Wednesday, February 21, 2024

Florida developer paid $18,000 for University of Montana BBER housing study; was allowed review of it as well

Editor | March 17, 2023 12:05 PM

A Florida developer paid $18,000 for a housing study analysis of the Flathead Valley completed by economist Patrick Barkey.

Location Acquisitions, also known as Location Ventures, contracted with the University of Montana’s Bureau of Business and Economic Research for the study from Oct. 15 to Jan. 15, 2023. The study was completed by Barkey and has been making the rounds at various city council and chamber of commerce meetings for several weeks.

Under terms of the contract, BBER would complete the study, and Location Acquisitions would be able to “review and comment on draft versions of the final report to allow for timely completion of the project.”

Barkey released the contract to the Hungry Horse News after the newspaper filed a records request with the University of Montana.

Location Acquisitions, which is owned by Florida developer Rishi Kapoor, is seeking city council approval for a 180 unit rental complex of 22 acres of land just east of the Flathead River.

The application goes before the council at 7 p.,m. Monday, March 20, at the Columbia Falls Junior High. The city-county planning board previously gave the project a negative recommendation.

In the study, Barkey says the Flathead Valley needs to build about 14,800 housing units to meet the cumulative need over the next 10 years based on population growth and in-migration.

The theory is that people will move from existing housing to newer housing if it is made available. In turn, the older housing should become more attainable.

“Consider the buyer of a market rate house who is a resident of Flathead County. Those who buy homes also sell them, or vacate the dwellings they previously rented, and the latter can often be older or smaller homes in different price tiers. Thus there is a supply effect beyond the price tier of the new home that is less affordable,” Barkey opines. “If the purchaser is a new arrival to the region, or the purchase is for a second home or even a vacation rental, the logic still holds. This is because the construction and the sale of the new home has displaced the removal from the marketplace an existing home that would have otherwise been purchased.”

But it appears investor housing is going beyond that.

Vacation and other short-term rentals are certainly having an impact. A 2019 story by Norma Nickerson of the University of Montana’s Institute of Tourism and Research in Montana Business Quarterly, notes the impact of short-term rentals on the housing market in Montana, both locally and regionally

“In Whitefish and Gardiner, the appetite for investments in real estate appears to be a main driver in the rapid increase in the number of short-term rentals. Vacation home owners hoping to cover the costs of owning a second home is another cause. It’s become common for real estate companies in the area to tout the sale of a home or apartment as an income generator,” the story notes.

Short term rentals offer investors not just income, but tax breaks. They can also finance the home through the short-term rental, live in it a few weeks, then rent it out the rest of the time. Or simply use the income to finance another home.

“Clearly, the home-sharing economy has disrupted traditional markets of rentals and home sales. As landlords switch from long-term rentals (used by residents) to short-term rentals (used by nonresident visitors), this drives up the rental rate and housing prices in the long-term market,” Nickerson writes in the story. “Granted, short-term rentals are not the sole cause of the lack of affordable housing in Montana, but in some areas they can be a factor. In the Whitefish area, there are more than 900 listings for short-term rentals on Airbnb in a town with 7,600 residents.”

The Hungry Horse News has found similar trends in Columbia Falls as of late. In the Cedar Pointe subdivision, for example, there are a host of out-of-state or even out-of-country investors. Of the roughly 40 or so homes in the subdivision, nine are listed for rent by Vacation Rental By Owner, which is another large online vacation rental company.

Currently Columbia Falls requires a permit for vacation rentals in its planing jurisdiction, but in most places, they are allowed, unless a homeowners association in a subdivision has restrictions on them.

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