HomeMy WebLinkAbout08-12-24 Public Comment - M. Egge - Egge AHO Comments 1
10 August 2024
Re: Revisions to the City’s Affordable Housing Ordinance
1) In 2023, a record number of new rentals came online. Vacancy rates went up and rental
prices (relative to inflation) went down. This should remind us that the single most
important strategy to achieve housing affordability in Bozeman is to continue to increase
housing supply which drives down prices for everyone.
2) The existing Affordable Housing Ordinance (AHO) is working well for rental product at or
below 60% of AMI (deployed in conjunction with LIHTC incentives) but has so far failed to
produce any homeownership opportunities. The capital gap between a home that is
affordable at 120% of AMI and a market rate condo is roughly $200,000. The revised
ordinance should strengthen the incentives for developers to also produce affordable for-
purchase homes. Incentive considerations should include:
1. Reduce the portion of required homes to qualify for incentives. E.g. 25% of
something is better than 50% of nothing.
2. Waiver of all parking requirements (noting that new parking will still be provided as
an amenity demanded by homeowners).
3. Waiver of city building permit and inspection fees (see Helena’s ordinance).
4. Payment of impact fees on behalf of the development (subject to available funds).
2) The ordinance is working well for rental product at or below 60% of AMI but has so far
failed to produce rentals that would benefit typical wage earners among professions like
community health workers, middle school teachers, paralegals, paramedics, or
firefighters. These professionals (and many other renter households earning similar wages)
are squeezed in the middle of an affordability vice: earning too much to be eligible for a
subsidized unit at 60% of AMI, but not enough to afford a market rate rental without being
cost burdened.
The table on the following page shows a list of professions that are essential to Bozeman’s
functioning as a city and the level of subsidized rental they would be eligible for. Those in
bold would be eligible for an 80% of AMI rental but not a 60% of AMI rental:
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Profession
Annual
Mean Wage
(1)
Median
Hourly
Wage (1)
Percentage
AMI in
Bozeman (2)
Max Rental
Price they
can afford
(3)
Home
Price they
can
afford (4)
Community Health Worker $52,720 $23.85 80% AMI $1,318 $172,000
Paralegal $58,310 $27.12 80% AMI $1,458 $194,313
Kindergarten Teacher $54,660 80% AMI $1,367 $180,005
Elementary School Teacher $52,350 80% AMI $1,309 $170,949
Middle School Teacher $58,090 80% AMI $1,452 $193,450
High School Teacher $70,370 100% AMI $1,759 $241,588
EMT $36,130 $16.93 50% AMI $903 $107,367
Paramedic $52,590 $23.25 80% AMI $1,315 $171,890
Firefighter $57,980 $29.31 80% AMI $1,450 $193,019
Restaurant cook $35,010 $16.77 50% AMI $875 $102,976
Janitor $37,720 $17.55 50% AMI $943 $113,600
Childcare worker $29,830 $13.99 50% AMI $746 $82,671
Electrician $64,940 $31.05 100% AMI $1,617 $220,302
HVAC Repair or Installers $56,960 $24.95 80% AMI $1,424 $189,021
Minimum Wage Earner $21,424 $10.30 30% AMI $536 $49,719
(1) Average Wage Data - BLS, May 2023
(2) 1 person HH - Rounded to Affordable Housing Qualifying Levels
(3) Assumes they spend 30% of their income towards housing. (4) Assumes no debt, $10K down payment, 30 year fixed loan, $3500 property taxes & insurance, 7%
interest rate
Allowing income range averaging and blending within a development is a good idea. Moving
the qualifying threshold for shallow incentives from 80% to 60% of AMI is not. If looking for
more community benefit from the shallow incentives, the city should increase the portion
of required affordable homes (e.g. from 5% to 7.5%) to produce a greater quantity of
affordable homes rather than squeezing more people like firefighters and middle school
teachers in the affordability vice. The City AHO layers on top of existing programs like LIHTC
that provide incentives for rentals at 60% of less of AMI. Rather than gut incentives for the
60 – 80% of AMI range, the city should strengthen these incentives.
4) I’m opposed to annual income screening for subsidized rentals. The city should require
an initial income-based qualification based on a multi-year income history and then forego
subsequent income screening. I’m opposed to rules that would kick families out from living
in a home they can afford because their circumstances happen to get better one year. I’m
also opposed to the city forcing people to fill out paperwork every year to prove that their
circumstances are unimproved. Most AHO units are going to be subject to federal LIHTC
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income verification anyway, so requiring additional income verification at the city level is
redundant in most cases. The ordinance does not require annual income screening for for-
purchase homes. It likewise should not impose this requirement on rentals above and
beyond what is already required by Federal incentive programs.
5) Regarding time horizons: all for-purchase housing produced using this ordinance should
require permanent affordability. For rentals, I’m skeptical about extending the required
affordability window on apartment buildings to 50 years (at least for the shallow
incentives). My impression is that many LIHTC development pro-formas only pencil out
based on a market rate sale at the end of the affordability period. Beyond 30 years, there’s
not much difference between 50 years and permanent affordability. It’s also worth noting
that, at least historically, subsidized rentals tend to end up in the portfolio of an agency like
HRDC at the end of their mandated period of affordability.
6) Regarding the deep incentives, I would support including all three (gold/silver/bronze) as
available options within the ordinance. For the deep incentive bronze option, I suggest
reducing required parking to not more than 50% of the number of units.
7) I generally support implementation of a fee-in-lieu program to generate funding for the
City’s affordable housing fund so long as the fee-in-lieu option does not undermine the
other incentives offered in exchange for actually constructing affordable units.
Submitted for your consideration,
Mark Egge
1548 S Grand Ave, Bozeman MT 59715