On Tuesday, Finney County commissioners were given a report showing where Garden City stands when it comes to its housing troubles.
Neighborhood and Development Services Director Kaleb Kentner presented the report, titled the Community Housing Assessment Study (CHAT). He explained to commissioners how Garden City is using Rural Housing Incentive Districts (RHID) in 2018 to entice developers and cut potential costs in its effort to expand the city’s housing footprint and alleviate its housing shortage.
Kentner said Garden City has been using the RHID program since 2012 to create 219 new housing units, adding that unincorporated Finney County and Holcomb are ineligible for the RHID program due to insufficient housing demand.
The initial housing study was conducted in December 2008 and has been updated every two to three years. The last update was completed in May 2017.
The study shows that the population in Garden City was 31,214 in January 2017, and the update assumes an annual population growth rate of around .7 percent.
According to the report, about 61 percent of Garden City residents are homeowners and 39 percent are renters. Meanwhile, the median household income is $47,279, the median value of a house is $116,400, and Garden City has a value-to-income ratio that indicates an affordable and self-sustaining housing market.
The report categorizes the housing market in Garden City three ways: affordable low market homes valued between $60,000 and $100,000, moderate market homes valued between $101,000 and $200,000; and high market homes valued over $200,000. Kentner noted that contractors would not be able to develop new homes that meet the lowest market range and remain cost effective.
He said that disparity could be addressed with stock of existing homes in the city aged 50 years and older that could fall within that price point and absorb the affordable low market.
“The ideal situation is people come to the community and stay in the community and they move,” Kentner said. “They move from their first home, maybe a starter home or an older home, and they stay in the community and move up to the next level home, maybe in the moderate market level or into the high market level.”
A complication to that, Kentner said, is the high population turnover rate in the community as a whole. He added that the majority of homes being built in Garden City are in the high market range, with some veering into the upper end of the moderate market range.
Meanwhile, affordable renting rates in Garden City range up to $700, but the market puts rates above $700.
The CHAT report indicates that average Garden City construction costs, without land acquisition taken into consideration, were $158,552 in 2017, meaning existing housing is better suited to meet demand for lower-cost units.
With an even split between owner-occupied and rental units, the study projects that Garden City needs 446 more housing units between 2017 and 2020 and 584 between 2021 and 2025 for a total of 1,030 more units over the next seven years.
In an effort to meet that need, Garden City has been using RHIDs as a development incentive.
The program is intended for housing developers to receive reimbursement of funds for improvements gleaned on an infrastructural level through housing development, based on an increase in appraised property value. Reimbursable costs might include acquisition of the property, site preparation, street grading, street light fixtures and sidewalks. Items ineligible for reimbursement might include architectural plans, building materials or construction costs.
RHIDs are established for 15 years with an ordinance and a development agreement between the developer and the city, according to Kentner. Reimbursements are made only for eligible expenses and can be reimbursed any time within the 15-year period.
However, Kentner said, if developers build more houses, it takes less time for full reimbursement. Some existing RHIDs, he said, stand to achieve full reimbursement within nine years, depending on the value and resale of those homes.
By providing a new tax base for Garden City, RHIDs stand to curtail city installation of costly infrastructure improvements for developments that may not come to fruition.
Funds for reimbursement come from tax improvements yielded after a housing unit is constructed. A percentage of that improvement is given to the city and other local taxing entities, and the rest is given to the developer.
There are currently 12 RHIDs throughout Garden City, and approved developments in four of those already have been completed.
On Tuesday, Garden City commissioners unanimously approved renewal of a resolution outlining the policy and use of Rural Housing Incentive Districts (RHID) in Garden City in 2018.
Before adopting more RHIDs, the city must pass a resolution to be renewed on an annual basis that allows for the use of the program within Garden City. However, each RHID presented in 2018 will require an ordinance to adopt its specific purpose.
During years when Garden City utilized the RHID program, housing development numbers spiked. In 2013, there were 112 units constructed, with 131 more in 2015. Conversely, there were only 16 built in 2012, 24 in 2014, 29 in 2016, and 33 in 2017. The study recommends developing 114 new housing units per year. At an average of 66 units over the last five years, Garden City has met 58 percent of that goal.
Through existing RHIDs, Garden City completed 11 new housing developments in 2017. Over the next three years, 233 developed units are projected, 72 of which will be rental units.
Future RHIDs are already slated to include 20 planned units in the East Cambridge Square development, just west of the intersection of Spruce Street and Jennie Barker Road, that will consist of single-family homes over $200,000, and 250 planned units in the Northeast Crossing development, just past the bypass on the northeast edge of town, that also will consist of single-family homes over $200,000.
Even with planned RHIDs, Garden City still doesn’t come close to meeting the projected market need by 2025, with an estimated shortfall of about 600 units. The RHID program is doing little to address moderate market housing needs and affordable low market housing and rental needs.
There are currently 47 moderate market units planned within one RHID area. However, if Northeast Crossing is developed as planned, there will be an excess of 182 high market units available.
“It seems that there is a disconnect between the average income and what affordability might be, even in the moderate area of housing,” said County Commissioner Lon Pishny, noting that he gets frequent complaints about rent prices. “I fully understand why developers cannot build a house for $100,000… but it seems that there is this disconnect between what our average income is in the county and what’s affordable.”
Kentner noted that Garden City averages 99 percent occupancy in rental units with less than nine countywide housing units on sale in any given month, meaning more high-density rental units are needed to lower costs and increase availability. Those numbers have changed, he said, since 2004, when Garden City experienced between 40 and 60 percent occupancy and had more than 200 homes on sale.
Finney County Economic Development Corp. President Lona DuVall noted that landlords aren’t likely to lower rates with low competition.
“It’s quite the opposite,” she said. “Because there has been no competition in that rental market, because we haven’t added any new apartment living, any new rental living, we’ve created our own beast basically by allowing that to happen.”
Contact Mark Minton at email@example.com.