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CITY CLUB

Missoula officials address short-term rentals, rent control at housing forum

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Renting households in Missoula County

Missoula County housing affordability challenges.

What Missoulians get paid isn't nearly enough to pay for housing here.

Last summer in Missoula, the median rent for a two-bedroom home was $979 a month.

The income required to afford a rent like that is $39,160 a year, but the median renter income was a paltry $27,456, according to Heather McMilin, the project development director for the affordable housing nonprofit Homeword. McMilin was part of a City Club Missoula forum on attainable housing on Monday.

“It’s a very large difference and why we have such a large attendance on this webinar,” she explained. “We’re all feeling it across all sectors.”

The median price of a home in Missoula was $485,000 in January, and the income needed to afford that home is almost $147,000. However, the median homeowner income is just about $72,000.

McMilin noted that the cost of homes are affected by laws, lumber, land, lending and labor.

“Of those five things, usually maybe two or three are difficult and the rest are manageable,” she said. “With what’s going on in Montana with everybody moving here, all five of those points within the development process are strained.”

Josh Slotnick, a county commissioner, said the county is working on a deed restriction program that would create more affordable housing. It’s based off a model that was recently implemented in Big Sky, Montana. It’s also been used in expensive ski towns in Colorado like Vail and Crested Butte.

“It’s basically the purchase of a deed restriction,” Slotnick explained. “It’s kind of like what happens in a conservation easement but it happens on a house.”

Essentially, the county is considering offering homeowners money to put a deed restriction on their house that would cap the appreciation of that home.

“We give you 10% right now in trade for a deed restriction that caps appreciation for 5% a year,” Slotnick explained. “So in 10 years, that house has only increased 50%.”

By comparison, housing prices rose roughly 30% between 2020 and 2021 in Missoula.

“So for 10% of the cost of a house we’re creating affordability instead of building a new one,” Slotnick said. “It’s really low cost compared to the construction of new housing. And we would limit the purchase of these houses to people who earn wages in Missoula County.”

The offer would only be made to homeowners whose property is worth 120% of the median home value or less.

Slotnick said the goal is to make housing available to people who live here who are being outbid by people from outside the community or people who are making coastal wages.

The county is investing $17 million in federal funds into infrastructure for the Mullan area to essentially create a new town, he added, so it’s not as if the county is turning away from encouraging new development as well.

Eran Pehan, the director of the city’s office of community development, planning and innovation, noted that they permitted 1,308 new homes in 2020. That’s a 140% increase from 2019.

“We made a strategic decision to dedicate more staff resources and time to getting shovel-ready projects approved and getting more housing on the ground immediately,” Pehan said.

Pehan was asked by state representative Danny Tenenbaum if the city is considering allowing four-plexes in all parts of the city, much like Walla Walla, Washington has done.

Pehan replied that the city is embarking on a historic comprehensive code reform effort over the next several years. Changing land-use ordinances such as zoning and density will be part of the “community conversation” that’s involved in that effort.

Slotnick said the county is looking to overhaul its zoning code and design codes as well to encourage the construction of more multi-family housing.

Another community member wanted to know how many housing units have been removed from the market by short-term rentals like Airbnb and what the city and county is doing about the situation. 

Pehan said the city is in the process of inventorying how many of those short-term rentals are in the city. She noted that because those companies don't share addresses unless they're booked, it's difficult to pin down exactly how many there are and where they're located. 

"What we hope is that data gathering process does inform our next steps," she said.

Slotnick said the county is embarking in a similar process.

One listener asked if rent price controls or laws that give renters the right to renew leases can be implemented. Mike Nugent, a City Council member and moderator of the panel, said the city has received a legal opinion on the issue. Essentially, the Montana Legislature has prohibited cities from interfering with private contracts, such as those between landlords and tenants.

"Things like, 'could the city of Missoula do rent control' is something that the Legislature has specifically said 'no, they can't'," Nugent explained. "So what the city can do in that area is limited."

Pehan agreed, saying the city is very limited by state law in what they can do in that area.

"At this point in time, advocacy at the Legislative level is probably the most effective effort," Pehan said.

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