Bozeman Daily Chronicle - Tuesday, February 3rd, 2015
Bozeman's real estate market is back in full gear — and it's time for the city to reinstate an ordinance to help working families afford homes in the city, according to a report by a city consultant released Tuesday.
The study, authored by Santa Fe, New Mexico-based consultant Daniel Werwath, suggested Bozeman reinstate a modified version of its workforce housing ordinance, which was adopted in 2007 but later suspended amidst the regional housing market crash resulting from the Great Recession.
Median home sale prices in the city have climbed from a low of $207,000 in 2011 to $287,000 in the first 11 months of last year, according to Werwath. Detached homes priced below $250,000 represented less than a fifth of the city's housing market last year, he added.
"While this is good news for existing homeowners and the building community," Werwath wrote, "many members of Bozeman's workforce are being priced out of the market."
He recommended that the Bozeman City Commission enact an ordinance requiring developers proposing subdivisions or other residential projects with more than 10 units to include a proportional number of affordable units in their plans.
Under the proposal, developers would have the choice of providing one unit in 10 at a price affordable to families making 70 to 80 percent of area median income, or providing three in 10 units at prices affordable to families with incomes at 100 percent of median.
For families making 70 to 80 percent of median income seeking a three-bedroom home, $198,000 is considered affordable. For households making 100 percent of median income, $255,000 is an affordable three-bedroom home price.
Area median income is a statistical concept widely used as a barometer in assessing housing affordability. The U.S. Department of Housing and Urban Development estimates Bozeman's area median income for a family of three as $64,000 a year.
Federal guidelines generally consider housing affordable if it costs 30 percent or less of a family's income — meaning the median family of three is considered to be in an affordable setting if its annual rent or mortgage costs are no more than $19,200, or $1,600 a month.
Developers would also have the option of meeting their affordable housing requirements by donating tracts of land for the construction of affordable housing by other entities — or by paying a penalty.
Werwath also recommended the city explore offering incentives to developers and builders who construct affordable homes, noting that the requirements would represent a de facto cost for them to bear. At public meetings, construction-industry representatives have said the economics of their business model would force them to pass those costs on to buyers by increasing the prices of homes not covered by the ordinance.
Among the incentives Werwath suggested for decreasing the costs of building less-expensive homes are deferring impact fees for roads, water and sewer infrastructure, reducing parkland requirements and streamlining the municipal review process for affordable housing developments.
He didn't recommend specific sources of revenue for funding the costs of those incentives.
Separately from the workforce housing ordinance, he also recommended that the city support new subsidized rental developments, encourage major employers like MSU or Bozeman Deaconess Hospital to sponsor housing for their employees, look at preserving mobile home parks and reassess restrictions on accessory dwelling units like above-garage apartments.
Werwath's findings and recommendations will be presented to city commissioners at their meeting at 6 p.m. Monday in the commission room at City Hall, 121 N. Rouse Ave.
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Eric Dietrich can be reached at edietrich@dailychronicle.com or at 406-582-2628
