Developers present workforce-housing feasibility study; council raises procurement and risk questions

Jim Hammond, representing the White Mountain Advisory Group, presented results of a feasibility study for a proposed workforce housing project and outlined three financing options the study modeled.

Hammond said the market assessment found constrained supply and strong demand, estimating roughly 940 workforce units needed in the 60–120% area median income (AMI) band and “over a thousand units” when additional needs were included. He told the council consultants found turnover, aging inventory, a growing population and rising employment were driving demand and that annual rental growth had averaged about 9% over five years.

The study compared private equity, municipal bonds and a public–private model with Sustainability Partners. Hammond said private financing would require about $18 million in equity and was unlikely because private investors expect roughly 15% returns. He said municipal bonds show positive cash flow over time but place development risk and balance-sheet exposure on the city. He described the Sustainability Partners model as “housing as a service,” saying it produced the highest return on cost, transferred development risk off the city’s balance sheet, and yielded a projected residual asset value in year 10.

Council members pressed for procurement clarity and risk limits. Councilman Clark asked whether Sustainability Partners was a sole-source provider and whether the city had run a request for proposals; Hammond said he believed Sustainability Partners was the only funder with that specific program and that the city’s procurement rules treat this as a sole-source situation when city funds or city-owned property are not being used. Clark repeated concerns that the presentation both claimed the city had no development risk under Sustainability Partners and also showed scenarios in which the city could be on the hook — for example, if the agreement were terminated early or if the partner failed — and said he remained “very hesitant” about moving forward without fuller protections.

Clark and other council members also asked for more detail about local partners and prelease commitments. Hammond said the team had reached out to regional partners: the hospital was “encouraged” and willing to sublease units, the school district declined to guarantee units but identified 25–30 staff actively seeking housing, Pine Top had expressed interest, and the college had received a presentation and was still considering participation.

Hammond said the next step would be to return to the council with a proposed project approval and a development services agreement that would bring Sustainability Partners in as the funding and operations partner. He said Sustainability Partners would absorb initial negative cash flow during the early years under their model but acknowledged there remain contractual and legal details to work through before a contract would be signed.

The council did not vote on a project at the meeting. Council members asked staff to provide clearer procurement findings, the draft contract’s termination and transfer provisions, and documentation of partner commitments before a contract would be considered for approval.