Tuesday night the Newton City Commission created a housing incentive program — one designed to help reduce the risk of losses by builders of spec homes that stay on the market.
Under the program, the city will provide builders with assistance to pay interest payments on new homes — homes that, according to a housing study and a work group, often sit on the market so long that interest payments on loans for materials and construction eat up the profits seen by builders when the home sells.
Tuesday the commission looked a recently completed housing study that showed which demographics are expected to grow in population in the next few years and what types of housing may be needed over the next few years.
“I think the housing study provides a good backdrop,” said commissioner Barth Hague. “I am in favor of anything that can get things jump started. … I think the most important things we can do in this community is improve our schools and improve housing. … I urge us to work at doing some prioritizing.”
The commission also reviewed incentive programs, and approved one for home builders that came out of recommendations from a group made up of of local real estate agents and bankers.
Under that program, the city would commit up to $10,000 per unit, with a maximum of $100,000 annually, to assist with interest payments on construction loans for homes within the city limits. In addition, the city agreed that for any new home under construction, the builder will not be charged for sewer service, will be charged only for the water used rather than a minimum charge, and will not be charged for trash/recycling service unless the builder requests it.
“This is an attempt to eliminate a hurdle to home construction,” said Bob Myers, city manager. “The goal is to produce a house that goes on the tax roles where we can gain some of that money.”
On a $200,000 home, the city will recover its $10,000 investment in about seven years.
Commissioners asked during a work session where funds will come from for the creation of the incentive.
“Our property and casualty insurance carrier has given us a $50,000 incentive,” Myers said. “That normally would go to the general fund. I had those funds set aside, and they can be used for this. ... Where the rest comes from, there are options. We are in the middle of the budget. … Can we make it available? Yes.”
Myers pointed out the city would not expend any funds for at least six months. The incentive would be available on homes of all price ranges.
“I think there are things that we need to grow. The rehabilitation and sale of existing housing stock, we have tremendous assets there. Some people need help bringing it up to standard,”Barth Hague said. “We can't just do this and check it off the box.”
The commission voted 3-2 to create the program. Leroy Koehn, Barth Hague and Rod Kreie voted in favor. Commissioner Glen Davis and Kathy Valentine voted against.
In other business, the commission:
• Waived event fees for the Harvey County Fair.
• Approved a cereal malt beverage license for 12 Brew Drive Thru.
• Approved a new fee structure for rental of roll-off dumpsters. The delivery fee will be $50, plus $75 for each dump plus landfill fees. The dumpsters also will now be available for landlords to rent.
• Approved new lease agreements with Avcon Industries for Building F and Hangars C, D, M, Q and W at Newton City/County Airport.
• Moved forward the annexation of city-owned property at the Newton City/County Airport.
• Started eminent domain proceedings to acquire right-of-way for water lines to serve Newton City/County Airport.