The cost is going up for developers who propose paying a fee in order to qualify for incentives available through the Legacy Homes Program, a voluntary program offered by the City of Whitefish to promote affordable housing in exchange for exceptions to certain zoning regulations.
The Whitefish City Council voted unanimously at its Sept. 3 meeting to raise the cost of what’s known as the “fee in lieu of units” option for participation in the Legacy Homes Program. Typically a developer must offer to deed restrict a minimum of 10 percent of the units in a project for affordability in order to qualify for the program, but there is an option to offer an equivalent payment, or fee in lieu of units, instead. The bump approved by the council increases the fee by 27.5% from last year, bringing the cost to $375,443 per unit. That’s up from $182,274 in 2022 and $294,349 in 2023, according to a memo provided to the council by Dave Taylor, the city’s director of planning and building.
In presenting the increase to the council, Taylor characterized the update as part of the city’s annual efforts going back to 2019 to update the program and keep the metrics it revolves around current in response to changing market conditions.
Developers who meet the requirements to participate in the program are allowed to utilize specific exceptions to development standards, including a 20 percent reduction for the number of required parking spaces for two-plus bedroom units, an increased maximum building height of five feet, a 10 percent increase in maximum lot coverage, and a 20 percent increase in density.
The $375,443 fee in lieu of units amount is calculated using the three-year average of sales in the 59937 zip code as provided by the Northwest Montana Association of Realtors, the average square footage of homes sold in the same zip code, and the area median income for Flathead County. The data from the Northwest Montana Association of Realtors doesn’t include outlier sales of $5 million or greater, according to Taylor’s memo, which says the data is obtained by city staff in the spring.
As part of the recent update to the program, the council also approved updated purchase prices and rental prices for deed-restricted housing offered by developers participating in the program.
More changes could still be on the way for the Legacy Homes Program after the council opted last month to direct the Whitefish Community Housing Committee to review the program.
“I think the Legacy Homes Program seems to work in some circumstances with apartments, but it does not work with other types of projects, and I think we’ve had a lot of apartment projects get built in the valley that are also approved,” Councilor Ben Davis said at the council’s Aug. 19 meeting.
“And so looking into the future we may not have as many apartment projects in the future, and I think it would be potentially worth the time to go back and look at the Legacy Homes Program and say how can we get this to work better for ownership opportunities, in particular subdivisions, and I think it would need a different incentive structure that is tailored to those types of development applications.”
Some members of the council had expressed frustration with the program earlier this year when a developer opted for the fee-in-lieu option instead of deed-restricting 10% of the units for affordability. After some discussion with the city attorney, the council voted to require the developer to deed restrict two of the units in the 21-unit project at Edgewood Place.