Long day today. We rearranged the schedule to start with Administration and Finance at 8:00am. On the agenda was the discussion of forgiving the loan to the North Missoula Community Development Corporation. The basic story goes like this. The NMCDC has developed three land trust projects in Missoula. The first two went really well. The third one has been more difficult. The Burns Street Commons is located at the end of Burns street on the Westside near the railroad tracks. There is an old warehouse that has been remodeled and converted into the Missoula Food Coop and 17 units of housing surrounding a beautiful courtyard. It is a very nice development.

 

The basic idea of a land trust is that the community makes an investment into subsidizing housing and that housing remains permanently affordable. The land is owned by the trust and the houses built on top have perpetual leases. So the private individual owns the home but the trust owns the land. The lease arrangement includes a deal that restricts the equity that the owner gains in the home. This allows it to be resold later for a price that continues to be affordable for the next owner. These homes serve as a subsidized entry point into homeownership. Over time the buyer can accumulate enough equity to purchase a market rate home when they are ready to move on. Through the deed restrictions the home will again sell at a reduced rate to another income qualified household and the process can repeat itself.  Buying into a land trust home can be a really good alternative to renting where no equity is generated.

 

But it isn’t as attractive as buying a market rate home if you can afford one where you have no equity restrictions. And this is where the problems start. With the crash in the real estate market there is no longer enough spread between the cost of these units and others on the market. The next problem is that only people who earn less than 80% area median income are allowed to buy these units. So that puts an upper cap on how much they can earn. But to qualify with banks to get a loan to purchase the units at the current subsidized price you need to make over a certain amount. This leaves a fairly narrow slice of the home buying market. As the rules have tightened on qualifying for a loan this slice continues to get smaller. Then you throw in the problem that the folks in this limited target market are also the folks who are the most uncertain about their financial future in the current economy and it just gets really hard to sell homes.

 

So the NMCDC was at the end of the rope with the bank. First Interstate wanted their money or they were going to foreclose on the project. The city stepped in and paid them off and also provided bridge funds to support the remaining debt that was refinanced by NeighborhWorks Montana. Now, a couple of years later the situation has not gotten any better. Again the money has run out to make payments on the loans and it is clear that the units are not going to sell at the current prices.

 

The solution proposed is to allow the NMCDC to convert a portion of the loan that we made to them into a grant. This provides the latitude for them to reduce the prices of the homes to the level that the market will support and they will actually sell. The amount the price has to be lowered below the pro forma price will be forgiven from the loan. Two deals have been recently put together that required lowering the prices by about $20,000 per unit. If this trend holds true then about $200,000 of the $400,000 loan will need to be forgiven.

 

The discussion actually went pretty well. Adam informed us that this is equivalent to what is generally called a short sale in the banking industry.  He seemed to be in agreement that it made more sense to make a blanket arrangement now instead of having each unit come before us for that portion of the loan to be forgiven.

Dick wanted to know what the outcome would be if we let the project go into foreclosure. Bob Oaks explained that Neighborworks is in first position, HRDC is in second and the city is in third. With foreclosure eventually the units will be sold and people will live in them. But it is unknown if the owner at that point will be committed to the vision of providing workforce owned housing or if they will just be market rate rentals. And with foreclosure it is also unknown how much, if any of the $400,000 will be recovered by the city. I think it makes more sense to just increase the subsidy a bit more and sell the units as intended.

The money comes from our “Title 1” fund. This is some kind of federal money earmarked for social service projects. It has been used to fund various small requests over the years. The entire $400,000 fund was dedicated to this loan. Any amount converted will of course not be available for other projects in the future. We were unable to complete the discussion and will continue it at 12:30 next Wednesday.

 

Next meeting was Conservation. We are buying sound tiles for Currents. Any noise that happens in that building takes ten seconds to stop reverberating. Multiply that by 300 screaming kids and it is unbearable. This is supposed to make it much nicer.

 

In PAZ we continued to slog through subdivision regs. Our rate of progress definitely picked up this time. One or two more meetings and we will be done with it just in time to start reviewing the code changes needed to comply with the last legislative session.

 

In Public Works we made an exception to the noise ordinance so MDT can rebuild the east end of Main street at night so as not to disrupt traffic during the day. I’m actually having second thoughts about that decision. It is going to suck to live near there for the week they are working from 7:00 pm to 6:00 am. Maybe disrupting the daytime traffic is preferable. Main isn’t all that busy anyway.

 

After lunch we had a three and a half hour public safety and health meeting regarding the police response to sexual assault incidents. The meeting started with the police chief talking for a full 90 minutes. Just last week I think I commented on how well organized and detailed his presentation was to us. Not so much this week. When he got done we had a couple of questions and then went into public comment. The first person to speak was a lady who went off on a rant that made almost no sense. I still have no idea what the heck she was talking about. After about ten minutes we’re all looking at Jon thinking “you wanted to be chair now you have to figure out how to get her to stop.” He handled it well.

 

Here’s my take on the whole thing. There is inadequate training at the police academy for sexual assault. They have a four hour session on it out of something like 480 hours of training. I wonder how much they get on stuff related to the war on drugs? I wouldn’t be surprised if it was over 100 hours. The Missoula police do some additional training but this is an obvious area to apply more resources. Another problem is that rape is one of the hardest crimes to get a conviction on. It requires the prosecutor to prove that consent was not given. The police know these cases rarely go anywhere so I imagine it has an influence on the way they pursue them.

The other big issue I see is providing adequate advocacy for victims. These women should have an advocate that is present with them when they are interviewed by the police and they should be following up with the police to make sure the officers are properly investigating the case. Women in this situation are vulnerable, scared, and don’t know anything about the world they have just stepped into. Somebody who is empowered and knowledgeable of the process should be making sure they are receiving every resource they are entitled to and that their case is being treated appropriately. I’m having trouble believing that the folks in the Crime Victims Advocates office are in much of a position to provide oversight of police investigations and practices. Maybe that’s not their role but it needs to be someone’s role in this process. A quarterly review of completed cases that have complaints associated with them by the police commission is not adequate. There needs to be some kind of real time oversight and advocacy.

Anyhow, that was my take away from the presentation and comments from the public. This isn’t an area I know much about but I’m sure we will continue to follow up with additional discussions and hopefully see some changes that lead to less rape and better treatment for victims.