Fourth Street Houses

The buildings being proposed to be moved or torn down on South Fourth Street East include homes built for Milwaukee Railroad workers in 1908.

Roughly 20 members of the public showed up to a Missoula City Council meeting on Wednesday to voice opposition to a controversial condominium and apartment project proposed in the University District. They criticized everything from the high price point of the housing to its effect on blocking sunlight.

Meanwhile, 40 people are on the waiting list to buy the condos, according to the owner and developer. And the developer's representative said the project would provide sorely needed housing for the city asked the City Council to allow them to move forward with fewer relatively affordable deed-restricted units, 15%, compared to the 20% suggested by some city council members.

The City Council's Land Use and Planning and Public Works committees held a joint hearing on a petition by developer and property owner Cole Bergquist to rezone the land to allow for higher density. Bergquist is proposing to build 48 housing units (75% of them would be condos with the rest apartments) and an underground parking garage. Bergquist is also asking the City Council to vacate its right-of-way on an adjacent parcel to allow for more units. The committee took no action on Wednesday and will revisit the issue in the future.

The property, on South Fourth Street East on the corner of Ronald Avenue, is currently occupied by six market-rate single-family homes that date back to the early part of the last century as well as a three-unit house. The new zoning designation that Bergquist is applying for would allow for a maximum building height of 65 feet, which is roughly the height of the ROAM Student Housing across the river.

Because the developer is asking for a right-of-way vacancy, the City Council has the power to impose certain conditions on the developer. Currently, several options are on the table, including requiring a certain percentage of the units to be deed-restricted. That means that either 20 years or perhaps in perpetuity, the units would be restricted to people under a certain income level and could only be sold at a certain price point. Another option is to make some units available to housing voucher holders, which are people who qualify to have some of their rent paid by the federal government.

"I am asking the city to give me approximately 10,000 square feet of city-owned land that borders my property," Bergquist told the Missoulian, echoing a public Facebook post he wrote. "This land is worthless if not attached to my development because it’s unbuildable on its own. In return, I will create 10 additional units and more underground parking stalls on my development."

He said Missoula needs parking and housing units desperately.

"In addition, I am willing to put deed restrictions on five of these 10 units so they qualify as 'affordable housing' in accordance with the Missoula Growth Policy," Bergquist noted.

Bergquist called the situation "a massive win-win" for his development and the city because opportunities to build affordable housing in highly sought-after locations, like the downtown riverfront, are rare.

Bergquist also said that 40 people are on the waiting list to buy the condos and 35 of them are from Montana.

"It's been reported that condos will be $500k-$1M," he wrote. "This is false. Condos will start at under $250k. The majority of the units will be priced under the 2019 median home price in The University District neighborhood."

The average price of the market-rate units he's proposing to build will be about $500,000, and the median price in the University District is about $530,000.

"Some of the units will even qualify as 'affordable'," Bergquist wrote. "There will only be a few units priced in the high six figure range and these will be the top floor penthouses."

Several people told the council that they had been led to believe that some of the current residents in the structures would be offered financial assistance to help them move by the developers, but that hadn't happened. 

Bergquist said he felt that there was some confusion about that detail. He said he never promised any direct financial assistance to the current residents. He noted that they will have a year before any construction begins and he's willing to help them look for places.

"We don't look at opponents of this project as the enemy," he said. "We're trying to work in as much of the feedback as we've got from everyone to make the most people happy. Missoula has a special place in my heart."

He said he wants people to know that it's a very expensive location to build, and no developer would voluntary choose to build affordable housing there. So, he said, his project to build some affordable units in exchange for a parcel of unbuildable land is "the best solution."

Sam Duncan, a Missoula resident, was opposed to the project. Duncan noted that an affordable price for a person making 120% of area median income in Missoula would be $240,000 for a home.

"None of those (condos) would be affordable for anybody making area median income or lower," Duncan said. "So I don't think it's a misconception. We know that these are not affordable prices."

Duncan also noted that the University District is one of the least affordable neighborhoods in Missoula already.

Another commenter who gave his name as Brian told the committee that the "opposition to this is ubiquitous."

"There are second and third order consequences to projects like this," he said. "Building a huge development like this many units of high-priced housing raises the median cost of living, because the standard for affordability is based on the median housing costs, thus raising the threshold for affordability."

He said the project will put everyone else who owns property in the neighborhood "in the crosshairs" of developers as well.

Nick Kaufman, a senior planner for WGM Group, represents Bergquist and asked the council to change the number of deed-restricted units from 20% to 15%. He noted that even at 15%, about half of the units that would be added with the right-of-way vacation would be deed-restricted. Kaufman noted that that is a higher number than many projects around the country that require developers to build affordable units into projects. He also said the reason there's no images of the project released yet is because it's still in the planning stages and they're still taking public feedback.

Eran Pehan, the city's housing office director, said her office prefers to have 20% of the units be mandated as deed-restricted. She said the city wants to be careful in how it goes about requiring developers to build affordable housing, because that often results in developers significantly raising the prices on the rest of the market-rate units.

"Which is what we don't want to see happen," she said.

Jeff Gardner, who lives in one of the houses, asked the council to not approve the re-zone because it amounts to "changing the rules of the game."

The City Council circulated a chart showing possible outcomes. The chart showed that if the city denied the rezone and the right-of-way vacation, there would be no units of affordable housing built. However, the more concessions the city makes, the higher the number of affordable housing units are likely, although there is still a chance for zero units in every scenario.

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