Missoula Hopes Motel Purchase Will Solve Short- and Long-Term Housing Problems

 In the long run, the city plans to redevelop the property as affordable housing.

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Since the coronavirus outbreak began, the city of Missoula, Montana, has used hotel rooms as temporary housing for at least 29 individuals experiencing homeless. Like other cities across the U.S., the city made the rooms available to people who were showing symptoms of the virus, says Eran Pehan, director of the city’s Office of Housing and Community Development. Luckily, none of them have tested positive for COVID-19 so far. Considering that most of the city’s 370-some homeless people live in encampments or in large congregate shelters, one case “could very quickly turn into dozens and dozens of cases without adequate isolation and quarantine,” Pehan says.

The city now thinks it has a better solution for emergency housing — and one that will help address its longer-term shortage of affordable housing as well. In late April, the Missoula City Council approved the purchase of the Sleepy Inn, a small motel on West Broadway near downtown Missoula that’s been operating since at least the 1940s. The city will use the motel in the short term to provide housing for homeless people who need to quarantine or self-isolate. And when the emergency is over — whenever that may be — it plans to demolish and redevelop the property for permanent affordable housing.

“Like most pandemic planning, we hope to overplan and underutilize, but we do know that there is a very real need on the ground today,” Pehan says.

Missoula has not been particularly hard hit by the outbreak so far. As of last week, Missoula County was reporting 41 positive cases, with 27 recoveries and 1 death. Across the state, there were 437 positive cases and 12 deaths. But cases could spike at any time, particularly as Montana Gov. Bullock began to ease stay-at-home restrictions Sunday. The motel has advantages over some other emergency housing options because some of its suites have multiple bedrooms, which could help homeless families isolate, unlike the hotel rooms that are currently being used, Pehan says. Officials in Missoula say the motel needs some basic remediation and sanitation, but it could be ready for use almost immediately. The city council approved the sale on April 20, and according to Ellen Buchanan, director of the Missoula Redevelopment Agency, the city was hoping to complete the sale by the end of the week. Homeless families could have access to it as early as May, Buchanan says.

The Sleepy Inn motel has been running since the 1930s or 1940s, Buchanan says. By current standards, it’s a significant underuse of its half-acre property on West Broadway near downtown Missoula, she says. The city has been “circling” the property for a few years, Pehan says. The combination of a need for emergency housing and the sudden drop in travel and therefore demand for motel rooms brought the owner back to the table and focused the city’s efforts. The city would “not be buying this [motel] right now but for the virus,” Buchanan says.

The Sleepy Inn (Photo via Google Street View)

The city is using Tax Increment Financing to purchase the property for $1.1 million. TIF districts in Montana allow for new tax revenues in certain areas determined to be in need of reinvestment to be diverted back to development in those areas rather than collected like typical tax revenue. The TIF district around the Sleepy Inn was created in 1991, Buchanan says, and the city later sold bonds against the tax increment, which extended its life for another 25 years. Taxes from new developments like the mixed-use Old Sawmill District have made it possible for the city to buy properties like the Sleepy Inn.

“It’s finally generating enough increment that this district is very healthy again,” Buchanan says. “Basically, the property taxes that the Old Sawmill is paying are [funding] this motel. It’s beautiful. It’s balanced.”

The purchase also fits into a land banking strategy created as part of Missoula’s citywide housing policy, which was adopted last summer. The city’s struggle to provide affordable housing is not new. After the last recession, it took longer than it did in other cities for housing development to take off again, Pehan says. Partially, that was because an oil boom in the nearby Bakken shale formation siphoned off much of the labor force that would otherwise be working in construction, Pehan says. But since 2017, Pehan says, the city has had “an incredibly fast-moving market,” especially for commercial and multifamily housing development.

The city faces a number of challenges to its ability to provide affordable housing. A 2018 study found that 41 percent of all households in Missoula, and 55 percent of all renter households, were cost-burdened, paying more than 30 percent of their income on housing. And housing prices are rising faster than wages, like so many other places. Much of the city’s property is zoned for single-family use, and even though accessory dwelling units are permitted everywhere, there isn’t a lot of space to do larger-scale multifamily housing, Pehan says. And the city is prevented from growing outward by the very things that make it desirable, she says — rivers, mountains, and protected lands.

“The land that’s left to develop on is quite small, and quite coveted,” Pehan says.

That makes the Sleepy Inn purchase all the more important. In addition to a Tax Increment Financing district, the property sits in an Opportunity Zone and a qualifying census tract for New Markets Tax Credits, Buchanan says. There’s no concrete vision for what the redeveloped property will look like — the city will start a public engagement process after the emergency is over — but a mixed-use, mixed-income property with public funds and private partners is likely.

“It’s a particularly interesting neighborhood,” Pehan says, “because it’s connected to transit services, it’s very walkable, it’s near schools, and it’s less than a quarter-mile away from a hospital system. It combines amenities that blend particularly well with higher-density affordable housing … Our longer term plan is to be able to utilize this site to provide more homes that our community members can afford, so in that sense this acquisition is a wonderful example of meeting a short-term need in our community while addressing a longer-term value of providing affordable homes.”

This article is part of Backyard, a newsletter exploring scalable solutions to make housing fairer, more affordable and more environmentally sustainable. Subscribe to our weekly Backyard newsletter.

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Jared Brey is Next City's housing correspondent, based in Philadelphia. He is a former staff writer at Philadelphia magazine and PlanPhilly, and his work has appeared in Columbia Journalism Review, Landscape Architecture Magazine, U.S. News & World Report, Philadelphia Weekly, and other publications.

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Tags: affordable housingcovid-19missoula

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