As local government searches for ways to promote affordable housing and the University of Montana works to recruit and retain more students and better serve them, an opportunity for creative collaboration arises.
You know the problem: high rents and high house prices help create a cost of living in Missoula difficult to manage on local wages. Someone moving into town, bringing with him large equity gained in a house sold elsewhere can do OK, but Missoula houses are beyond the reach of many wage-earners. Scarcely 50 percent of Missoulians own or are buying their own homes, compared to more than 65 percent nationally. Rents have risen at least as much as home prices. According to the U.S. Census, 50 percent of Missoula County renters spend more than 30 percent of their gross income on housing.
Meanwhile, UM finds itself without enough housing to accommodate incoming freshmen. This fall, the university faces the prospect of having to lease apartments from the private sector. And that's just to accommodate the freshmen who are required to live on campus. Overall, the university provides housing for only about 25 percent of its students.
The rapid rise in Missoula home prices through the 1990s and in this decade coincides with significant increases in UM enrollment. UM enrollment didn't cause the increase, but if the laws of supply and demand mean anything, it certainly contributed to it. More students seeking off-campus housing increases demand. That rising demand helped make conversion of single-family homes to multi-party rentals economically attractive for landlords. The value of homes as potential income-producing rentals often exceeds what local wage-earners seeking a home for their family can afford to pay.
By itself, the city has little ability to make housing more affordable. Its tools are largely regulatory. And regulations tend to make things more expensive, not less. Some attempts to ease regulations to increase housing density, with a goal of making it more affordable, have made things worse, not better.
That brings us to the opportunity at hand.
UM needs more housing for its students. We also think it needs to take a closer look at the high cost of local housing as a factor in the overall cost of higher education, which continues to strain students' and families' ability to pay. UM focuses on trying to limit tuition increases, but tuition can be a lesser expense than housing. We can't say high housing costs are a factor in UM's low graduation rates and its difficulty in retaining students, but we'd be surprised if it weren't. Demographic trends suggest competition among universities for students is going to heat up in the coming decade; high housing costs could make UM less competitive in attracting new students.
What if UM provided more students with more affordable and more attractive housing? Doing so would increase the supply of housing, creating a damper on local rents and reducing incentives for conversion of single-family homes to rentals. Were UM to accommodate enough of its students, then many rental homes likely would come back on the market. Look around Missoula and you'll see thousands of distressed rental homes that, in many markets, would be the fixer-uppers that tend to be affordable to first-time homebuyers. Because UM's enrollment increases and lack of campus housing distorts the supply-and-demand balance, these homes have tended to be more valuable as rentals than as fixer-uppers.
Providing student housing is a legitimate part of UM's overall mandate to educate students. The university also has extraordinary ability to finance housing construction through revenue bonds, repaid through rent. As an institution of higher education, UM doesn't have to turn a profit, so it can provide housing to students essentially at cost.
Were UM to increase its housing to a mere one-half of its enrollment - a modest level compared to many universities - that doubling of campus housing could have a tremendously positive affect on housing affordability and UM competitiveness.
This is something the city of Missoula should encourage. The city could help in several ways. For one thing, UM has limited space on campus for housing. Could the city help integrate student housing in logical places around the city? Doing so would fulfill the goal of using “infill” development to reduce sprawl. It could cut down on traffic and also help bring new vitality to neighborhoods.
UM also has to think about the long term: What if enrollment trends reverse and UM has difficulty filling all the new housing we're asking for? The city, perhaps working in concert with the Missoula Housing Authority, Missoula Redevelopment Agency or other partners could play the role of shock-absorber, taking some of that risk away from the university.
We're making this up as we go, but maybe another party could build housing under contract for long-term lease to the university. Or UM could build housing later to be sold to the Housing Authority or private parties should economic conditions dictate.
Don't look to us to figure out all the details. That requires more expertise than we bring to the table. Fortunately, between the university and local government, there are a whole lot of really sharp people.
Let us suggest, for starters, that Mayor John Engen sit down with UM President George Dennison to examine common housing interests. UM could and should provide more housing. What can the city do to encourage that for the benefit of the entire community?
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