Loading...
HomeMy WebLinkAbout11-15-18 Public Comment - G. Stratton (Kilday & Stratton) - Affordable Housing Incentives 1!4tN "day&Stratto In.. Developers • Builders •Consultants November 15, 2018 City of Bozeman Attention: Clerk's Office PO Box 1230 Bozeman, MT 59771 Dear Members of the City Commission of Bozeman; Request: To provide incentives currently available for homes priced at 70% AMI to homes priced at 80% AMI: The following provision will be added to the incentives currently provided to homes priced at 70%AMI: "The incentives available for Lower-Priced Homes are also available for Affordable Homes priced at 80% (subject to availability of funds), with the exception of the reduction of parkland requirement. Affordable homes priced at 80%AMI will not count toward the requirement that 10%of the homes in a development proposal be Lower-Priced Homes,however, they may be counted as a Moderate-Priced Home satisfying the minimum number of Affordable Homes to be provided." The Problem: Cost vs Revenue The following costs are preliminary estimates on actual 4-plex buildings that consist of two 2-bedroom and two 4-bedroom dwellings. The incentives provided in the current Affordable Housing Ordinance are included in these estimates. If Priced at 70%AMI If Priced at 80%AMI 4-Plex Sales Price $770,620 $913,336 Total Cost $850,000 $850,000 Profit Margin ($79,380) = (9.3%) $63,336=7.5% At 70% AMI prices, the incentives do not bridge the gap between costs and revenues. - This encourages builders and developers to construct the minimum number of affordable homes. - The result is the sacrificing of the volume of homes that could be constructed to reach buyers with incomes well below the 65%AMI goal of the Affordable Housing Ordinance. 2880 Technology Boulevard West • Bozeman, MT 59718 • 406-577-2028 • kildaystratton.com By allowing incentives for homes priced at 80%AMI we hope to make constructing Affordable Homes more attractive to builders resulting in a higher volume of homes to incomes where the bulk of potential buyers are concentrated. This will put the focus on buyers with incomes between 70%AMI and 80%AMI who still need assistance to purchase a home. The Goal: To provide a higher volume of Affordable Homes to qualified buyers making up to 80% AMI. If the 70%AMI incentives are provided to 80%AMI priced homes the result will be an increase in the number of affordable homes built,without a significant reduction in the number of families qualifying to purchase those homes by: - Making it more attractive for builders and developers to build Affordable Homes by increasing the number of Affordable Homes available to qualified buyers between 70%AMI and 80%AMI. - Enticing more builders to get involved in the Affordable Housing Program increasing the number of homes available to qualified buyers. - Experience to date shows that even when homes are priced at 80%AMI buyers well below the 65%AMI goal of the Affordable Housing Ordinance have been able to complete a purchase. - The option to build 10%of homes in a development priced at 70%AMI is still available for developers. - Under this scenario, homes priced at 80%AMI will not count toward the requirement that 10% of the homes in a development proposal be Lower-Priced Homes. These homes will count toward providing 30%of the homes in the subdivision as Moderate-Priced Homes. Sincerely, Greg Stratton Partner Kilday&Stratton, Inc.