MRA Explores Opportunities Under New Definition of Workforce Housing State

October 25, 2022

Montana Lending

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Martin Kidston

(Missoula Current) With a change in state law regarding workforce housing, the Missoula Redevelopment Agency plans to convene a task force with a number of stakeholders to determine how it may apply tax increment funding to certain projects.

The term workforce housing can mean different things to different groups, and cities across the state are wrestling with how to define it. But if MRA can accelerate a new program around these homes using the tax increase as a catapult, it could help spark a new development tool.

“In the last legislative session, a change was made to the definition of infrastructure in the urban renewal section of the law,” said Annie Gorski, deputy director of the MRA. “We’ve been working since the spring to figure out some things.”

Among the questions, Gorski said the MRA is exploring how other cities in the state that use urban renewal districts are approaching redefining workforce housing as a form of infrastructure.

At the same time, MRA met with the city’s housing office, lenders, developers and other stakeholders to understand what the needs are and how a new program could meet while complying with state law.

“If we were to develop policy and program options, specifically a new grant program where we could invest directly in workforce housing, what would be most beneficial? said Gorsky. “Which programs are simple to administer and flexible, knowing that the needs of a small project may be different from those of a large project, and projects for rent and for sale will need a tool that can be flexible to both types of projects.

MRA has a long history of investing in affordable, market-priced housing. Although this investment is not directly earmarked for housing development, it can be used to fund infrastructure needed for development.

More recently, this has included road and infrastructure works in the Scott Street neighborhood, where several housing projects are underway. This direct investment in infrastructure, including utilities, can help reduce costs for the developer, with the savings passed on to the end user.

But the change in state law could allow MRA to invest directly in housing if it is considered infrastructure.

“If it’s a new grant program, it would be a set of guidelines for that grant program if they’re different from the infrastructure program we have now,” Gorski said. “We have ideas and concepts.”

The state of Montana is also working on housing issues, but Missoula may be ahead of the game given MRA’s investment in housing-related infrastructure and the city’s permanent housing policy. The latter was created by former Mayor John Engen several years ago and features a range of goals that have found their way into city operations and budgeting.

“I think it will be something that will go to city council as policy, and we will execute it,” MRA Director Ellen Buchanan said of any future policy recommendations. “But we really need to check that internally. We have an overview of the revenue from tax increases that are available. This must be at the forefront of any new policy.

Pending approval from city management, the MRA plans to establish a task force to formulate all proposed recommendations. The group will likely consist of bond attorneys, stakeholders, developers, housing experts and a member of city council.

“There are a lot of layers here, and a lot of definitions floating around, depending on what entity you’re talking to,” Buchanan said of the new law. “We need the cooperation of the mayor and the president of the city council. We’ll take the idea to them and see if a working group is something they want to do, or if they’d rather we take it on as a board.