Kalispell City Council on Tuesday decided to hold a public hearing on a plan that would specifically allow for certain city funds to be used for workforce housing projects.

The motion passed on a 6-3 vote, with Mayor Mark Johnson and Councilors Chad Graham and Sid Daoud voting in opposition. The public hearing is set for Sept. 19, where the council will vote on whether to update two of its urban renewal plans to allow for tax increment financing (TIF) funds to be made available for projects with workforce housing.

Though the council held a lengthy work session on the matter in August, it spent another 45 minutes Tuesday sifting through details surrounding the resolution. The council continues to be split over whether making the changes to its plan make sense – some want more flexibility in the program while others say that the changes are not necessary because developers can already apply for TIF funds.

Daoud called the proposal “superfluous.”

“Even if we don’t have this ordinance they would still be able to apply for TIF funds,” he said. “It’s going to come before us anyway for approval.”

The resolution is proposed to allow development projects to apply for TIF funds for workforce housing for households making 80% to 120% average area median income.

Several attempts by Councilor Ryan Hunter to amend the proposal were unsuccessful during the meeting.

Hunter suggested that the income range be lowered to those making 50% of the average area median income, suggesting that it would give greater flexibility to include more housing projects. However, some councilors suggested that eliminating the income guidelines all together would provide the most flexibility.

STATE LAW does allow for the use of TIF funds for workforce housing, but the city’s proposal looks to specifically call that use out in the city’s Downtown Urban Renewal Plan and the West Side/Core Area Urban Renewal Plan, along with providing income parameters.

Currently, a developer could ask the city for TIF funds to be directed to the infrastructure costs of a project, which some argue would then lower the overall cost resulting in reduced housing costs. The proposed changes would allow a developer to apply for TIF funds specifically as a way to reduce the cost of the rent.

City Manager Doug Russell said the change in how TIF funds could be applied to a project would allow for a “buy down” of the rent.

“It would pay for the vertical construction costs of facilities,” he said. “Rather than now how TIF funds apply just to the public infrastructure components.”

City staff suggested that the program focus on workforce housing for households in the 80% to 120% average area median income range. In Flathead County, the estimated area median income for a four-person household is $80,300. To be considered at 80% AMI, the same size household would need to earn $63,500. To be at 120% AMI, the household would be earning $95,300.

A four-person household at 80% AMI would be able to afford $1,587 per month for total housing costs. The same household at 120% AMI, would be able to afford $2,382 per month.

ALSO DURING the meeting, the council approved submitting grant applications to the U.S. Department of Transportation Safe Streets for All and Reconnecting Communities. The city is submitting the grants in cooperation with Flathead County and the Montana Department of Transportation.

The grants that would fund a corridor study for Main Street and U.S. 93.

The grant application will be for $650,000 with 20% match required at $130,000. The match would come from the city at $80,000 and the MDT at $50,000.

The city has budgeted $70,000 for a Main Street study within the Downtown Tax Increment Financing funds and $10,000 would be administrative or in-kind assistance for the development of the plan.

Council voted to adopt priorities to provide guidance for potential legislation in the upcoming state Legislature. Priorities include local option sales tax, tax increment financing, special district legislation, environmental quality, public infrastructure assistance, public resource management, service delivery and affordable housing.

Features Editor Heidi Desch may be reached at 758-4421 or [email protected].