Can a new approach to affordable housing keep the middle class in booming Bonner County?

SANDPOINT – Nancy Hadley never could figure out how to develop her 6-acre parcel into housing that local people could afford.

Then Rob Hart arrived in town.

An itinerant developer who has trained as an architect and engineer, Hart left the Mediterranean island of Gozo, where he retired among some of the oldest buildings on earth after a four-decade career, and came to Sandpoint in 2018, seeking what has drawn so many to the little North Idaho city: a good quality of life.

And considering what he was looking for – a town of fewer than 10,000 people that was near a ski hill and a beach – Hart said, “It was very affordable compared to other places.”

He took a seasonal job at Schweitzer, designed and built his own home, and intended to enjoy the outdoors in his semiretirement.

But it wasn’t meant to be.

After decades of mostly steady increases, the relative affordability that drew him to the area had disappeared.

Housing prices in Bonner County jumped 57% in the last year alone and made the median sale price of a home $600,000 in June, according to Redfin.

Meanwhile, an opportunity to do something about it emerged when the nonprofit Bonner Community Housing Agency announced it was seeking a new executive director.

Hart viewed the opening as “pure serendipity.”

He’d lived in places like Sandpoint before, including Ketchum, Lake Tahoe and the San Francisco Bay Area – places where rising housing prices displaced the working class, then the middle class, unraveling the social fabric. And he didn’t want to see it happen again.

Since taking over on May 1, Hart’s daunting job with the agency has been to help the countless county residents priced out of that rapidly escalating market find a way in.

But like many other nonprofit housing agencies, Hart has few resources at his disposal and a litany of obstacles.

Working out of a tiny downtown office with only one other employee, Hart has tons of regulatory red tape to get through and annual funding that amounted only to about $120,000 last year, Hart said.

With those limited resources, the agency has historically focused on a limited mission: building one or two homes a year and subsidizing their sale to people making less than 80% of the area median income.

That work has undoubtedly helped the families who moved into those houses, but Hart believes the pace of affordable construction will have to pick up dramatically to make a significant difference.

And he knows his agency can’t do it alone.

He will need to harness the power of private developers, landowners and employers. He will need people interested in making not just a profit but a difference by helping to carve out opportunities for the middle class, even if they could make more money by selling luxury homes.

He will need people like Hadley.

To give them a “framework,” Hart launched a new plan with the agency: the Income-Based Local Housing Program.

Instead of using public housing subsidies, the program will allow the housing agency to partner with the private sector to facilitate construction of new housing for middle-class county residents and to price it at a cost of no more than 30% of their income.

“It’s like we’re building a set of tracks, and we’ll get the engine on there,” Hart said. “And then they (the private investors) will drive the train.”

He said a lot is riding on the program’s success.

“It’s the fabric of the community,” Hart said. “That’s what’s at stake.”

‘An opportunity to give back’

Hadley is a Sandpoint native who acquired her 6 acres slowly, beginning by buying a lot from her mother that her father, who operated a marina, used to store boats.

Over the next 15 or 20 years, Hadley said, she added more land until she had enough for a subdivision, as well as a desire to do something good with it.

“I’m second generation, born and raised in Sandpoint, and I just know how difficult it is to make a living here and to stay in Sandpoint,” Hadley said. “So I was really looking for an opportunity to give back to a community that has given me so much.”

But the longtime financial planner also had to make at least a modest return on her investment.

“One thing I can’t afford to do is … lose money on the subdivision,” Hadley said.

So when her son, Daniel Hanson, who serves on the board of the Bonner Community Housing Agency, told her about Hart’s new approach to the local housing crunch, Hadley went to meet him.

In the short time since, a highly detailed plan has come together for the first, and so far only, project in the Income-Based Local Housing Program.

If completed, Culver’s Crossing will be a 49-unit development for people who make between 70% and 120% of Bonner County’s median income, which was $64,500 for a four-person household in 2020, Hart said.

Of those units, two will be built as part of BCHA’s existing work through the HOME Program units, with funding from the Idaho Housing and Finance Association.

Hadley, however, will develop the rest through the Income-Based Local Housing Program, with Hart playing what he describes as a largely advisory role, creating a detailed business plan and helping her walk through the process from start to finish.

Hart and Hadley have a variety of product types in mind, including five single-family homes, 12 twin homes that don’t share walls but do share lots, and 28 units in so-called “big houses” that look like a house but are divided into three or four townhomes.

Culver’s Crossing also will include a big house with four rental apartments.

To give fellow locals an “opportunity to stay in the area” amid a flood of outsiders, Hadley initially planned to offer the units only to people who had lived in Bonner County or adjacent Boundary County for at least two years.

Hart said the idea was: “Everybody qualifies, but we have preferences.”

After consulting with lawyers, though, Hart changed course and said Friday that the development is “not going to be able to restrict housing to local residents.”

In part, that has to do with laws that protect tenants from discrimination.

It also has to do with the fact that outsiders’ inability to find housing is also hampering the local community, making it difficult for employers to recruit for both critical services, like law enforcement and health care, and for other important jobs , Hart and Hadley said.

“We identified a niche that was very near and dear to my heart,” Hadley said of the focus on selling to locals. “But I know that there’s a bigger area that needs service.”

‘Plans in the works’

Schweitzer is a major draw for many who choose to move to Sandpoint, including Hart. And with some 600 employees at its winter peak, it’s also one of the area’s major employers, said Dig Chrismer, the ski resort’s marketing manager.

But the tight and expensive housing market has “definitely been an issue,” Chrismer said.

This summer, the resort decided not to open its zip line due to a staffing shortage, she said.

Schweitzer is hardly alone.

As the city of Sandpoint tries to get a handle on the housing problem, it conducted a survey of local employers designed to gauge the effect the rising housing costs are having on their businesses.

Of the 127 business owners who responded, 57% said “current housing conditions detract from the success of my business.”

Those business owners also claimed they had a total of 397 employees currently seeing rental housing and identified 586 “potential recruits (who) have not been hired at least partly as a result of poor housing availability or affordability” over the past three years.

In an editorial in the Bonner County Daily Bee last week, Mayor Shelby Rognstad announced both the results of the survey and the formation of a new advisory body, the Sandpoint Workforce Housing Task Force, that will be charged with organizing “community partnerships and resources to facilitate creation of new workforce housing solutions for Sandpoint.”

Meanwhile, City Administrator Jennifer Stapleton said longtime residents and business owners have already stepped forward with ideas for projects that would create below-market-rate housing, both in partnership with the Bonner County Housing Agency and without the organization’s assistance.

Stapleton said a number of other projects are in the development pipeline that “we expect to come through.”

Schweitzer is behind one of the projects, Chrismer said.

The resort recently acquired a former assisted living facility in Sandpoint. It has nine rooms and can accommodate up to 12 residents, and Schweitzer is renovating it now for use this winter.

Chrismer suggested there’s more to do to proactively address the potential for the county to become too expensive for those who work there.

“There are other plans in the works and other strategies in the works,” she said.

Chrismer didn’t say Schweitzer has committed to working with BCHA, but she did say Hart has “got some great suggestiond and ideas.”

“And hopefully moving forward we can learn from each other and come up with some better strategies,” she added.

‘We have to perform’

Hart knows he’s attempting a balancing act.

On one hand, he has to convince people to forgo potentially enormous profits in favor of aiding middle-class workers.

On the other, he has to show potential participants that they will still make at least enough to keep their development sustainable.

Meanwhile, he has to ensure his agency remains in compliance with a litany of state and federal rules and laws that intend to preclude discrimination and promote fairness.

Finally, Hart must continue to work within the traditional federal affordable housing system to continue building homes for low-income earners.

Hadley, for one, was convinced by Hart’s pitch, and by the detailed and voluminous business plan he drew up to show her it would work.

“Everything he said made sense to me, and it just felt like the right thing to do,” Hadley said. “And he’s got the background and the process to back it up. I love accountability. There’s a lot of steps along the way that we’re really kind of touching.”

The Culver’s Crossing project has only made it to the pre-development conference step and still has a long way to go before it can be approved.

While Hart said BCHA is working with “several leading employers” who have “expressed strong interest” in his approach, he realizes the success of Hadley’s project is vital, especially after a flurry of news reports touted the idea of a locals-only housing development that now will be open to people from outside the area.

“The problem is that we have to perform,” Hart said.

His goal is for BCHA alone to increase its production to 20-30 homes a year. But to meet the kind of demand identified in the city’s workforce housing survey, Hart said production will need to bump up to somewhere between 200 and 500 affordable houses over the next five years.

“I’m just a small fish in a very big pond,” Hart acknowledged. “I’m not going to solve the problem. But if I can set an example … maybe others will hop on that little bandwagon.”

Among those watching Hart’s example is Maggie Lyons, executive director of the Panhandle Affordable Housing Alliance, which serves Kootenai and Shoshone counties.

While it remains to be seen what will come of Hart’s program, Lyons said one thing is clear: existing approaches haven’t done enough to stop low- and middle-income residents of North Idaho from being priced out of the housing market.

“Doing it the same old way right now is not going to work,” she said. “ We need creative solutions.”