CITY OFFICIALS VOTE TO RAISE HOME PRICES IN MISSOULA- (DOESN’T WANT TO HEAR COMPLAINTS FROM DEVELOPERS/AFFORDABLE HOME ADVOCATES.)

First of all I would like to thank Missoula City Councilwoman, Stacy Rye, for summing up the city’s attitude toward affordable housing (Missoulian article Building fees will increase 9/26/08) by stating she didn’t like developers using affordable housing as an argument against paying their fair share. Until now I was not able to figure out what the city wanted. City officials along with the mayor are constantly complaining about the lack of affordable housing, and have created countless meetings and even a special task force to address the issue, yet everything the city does makes housing less affordable.

From my experience:

1) Raising the building fees will cause the price of housing to go up.

2) With all of the city’s new regulations and rules, an approval that used to take one year to work through the system now takes two, and in the case of a subdivision, more often, three years. This increases carrying costs. For example: If you invest 1.75 million into a project at 7.5% interest, the extra year costs an additional $131,250 in interest expense only, plus the costs of taxes and insurance.

3) With the extra year also comes inflation. If inflation is 5% a year (and right now inflation for building materials is way higher) a unit that would have cost $150,000 to build last year will now cost $157,500 (for the exact same product!).

All of these factors ultimately raise the cost of housing. Perhaps the most offensive remark made by Rye is that developers need to pay their “fair share”. Stacy please take a look around our community, a huge part of it is either linked to or totally dependent upon housing.

Here is a list of some of the people/companies that have received money from our development: Architects, electricians, engineers, planners, surveyors, framers, finish carpenters, fabricators, plumbers, laborers, road builders, excavators, masons, siding installers, truss builders, painters, flooring suppliers/installers, dry-wall installers, cleaners, truckers, delivery services, heating/cooling suppliers/installers, appliance suppliers, furniture stores, interior designers, roofers, lighting suppliers, movers, shelving installers, counter top suppliers/installers, cabinet makers/installers, landscapers, sign makers, billboard sales companies, lumber companies, window manufacturers, cement companies, asphalt companies, real estate agents, appraisers, title companies, insurance companies, power washing companies, lenders, city/county employees, website designer/host, the local newspaper (advertising), heavy equipment operators, rental companies, satellite television providers, metal fabricators, insulators, welders, railing suppliers, truck and equipment sales, temp services, recycling companies, house movers, Internet service providers, telephone service providers, copy companies, local party favors supplier, coffee suppliers, fencing suppliers/installers, water/sewer, maintenance management companies, surveillance equipment suppliers/installers, utility companies.

Now let’s take a look at some numbers from a project we are currently building. It is what the city would define as “affordable” as even our most expensive units are still under $200,000:

1) We estimate that our building permits and fees paid directly to the city will be $182,229 (before the 25% an increase, which will bring that number well over $200,000).

2) We estimate to increase the annual tax base by 132 units X $1,750 per unit = $231,000 per year (before the new tax increase).

3) We estimate to increase the annual city sewer revenues by 132 X $220.00 = $29,040 per year.

4) We are pumping tens of millions of dollars into the local economy by providing good paying jobs to people who live here.

Please explain to me how I am not paying my fair share… Also, with regard to you tipping your hat and calling city finance director Brennt Ramharter a “ Boy Scout” for raising taxes (Missoulian article 09-09-08), I am a Boy Scout too and one of the first things I was taught was responsibility. It seems to me the responsible thing to do in a slowing economy and housing market is to cut expenses not increase them.

Michael Priske

Developer/Affordable Housing Advocate

09/16/08