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The Tollefson Apartments, which were under construction when this photo was taken in January 2018, comprise nine buildings and 330 apartments near the intersection of Mullan and Reserve in Missoula. The first phase of the project cost roughly $19.2 million.

At least two residential builders in Missoula believe the City of Missoula has taken a “step in the right direction” with the policy suggestions rolled out last week to address a shortage of affordable housing here. Meanwhile, the city's top housing official said some of the policy recommendations, such as reducing the minimum lot size to promote infill, could happen "swiftly."

Eran Pehan, the director of the city’s housing office, told the City Council’s Committee of the Whole on Wednesday that her office wants to reduce the lot size quickly. That's because she and her team aim to bring 1,300 “income-targeted” homes to market over the next five years, which would affect 6,000 people.

“We aim to have the recommendations contained (in the 95-page document) implemented over the next 24 months,” she said.

Council member Julie Armstrong said she’s specifically interested in reducing the minimum lot size for homeownership projects from 3,000 square feet to 1,500 square feet.

“The reduction of lot size is something we’re actively working on,” Pehan responded. “We have a vehicle to work on that through the Townhome Exemption Development and zoning. That’s a great example of how some of these changes are going to occur very quickly through a process that’s currently underway."

She said the city office that's responsible for implementing lot size regulations is on board.

"I think Development Services is very supportive of the (overall housing plan), with reduction in lot size being one of those," Pehan noted.

Ryan Frey of Saddle Mountain Construction and Steve Loken of Loken Builders both say reducing permit-processing times and streamlining the process for builders could cut costs and lead to the construction of homes that are affordable to people making average wages here.

After years of taking input and studying the problem, the city’s Office of Housing and Community Development unveiled a 95-page document aimed at alleviating the shortage. The recommendations include everything from decreasing height, parking and other requirements on Accessory Dwelling Units to changing zoning to allow higher-density building in single-family home neighborhoods. It also proposes reducing setback and infrastructure requirements on new developments, and reducing regulations on smaller, infill Townhome Exemption Developments.

“Overall, our fundamental hurdle is lack of land, prices of land and lack of developable land,” said Frey, who has more than two decades of experience building homes here. “As far as doing smaller infill projects, it’s a great step to change zoning. And allowing more flexibility with parking is a great proposal.”

Frey said most of his projects are infill projects. The proposal to reduce the minimum lot size below the current 3,000-square-foot minimum for homeownership projects is something he said he thinks would promote infill.

The housing report also suggests “equitable” distribution of density, which could mean changing zoning to allow higher-density apartment complexes, townhome developments and other projects in traditionally single-family neighborhoods. Frey, the builder, said that's a good idea.

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“If they change zoning and lot sizes, that could definitely help infill,” Frey said. “I am currently looking for something that fits my zoning and fits my profile and I can’t find anything in the city to do infill stuff. You can find a lot in Linda Vista to do a $400,000 home, but you can’t find anywhere in the city to do a $300,000 home.”

According to the Missoula Organization of Realtors, a three-person family would need to have an income of $95,731 and a 5% down payment of $14,500 just to afford a median priced home listed at $290,000 in Missoula County. However, the median family income for a three-person household in the county is just $63,400.

Steve Loken said when he submits plans for new construction, six or seven different city departments have to review them.

“They do interact with each other to some degree,” he said. “I don’t mean to throw the city under the bus but they’re struggling to make this work. The people have been pretty good working with me.”

Loken said increasing density saves money for both taxpayers and builders.

“It seems to me that the things we have to focus on to get more affordable housing are clustering, multi-story and adaptive reuse of land that is in the urban area and underutilized spaces,” he said. “We have all these single-story homes and single-story box stores. We have to figure out how to do residential above them. That preserves farmland, saves on infrastructure costs and puts people where services are, right above them. It saves parking as well because people can use the trail system.”

Both Frey and Loken agree that Accessory Dwelling Units, known as backyard homes or granny flats or alley houses, can be part of the solution. But they caution that small homes aren’t necessarily cheaper to build per square foot.

“There’s a misconception out there that the smaller you build, the cheaper the cost is going to be,” Frey said. “But there’s a tipping point at about 1,400 or 1,600 square feet. The major cost is infrastructure. Getting your water and sewer and that stuff, and the kitchen and bathrooms are the two most expensive rooms. So that’s why on these smaller homes, you probably can’t get the rents to cover the build cost.”

He also said materials and labor costs have gone up in recent years.

Both Frey and Loken agreed that the time it takes to get projects approved increases the cost of building, which is then passed on to buyers and decreases affordability.

“Probably the biggest hurdle is reducing the time it takes to go through the subdivision review for the large Townhome Exemption Development process,” Frey said. “It’s 18 months to two years now. The cost to carry a piece of property that long, the cost to carry land that long is outrageously expensive. I’d love to see that somehow streamlined as much as possible. I think that was mentioned in the report. I don’t know if they’ve figured out a way to do that yet.”

Frey said some of the delay is caused by state regulations and not local ordinances, so the City of Missoula can’t fix the problem by itself.

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