Bozeman Area Chamber of Commerce
Workforce Housing Policy
June 16, 2006

To Members of the Bozeman City Commission:

The Chamber strongly believes that any policy adopted by the City of Bozeman will ultimately have a ripple affect on other housing, and will increase the challenge of workforce housing. We further believe in the supply and demand form of economics offered by a democratic society. While housing prices are escalating rapidly in Bozeman today, this may not always be the case.

The developer doesn’t build the home – builders do, and pass any related costs on to the homebuyer – therefore, any workforce housing program needs to take into consideration that expediting the review process and reducing fees will immediately make housing more affordable.

In response to the city’s proposed Workforce Housing Ordinance, we offer the following concepts as substitutes and alternatives:

1. Foremost, we do not believe that Inclusionary Zoning is an effective way to deal with this community concern. Incentives listed below will go a long way to achieve the desired results. We have not found any examples of similar cities – or cities that we strive to be like – where IZ works.
2. Establish a goal for the program. What is the problem? What is the goal? What are the measurement standards for a ‘successful program?’ Place a sunset on any ordinance that is adopted.
3. Engage the MSU School of Arts & Architecture to design 5 standard floor plans of 1500-2000 square feet. These plans would be exempt from the Design Review Process and be available for use by developers and/or workforce housing buyers. This would save thousands per house. Final designs would be put out to bid and a list of qualified builders would be provided to subdivision developers.
4. Put a bond issue or mill levy to the voters to determine the public’s support of government’s desire to provide housing programs. Although the Chamber would likely oppose this, it’s fair to see how much the community wants to support this.
5. Find and promote down-payment assistance programs. These federally subsidized programs can offer first-time buyers creative tools.
6. Recruit another low-income housing authority to the Gallatin Valley. Currently the Human Resources Development Council is the only program, but Missoula has several. This would serve to increase opportunities for first-time owners.
7. Encourage homes that are not traditional – including assembled-on-site, manufactured and modular. Require that the land be deeded (increasing finance options), not a rental lot.
8. Waive the park land requirement for each workforce housing lot created.
9. Adopt alternatives that expedite the review process.
10. Pursue a loan fund backed by the city that would provide financing security for workforce housing lots.
11. Financial tools exist for employers to gift money to employees for down payment assistance. An excellent gesture by the City of Bozeman would be to offer its new employees this assistance to encourage home ownership within the city limits (a de facto signing bonus).
12. Review requirements of city’s Revolving Loan Fund regarding job creation. Could builders who add jobs qualify for the low-interest loans?
13. What has happened to the $450,000 contributed by Wal-Mart and Home Depot?
14. We strongly oppose the requirement that workforce housing lots be developed first. If covenants are in place to restrict plans for houses, then those lots will sell at an equal pace with other lots.
15. Restricted Size Lots are not working now. We believe they will become a more effective tool with these suggestions.
16. If a family income exceeds a specific amount they cannot qualify for a workforce housing lot.
17. Building equity and moving into a different house as a family changes is part of the American Dream. Therefore, we find the 3% cap on equity to be very counterproductive to encouraging home ownership. We suggest the following formula for equity available upon sale of the house:
    1. Year 1 = 5%
    2. Year 2 = 15%
    3. Year 3 = 35%
    4. Year 4 = 60%
    5. Year 5 = 85%

Balance of equity from sale of workforce housing lot/home would go into the CAHAB account for future workforce housing projects.

The growing concern over workforce housing is deserving of a thorough and comprehensive housing policy.  The challenge of affordability has resulted over time and successfully addressing the issue will require a comprehensive affordable housing strategy to effectively address the issue. 

A comprehensive affordable housing strategy must include consideration and review of the entire land development and planning processes.  Thorough review of the processes should include analysis and considerations of how buildable land is made available, how development standards are imposed and their financial impacts on overall housing costs.

An affordable housing policy should not shift the burden onto only a certain segment of our community.  Workforce housing benefits the entire community and should be addressed by the community as a whole.  The ultimate goal should be to create outstanding public-private partnerships.

Sincerely, 

David Smith

President/CEO

Bozeman Area Chamber of Commerce