are a slew of properties available on the market below the $200K mark in Bozeman and median price figures are being tossed out without framework – the consultant is strictly looking at single family units – at that price you have a selection of condos and townhomes.  Owning one of these is still home ownership.

Forcing developers to built affordable housing is a bad idea – it bootstraps the industry into having to build product that kills their bottom line.  Make no mistake – developers are a for profit entity – why wouldn’t they be?  They benefit from the law of supply and demand – and they just had a horrible go of it between 2008-2011.  A better course of action is encouraging them to get excited about affordable housing – planning projects that are supported by tax credits and impact fee reduction or elimination.

Eric Dietrich, Chronicle Staff Writer

Posted: Tuesday, February 3, 2015 8:00 pm

2015 Affordable Housing Study Report and Recommendations

Report prepared by Werwath Associates in January 2015 detailing recommended action for the City of Bozeman on affordable housing.

Bozeman’s real estate market is back in full gear — and it’s time for the city to reinstate an ordinance to help working families afford homes in the city, according to a report by a city consultant released Tuesday.

The study, authored by Santa Fe, New Mexico-based consultant Daniel Werwath, suggested Bozeman reinstate a modified version of its workforce housing ordinance, which was adopted in 2007 but later suspended amidst the regional housing market crash resulting from the Great Recession.Median home sale prices in the city have climbed from a low of $207,000 in 2011 to $287,000 in the first 11 months of last year, according to Werwath. Detached homes priced below $250,000 represented less than a fifth of the city’s housing market last year, he added.

“While this is good news for existing homeowners and the building community,” Werwath wrote, “many members of Bozeman’s workforce are being priced out of the market.”

He recommended that the Bozeman City Commission enact an ordinance requiring developers proposing subdivisions or other residential projects with more than 10 units to include a proportional number of affordable units in their plans.

Under the proposal, developers would have the choice of providing one unit in 10 at a price affordable to families making 70 to 80 percent of area median income, or providing three in 10 units at prices affordable to families with incomes at 100 percent of median.

For families making 70 to 80 percent of median income seeking a three-bedroom home, $198,000 is considered affordable. For households making 100 percent of median income, $255,000 is an affordable three-bedroom home price.

Area median income is a statistical concept widely used as a barometer in assessing housing affordability. The U.S. Department of Housing and Urban Development estimates Bozeman’s area median income for a family of three as $64,000 a year.

Federal guidelines generally consider housing affordable if it costs 30 percent or less of a family’s income — meaning the median family of three is considered to be in an affordable setting if its annual rent or mortgage costs are no more than $19,200, or $1,600 a month.

Developers would also have the option of meeting their affordable housing requirements by donating tracts of land for the construction of affordable housing by other entities — or by paying a penalty.

Werwath also recommended the city explore offering incentives to developers and builders who construct affordable homes, noting that the requirements would represent a de facto cost for them to bear. At public meetings, construction-industry representatives have said the economics of their business model would force them to pass those costs on to buyers by increasing the prices of homes not covered by the ordinance.

Among the incentives Werwath suggested for decreasing the costs of building less-expensive homes are deferring impact fees for roads, water and sewer infrastructure, reducing parkland requirements and streamlining the municipal review process for affordable housing developments.

He didn’t recommend specific sources of revenue for funding the costs of those incentives.

Separately from the workforce housing ordinance, he also recommended that the city support new subsidized rental developments, encourage major employers like MSU or Bozeman Deaconess Hospital to sponsor housing for their employees, look at preserving mobile home parks and reassess restrictions on accessory dwelling units like above-garage apartments.

Werwath’s findings and recommendations will be presented to city commissioners at their meeting at 6 p.m. Monday in the commission room at City Hall, 121 N. Rouse Ave.

via Consultant recommends affordable housing action for Bozeman – Bozeman Daily Chronicle: City.