Community Development staff and the Community Development Board recommend allocating $1,400,000 in HOME funding and $145,000 in CDBG funding to Homeword and HomeFront for the new construction of LB Lofts affordable apartment housing. The recommendation for approval to allocate funding is contingent upon the viability of stored building materials and firm funding commitments from other project funding sources. This allocation and expenditure of funding is expected to enable this new affordable housing project to be constructed in Billings and will also assist the Community Development Division in meeting program expenditure deadlines. 

Application: On October 18, 2024, an Affordable Housing Development Program application was submitted by HomeFront and Homeword. The organizations provided a revised project budget on August 21, 2025. HomeFront and Homeword are requesting $1,545,000 to construct 79 new affordable two-bedroom rental units.

Project Site: The proposed project is located near the intersection of Sioux Lane and Twin Oaks Drive in the Billings Heights. The property is valued at $1,177,740 and was donated by HomeFront for the proposed project. The total availability of units will be 101 two-bedroom units. Twenty-two (22) of these units will be funded via Low-Income Housing Tax Credits awarded to the project by the Montana Board of Housing. If awarded, the City of Billings’ HOME funding would be used to assist in funding the remaining seventy-nine (79) units. If awarded, the City of Billings’ CDBG funding will be used for infrastructure improvements.  

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). Thirty (30) units would serve 31-50% AMI households; forty-nine (49) units would serve 51-80% AMI households. Based on the project’s affirmative fair housing marketing plan, the target populations for this project are Native Hawaiian/Pacific Islander, Black/African American and Asian households. The only tenants to be excluded are registered sex offenders. The use of existing infill land for the project site provides additional affordability. The applicant is willing to secure the City’s funding award through deed restrictions and a trust indenture, assuring the City will be repaid the full award if the project no longer serves the intended population or is sold.

Procedural History
· 9/26/2023: The project was presented to the Heights Task Force.
· 4/4/2024: A local community meeting was held at the Heights Clubhouse.
· 6/4/2024: HomeFront and Homeword presented the project to the Community Development Board.
· 6/28/2024: A public notice was published in the Yellowstone County News.
· 7/8/2024: Patti Webster from HomeFront gave an overview of the project to City Council and the meeting was open for public comments.
· 7/12/2024: A second public notice was published in the Yellowstone County News.
· 8/5/2024: Application submitted to the Montana Board of Housing for 2025, 9% Low-Income Housing Tax Credits.
· 10/18/2024: HomeFront submitted an Affordable Housing Development program application to the City’s Community Development Division requesting $1,545,000 in funding for the project.
· 12/19/2024: The project was awarded $6,500,000 in tax credits by the Montana Board of Housing to build 22 units of the total 101 units, leaving 79 units to be funded by the City’s Affordable Housing Development program.
· 3/4/2025: Homeword staff and High Plains architects attended the Community Development Board meeting to give an updated presentation on the project, discuss longevity of materials and answer questions.
· 4/1/2025: The Community Development Board recommended the project be taken to City Council for funding allocation.
· 8/21/2025: A revised project budget was received from Homeword and HomeFront, enabling City staff to complete the project materials for Council action.

Project Review
Proximity: The property is in the Heights 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 Skyview High School. It is also close to multiple churches, many employment opportunities at businesses such as Wal-Mart, Walgreens, USPS, Albertson’s, multiple fast-food restaurants, several large branch banks or credit unions and multiple convenience stores. The two larger retailers nearby have a pharmacy. Additionally, Albertson’s, which is approximately one mile from the property, has a pharmacy. There are two thrift or consignment stores in close proximity. Public transportation routes include a bus stop at the intersection of Lake Elmo Drive and Sioux Lane, as well as other bus routes in the vicinity. Intermountain Health Heights Clinic is less than one mile from the project site, while Billings Clinic and St. Vincent’s Hospital are less than five miles from the project site.       

Project Management, Developer Qualifications, and Portfolio Assessment

• Management: HomeFront will be the property owner and will oversee the project management in conjunction with Homeword as the project developer. HomeFront will maintain ownership and oversee the management of the property after construction.
• Qualifications: The applicants’ staff has significant experience in affordable housing development, construction, maintenance, and oversight. HomeFront has utilized HOME and CDBG funds since 1995 to develop affordable housing projects. Homeword has developed or preserved 35 affordable housing projects across Montana. The staff of HomeFront and Homeword have extensive experience working with HOME, CDBG and tax credit projects.
• Beneficiary Involvement: The organization held a neighborhood meeting on April 4, 2024. Public notices requesting comments were published in the Yellowstone County News on June 28, 2024, and July 12, 2024. The project was presented to City Council on July 8, 2024, and public comments were requested.

Market Analysis
The property is located near the intersection of Sioux Lane and Twin Oaks Drive in the Billings' Heights neighborhood and is valued at $1,177,740. The land was donated by HomeFront for the proposed project. A property appraisal is to be completed as required by the project lender.

Alignment with Consolidated / Annual Action Plan: As noted in the City’s 2025-2029 Consolidated Plan, there were over 8,000 households on waiting lists for public housing. Over 3,600 people were waiting for single-person housing. The project addresses all the City’s Consolidated Plan goals:

• Create, preserve, and expand affordable housing options
• Neighborhood revitalization
• Impact poverty

Financial Analysis
Leveraging: Estimated costs to construct the project total $25,074,596. To date, funding applications have been submitted (see following page). The City funding request of $1,545,000 is just over six percent of the total project budget.

PROJECT BUDGET
Item	Bids Received	Estimated Cost
Land Purchase	Donated	$0
Site Work	Pending	$1,707,910
Construction		$17,169,808
Professional Work & Fees (Architect, Attorney, Engineer)		$611,091
2029 Construction Interim Fees	Business fees	$999,000
Permanent Financing Fees		$336,300
Soft Costs		$371,787
Syndication Costs		$89,700
Developer’s Fees		$3,200,000
Project Reserves		$589,000
TOTAL		$25,074,596

 

LEVERAGED FUNDING
	Leveraged Resources	Commitment Date
NWMT Capital Magnet Loan	$2,450,000	Requested
Glacier Bank Tax Exempt Loan	$7,500,000	Requested
Deferred Developer Fee	$1,357,169	Proposed
HC Equity Non-Competitive	$12,222,427	Proposed
TOTAL	$23,529,596

Fiscal Health: To date, funding has been requested or proposed, but not firmly committed. The project is being built with the goal of a tight, efficient, and durable building envelope for longevity and lower utility costs. Preliminary design concepts include crime deterrence (utilizing Crime Prevention Through Environmental Design practices) to protect the buildings as well as maintain the safety of the residents.

Subsidy Layering Review: The list of proposed costs appears to be thorough and complete. HomeFront has management and maintenance plans in place to ensure the property’s long-term viability. The $1,545,000 in requested funding is a very small percentage of the overall project costs and funding under the maximum subsidy limits. The developer, Homeword, has past 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, as a developer, 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 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. The cost per unit for construction is $317,399 per unit. For comparison, the cost per unit for the Mitchell Court project was $348,902.
 

AFFORDABLE HOUSING PROJECTS
Project	Developer	# Units	City Award	Year
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	$175,000	2008

City Council may:

• Approve the $1.4 million of HOME funding and $145,000 of CDBG funding for the LB Lofts project; or
• Not Approve the $1.4 million of HOME funding and $145,000 of CDBG funding for the LB Lofts Project. The project is in alignment with the City's adopted Consolidated Plan and supports provision of more affordable housing for the residents of Billings, so not approving the funding would not be in alignment with City program goals. 

The City currently has $1.4 million in HOME and $145,000 in CDBG funding available for this award. Committing this funding would assist the City in meeting commitment, expenditure, and timeliness requirements, as well as meeting City goals for affordable housing development.

An overall review of the application reveals the project is consistent with similar projects the City has funded in the past and is in alignment with the City's Consolidated Plan. There is a demonstrated need for safe and affordable housing, as evidenced through data from the City's recent Consolidated Plan, including the Housing Needs Assessment, Market Analysis and the Analysis of Impediments to Fair Housing Choice. The applicants have extensive experience in developing and managing affordable housing projects, as well as knowledge about federal program requirements.