President Jones All right moving on to our two public hearings tonight. State law and City Council rules set guidelines for inviting community comment in a formal way on certain issues. Following a staff report on each item, the City Council and the Mayor invite community comment. During COVID-19, City Council is holding the public hearing open for a week and then voting the following week, unless there is a requirement for a final action on the night of the public hearing. And let me see, the first one is 9.1 Homeword Creekside Tax Credit Application, and we will be voting on this item tonight. So, we have Ms. Emily Harris-Shears here to present on this.
Emily Harris-Shears Thanks. I’ll share my screen. I’m hoping you can see a PDF.
President Jones Yep, we can see it. It looks great.
Emily Harris-Shears Thanks. Well, hello, I’m Emily Harris-Shears. I’m a Housing Policy Specialist with Community Planning, Development and Innovation. Thank you for hosting the public hearing for Homeword's Creekside low-income housing tax credit application to the Montana Board of Housing. Homeword is applying for Montana housing tax credits to provide necessary rehabilitation to the Creekside Apartment Complex and preserve the dedicated use as income restricted housing for an additional period of affordability for 46 years. Tonight's public hearing is an opportunity to hear community perspectives and input on whether Creekside and the proposed rehabilitation meets a community need. This also satisfies the state of Montana’s public hearing requirement for tax credit applications and there are three, just some background before I turn it over. There are three primary mechanisms for income restricted housing. New construction starts with an initial public investment and a period of affordability. Acquisition is exactly what it sounds like. It brings an existing housing into a dedicated use through new public investment. And preservation, which protects existing dedicated income restricted housing with an additional investment and an extended period of affordability. And the project that's before you today is not requesting funding from the City of Missoula at this time, but participating in the public hearing is a requirement of the of the process. And so, so I just want to also highlight that the City's adopted housing policy, A Place to Call Home, elevates the importance of preservation and the role that the City and Council can play in advocating for more tax credit investment in our region. Tax credits are an important funding resource and can be quite competitive given our state's population, which limits the total share of tax credits that we have access to. Ways to support projects include strategies we're utilizing for this project, like partnering with applicants to host public hearings, sharing letters of support and working collaboratively with the applicant to attend key Montana Board of Housing meetings to express our support. The item before you includes a motion to authorize Council President Jones to sign a letter of support on behalf of Council and with that I will turn the presentation over to Heather McMilin, Homeword’s Project Development Director.
President Jones Great.
Emily Harris-Shears And I’m not sure if heather has been elevated yet, if we could please elevate her.
President Jones Hang on a second. Okay, Heather you should be able to talk now. You can unmute yourself.
Heather McMilin Yes.
President Jones Prefect.
Heather McMilin Can you guys hear me?
President Jones Yes. And Emily, we’re still on the same slide. Is that where you want us to be with the 3 bubbles? Ah, perfect. Okay. Great. Good evening Heather. Thanks for joining us.
Heather McMilin Great, thank you. I did have a small moment of panic when I got thrown out of ZOOM, but I’m here back in here now. Great. Again, my name is Heather McMilin. I’m the Project Development Director for Homeword. You can go ahead and advance to the next slide. I’m here tonight to talk to you guys about Creekside. Creekside is located between here and east Missoula right along the Clark Fork corridor. There are 161 homes located right between east Missoula and Missoula. Go ahead and advance to the next slide. We spent some quality time talking about this at the housing redevelopment community program committee and so I’m going to go a little bit higher level tonight but I’m also here to answer any questions as we go. So please, by all means ask. Creekside Apartments were built by a private developer in 1996; it's 161 homes in actually 15, 14 different buildings with one community building located at this property. It's a mix of studio, ones, twos, and threes and we were lucky enough in 2017, working with the city, the city issued a 501(c)(3), conduit bond in which First Security Bank purchased that bond and we were able to compete with market rate developers to hold and preserve Creekside and maintain its original affordability. You guys had a pretty healthy discussion just previously about the periods of affordability and you're all right at different various levels and we can get into that and unpack that later but as far as Creekside is concerned, this is a low-income housing tax credit project and it was built in 1996 and at that point the Montana Housing, previously Montana Board of Housing only required 30 years of affordability. They have since changed those rules and anytime we apply for tax credits now and in the past probably 15 years, we commit to 46 years of affordability. And Commissioner West was correct, every state's a little bit different but we all can we all commit to 40 years, 46 years of affordability. So, let's go ahead and advance to the next slide. Creekside is really in a unique position right now. We knew when we purchased the project in 2017 that we were going to, (1) Compete against market rate developers who wanted to hold the project, let the period of affordability burn off, and in 2026 they could take Creekside to market rate. We also knew that if we didn't preserve it, it would go to market but also at that time we knew there was significant rehab necessary. At that point, it was pretty clear with the capital needs assessment and visual inspections of the building that a lot of the materials used to construct Creekside at the time in 1996 would be coming to the end of their useful life and so this is a really again we had a robust conversation, but it should be continued where you're talking about periods of affordability. Right now, we're looking to do a pretty extensive rehab on Creekside and why we're here in front of you today talking about accessing housing credits from the state. Please go ahead and advance. Yeah, we currently own the property and been working with Tamarack Property Management and they're doing their best, they're patching the roofs when the shingles fly off with the Hellgate winds, repairing decks, and dealing with failing materials. Buildings just simply don't last forever. The vinyl siding that the developer used at the time of building it, the fasteners are failing, some of those panels are coming off. There's just simply buildings don't last forever, so it's a topic a conversation that we should spend a while a lot of quality time digging into, but for today's purposes just know what we would like to do is do metal roofs and cementitious siding and replace the really efficient materials that were used in 1996 to build it and really upgrade the energy performance of the windows and do a few things where we know those buildings components will last longer. You can go ahead and advance to the next slide. And again, we've deferred maintenance and we've only done what we can actually do with the money from operations and so we've done a pretty decent job but there's definitely some deferred maintenance. Please advance to the next slide. Thank you. So, what we are proposing and what is in front of you today with the letter of support we're requesting is that we are applying to Montana Housing for a 9% low income housing tax credit application. We were asked to apply. The applications are due on August 1st, and we won't know about that 9% tax credit application until October. What we're doing is proposing, because this is a very large project and the 9% is limited on how much we can ask for, we are also pairing it with a 4% tax credit. The short version of that is the 4% tax credit gives you about 40% of the equity that you need to do the rehabilitation, the rest is debt, the 9% is more 70-80% of the money you need for the project, but this is a commonly used, in recent years commonly used, structure and we are looking to apply it to Creekside. Please advance the slide. Right, so the proposed improvements I talked a bit about, it’s mostly building envelope, mechanical units, electrical fixtures things that are just at the end of their useful life. We are also doing a unit by unit inspection. We're going to comb through and make sure that cabinets and you know flooring and all the finished materials are, are prioritized in order of need, and trying to stretch the dollars as, as far as we can. Please advance. Yeah, so again, the portfolio, preserving our portfolio is just as important as building the 202 homes at Trinity, building the projects you guys just talked about, Bellagio is another 200 homes, Homeword has hundreds of units around Missoula. This project is also vitally important to Missoula’s existing portfolio, buildings age, it's very important to take them and rehabilitate them as necessary and so the conversation the program of the low end housing tax credit is you know just old enough we're seeing these projects come to fruition. We, years ago, built a Fireweed Court using hardy panel and hardy siding and we still haven't had to paint the building and the vinyl siding on this building is starting to fail. So, we're really trying to invest back into this project and extend the life past just the initial baseline efficient building materials and give Creekside additional life because preserving these units is just as important as building new. Please go ahead and advance. Great so, we'll just end on the fact that we're really grateful for you guys having the conversation we had at committee. We're also very excited to request tonight for a letter of support showing that Creekside and the rehabilitation and preservation of this project meets a strong community need here in Missoula. We are very excited about the project and bringing new life and we want to be very clear that the entire reason we're doing this is so that this project doesn't, didn't go to market in 2017. We don't intend on selling the project. We really are excited to be able to reinvest in this project to extend its useful life and its period of affordability, so that all the residents currently living at Creekside can stay and have a really healthy safe living condition. So, if there are any questions I’m actually very happy to answer them, love to get into a discussion about some other topics around periods of affordability and things that would come up tonight at any point. I would love to weigh in on some of those things but for any purposes on Creekside, please let me know if you have any questions.
President Jones Thank you. All right any questions for? Why don’t you take that slide…there, thanks. Ms. West, questions.
Alderperson West So I did have a question on the 4% versus the 9% tax credit, and I know that the 4% tax credit is not competitive, not quite the same process and so I was wondering if you had any indication from the state if they would be willing to award the 4% tax credit funding even if this 9% tax credit application doesn't make it through the competitive process?
Heather McMilin That's a very reasonable question Heidi, I appreciate. The 4% percent, we are lucky in Montana, and this won't last forever but our 4% are not over asked so at any one point we can apply to the state for the 4% credits, and they know this project is coming via the 9% but also that we'll be submitting a 4% application. Really, the, the necessary rehabilitation on this building because it was built in 1996 for the most effective cost point possible at that point in time, we just need that infusion of the 9% but at any point if we could figure out how if, if we weren't awarded the 9%, we would come back restructure it as a 4% and do all the rehab we could do with the resources available and that would be something that we simply on a rolling clock can apply for and work through. So, it is not a as competitive yet in Montana’s market but not long from now just with our housing demands around the state and outside developers coming in, it may become competitive, but it would be something that the Board of Housing is very committed to solving for. So, did I answer that question?
Alderperson West You did. Thank you.
President Jones Ms. Sherrill.
Alderperson Sherrill Yeah thanks and Heidi, I appreciate that the question about those credits. I’m curious you know if, if on this project we had done something like what was, I don't know if you were in the meeting the whole time but being suggested of doing a 75-year if we had if we weren't at the end of our you know guaranteed affordability, what would that do as the building was kind of falling apart and we were looking to get tax credits on this project? I’m kind of going back to our earlier conversation because I don't understand how tax credits work in that….can you just talk about that a little more?
Heather McMilin Sure, yeah, no, no problem. I will say, I did, I did listen to the discussion, and it really depends on how a project is underwritten, how it's put together, what the targets are. There is nothing simple….. our jobs used to be fun, it was all problem solving and it's just not that fun anymore because it's all complicated, but in the world of tax credits this particular project is at risk because and I, I kind of glossed over it in presentation mode but the fact that the Board of Housing put a deed restriction on the property in 1996. In 2026, that goes away and if we hadn't competed, if you all hadn't supported us with the conduit bond and we hadn't purchased it in 2017, it would have gone to market and somebody would have purchased it, held it, taken losses, and then let it go this these restrictions would be gone. They are across from the university; they could have before COVID had you know market rate rents. Today's market, that's a whole another ball game and we're seeing we've competed head to head with private developers. There are a lot of great non-profit developers, like BlueLine, we work with that wouldn't be doing this but there's outside developers that would come in and make offers and this has happened where they're buying tax credit properties close to the end of a period of affordability when there's no deed restriction anymore and they will pay three to five million dollars more than they're worth to take those losses and then take it to market because just, we are, we are just in that kind of market condition now for being able to charge pretty significant rents. And so, from the tax credit world, I’m really glad that a lot of our properties are, have that longer affordability. It was a choice by the state to extend it from 30 years to 46 years, and the talk for a long time with us the limited partners only around for the first 15, but we were committing to 30 in the beginning and now we're committing to 46 and so by us getting credits now, we're awarded credits in 2023 that clock starts over again. We will, because we've been asked for the investment, receive the credits, we'll comply with the limited partner for 15 years, they'll go away but we'll still have another was that 31 years after that to keep this affordable, but I think the healthy conversation we're having as a community because we had this at the committee, and we work with staff is that you have to reinvest. You have to, you know we have properties that yes we built well, and we were very adamant that you build energy efficient durable materials, all the things sustainability means is tied directly to affordability, but those buildings also won't last forever. we may have Lenox Flats need you know control replacements or capital needs, as we go over these coming years and we're really looking deep into our portfolio to be able to maintain their affordability because there's really large capital expenditures coming up when things wear out. And so, we are going to have to look, as a, you know, community to reinvest in that because we can't just simply borrow the money to cover it and we want to if you want the projects to remain affordable, have a longer restriction, let's say you want to have a 75 year restriction, you have to be willing to invest in them ongoing as the buildings age and hopefully we're designing and building the right way. I didn't mean to go down you know all these depths of conversation but none of the stuff you guys are grappling with now are simple. So, I, I could talk for hours, so I should probably be respectful of your time, but I mean I hope I answered the question, if I was clear on how the tax credit piece works.
Alderperson Sherrill Yeah thanks. Madam chair, may I have a followup?
President Jones Go ahead.
Alderperson Sherrill Yeah that was I think that was clear and I appreciate that and I, I think that one of the pieces that's also important here not understanding all of it. I, I want to be honest it's very complicated as you know, and you could talk for hours on it but. it is that we're, we're creating with, with this we're creating a long, longer time of affordability and we're making livable housing. I mean we want to make sure that, that we, we don't want to create slums. We want to we want to create livable housing for our community. Thanks Heather, I really appreciate the work that you guys do and your expertise in this area, so just have a lot of a lot of respect for what you do. Thanks.
Heather McMilin Thanks.
President Jones Thanks and I don't see any other raised hands. I did have a quick question for you Heather, if you could just shortly explain the, you were talking about how the 4% tax credits are not over asked, so that's much easier to get 9% are very competitive and I know Missoula goes to bat as often as they can to take them home to our community, but this just clarify a little bit this goes in front of the State Montana Housing Board? Is that the name of it?
Heather McMilin It’s, it’s Montana Board of Housing. The staff component is Montana Housing, but the board is governor appointed, Montana Board of Housing.
President Jones Thanks and I just kind of wanted to comment. I know projects in Missoula that have been built with the 9% and I know we try and get those as often as possible, but if otherwise we take the 4%. This is a tool from the state that really, really impacts what we can build on the ground, and it appears that the state legislature is focusing now on affordable housing and there is a gigantic surplus with the State of Montana, and I hope there are some conversations happen about this because I’ve over the years I’ve gone to Helena in front of this, the Housing Board to advocate for certain projects and it's really competitive. So, and we're competing against other Montana communities and frankly we're all in the same boat. So, this, this to me is low-hanging fruit that could be addressed, just saying. Okay, so moving on, any other questions from Council? Seeing no other questions, we will need a motion from Ms. West, and then we'll call for public comment.
Alderperson West All right, so the motion is to authorize Council President Jones to sign the letter of support for the Creekside Low Income Housing Tax Credit application. And I’ll hold my comments until after the public has a chance to comment.
President Jones Is there any public comment on the motion that is in front of us? Please come up to the podium and state your name and try and keep it to 3 minutes.
Akhilesh Boehmler Sure, my name is Akhilesh Boehmler, and I am familiar with the Creekside Apartments. I remember when they were built and I’ve seen them recently, and yeah they're definitely sloppy at this point. I do wonder if there's been any assessments of possible 100,000 year flood assessments given its geographic location and the climate instability regionally if there's been any such studies? That’s kind of a main concern of mine on this project. Just curious if you have any information in that direction?
President Jones Thank you. Could I ask you to spell your name? Just so that when they do a transcript it’s not as challenging. Go ahead.
Akhilesh Boehmler Yes, it’s difficult. So, it’s Akhilesh, spelled A-K-H-I-L-E-S-H, last name is Boehmler, spelled B-O-E-H-M-L-E-R.
President Jones Thank you so much.
Akhilesh Boehmler You’re welcome.
President Jones Okay. Any other public comment on this item? And I’ll check our attendees, raise your hand if you'd like to comment virtually. Seeing none, Ms. West.
Alderperson West So, I, first of all, I want to thank Heather and her team for being willing to go back to Helena year after year and apply for these funds. I, if, if you've never gone to Helena to watch the Montana Board of Housing evaluate these projects kind of the last end leg of the application process I suppose it is incredibly nerve-wracking and they are all good projects. There is so much need, there's usually millions of dollars more in asks than the funding that is available and the one time I went, I sat next to Heather and my stomach hurt. So, I can't imagine what everybody else in that room who actually had projects on the agenda felt like. This particular project, I think, is just an amazing opportunity because it you know dramatically extends the affordability of these units in particular and obviously they are in need of upgrade, upgrades and repair, and it'll increase really the affordability of the units themselves to the folks that live there with the upgrades and efficiency and windows and really you know that that's the best possible outcome. And then I also just, just want to point out just how much affordable housing we have in our Clark Fork River corridor, which I think is just so wonderful that folks with limited incomes get to live in some really beautiful, desirable places. This is just one of many affordable units that are located in this corridor. I mean it's the creek side and then as you go down, there's the bridge, Clark Fork Commons, and then of course the Solstice and Equinox, and I think I am missing some that are on the opposite side of the river. And I don't think many communities can say that and I think that's something that we should be really proud of because you know it's affordable housing that's in desirable locations and mixed in with, with other incomes and that is what I think is really special about Missoula. So, thank you.
President Jones Ms. Vasecka.
Alderperson Vasecka Thanks. I would like to relay Akhilesh’s question to staff, if that’s possible?
President Jones Sure. Could you rephrase it? Actually, I think Heather’s got her hand raise. Heather.
Heather McMilin Yeah, I, I’d be happy to address and, and staff should definitely look into it. Equinox and Solstice, we were definitely required to do when we developed it from scratch, we had to actually do a LOMA, which is a, we had to move the boundary of the flood plain because it was an infill site. So, we have to work closely with the 100 year, 1,000 year floodplain when we develop on the River and I’m sure Clark Fork Commons had to do the same thing. I’m assuming that the developer originally at Creekside had to do similar research because our tax credit investors make us do all the testing and all the risks, and I know for sure because when we went to purchase it and had to do all of our research on it that it wasn't in any of the extended floodplain, the longer you know 100 year and 500, longer floodplains. Now that doesn't mean that we understand climate control, you know what's happening with our climate changes and the impacts and it's why we're working on the building envelope as a primary response because we don't, we have heat loads that we haven't ever seen before and they're routine now they're not just every once in a while and so the windows and all those being replaced are really important to us. So, and I, I just wanted to be able to dress up because it was a very good question from a public standpoint of that location and we have to be very careful and dot our I’s and cross our T’s, and make sure that we're dealing with it, especially in buildings that have elevators and pits, and you know all the things. So, yes we have looked into that and it's not a concern, but the city staff can actually look that up as well.
President Jones And we have Cassie Tripard who is city staff. Cassie, I assume you’ve got more information on this question?
Cassie Tripard Yeah, I’m Cassie Tripard, a Planning Supervisor and the city's floodplain administrator. We are currently undergoing a project to remap the floodplain for the Clark Fork River and the Bitterroot River. So, while the data is currently in draft stage, we do have new models and data for that stretch of river. I did take a peek at the draft maps during this and as of now in the current draft map, as they're shown, none of the structures appear to be in the flood plain.
President Jones Thank you. Okay. No followup Ms. Vasecka?
Alderperson Vasecka I think we’re satisfied, thank you.
President Jones Okay. Thank you. Mr. Nugent.
Alderperson Mike Nugent Thank you. I think this is great and definitely will, will support the Council signing on to a letter but I do just want to say thank you and I’m probably going to say this every time Homeword is ever in front of Council, but the work you do in in Missoula and all of Montana is so important and, and we're lucky, lucky to have organizations such as Homeword advocating for, for people in Missoula. And I would just encourage those who are unaware to kind of learn more about all that Homeword does because it goes so far beyond just housing and education, and it's just a great group. And on that note after, I’ve duly complimented you, I hope that Homeword would be willing to come to a committee meeting someday in an informational capacity to educate all of us on, on what we've been talking about tonight, and how these credits work and how financing a project works because I think that that would be very beneficial. So, hopefully that's something you'd consider.
Heather McMillin If you don't mind, I’ll, I’ll answer. I would love to, and I know we only get snippets of time when we're in committee and at Council meetings, but I applaud the level of conversation you're already having and the understanding and the want to have long-term affordability. And so, we'd be happy to come and talk it's, it's really refreshing to have you guys be as educated as you are in the decision making and the leadership you're showing, especially you know with the world we're living in so currently. We'd be happy to come and talk through and get you guys better armed for conversations and just talk through it because there's no exactly right answer, but it is, it warrants and would be a good discussion. We'd be happy to participate at any point you guys would like.
Alderperson Mike Nugent Great. Since we are talking about low-income housing tax credits, the, the state legislature last session managed to get a bill through in bipartisan fashion to expand this program and for reasons I don't quite understand, it got vetoed by the governor. So, my hope is that that work will happen again because it was truly a bill supported by republicans and democrats and a large coalition of private developers, cities, communities, non-profit developers. So, you know, the time may come where we need to do a, a public, public push to let people know that this is important.
Heather McMilin Great thank you and it may, I may be out of turn, but I would have said something before I hung up about that because it is a very powerful tool. All of Montana is suffering right now and we could double our production with the credit bill that had been passed and vetoed, and it will be coming back for this session. So, thank you for your support.
President Jones Ms. Anderson.
Alderperson Anderson So, it looks like we will be going on a field trip to Helena to support it, but yes I want to echo what my Council member or fellow Councilmember Mr. Nugent said in response, response to how thankful we are and lucky that you and your colleagues do such amazing work. I’m happy to add my voice of support to this project it is and I also want to thank the members on Council who were there in 2017 who used some creative thinking and tools to allow for you folks to buy it because you are good stewards and, and keeping it from you know letting you be competitive within the market to be the ones who have now ownership of this so that you can continue to work to preserve this really important housing asset in our community for folks at the very bottom scale of the affordability. And I think it's you know I’m really hoping that you are successful because it you know we in Missoula are not unlike other communities in terms of the pinch that we are seeing post COVID and some of it leading up to that and we are trying to utilize the tools that we have and create new ones and be creative in what we have the ability to do with developers and an Affordable Housing Trust Fund and our CBD, our community block, oh I, I would get that acronym wrong every time but we need the state to help and this is where they can and this is you know a really important way for them to award these dollars to trusted partners like you to really be able to rehab this facility and think about it from a more long term you know utilize upgrading those materials and then you know going through each unit and thinking about things like windows because that also helps the individual homeowner who lives there and, and you know as we all are looking at our family's budgets and you know trying to figure out how to pinch pennies and, and absorb some of the effects of inflation you know and rising electric bills is not helpful and so the fact that that is not only that's a significant component of this is an overall really important and will have an impact on these families. So, you know we're doing what we can, and we need our partners at the state to do what they can and I’m happy to support this and once again just thank you guys so much and you're really such an important component of what makes Missoula a really amazing place and, and all the work that you do. So, thank you.
President Jones Ms. Becerra.
Alderperson Becerra Thanks, I’ll be brief. I am happy to support this motion tonight and also sing Homeword’s praises for everything that it does in our community. It is not easy to provide affordable housing and have it be well maintained. It is also not easy to provide housing that the, the tenants feel proud to live in, that gives them a sense of the longing and Homeword has always done so has always done that as a priority and I do think that that's a really important part of affordability, to give people and residents a sense of pride in where they live. So, I am happy to support it and happy to always support going to get some of those tax credits whenever they're available. Thanks.
President Jones Great. Thank you everyone. We’ve had questions, we've had comments, and we've had public comment. Thanks for all of the, the great comments and Heather yes we appreciate you and Homeword very, very much. I think we will go to a roll call vote Marty.
Marty Rehbein Okay, this this is on the motion to authorize President Jones to sign a letter in support of this application and I think we start this round with Hess.
President Jones Thank you; that passes. Thank you for your time Heather and Emily, appreciate it.