Members of Greene County Development Corp on Tuesday evening asked the Jefferson city council to take advantage of a new opportunity to address a critical need for rental housing.
Banker Sid Jones, GCDC vice president, and Ken Paxton, GCDC executive director, asked the city council to apply for a loan through the Iowa Finance Authority’s new Workforce Housing Loan Program (see related story).
The $1 million loan would be used to assist JCorp of Huxley with a rental housing project – Water Tower subdivision – proposed for the northwest quadrant of Jefferson. Construction on that project was planned to be completed by the end of this year. The city this summer installed a new water line to serve the project at a cost of $73,950 and approved tax increment payments of $750,000 over seven years.
The project stalled when the appraised value of the completed project was determined to be 26 percent less than construction cost, making bank financing impossible.
Paxton told the council the need for rental housing is critical. He said that adding 1,000 new jobs in the past two years has resulted in population growth in Carroll, Boone, Ames, Perry and even Fort Dodge because there isn’t housing available in Greene County. “I can’t go to businesses and ask them to come to a community that has no housing,” Paxton said.
He also provided figures showing that as much as 80 percent of the workforce at Bauer and John Deere live outside Greene County, as well as 75 percent of Louis Dreyfus employees and 50 percent of Scranton Manufacturing and B & D employees. “If all the employees working in Greene County actually lived here, it would have a significant impact on our tax base and also keep their retail expenditures in our county to support our businesses,” he said.
Jones said the need for attractive rental housing is critical. “Without that, it does make it really difficult to have future business success coming our way,” he said. “A lot of employers do want their employees to live locally and not have to drive.” He added that most of the general public does not understand the private-public partnerships that are required to complete many types of projects, including housing projects.
Duane Jensen of JCorp had already discussed the new Workforce Housing Loan Program with council member Lisa Jaskey, mayor Craig Berry, city officials and members of GCDC and has offered to do most of the work on the application.
The city would receive the funds and then in turn lend a portion to the developer for repayment and provide the rest as a grant for the project. (Jones later told GreeneCountyNewsOnline that JCorp suggested a $350,000 loan and a $650,000 grant, but said that is negotiable.) The city would ultimately be responsible for repaying the entire amount, regardless of where the repayment funds came from.
The gap in financing for the project does not reflect on JCorp’s financial solvency, but comes from a lack of comparable projects, Jones said. Without similar projects in small rural towns, the appraiser used data from a wider area and was very conservative in figuring potential income the project would have to put toward repayment.
“Obviously, this is happening all over the state of Iowa, or they (IFA) would not be out trying to solve the problem,” Jones said.
Once built and occupied, Water Tower housing would serve as a comparable project to make it easier for developers to secure financing. “We have to be bold enough to somehow get this first project done. I think once a project is done and we can show it is 100 percent occupied and that the rents that were proposed by the developer were actually the rents that were received, all those things can help the next appraisal be stronger and require less community support and less public support the next time around,” Jones said.
Jones asked the council if, with a commitment from GCDC to work with the county and Grow Greene to shoulder some of the responsibility for repayment, there would be support for the Workforce Housing Loan Program. Completing the application would not necessarily mean the city would receive the loan or accept it, but because of the short time until the applications are due, Jones wanted an okay to proceed.
The mayor asked each council member if he or she had “any problem” with moving forward with the application process. Although Jaskey was the only council member who had detailed information about the proposal ahead of time, Berry limited questions and discussion by the council, citing a time constraint. Council member Larry Teeples named the city’s involvement to date, saying he didn’t want the public to think the council had dragged its heels on the project. Gary Von Ahsen said he would want to see “all the facts and figures” before accepting the loan, should it be offered.
Larry Saddoris, who owns several rental properties in Jefferson, said he has not seen an increase in calls for rental units in recent months. He expressed concern that the wages at Wild Rose are not enough to support the rents proposed for Water Tower units. Jaskey answered that the Water Tower units will be two- and three-bedroom apartments and would serve two-income households. “With just that income, they wouldn’t be able to afford these, but they’re not one-bedrooms, they’re two and three,” Jaskey said.
Teeples answered that it’s families moving into town. “They probably wouldn’t want to live with someone else,” Teeples said. “But they would have two incomes,” Jaskey said. “They would have to,” Teeples answered.
Berry said JCorp’s original premise was that Water Tower rentals serve two-income households. Council member Shannon Black said questions about the affordability of rent, and whether there would be enough occupancy to make the project viable, are questions the council can consider if the loan is offered.
Saddoris verified that the city would be responsible for the loan if the builder defaulted. “It just seems like a lot of risk,” he said.
