Whitefish has ways to go to meet targets

Whitefish appears to still have a large hurdle to overcome in creating the number of housing units — and in particular affordable housing units — needed to serve the city, according to a housing assessment issued four years ago.

The 2016 Whitefish Housing Needs Assessment identified a need for 980 total new units to be constructed through 2020 to make up for a shortage of available workforce housing and plan for future needs. The document stressed that 62 percent of those units — or about 595 units — should be at more affordable prices for workforce households earning at or below $40,000.

For the period from 2016 through 2019, the City of Whitefish issued building permits for about 660 housing units. Of the total permits, just 50 of the units are deed-restricted as affordable.

This means that in order to meet the target identified in the needs assessment document, the city still would have to construct another almost 320 units by year’s end. Even if all of the new units were deed-restricted as affordable, Whitefish would still be short on the number of units needed in that category.

In what is the highest total of the decade, Whitefish in 2019 issued residential building permits for a total of about 245 units. This nears the highest year recorded by the city in 2005 at 292 units.

Planning and Zoning Director Dave Taylor pointed out that not only are multi-family units being constructed, but also single-family residences.

“The brand new residential development smashed records from previous years,” he said. “I’m not sure we’re getting affordable housing, but it’s about supply and demand — hopefully prices go down as more is constructed. We haven’t seen many units that are deed-restricted as affordable.”

The housing needs assessment showed that needed units are those priced at both market rate and affordable levels, and both for ownership and rental. The assessment found that the city needed to add 400 units for ownership and 580 rentals.

Mayor John Muhlfeld said the city is still working to address the issue of affordable housing, and it expects the need for an update of the housing needs assessment to factor in changes that have occurred since it was completed.

“We are holding steady, and not slipping backwards which is a step in the right direction,” he said. “We knew developing 900 plus affordable and workforce housing units by 2020 was a far stretch, but we’ve taken proactive steps to stay on top of this community problem.”

The industry standard for affordable housing is that it should not be more than 30% of the owner or renter’s annual income. For a worker making minimum wage at $17,680 per year, they would be able to afford a rent of about $445 per month.

The area median income in Flathead County is $44,998, making an affordable monthly housing cost about $1,125.

Of the residential building permits issued by the city from 2016 through 2019, the total includes both single-family and townhouses permits issued at 425 units and permits for about 240 for multi-family units in the city.

Land use approvals for the city from fall 2016 through 2019, show that approval was given for 563 ownership units and 359 multi-family units. Of those, 58 ownership units are deed-restricted as affordable, and 90 multi-family units are planned as deed-restricted.

Though this shows what has been approved by the city, there is lag time between projects being approved and actually being constructed. Not to mention that not all units approved are actually constructed because land use approval permits can expire before construction occurs or owners abandon the projects, according to the planning department.

One of the larger projects, Riverbank Residences, is planned to include 234 rental units and of that 47 were proposed as deed-restrict. The permit for that project, located at the former North Valley Hospital site across from Safeway, expires in February 2022.

However, Taylor said he’s heard the project isn’t going forward.

Though he knows of the potential for a few projects on the horizon, Taylor said it’s uncertain what will come forward this year.

“It’s hard to say,” he said. “I don’t think we will do quite as well as last year, but we’ve been saying that and we haven’t seen any slow down yet. National trends are showing a slowing, but we continue to see that Whitefish is a popular place to build and live.”

In terms of sales, the median home price for Whitefish appears to only be increasing. In 2015, the median price was $312,500, according to the city’s needs assessment issued the following year. The median home price for Whitefish through November 2019 was $433,319, according to the Montana Regional Multiple Listing Service.

Muhlfeld said there’s an increasing trend in regard to second homes in Whitefish.

“We are also seeing more and more single family homes slip into second home ownership, taking away for the pool of affordable housing,” he said. “People are coming here and buying homes as investment properties, oftentimes occupying them for just a handful of weeks per year which is extremely unfortunate.”

A shift appears to be already taking place in the rental market when considering the whole Flathead Valley.

While Whitefish has approved a number of projects, what’s actually been constructed is a much smaller number. The city since the fall of 2016 has approved 430 rental units, but of that only 68 have been constructed, according to a review by the planning department. The project with the largest number of units on that list came at 43 as part of the Aspen 110 apartments on Colorado Avenue.

The Highline Apartments in Columbia Falls seems to be a draw for those looking to rent. The first two buildings of the project opened in August with 100% occupancy, and construction is still ongoing to bring the total number of units to 180.

Addie Brown-Testa, owner of At Your Service Property Management, said in about the last eight months she has observed a change in the rental market. She has had some apartment and house rentals sitting vacant for several months, when in the past those were always full.

“There’s properties that I’m managing that have never been open in 10 years and they are now,” she said. “And that’s not just in Whitefish, I’ve got some in Columbia Falls that are like that too.”

Brown-Testa said location isn’t always a sticking point for those looking for an apartment.

“What people look at is the price, not whether it’s in Whitefish,” she said. “They want something that they can afford and they don’t mind driving from Columbia Falls or Whitefish.”

Brown-Testa said she expects that the market will shift in response by lowering rent rates because owners won’t want to keep their properties vacant.

The housing assessment showed that roughly half of year-round workers in Whitefish commute in to town for their job.

Kevin Gartland, executive director of the Whitefish Chamber of Commerce, said in speaking with business owners recently about what they’re predicting for the coming year, a barrier for them in terms of growth, continues to be a lack of workers and part of that comes from a need for housing.

“There’s really a lack of employees for entry level positions and I don’t think that has changed,” he said. “The housing assessment set a target and we’ve begun to make some dents in that, but it’s a long battle. The need for housing is going to be at or near the top of our priorities for decades to come.”

Last year, the first affordable multi-family rental property to be constructed in Whitefish since 2004, the Alpenglow Apartments broke ground on Edgewood Place. The project, expected to be ready for occupancy in late 2020, includes 38 apartments providing deed-restricted housing for residents.

The Trailview subdivision on the east side of Whitefish is also under construction and is the city’s first completely affordable housing project. The development is planned to include 58 single-family homes.

Gartland said those projects, along with the city’s planned development of its snow lot, creating affordable housing are positives.

“It’s best to celebrate the victories along the way,” he said. “Those projects wouldn’t have happened without the community, City Council and the Whitefish Housing Authority Board stepping up to do more than has ever been done before.”

Muhlfeld agreed noting that Alpenglow Apartments will create deed-restricted affordable units targeting those earning up to 60% of area median income.

“It’s a small gain relative to our 2020 target, but it’s certainly a step in the right direction,” he said.

Aimed at addressing the need, the Whitefish Strategic Housing Plan, completed in 2017, laid out a guide outlining several initiatives aimed toward creating housing.

The document also notes that updating of the plan will be necessary to measure how trends may have changed and to review residential market conditions.

From her perspective, Brown-Testa says, it may be time to re-evaluate what’s needed for housing because it may not be rental apartments.

“What I’m seeing is that a lot of people feel we haven’t constructed enough, but what we need is affordable homes for purchase,” she said.

Gartland said an update may be needed in the next year or two as with any major plan for the city.

“We have always anticipated a targeted update,” he said. “There’s been a lot of strong development happening in terms of multi-family development and we need to look at what’s happening nearby in Columbia Falls and Kalispell.”

Whitefish is part of larger regional economy in the Flathead Valley that can impact what’s happening here in terms of housing, Gartland notes.

Muhlfeld said an update will be necessary to factor changes in the market.

“Our housing need assessment was completed over four years ago and it’s already in need of an update,” he said. “So we don’t slip backwards, it will be important to update this plan to market influences such as the affordable housing projects being built in adjoining communities such as Columbia Falls.”

Initiatives in the strategic plan were aimed at a target of creating 600 affordable workforce residential units and anticipated another 375 would be created by the free market.

Inclusionary zoning, under the Legacy Homes Program, was implemented by the city and went into effect in July 2019.

The Legacy Homes Program requires that 20% of all housing as part of new residential developments that require a discretionary permit to be deed-restricted as affordable housing.

The first project to be developed under the Legacy Homes Program, the 7th Street Apartments near the new Muldown Elementary School is proposing to construct 36 apartment units. City Council was set to vote on the project on Tuesday after press time.

Muhlfeld said Council acknowledged when it was passed the Legacy Homes Program, it would need an update and that city staff is compiling a list of items that need adjusted ahead of the one year anniversary of the ordinance.

The January Planning Board meeting was canceled due to a lack of applications to the city.

Taylor said the Legacy Homes Program may slow projects in Whitefish in the short-term, but the city will have a better idea of that impact after this year.

“I’ve talked to a few developers that are going to Columbia Falls or Kalispell because they would rather not lose money by developing affordable housing,” he said. “But eventually that won’t mater because people want to be in Whitefish.”

Another priority was to develop the city’s snow lot for affordable housing. The city’s Whitefish Strategic Housing Plan Steering Committee continues to work on the feasibility of the plan after an assessment showed it could cost about $7.8 million to turn the lot into an affordable housing project.

The committee is now studying constructing townhouses for ownership for the entire property rather than a mix of townhouses and rental apartments as originally proposed.