According to those in housing industry, there is a need in Newton — a need that a working group made up of local developers, Realtors and bankers with close ties to that industry has addressed over the past few weeks.
Reviewing the preliminary results of the 2019 Newton Housing Study, the need for all types of housing (single family, multi-family, rentals, owner-occupied, etc.) was highlighted among the working group. In particular, the study targeted the need for single family spec homes — homes not built for any particular buyer — to help jumpstart that housing market.
With that target identified, the working group came before the Newton City Commission on Tuesday to propose a residential housing incentive for builders that would encourage construction of more such homes in the area.
For homes to sell in Newton, there have to be homes for sale in the first place — something Newton has struggled with in recent years. Working group member and local real estate agent Gary Hill noted the city used to have 55 to 75 new homes built each year, but that number has dropped down to 11 homes over the last few years. At the current rate, Hill said, no new homes may be built in Newton in 2019.
Part of the issue, it was reported from builders, is tied to the risk of not knowing how long it will take to sell a home, with the housing study showing that some homes stay on the market for one to two years — meaning increased construction loan costs (charged annually) for the builder.
"When houses have birthdays, that's not a good thing for a builder," Hill said. "Unfortunately, they've experienced a lot of birthdays with their houses and that's not a celebratory event when that happens."
Additionally, while there has been a business boom in the region recently, the lack of housing in Newton means many of those potential new residents are looking for homes in other nearby communities — where developers are building.
Looking to attract some of that business back to Newton, the working group proposed a builder's incentive to the city commission to help reinvigorate the market.
Proposed incentives would be offered to licensed residential building contractors developing in Newton as a reimbursement for their construction loans following the completion of the home build (defined as the time at which the city issues a Certificate of Occupancy) and after submitting proof of loan payment. The program would be capped at a $10,000 incentive per dwelling unit and $100,000 total per calendar year.
On a $250,000 new single family home built in which an incentive was granted to the developer, the city would see a return on investment in five and a half years — but Hill pointed out the idea behind the program was to generate enough development that there would enough construction over top of the threshold of the incentive program to generate more revenue and attract more buyers.
"The goal is not to have to incentivize every project," Hill said. "We hope, if we can begin to get more inventory so people will stop and look at new construction, that maybe we can start capturing some of those people who currently are driving down to other communities south of us at this point."
While meeting the varied housing needs of the community is a priority being addressed through this proposed incentive program, the benefits to the revenue stream were also pointed out. New homes mean new taxable property in Newton — something that would be a boon given the financial position the city is in currently.
Funding of the program was questioned, though, with commissioner Glenn Davis asking where the money would come from and stating his opinion that amenities are what will bring people to Newton — not homes alone. However, members of the working group argued that the added tax revenue from new homes could potentially help get those amenities.
"If we can't come up with a mere $100,000, what kind of an amenity are we going to be able to build as a community that people are going to want to come live in Newton," Hill said.
"We need amenities; we have to have a tax base to get amenities," said Midland National Bank president Ron Lang. "The purpose of the incentive is to create a new tax base."
Questions were raised by Mayor Kathy Valentine about why a buyer's incentive wasn't also being proposed, as it was mentioned as being in place in some of the nearby, competing housing markets. Hill said the homes have to come before the buyers, which is why the builder's incentive was being prioritized. He did state that the working group is taking a buyer's incentive under consideration.
Hill also pointed out that he has already been approached by multiple developers who would be interested in returning to Newton if something like the proposed builder's incentive were put in place.
Aspects of the other needs of the housing study — which assistant city manager Kelly McElroy noted would be made available to the commission — were brought up during Tuesday's meeting, but McElroy and the working group also stated the proposed incentive was meant to be the start of a multi-faceted , overarching strategic plan to address Newton's housing needs.
Overall, the commission was in agreement that it needed more time to make a decision on the proposed housing incentive program, which was tabled until its next regular meeting on June 11.
In other business, the city commission:
• Approved the consent agenda, including approval of minutes and appointment of Bob Myers to the economic development council.
• Recognized All-State Treble Honor Choir member Ellie Entz and Newton High School students who participated in the 2019 Kansas Scholastic Press Association state competition.
• Approved special event application fee waivers for Sand Creek Summer Daze, the Mexican American Fast Pitch Tournament, Headin' for Home 5K, Junior Rodeo and a food truck rally on Main Street.
• Approved a temporary alcohol permit for Blues, Brews and Barbecue and the food truck rally, as well as a temporary cereal malt beverage permit for an event at Ultimate Martial Arts on June 1.
• Was updated on work to allow for a cereal malt beverage license at Klein-Scott Field, to be used by the Newton Rebels.
• Learned that restructured leases with Avcon Industries for space at the Newton City-County Airport will likely come before the commission for action in two weeks.
• Approved an option for street improvements — as part of its recent agreement with Occidental Management — extending Wheatridge Drive west (and slightly south) and adding a traffic light at the intersection with South Kansas Avenue, at a total cost of $1,571,897.
• Heard a request from Tara Goering of Grand Central during a citizen's forum to consider the formation of a senior citizen task force.