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Revolving loan housing fund under discussion

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By Nick Johansen

A group of roughly 80 community members, including the Montgomery County Board of Supervisors, city council, school board members, and community leaders, met for a special county-wide discussion about a key tool for growing Montgomery County, a revolving loan housing fund. 

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The meeting included Special guest presenters Terry Lutz, CEO of McClure Engineering, and Zachary Manheimer, Principal Community Planner for McClure. Lutz said housing is a local issue that will not be solved by the state and federal government. 

“The county has declining population, the housing stock is on average 82 years old, and you’re losing on average 35 housing units per year. You can no longer expect a developer to come into your county and take the risk of building housing. The wages in rural Iowa have not kept up with the inflation it takes to build new construction,” Lutz said. 

Lutz added the benefits given to attract business to the state have not expanded enough to draw developers to build. 

“We give industry TIF funds, tax abatements, or land for free. We’ll bend over backwards to make a deal for them, but we don’t take the same thought process to think about incentives for developers to come into town and build housing so they have a place to live,” commented Lutz. 

According to Lutz, in Red Oak alone, there has been an enrollment drop of 76 students over the past two years. Population fell in the county from 11,771 in 2000, to 10,225 in 2016. Also, the county lost 618 housing units, an average of 35-40 units per year. On the plus side, the state’s renewable fuels generated a low cost of energy. The state also has an abundant water supply, and most natural disasters, such as hurricanes and earthquakes, do not happen in the state. 

“You will continue to see manufacturing come back into the state primarily because of these factors. There’s no reason to think Iowa won’t continue to grow,” Lutz advised. 

In Montgomery County last year, 102 properties have sold, with an average price of $72,500. Currently 40 units in the county are for sale, at an average price of $77,500. To expand the housing market further, Lutz said there are tools the county could use to create a program to make the market grow. 

“We’re proposing leveraging a small amount of county money with private dollars to create a program that would be a catalyst to create some development. This money could generate a $2 million fund to get started,” said Lutz. 

Lutz’ proposal included a pledge of $1 million from the county and/or cities, a $500,000 pledge from the private sector, and a $500,000 pledge from the Iowa Finance Authority. 

“This would be the potential sale of $1 million in general obligation debt. If the county is willing to discuss that, we’re willing to work to raise the $500,000 from the private sector, and we’re very confident we could get $500,000 from the Iowa Finance Authority. The money from the Iowa Finance Authority would be loaned at 1 percent for 30 years. IFA was given $5 million from the legislature a few years ago, and so far, they have only been able to give out half. The reason is because no one is really going out and promoting this, and those that have heard of it cannot guarantee the ability to pay back the loan. We’re very confident Montgomery County has the ability to do that,” Lutz said. 

An additional $50,000 loan is available from IFA to offset the cost of McClure engineering doing the groundwork to develop the program. Lutz said the proposal wasn’t designed to force the county to immediately sell $1 million in bonds. 

“What we need is the county’s pledge to create the funds, so if we are successful in bringing in a developer to build housing, we can deploy the money, issue the debt, raise the funds for the pool and get the projects started. It’s essentially a no-risk plan when approached that way,” advised Lutz. 

Funding could also be used to rehabilitate the county’s existing structures. Lutz said if the county were to issue $1 million in general obligation bonds, the annual debt service levy per $1,000 valuation at 15 years, would be a total tax increase of $5.85 per year, or roughly $.50 per month. 

Manheimer said that the fund would help bridge the gap to developers. 

“If this fund is created, it will help developers build the homes you’re describing, that those young couples can move into. We believe this is the program to get you where you want to be, from a financial standpoint, a population standpoint, and the economic standpoint you want,” Manheimer said. 

Montgomery County Development Corporation director Shawnna Silvius said there was the potential to attract people to move to the county from Omaha and Council Bluffs, with dedicated marketing strategies in place. 

“We haven’t packaged ourselves right and marketed ourselves to attract people from Omaha. If we put a dedicated effort into doing that, it really gives us a key into part of this issue, but we have to intentionally market to specific audiences to do this. I believe if all the communities move the same direction, with a shared vision, we can do this. We are in a prime central location with access to major airports and highways,  between three major cities: Omaha, Des Moines and Kansas City. Community support of the supervisors and our city leaders is key,” Silvius said. 

Supervisor Donna Robinson asked if the funding proposal was set, or if a million dollars could be generated from private funding with a $500,000 commitment from the county. Lutz said the funding could be generated whichever way the county wanted, and there was the potential more funding would be available from IFA. The IFA funds must be distributed by the end of the current legislative session. 

Karl Bormann said he was supportive of the plan, and it was worth the investment. 

“I’ve spent pretty much my whole life trying to improve communities, and one of the issues I was never able to resolve, was housing. It plagues us everywhere. I think if we go five years, we’ll be shocked where we’ll be. It takes a little courage up front,” Bormann said. 

Billings said if they did nothing, they would eventually be forced to raise taxes for no return. 

“We’re going to have to pay, if this decline in population continues to happen. The declining population graph spells out our future if this continues. We won’t need a hospital, we won’t need the WPAC, we won’t need a variety of things because we’ll have no money to pay for them,” Billings said. 

Steve Adams agreed with Billings that the graph was a strong indicator of what was in store for the county by doing nothing. 

Red Oak School Board President Mark Johnson said he had children who lived in Colorado who commute for up to two hours to get to their work. 

“The jobs are going to be where the jobs are going to be. But the people will go where they can afford to live. People who can’t afford to live in the big city move out to where housing is affordable. People in Omaha are moving west. There’s no reason they can’t move east, because the job market in Omaha will continue to grow,” said Johnson. 

Supervisor Bryant Amos said he thought the program would be a wonderful step for the county to take. 

“I’ve heard people say for years and years we need to fix things, and we get nowhere. We get tools put together that we can use, and we pull back because it’s going to cost a little money. This is not going to get done for free. I believe in it, but we have to get support from the community to get it through the board of supervisors,” Amos said. 

Silvius said housing was the most important key to growing the rest of the county moving forward. 

“It’s the number one issue, and this is why we’re starting with this. I can’t recruit workforce if we don’t have housing. If I can’t recruit workforce, our companies may leave. I think we have a great model here,” said Silvius. 

Clint Rubey said everyone was aware that the population was declining, and if they didn’t find a way to work together, they might as well forget it. 

“We know what happens in towns that don’t stay progressive. We have Wales, we have Coburg. The towns died off because they didn’t grow. This county needs to work together. An immediate need here is 15 people to work at one of our plants. We have a new plant losing 40 people, and they are struggling to find qualified applicants. Who more wants to come back to the county than someone who grew up here? I’d like to see some kind of deal for high school kids interested in working with their hands get the chance to have their schooling see some reimbursement if they come back to work here,” Rubey said. 

Manheimer said if the fund were created, and the second story apartments around the square were rehabbed, additional funding could be provided from the fund to underwrite their rent, and pay down student loans.

“They have to stay here for a certain number of years, and you don’t give them free money. You engage them in community service hours to equal out the money given so they are embedded in the community. If they stay, it boosts economic development. The housing loan program money can be used however you want to,” Manheimer advised. 

Following the meeting, the audience was encouraged to sign up to receive further information and consider being on a committee to provide future input. 

 

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