County board, school board adopt resolutions of support for proposed RHID

In an effort to meet a need for moderate income housing in the community, the city of Concordia is proposing the use of a pair of financial tools for the development of a housing subdivision.
The city is seeking to establish a Rural Housing Incentive District (RHID) to repay the special obligation bonds that would be issued to cover the cost of the infrastructure and will apply for a Moderate Income Housing grant to fund the above ground construction of the homes in the subdivision.
The Cloud County board of commissioners and the Unified School District 333 board of education each voted unanimously on Monday to approve a resolution of support for the city's effort to establish the RHID.
“Housing is a regional problem, and we need everyone to work together to solve it. I appreciate the county commissioners and the school board for their partnership as we work on this complex issue,” Concordia mayor Ashley Hutchinson said.
RHID is a program designed to aid cities, counties and developers in building housing within a community by assisting in financing of eligible projects.
The establishment of an RHID captures the incremental increase in real property taxes created by a housing development project for up to 25 years.
“The Rural Housing Incentive District takes the incremental increase in property taxes generated through new construction to pay for the infrastructure that you build to serve that subdivision,” Concordia city manager Amy Lange said in presenting the RHID plan to the USD 333 board Monday night.
The Concordia city commission and CloudCorp teamed up to procure a housing study and market analysis by FIVE RULE Rural Planning, Kearney, Neb., in the fall of 2021.
The results of the study presented by FIVE RULE on August 3, 2022, revealed a need for 245 additional moderate income homes and 12 additional high income homes.
At the recommendation of the community resources of CloudCorp, and with the approval of the city commission, the city staff proceeded with conversations with property owners and securing funding to support new home construction in Concordia.
On August 26, the Cloud County Health Center voted to donate approximately eight acres of land that the current hospital sits on to the Concordia Land Bank for the purpose of constructing new homes.
Cloud County Health Center will open a new hospital on College Drive later this fall, and the old facility will be razed.
The city of Concordia has proposed developing a housing subdivision on the property that would include lots for 11 to 12 moderate income homes and then three lots available for the private development of three high income homes.
To cover the estimated cost of $1.6 million for the infrastructure for the development, which would include extending Sunflower Drive, the installation of water and sewer and addressing storm sewer issues, the city has set aside $1.5 million in bonding capacity.
Lange said that the city also has $392,000 in American Rescue Plan Act funds and $144,000 in available capital improvement funds to buy down the bonds.
If the plan for the subdivision moves forward, the city would issue a little over $1-million in special obligation bonds for the infrastructure.
Taxes generated within the RHID, if established, would be used to repay those special obligation bonds over 25 years.
Once completed homes are sold, the property taxes paid by the home owner on the ground the home sits on would be distributed to the local taxing entities. The property tax paid on the home goes to repay the special obligation bonds.
“The way that the RHID is set up, by statute only the property taxes generated within the RHID can be used to repay those special obligation bonds,” Lange said.
It is the intent of the city to use the RHID program and Moderate Income Housing (MIH) grant funds to make the proposed homes more affordable for the contractor to build and the home buyer to purchase.
City staff is working with CloudCorp to prepare the MIH grant application that is due September 30.
The MIH could provide up to $650,000 toward construction of the new homes.
Proof of support from other local taxing entities is required for the MIH grant.
“In order to check all of the boxes and get everything ready for grant submittal, it is helpful for us to have proof of support of local taxing entities,” Lange said.
If received, the MIH grant funds would be used to cover the cost of the materials for the homes built.
Lange said that a contractor would get a loan for labor and equipment and once the house is sold, he would take the money provided to him by the MIH and use it to buy materials for the next house.
The plan would be to build two homes at a time.
Lange said that the city would be working with local contractors, local suppliers and local banks.
“So it the end, not only does it benefit you and other businesses that need to fill vacancies that are in that moderate to high income bracket, to actually have homes so they can fill those vacancies, but it benefits us in the way of taxes and it benefits us in the way of utilizing our local businesses,” Lange said.
School board member Brad Berk asked Lange what happens if the homes are not sold.
“That is the risk we are willing to take. And the reason we are willing to take that is because the numbers from the housing study were so strong that we have such a deficit,” Lange said.
Lange said that the liability is shared between the city and contractor.
“The infrastructure piece falls back to the city. The contractor has some skin in the game in building the house, so they are motivated to sell because they have an investment in labor and resources,” Lange said.
The county commission and the school board do have statutory authority to nullify the RHID.