The Community  Development Board and staff recommend allocating up to $750,000 in Community Development Block Grant (CDBG) funding to Homeword for the rehabilitation of Sage Tower at 115 North 24th Street. The CD Board and staff recommendation is contingent upon the Department of Housing and Urban Development's (HUD) acceptance of the environmental review and long-term pest control monitoring to ensure the health and safety of residents.

Homeword is requesting $750,000 in CDBG funding to rehabilitate Sage Tower, an 81-unit affordable housing property in downtown Billings serving low-income seniors and individuals with disabilities. The project will address major building systems, including roofing, windows, and plumbing, to preserve long-term affordability and improve living conditions for residents earning up to 80% of the area's median income.

Application: On January 16, 2026, an Affordable Housing Development Program application was submitted by Homeword requesting $750,000 to rehabilitate Sage Tower, including new roofing, windows, mechanical, plumbing and more.

Project Site: The proposed project is a ten-story building located in Downtown Billings at 115 North 24^th Street. The building was built in 1974 and rehabilitated using tax credits in 2009. The City also awarded funds to the property in 2008 for work on 20 of the units in the building, but the loan was paid back in 2019 (See Previous City Award Table below). The property is valued at approximately $3,642,058 and was acquired by Homeword in 2019.  The property consists of 36 studio and 45 one-bedroom apartments for low-income seniors and people with disabilities. All units utilize either Section 8 Housing Assistance or a Tenant Based Voucher. If awarded, the City of Billings’ CBDG funding will be used for rehabilitation of the property. The property is within walking distance of a variety of services, including medical, retail and a grocery store, making it a great addition to the Downtown area for residential use.  

Project Utilization and Beneficiaries: Funding investments in this project will benefit low-income individuals and families with household income up to 80% of the Area Median Income (AMI). Eight (8) units serve less than 30% AMI households; one (1) unit serves a 31 to 50% AMI household; 72 units serve 51 to 80% AMI households. The property’s management company utilizes Homeword’s approved resident selection plan, which includes serving all who are eligible, unless they are a lifetime registered sex offender.

Community Concerns: Recent community concerns have been raised regarding reported bedbug and cockroach infestations at the property. CDBG-funded rehabilitation activities must comply with:

• 24 CFR 570.202 (Eligible Rehabilitation Activities)
• HUD Property Standards (24 CFR 5.703)
• Environmental health and safety standards

Infestation conditions may imply health and safety compliance is not adequately addressed. CDBG rehabilitation funding is intended to improve living conditions and preserve affordable housing. While reported infestation concerns present identifiable risks, those risks may be mitigated through structured safeguards and compliance controls. CDBG funds may be used to correct code deficiencies and health hazards; however, the City must ensure that public funds are supporting properties that maintain compliance through effective management. 

Homeword mobilized quickly to implement a comprehensive response to the infestation conditions and supported residents throughout the process. Homeword engaged Montana Pest Solutions to complete two (2) building-wide treatments. Montana Pest Solutions reported a substantial reduction (80 to 90% reduced) from their pre-treatment inspection. Going forward, Homeword will continue monthly treatments for the next six (6) months. Homeword continues to monitor the situation closely and remains committed to ensuring all residents have a safe, healthy living environment. If funding is approved, Homeword will provide pest monitoring reports to the City to ensure compliance with approval contingencies. 

Procedural History 

• 7/25/2025: A public notice was published in the Yellowstone County News alerting the community of Homeword’s intent to rehabilitate Sage Tower.
• 8/1/2025: A resident meeting was held in the Sage Tower Community Room to garner community feedback and prepare residents for the upcoming rehabilitation work. A second public notice was published in the Yellowstone County News alerting the community of Homeword’s intent to rehabilitate Sage Tower.
• 12/4/2025: The project was awarded $7.5 million in tax credits by the Montana Department of Commerce. This award also includes funding for rehabilitation of Fraser Tower. Of the total award amount, $1,671,000 will be utilized for the rehabilitation of Sage Tower.
• 3/3/2026: Homeword presented the project to the Community Development Board. The Community Development Board recommended the project be taken to City Council for funding allocation.
• 4/8/2026: The City’s Legal Department completed review of legal agreements for the project.

Project Review
Proximity: The property is in the Downtown area and within Billings city limits. As part of the environmental review process, CD Division staff review locations for proximity to amenities, transportation, employment opportunities, food sources, education resources, etc. The property is near Central High School and Senior High School. It is also close to multiple churches, many employment opportunities at businesses, multiple fast-food restaurants, several branch banks or credit unions and convenience and grocery stores. The Downtown Family Pharmacy and Albertson’s Pharmacy are less than one mile from the property. Public transportation routes include a bus stop at the intersection of 2^nd Avenue North and North 24^th Street, as well as other bus routes in the vicinity. Billings Clinic Hospital and Intermountain Health Hospital are less than one mile from the property.

Project Management, Developer Qualifications, and Portfolio Assessment
Qualifications: The applicants’ staff has significant experience in affordable housing development, construction, rehabilitation, maintenance, and oversight. Homeword has developed or preserved 35 affordable housing projects across Montana. The staff of Homeword have extensive experience working with CDBG and tax credit projects.

Market Analysis
Alignment with Consolidated / Annual Action Plan: The project addresses all the City’s FY2025-2029 Consolidated Plan goals:

• To provide decent housing by maintaining the affordable housing stock in the community  
• To provide a suitable living environment
• To expand economic opportunities by promoting long-term viability

Financial Analysis

Leveraging: Estimated costs to construct the project total $24,481,100. The City funding request of $750,000 is approximately three (3) percent of the total project budget.

Subsidy Layering Review: The list of proposed costs appears to be thorough and complete. Homeword has management and maintenance plans in place to ensure the property’s long-term viability. The $750,000 in requested funding is a very small percentage of the overall project costs and funding under the maximum subsidy limits. Homeword has experience in developing housing with Federal funds and Low-Income Housing Tax Credits.

Procurement: Bids have not been obtained for the project. If funded, Homeword is required to follow procurement regulations to obtain additional, competitive estimates through a free, open, and competitive process. The U.S. Department of Housing and Urban Development’s (HUD’s) Build America, Buy America (BABA) requirement must also be met. 
The overall project budget is reasonable, given the professional expertise available in Billings. There is a workforce and contractor availability shortage, and the cost of materials has greatly increased due to pandemic impacts.

Previous City Awards: The project is in alignment with previous awards granted by the City. 

AFFORDABLE HOUSING PROJECTS
Project	Developer	# Units	City Award	Year
LB Lofts	HomeFront – Owner, Homeword - Developer	101	$1,545,000	2025
Mitchell Court	GL Development	32	$1,200,000	2024
Off The Streets / Western Hotel	HomeFront	60	$450,000	2021
C & C Community:  Infrastructure	NeighborWorks MT	60	$540,000	2020
Pheasant Home	HomeFront – Owner, Homeword - Developer	16	$554,191	2014
Sioux Lane:  Infrastructure	HomeFront	32	$262,000	2008
Westchester Square	HomeFront	3	$200,000	2008
Sage Towers	Menola Land	20	$150,000	2008
Southern Lights	Homeword	20	$500,000	2006
Old Town Square	HomeFront	8	$242,000	2002
Acme Hotel	Homeword	19	$143,400	2002
YWCA Gateway House

CDBG: The City currently has $200,000 in CDBG funding allocated to the Lead Water Service Line Program, $50,000 allocated to the Crime Prevention Through Environmental Design (CPTED) Program and $150,000 allocated to the Foreclosure Acquisition and Rehabilitation Program that can be reallocated to this project. As was provided to Council when it heard a presentation on the Annual Action Plan and CDBG and HOME program HUD allocations for FY27 on April 13, the Lead Water Service Line Program has had no response from property owners with lead service lines, CD staff and PRPL staff continue to work on potential CPTED projects in qualifying parks but have not projects currently identified, and the Council voted to stop administering the Foreclosure Acquisition and Rehabilitation Program at its April 27 meeting. The City currently also has $385,000 in program income as of February 19, 2026, bringing the total available CDBG funding to $785,000. Reallocation of funding from the noted programs allows this project to be funded.  

2) Not approve funding for the project. Homeword would need to secure other conventional financing to complete the project or not move the project forward.