An analysis by a nonprofit that develops affordable housing projects around the state estimates it could cost about $7.8 million for the city to turn its snow lot into an affordable housing project.

The city of Whitefish for several years has targeted its snow lot, at the corner of Railway Street and Columbia Avenue and named such because it’s where it stores snow from plowing, as a potential site for an affordable housing project.

Homeword, a Missoula-based nonprofit, has been working with the city for a few years to create conceptual designs for the property and gather input from neighbors on what they’d prefer to see on the lot.

Preliminary designs for the lot call for creating 35 housing units on the property. Six duplex buildings along Railway Street would produce 12 affordable homes for sale and two separate buildings, one on the north portion and the other on the eastern portion of the lot, could provide a total of 23 affordable rental apartments.

A financial analysis for the project shows the city could estimate on having about $4 million in revenue to go toward the project, including from eventual home sales on the property, but that would leave up to about $3.5 million in a funding gap the city would have to make up in order for the project to be feasible.

Heather McMilin, housing development director for Homeword, presented the analysis to the city’s Whitefish Strategic Housing Plan Steering Committee last week.

McMilin said the conceptual design for the site was shaped by comments from neighbors and the financial analysis is based on information gathered specifically about the site, but also on Homeword’s work on other projects.

City Manager Dana Smith said the idea behind the financial analysis is to provide information for moving forward and how the project can be adjusted to meet the city’s goals.

“We wanted to take a look and make sure that the assumptions we’ve made are as accurate as possible,” she said. “We wanted to see if it was reasonable and take a look at the financial feasibility of it.”

In terms of the financial piece, the analysis outlines two main options for funding related to the potential project. Both show a gap between projected expenses and known resources for the project.

One would sell affordable homes at a rate based on 100% area median income (AMI) and average rentals to a rate of 75% of AMI. This would results in a funding gap for the project of roughly $3.5 million.

The second option for the project shows home sales for those at 125% AMI and rentals at an average of 95% AMI. The funding gap under that scenario is $1.8 million.

The AMI for a two-person household in Flathead County is $55,700 or what’s referred to as 100% AMI.

The median home price for Whitefish in June was $628,683. The industry standard for affordable housing is that it should not be more than 30 percent of the owner or renter’s annual income.

As an example of what housing costs could look like for the snow lot project, a townhouse unit, at just over 1,000 square feet, would be priced at about $235,000 for a four-person household at 100% AMI. That size household would make $69,600 per year to be considered at 100% AMI.

One of the suggested ways to make up the funding gap is to sell all of the housing units in the project rather than provide some as rentals, or sell housing to those who could pay more because they are at a higher percentage of AMI while still providing housing that is below market rates.

“You still have to figure out the goal you want to meet for what you want to do as a community,” McMilin said. “You may want to sell more to make up the gap.”

The committee said it would need more information before it could make adjustments to the plan such as selling all the units or pricing them higher.

The committee will eventually likely make a recommendation to the City Council on how to move forward. A final project likely would go before the Planning Board and City Council for public hearings.

In the analysis, making up the funding gap could come from a number of areas. The city has funds set aside in its tax increment finance fund for the project, and the Whitefish Housing Authority says it could provide some funding to the project.

Homeword’s analysis notes the city could pursue other options toward funding the gap, including loans through the Montana Housing Coal Trust Multifamily Homes program and explore options in construction delivery including phasing the project,

As part of the committee’s work, an unscientific inventory of the current market rental listings in Whitefish was conducted. It showed the average for a studio apartment is $917 per month, a one-bed and one-bath apartment average is $1,200 and a two-bed, two-bath apartment is $1,822.

Recommended possible rental rates for the snow lot could range from $800 for a studio, $1,000 for a one-bed and up to $1,200 for a two-bed, though these numbers are not finalized.