Legacy Homes program may see changes to fee in lieu option

The Whitefish City Council approved a conditional use permit for a 21-apartment project after adding a condition requiring the developer to build deed restricted units, per the Legacy Homes program, rather than pay a fee in lieu.

The developer, JLA Whitefish, LLC., requested a conditional use permit to build 21 apartments on about half an acre on Iowa Avenue. Edgewood Place is along the south of the project and Iowa Avenue is to the west. 

In order to participate in the Legacy Homes program, 10% of the units, or 2.1 units, need to be deed restricted for affordability or a fee paid in lieu of providing the units. In return, the applicant is entitled to incentives.

In this case, the developer will utilize 20% increased density, increased building height to 40 feet and a 20% reduction in the amount of required parking.

The developer chose to pay the fee in lieu of the 2.1 units, which amounts to $618,132. Whitefish Housing Coordinator Luke Sponable said the program offers developers a choice of one to four deviations from the standard should they voluntarily participate in the Legacy Homes Program.

The project’s architect, Matthew Lawrence with Montana Creative, said the group made a committee decision after going back and forth “quite a bit” on whether to pay cash in lieu or deed restrict the units. Ultimately, they decided to go with the cash in lieu.

“Can we require that the developer actually build the units and deed restrict them?” Mayor John Muhlfeld asked.

Before turning the question over to Whitefish City Attorney Angela Jacobs, Sponable said the city plans on making some modifications to the Legacy Homes program, in part because of lessons learned from this project.

“The way the ordinance is written is the city will consider alternatives to actually constructing the units in certain circumstances,” Jacobs said and listed examples of when it might be more appropriate to pay the fee in lieu. “So the city council does have the discretion to require them to build it.”

Speaking in favor of accepting the fee in lieu, Councilor Rebecca Norton said the city has already committed funds for housing so the fee would give the city more cash to work with.

Councillor Ben Davis proposed an amendment requiring the builder to produce the two deed restricted units and pay the remainder in cash. The amendment passed by a vote of 3-2 with Councilors Norton and Giuseppe Caltabiano in opposition.

The council voted unanimously to approve the conditional use permit for the development.

Davis said he was involved in the initial drafting of the Legacy Homes program.

“I am fairly perplexed by the interpretation that the developer is able to offer, at their discretion, a cash in lieu or the units,” Davis said. “The reality is the community needs affordable housing units … we are not here to extract money out of the developer, we need units.

“Money can be turned into units but it takes a lot of years, it’s expensive and, quite frankly, the government is just not as good at building housing units as the private sector,” he added. “I do feel like the intent of this program is to provide units.”

The project includes three one-bedroom units, six two-bedroom units and 12 studio units.

Lawrance said the market shows that studios and two-bedroom units are the most popular.

“I live in a small studio apartment and it’s great. I don't need that much and it lets me save money,” Whitefish resident Dakota Whitman said. “Not everyone needs a huge one- or two-bedroom apartment.”

Whitman gave full support for the development and said density is needed because younger people struggle to be able to afford to live in Whitefish. He added that he welcomes diversity and the prospect of new neighbors.

Councilor Steve Qunell asked if they could require more than 10% of the project to be given in exchange for the incentives.
“When this ordinance was created it was a mandatory project and… we felt 10% … was appropriate,” Jacobs said. “Now that it is discretionary … I think we can take a look at whether or not 10% is still appropriate.”

Nathan Dugan of Shelter WF said he was happy with the density of this project which is nearly 39 units per acre.

“Happy to hear there’s a little bit of discontent with the fee in lieu price,” Dugan said. “I think I’ve come up here three times before and said that calculation probably should be adjusted.”