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Establishment of RHID proposed to help meet housing needs

The proposed establishment of a Rural Housing Incentive District (RHID) as a financial tool to help address housing needs was the topic of conversation during an intergovernmental meeting hosted by the city of Concordia Tuesday night at City Hall.
Members of area governing bodies were provided information on how establishing an RHID is critical in an effort to meet the need for moderate income housing.
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.
Establishing an RHID allows cities and counties to address specific types of housing needs in a variety of price ranges. The process involves using property tax increase by the new housing project to pay for or reimburse certain eligible improvements.
The incremental property tax increase can be used to pay debt service on bonds issued to fund the project or be transferred to the developer as reimbursement for costs incurred.
If the city/county issued bonds to pay for infrastructure, then the increment may be used for debt service. The reimbursement can be up to 25 years.
The city commission and CloudCorp recognized that Concordia was poised for a level of community growth that has not been experienced since the 1940s when the city added more than 10,000 residents in one decade.
Both the city commission and CloudCorp knew that a lack of housing for all income levels limited the community's growth potential.
In an effort to address the housing issue, the city commission and CloudCorp partnered with FIVE RURAL Planning, Kearney, Neb., to complete a housing study and market analysis for the city of Concordia.
The housing study consisted of information collected through conducting community engagement activities and completing an existing housing stock assessment and corresponding market analysis.
A total of 215 Concordia residents participated in the survey.
Bobbi Pettit, founder of FIVE RULE, reported to the city commission that the study indicates that the city has a shortage of homes valued at less than $50,000 and more than $100,000. That shortage is likely driving up the cost of units that are worth $50,000-$100,000, which creates a situation where housing units are selling for much more than they are worth and raising the price of all homes.
Concordia mayor Ashley Hutchinson informed those attending the intergovernmental meeting that Cloud County ranks third on the list of the top 50 counties with the oldest housing in Kansas.
“Out of the top 10 we also had the lowest replenishment rate since the year 2000. Less than three percent of the current housing was built after 2000.
The average year that a home was built in Concordia is 1939. That is 10 years older than the state-wide average.
“In order to meet the needs, the housing study showed we need 36 new housing units every year for the next seven years to keep up with a demand for a half-percent growth every year,” Concordia city manager Amy Lange said.
Through the Kansas Housing Resources Corporation's Moderate Income Housing Program (MIH), five million dollars has been made available statewide to support either actual housing development, including acquisition of real property, new construction, modular or manufactured housing and/or rehabilitation of existing housing or infrastructure in combination with actual housing development.
Lange said the city of Concordia is applying for $650,000 of MIH funding to aid in the development of a housing subdivision.
To qualify for moderate income housing program funds, the city of Concordia must identify land to build a subdivision or provide existing lots for infill in established neighborhoods. Grant candidates must also demonstrate local partnership and local resources available to supplement the grant funds.
The application for the grant funds is due September 30. It requires certain information including proof of site control, proper zoning or zoning application, sketch plan, proof of funding sources in addition to a narrative demonstrating need.
The city commission, in August, gave permission to city staff to proceed with conversations with current property owners regarding property acquisition requests or donation of land for moderate income housing development and to proceed with preparations necessary to secure funding for subdivision infrastructure development.
It was announced last week that the Cloud County Health Center board of trustees had voted unanimously to gift the existing hospital land to the city of Concordia land bank for the purpose of developing moderate to high income housing.
Cloud County Health Center is current constructing a new hospital on College Drive that will open, under the new name of North Central Kansas Medical Center, this fall.
The existing hospital building will be razed, creating useable acreage.
Lange said that 11 to 12 moderate incomes homes could be constructed on the hospital site.
The city is looking combine funds received through the MIH grant with the establishment of the RHID to get those homes built.
“We are going after that Moderate Income Housing grant. We get more points on our application, we have a better chance of getting that money to help our our local contractors, which in turn gets the homes built faster for us, if we also pair it with a Rural Housing Incentive District and prove to the state that we can effectively marry the two together,” Lange said.
In a plan developed for the proposed subdivision, the MIH funds would be used to help fund the above ground construction of the homes.
“The Moderate Income Housing grant would help lower the risk for our local contractors. So they could use that money for supplies for a home. Their risk is a construction loan for labor and equipment. Once they sell that home, they pay off the construction loan and they re-infuse the material money from the MIH grant into the next home and they continue to build and re-infuse that all the way through,” Lange said.
The development of the RHID would help cover the cost of the infrastructure for the subdivision, which has an estimated cost of $1.6 million.
The city has set aside $1.5 million in bonding capacity to put toward housing subdivisions.
Lange said that the city also has about $750,000 in remaining American Rescue Plan Act funds that can be used for infrastructure.
The city commission has also set aside some capital outlay funds that have not been allocated for a specific project.
Lange said that without establishing the RHID, a portion of the infrastructure costs would have to be paid for by special assessments placed on the home buyers at an estimated rate of $7,407 per year, which is nearly twice as much as their property taxes would be.
“Let's use this different economic tool (RHID). And then let's buy down a portion of that with city ARPA funds, franchise fees, those capital outlay dollars to get the debt repayment less,” Lange said.
As the process of establishing an RHID proceeds, Lange will be meeting with the other taxing entities in the county to present the plan.
The county and  Concordia Unified School District 333 have veto power over the establishment of an RHID.
“What we are saying here is that we feel like we are at a critical juncture and housing study supports it, and if we don't intervene as a government to be the catalyst for some housing development, make it affordable, the private sector is not going to take care of it,” Lange said. “When we bat cleanup in government it is because we are picking up where the private sector is not seeing any return and not seeing the need and profitability in doing something. If we can pick up that slack and invest as a community government in that infrastructure then we can bring that cost down and make it affordable for those contractors to say 'yes, let me build that home.'”

 

Concordia Blade-Empire

510 Washington St.
Concordia, KS 66901