Marissa Getts, associate executive director of the Whitefish Housing Authority, met with the Whitefish City Council during a work session last week to discuss changes to the Depot Park Townhomes project.

The aim of the meeting was to put an updated memorandum of understanding in place between the city and the Housing Authority. The council directed City Manager Dana Smith to move forward with the agreement and the council will revisit and potentially approve the memorandum at the April 16 meeting.

The project, located on the corner of Railway Street and Columbia Avenue, comprises 22 two-bedroom townhouse units that were originally 100% deed-restricted for affordable community housing. 

The initial plan, proposed in 2019, was to make the homes available to households earning 80% to 120% area median income (AMI) with an average of 100% AMI.

The city donated the land to the Whitefish Housing Authority in June 2020, specifically to develop affordable housing. The city has given close to $1 million to the project and has committed to giving another $2 million.

The discussion last week was a continuation of one held earlier this year with Luke Sponable, the city’s housing planner, about changes to the project due to rising interest rates and building costs that result in a projected shortage of over $3 million.

Currently, the average unit price is about $370,000 and the development cost per unit is about $504,000. These are the numbers after the Housing Authority was able to value engineer $700,000 off the construction cost.

“It's going to be really difficult to hit the prior AMI level,” said Getts. ”So that $3 million gap was based off the prior AMI [levels].”

Getts provided a table to the council that showed the suggested price ranges of the homes with the city subsidy would be from $300,000 to $425,0000. The corresponding estimated AMI range is between 100% and 145%.

“I don’t know how somebody who’s making $110,000 to $120,000 can afford a $425,000 home,” Councilor Frank Sweeney said. “How does that work today? I’m trying to really get my mind around what is affordable here?”

Getts said some potential buyers have help from family or savings, and there are options for subsidized mortgages, especially for first-time buyers. 

Smith added that 30% of one’s gross income is what is deemed affordable.

Kim Morisaki, executive director of the Northwest Montana Community Land Trust, said any money the federal government would give the city for affordable home ownership must go to people who are below 80% AMI.

“Depending on their other debts, how much money they’re bringing to the table, typically the size of mortgage they can get is somewhere between $120,000 and $220,000,” Morisaki said. “So people who are at 80% AMI could qualify for $90,000 of homebuyers assistance, but that still only gets them up to about $310,000.”

“We’re talking about the missing middle here,” Morisaki continued. “A huge percentage of our valley’s population is at that income level and there are no houses to be bought.”

Jerry Dunker, developer of the Trailview Way homes in Whitefish, said they sold some of the Trailview houses to people earning more than 150% AMI, but they were still part of the deed restriction.

“When they resell, they could go to somebody with a lower AMI and then, with the help of the land trust, we’re even lowering that,” Dunker said. “I think, unfortunately, until the government catches up with the reality and raises their AMIs, home ownership under 100% AMI is probably not reality without substantial subsidies.”

He said there are many models to use to make the project work. Sometimes, he said, it’s a good idea to get started, complete four or six buildings and raise money for the rest afterward.

“Selling it at market rate the first time does not mean it needs to stay at market rate forever and ever,” Morisaki said of the planned townhomes. “It means you’re buying yourself some time to buy it down.”

At the earlier meeting, the Whitefish Housing Authority asked the council to consider increasing the range of household AMIs served by the project. Another option was to sell the land to the Northwest Montana Community Land Trust as a way to subsidize construction costs.

The updated plan is for the Whitefish Housing Authority to work with the Northwest Montana Community Land Trust on developing and executing a sales subsidy funding plan. The Housing Authority is also working with grants and private funding to attain more affordability.