Housing-start stimulus grant approved for Baldwin City
Baldwin City will soon receive a $200,000 housing-start stimulus should a grant be made available as approved.
Dave Hill, chairman of the Baldwin City Economic Development, said the Kansas Housing Authority Corporation has approved a $400,000 grant for Baldwin City and Wellsville with each community eligible to receive $200,000. The grant will provide $20,000 to qualifying “moderate-income” individuals or families toward the purchase of a newly constructed home.
Hill said qualifying buyers can pay cash or arrange financing from the bank of their choice.
The catch right now is whether funding for the grant will survive Gov. Sam Brownback’s belt-tightening as he deals with an estimated $700 million revenue shortfall in this and next year’s budgets, Hill said.
The governor is now working on how the state should address the shortfall. Hill said he was hopeful the funding question would be answered by year’s end.
The program’s other requirement is that new homes be built to defined energy efficiency standards, Hill said. To prevent new homeowners from flipping the homes and pocketing $20,000 in profit, they would be required to file a “soft mortgage” at closing that would provide reimbursement to the program should they sell the property during the first five years.
In return for what could be $2 million in residential property added to the tax rolls, the city is supporting the program with a commitment to limit to $2,500 any development fees on the 10 homes built with the grant.
The $200,000 is available for five years, but Hill said he anticipated it would be claimed within the next 10 to 18 months. There are already three people interested in the grant, he said.
Ten homes would surpass the number of new single-family homes built in Baldwin City since the start of the recession in 2008. That slump continued this year with only the city issuing only one permit for a new single-family home in 2014, said Tina Rakes, city zoning and codes administrator.
The year hasn’t been entirely bleak, however, as the city has issued permits to build three new duplexes and an 18-unit apartment complex now being built on First Street north of U.S. Highway 56. That represents the most active year in new residential development since the start of the recession, Rakes said.
The numbers fall far short of the boom years of a decade ago. Rakes said the city issued permits for 54 new single-family homes and seven duplexes in 2005. That was the largest number of single family home permits issued in the last two decades, but 2003 surpassed it in new residential development with permits issued for 52 new single-family homes and 18 duplexes.
Rakes said there may be more applicants for single-family homes before the first of the year, when the city’s current reduced rates on development fees are set to expire.
In an attempt to stimulate housing starts after the recession, the Baldwin City Council for the past three years has cut by half to $3,185 the building permit fee and the water, sewer, park and electrical system development fees charged for the construction of single-family homes. When the council approved the measure for 2014, city staff indicated it would not recommend the fees be reduced another year.
At the reduced rate, Baldwin City had lower fees on new single-family home construction than Eudora, Gardner, Lawrence, Olathe or Ottawa, Baldwin City community development director Collin Bielser said. He noted the reduction didn’t stimulate construction and that the cities on that list with the highest fees also had the most new housing starts.
That suggested, Bielser said, development was driven by demand, regardless of development fee structure.
Bielser and Hill noted promising trends that could drive demand in Baldwin City. The Burlington Northern Santa Fe intermodal is gaining momentum, with the recent announcement that two firms would build warehouses in the adjoining logistics park. They also noted cheaper fuel prices, should they last, could make Baldwin City a more affordable bedroom community option to Lawrence, Kansas City metro and Ottawa commuters.
“Higher fuel prices is what shut Baldwin housing down,” Hill said. “Our housing economy shut down with higher gas prices in 2006 not when the recession started in 2008.”
Update: Dave Hill said the budget adjustments Gov. Sam Brownback made Tuesday would not affect the grant program and that all was "full steam ahead."