City Commission approves partnership with land trust

After a lengthy discussion Monday night, the Polson City Commission voted 4 to 2 to authorize City Manager Ed Meece to develop an affordable housing project in concert with the Northwest Montana Community Land Trust.

The city’s administration has been discussing the feasibility of a project since last fall and Kim Morisaki, executive director of the Kalispell-based nonprofit, has made previous presentations to the commission and the Polson Redevelopment Agency, which oversees expenditures in the Tax Increment Finance (TIF) District. She was on hand Monday night, along with Glacier Bank president Mike Smith, who attended via Zoom.

The guidelines approved Monday set a project budget of $200,000 in TIF funds, which could be spent to purchase a single-family home and make necessary improvements to the structure. Once it meets livability standards, the home would be resold to a qualified first-time homebuyer whose income is within 120% of the area’s median income and is able to secure a mortgage.

The homebuyer purchases the home with the understanding that the city retains ownership of the land that the house sits on, basically signing a 75-year ground lease and agreeing to pay property taxes on both the home and property.

If they sell the house, the homeowner receives 100% of what they paid for the house and 25% of its increase in appraised value, while the city retains ownership of the land – a key component in keeping it affordable for future purchasers.

“This is not something new and novel,” Meece told the commission. “There are seven or eight land trusts across the state and hundreds across the country using the same or similar methods.”

In the Flathead Valley, the land trust has 52 properties and is in the process of acquiring three more, according to Morisaki.

She added that finding affordable projects that meet the city’s funding cap of $200,000 will require patience, noting that most of the homes acquired in Kalispell were through foreclosures.

“We have to be very diligent,” she said. “This will not be an emotional purchase.”

Smith noted that his bank and several other regional lenders have no trouble working within the constraints imposed by the land trust.

“To me, it’s a really good product,” he said. “I’m excited that Polson is willing to work with us on finding affordable housing.”

“My biggest issue is the 25% cap on top,” said Commissioner Tony Isbell. “It’s just glorified renting if you don’t own the land under the house. How can the homeowner build equity?”

In a volatile housing market, he suggested the city could “make better use of $200,000 to improve more lives in town.”

He made a motion to not approve the agreement, which did not receive a second.

During public comment, Mary Frances Caselli concurred with Isbell. “This strikes me as not the best way of using those funds,” she said. “If I was a homebuyer, I wouldn’t want a house that I didn’t own the property underneath it.”

Morisaki countered that “the majority of people I deal with walk away with $30-$50,000 in their pockets.” The program, she said, allows low-income buyers to take “that first step into owning their first home.”

City watchdog Lee Mannicke, who keeps a close eye on TIF expenditures, was also opposed to the move. Since the resolution that established the TIF district sunsets in 2025, he counseled the commission to seek funding for projects of this ilk from marijuana-tax proceeds instead.

“Those are not restricted and have a longer life than the TIF district,” he said, adding that the land trust seemed like “a cumbersome way” to pursue affordable housing that “costs the TIF district a lot of dollars with minimum benefits.”

Tim Biggs recommended a further study of options to improve workforce housing. “If you only have one tool in your arsenal, the one tool you can use shouldn’t be this formulated,” he said.

The commission ultimately approved the agreement that allows the city manager to collaborate with the land trust on a project and sign a buy/sell agreement, conditioned upon final approval by the city commission within 14 business days of an offer and “completion of satisfactory due diligence.” The agreement was supported by four commissioners and opposed by Isbell and Mayor Eric Huffine.

Commissioners also unanimously approved resolutions committing local water and sewer funds as a match for federal American Rescue Plan Act (ARPA) funding of $860,000 for sewer projects and $1,453,336 for water projects. The competitive grants are authorized by the State of Montana.

The funding package will allow the city to complete work on two important lift stations, replace sewer main sections that are infiltrated with roots, complete work on Wellhouse No. 8, and replace Hillside Reservoir and a water main on Fourth Ave.

They also gave unanimous support to appointments to three city boards:

• Felix “Trey” Moran was reappointed to a three-year term on the Joint Airport Board;

• Board chair Peter Ridgeway and Jill Campbell were reappointed to the Parks and Tree Board, along with new member Mike Marnin, each for three-year terms; and

• Jennifer Bagley and Irene Marchello were appointed to four-year terms on the Polson Redevelopment Agency.

While the appointees fill several vacancies, Meece noted that there’s still ample room for those interested in city government to serve on the Board of Adjustments, the City/County Planning Board and the Economic Development Council.

An agenda item on the proposed Safety Inspection Program was postponed when Mayor Huffine requested more time to seek input from the business community prior to taking legislative action. If approved, the ordinance would set a fee for local businesses to cover the costs of annual safety inspections conducted by the Polson Fire Department.