Council passes on proposed annexation policy

The Whitefish Community Housing Committee sought feedback from Whitefish City Council on a proposed annexation policy based on the goals in the 2022 Whitefish Community Housing Roadmap.

After discussing the proposed policy at a work session, the council sent the idea back to the drawing board due, in part, to concerns about the Legislature and the lack of precedent for the plan.

“I think we are in agreement that we’re not ready for that quite yet, if I interpreted the council correctly,” Mayor John Muhlfeld said. 

Councilor Frank Sweeney said he had the impression that the councilors were not comfortable with the policy and Councilor Andy Feury said the Legislature will likely kill the approach for being too prescriptive.

The roadmap provides priority action items to address the shortage of community housing, including an objective to maintain and increase the number of primary residences in Whitefish, which is currently at 70%. 

A goal of the proposed policy was to see the majority of new housing units purchased by locals or those intending to make Whitefish their full-time residence, as opposed to second homeowners, corporations or investors who do not intend to live in the home. 

The proposed policy directed the city to “develop and adopt annexation policy requiring a significant percentage of homes developed on annexed property be deed-restricted community housing” in an effort to reach 80% primary residences, as recommended in the 2017 housing plan.

The proposed annexation policy would apply only to properties being annexed voluntarily and would require, as a condition of annexation, that “a deed-restriction is placed on the property limiting occupancy to at least 70% of all housing units annexed, or created post-annexation, are by a household where at least one member is a local resident.” 

A local resident is defined as someone who lives in the home for at least 10 months per year, thereby making the home a primary residence. A qualified household is one containing at least one person who will use the home as a primary residence.

Councilor Ben Davis is a member of the Whitefish Community Housing Committee and said one of the biggest issues the community of Whitefish faces is growth.

“We can’t continue to grow, grow, grow, without a vision of what makes sense for the people who live here,” Davis said. “There are minimal, if any, sideboards to direct annexation in a way we think works well for the community.

“One thing that I struggle with is the fact that we were not able to find another municipality in the country that does this and that’s a concern to me because we’d be blazing a trail,” Davis said. 

Whitefish Community Housing member Rhonda Fitzgerald said one reason other towns haven’t utilized a policy like this is their ability to do other things that Whitefish cannot do. She said another reason is that other resort towns aren’t year-round communities.

“We’re at the leading edge here,” Fitzgerald said of Whitefish. “We’re a real place with real people who live here year-round … and we’re trying very hard to maintain that and sustain it.”

While the committee would like to see affordability requirements for deed restriction to ensure housing is affordable for intended occupants, they say the city should, at least, require a light deed restriction.

“Given the actions at the Legislature, we did have to develop this program with a light deed restriction versus an actual price deed restriction or AMI restriction for occupants,” Whitefish City Manager Dana Smith explained. “So it is a light deed restriction … just requiring a primary resident versus a secondary resident.”

The deed restriction would also apply only to ownership properties as the city is not legally permitted to limit the rental of units only to locals. 

Smith said the pros of the policy included that it is low cost to the city, it benefits the community by providing additional housing for locals, and that the incentive is not monetary, but is the ability to annex and gain access to city services. 

“Another pro is it’s a long-term solution through permanent deed restriction, it considers the needs of locals when annexing,” Smith said. “This program will likely target your higher AMI needs … we have needs that are up to 250% AMI.”

Some of the cons include the possibility of developers choosing to develop in the county instead of annexing, and deed restriction could pose a limitation to developers when financing and construction projects.

“We have the risk, and I will say this is probably a high risk, … that the Montana Legislature could prohibit such a policy,” said Smith. “And there is no mechanism after sale, confirming that they are still residing in a unit.”

Councilor Rebecca Norton said the committee is doing a great job but the proposed policy might result in the city being sued or targeted by the Legislature for taking the right to make a profit on a subdivision. She said she couldn’t support the policy.

“I like the end product if we can get it,” said Sweeney. “I think using this mechanism, it would be impossible to get the result that we want, lawfully or practically, in my view.” 

Councilor Giuseppe Caltabiano asked about unintended consequences of the policy and wished there was an identical precedent. 

“The legislative side concerns me hugely because I think we’d see a bill instantly, quite frankly,” Feury said. “I do have a concern about driving things into the county farther … because septic is going to be a bigger issue than development over time in this state.”

Although the proposed annexation policy failed to garner support, the Whitefish Community Housing Committee was lauded for their work. At the end of the meeting, Whitefish Attorney Angela Jacobs said she understood the councilors’ frustrations associated with the Legislature.

“I think we have a huge opportunity with our new growth policy to direct growth and density and affordable housing, maybe, where we want it, without getting in the way of the legislature,” she said.