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The new Scott Street Village housing development, shown here under construction in 2016, on Missoula's Northside. The development transformed the former industrial complex with help from Tax Increment Financing.

Tough choices, sacrifices and stark changes loom ahead if Missoulians are serious about confronting the severe affordable housing shortage here.

The City of Missoula has finally unveiled its policy proposals aimed at alleviating the problem, and they include recommendations on everything from decreasing height, parking and other requirements on Accessory Dwelling Units to allowing higher-density building in single-family home neighborhoods. It also proposes reducing setback and infrastructure requirements on new developments, and proposes a taxpayer-funded housing bond and donating city land.

Eran Pehan was hired by Mayor John Engen in the summer of 2016 to direct the city’s newly created Office of Housing and Community Development. Now, Pehan’s office has published a 95-page document with policies they say would “reduce barriers to new supply and promote access to affordable homes."

A meeting before the City Council’s Committee of the Whole is scheduled at 1 p.m. Wednesday in the City Council chambers at 140 W. Pine Street to discuss the proposals.

The document lays out a broad set of suggestions that would have to be adopted by the City Council before they become law.

Among the recommendations:

  • Reducing the city's 3,000-square-foot minimum lot size for homeownership projects.
  • Reducing parking requirements.
  • Expediting review of development applications for below-market housing projects.
  • Expanding the zoning categories that allow density bonuses.
  • Reducing regulations on smaller, infill Townhome Exemption Developments.
  • Changing zoning laws to allow higher density in more neighborhoods rather than letting just a few neighborhoods absorb the majority of infill. 
  • Expanding city support of housing services, setting goals for Accesssory Dwelling Unit (ADU) construction, and developing new financing tools to preserve mobile homes and existing affordable housing.

The median home sales price in Missoula has soared nearly 40% since 2008, along with rent increases, while wage increases have lagged far behind.

One of the major recommendations in the report is to “promote infill” by incentivizing and increasing the construction of ADU homes.

“Accessory Dwelling Units (sometimes known as granny flats, Fonzie flats, or alley houses) are one of the most ecologically sound ways to develop new homes,” the proposal states. “They help reduce carbon dioxide and other pollutants that cause climate change by increasing urban density and requiring fewer natural resources to build and operate than a standard-sized home."

And because ADUs are generally smaller than typical single-family homes, they use fewer natural resources to build and less energy to heat and cool, the report added.

Pehan’s team says ADU construction is more “resource efficient” for local governments.

“By utilizing existing city infrastructure, it combines an ecological and financial benefit when compared to costly infrastructure expansion at the urban fringe,” the report states. “The deployment of ADUs in existing neighborhoods also reduces the need for automotive transportation — a source of about 25% of greenhouse gases — and supports alternative modes of transportation such as walking, biking, and public transit. The wider adoption of ADU development represents a housing approach strongly aligned with the City’s Focus Inward growth policy.”

In 2013, after a contentious few weeks of debate, the city passed an ordinance intended to encourage production of ADUs. But since then, only 13 have been permitted and constructed, and only nine are actively permitted within the city.

“The primary remaining obstacles to adoption are a lack of community awareness, limited financing resources, and code obstacles that add significant cost and uncertainty to the development process,” Pehan wrote.

The report says the city currently requires a total of three on-site parking spaces for most homes and an on-site parking space for any newly constructed ADU.

“This represents a significant amount of lot area and a construction cost increase that makes many potential lots infeasible for development or makes the rent needed to cover debt service less affordable,” Pehan wrote. “There is little evidence to suggest ADUs cause widespread parking problems."

Her office also found that new parking requirements currently mean portions of alleys have to be paved, which significantly increases construction costs; mandating new off-site parking means requiring a curb-cut that eliminates an existing on-street parking spot that is already paid for and available for public use.

“The City should eliminate the third off-street parking space requirement for new construction of ADUs when adequate on street parking is available,” the report concludes.

Current regulations also limit the maximum size of ADUs to 600 square feet and a minimum of 350 square feet. Regulations also limit the height of ADUs to the height of the primary residence on the property, meaning a one-story home can only have a one-story ADU. Her office suggests eliminating or revising all those requirements.

Also, as of now, the owner of the property has to live in either the primary residence or the ADU in Missoula.

“The current owner occupancy requirement presents significant barriers to the construction of ADUs,” the report states, saying it hampers developers’ ability to get financing, and dissuades some potential builders who may not plan to occupy them long-term.

“There is also a secondary effect when a property owner no longer resides on site, and a potential rental unit must be legally removed from the market for little or no community benefit,” Pehan wrote. “Because of obstacles to financing and the potential to needlessly remove rental units from the market, the City should no longer require owner occupancy for ADU construction and ongoing permitting.”

Another of the topics discussed in the report is "Equity in Land Use." In it, the city says that affordable housing construction has been limited by a number of factors in Missoula neighborhoods that are zoned for single-family housing.

"While some of these impacts on affordability and equity have been ameliorated in recent years with changes to zoning, the vast majority of growth and, by proxy, affordability is still supported by a small number of neighborhoods that were originally zoned for higher density," the report states.

Pehan and her staff recommend hiring a consultant to conduct a zoning audit that would help "quantify how affordability is distributed geographically with the goal of increasing the amount and geographic distribution of land appropriately zoned to support affordable housing development."

Many other policy recommendations are laid out in the report.

For example, the document says Missoula “has relatively large setback requirements, particularly in single-family zones” and infrastructure requirements such as “ideal complete streets.” These two policies, Pehan’s office writes, increase the cost of building and the final price of homes and “can create conflict with the goal of promoting small infill development.”

“The City should work to create the most predictable infrastructure standards possible and consider appropriate reductions in requirements for all infill projects serving 5 units or less,” Pehan’s office wrote. “(Also), it is recommended that the City evaluate setback requirements for all development within the context of affordability, the ability to achieve maximum zoning density, and how it impacts the potential to convert non-conforming structures into ADUs.”

Pehan’s office spoke with a broad range of stakeholders, including developers, to get feedback. She said developers mostly agreed that reducing setbacks would allow for greatly enhanced affordability.

The full report can be read online at http://missoula.siretechnologies.com/SIREPub/mtgviewer.aspx?meetid=3039&doctype=AGENDA and is attached to this story at Missoulian.com.

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