Missoula, Montana: Partnership Expands Affordable Housing Opportunities

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Missoula, Montana: Partnership Expands Affordable Housing Opportunities

 

The Villagio, an apartment complex in Missoula, Montana, provides much-needed affordable housing in a booming city that has seen minimal affordable housing construction over the past two decades. Rising housing costs and a limited supply of housing are statewide problems in Montana, and in Missoula, where typically only 20 to 30 new housing units have been built each year, low- and moderate-income individuals and families have had difficulty finding affordable homes. The project was a three-way partnership among the Missoula Housing Authority (MHA) and private developers Madison Crossing and BlueLine Development.

Local Housing Market

The Villagio, in Missoula's desirable Northside neighborhood, represents a major step forward in balancing the housing supply in this western Montana city of 77,763. Residents favor the Northside neighborhood for its historic fabric and proximity to downtown Missoula.

The city of Missoula is at the confluence of five river valleys, which limits the city’s options for growth. The city’s comprehensive plan and upcoming zoning code updates advocate building upward and inward. According to Sam Oliver, executive director of MHA, Missoula was once a quiet mountain town with little industry other than mining and mineral extraction. Oliver added that "Missoula’s biggest challenge is that we don't have enough housing at any point in the spectrum. So, from absolute baseline beginning rental housing all the way up to until you get up into about the $1.5 million range, we're lacking in all segments of that market." As with many of MHA’s affordable housing endeavors, the Villagio project became possible largely because of the availability of an appropriate site. Madison Crossing bought the site and leased it to MHA for $10 per year. The developer will be reimbursed for the land costs, receiving a percentage of net income after all other fees are paid out.

The Apartments

Villagio is affordable to households earning 30 to 60 percent of Missoula’s area median income, and project-based vouchers are attached to 32 of the units. The 200-unit development is pet friendly and offers 93 two-bedroom, 101 three-bedroom, and 6 four-bedroom apartments featuring primary suites with ensuite bathrooms, private balconies with storage, large master bathrooms and closets, 9-foot ceilings, and in-unit washers and dryers. Underground parking, an important amenity because of Montana’s long, snowy winters, is available to residents, and rents include the cost of water. MHA had noted a strong demand for affordable family units, and Villagio was "purpose built" to meet this need with three-bedroom units. In the past, most Missoula apartment developments consisted primarily of one- and two-bedroom units. All MHA new construction is built to Type B Americans with Disabilities Act (ADA) standards, which exceed the minimum ADA requirements. Villagio residents include seniors, individuals, and one- and two-parent workforce families. "[O]ne of the things we're proud of in Villagio and some of our other projects is that we house the community," said Oliver. "It's a microcosm of our community."

The development team carefully selected exterior materials to help the project blend into the surrounding natural and built environment. MHA refined their design and building practices based on feedback received from residents. For example, residents with limited mobility often were housed on the ground floor until some expressed their desire to live on the upper floors and enjoy the scenic mountain views that other residents did. "If we have somebody [who] comes to one of our properties who has mobility issues, we can address those very easily" by making some simple modifications, said Oliver.

Community Impact

When Villagio and another comparably sized MHA affordable project opened in 2023, the city added 402 affordable units to its housing supply, equivalent to more than 15 years of production at Missoula’s historic rate of affordable housing construction. An estimated 1,000 people signed the interest list for the apartments during the preleasing period. Although MHA originally intended to stagger the projects by 2 years, the COVID-19 pandemic disrupted the schedule, and both projects launched at approximately the same time. This timing forced MHA staff to adapt to a significant increase in their administrative workload. Villagio became a catalyst for new neighborhood amenities and development. For example, new bus stops now serve the larger neighborhood, and the city has a new park on the drawing board to serve Villagio and other new neighborhood developments.

Financing

The $62 million project was financed through the sale of federal tax credits, a federally guaranteed tax-exempt loan, a city of Missoula HOME Investment Partnerships loan, a Montana State HOME Investment Partnerships grant, and a Missoula Housing Authority deferred loan (table 1). The Montana Department of Commerce provided 4 percent and 9 percent low-income housing tax credits. The Missoula Redevelopment Agency provided partial subsidies.

Lessons Learned

When asked to give advice to other affordable housing advocates facing similar constraints (a tight market and a lack of workforce, affordable, and senior housing), Oliver said, "[M]y simplified advice would be, don't try and do it alone…go to the private sector, go to who can move the needle and have conversations with them, because oftentimes we're not as far apart as you might think." Oliver also recommended seeking out local partners; MHA worked with private developers, the Missoula Redevelopment Authority, the city of Missoula, a local group of real estate agents, and others. Oliver suggested that housing agencies without access to a network of local partners work with resource organizations such as the National Association of Housing and Redevelopment Officials and network with other peer agencies.