Jan 24, 2020

🎥 City commission changes RHID policy; just 10 'affordable' houses for sale

Posted Jan 24, 2020 12:01 PM
Adam Pray, Platinum Group real estate broker/owner, and Doug Williams, Grow Hays executive director, talk about the RHID  portion of  Hays' economic development incentives policy. It has never been used. 
Adam Pray, Platinum Group real estate broker/owner, and Doug Williams, Grow Hays executive director, talk about the RHID  portion of  Hays' economic development incentives policy. It has never been used. 

After some discussion and also listening to concerns from a local realtor, Hays city commissioners voted 4-1 Thursday night to approve an addition to the Rural Housing Improvement District (RHID) section of the city's economic development policy.

The amendment was requested by Doug Williams, Grow Hays executive director, who presented a plan last week for 75 units of affordable housing to be built in east Hays.

The current RHID policy, created in July 2013, requires 10 renter-occupied low-income or income-qualified units.

Williams told commissioners last week and again Thursday that this project, using the resources of Heart of America Development Corp., an investment consortium in Ellis County, is planned for single family homes only.

The requested change in the RHID was drafted by City Attorney John Bird.

Hays city commissioners approved a change  (in red) Thursday to make exemptions possible for qualified non-profit entities from the ten-renter unit minimum that had been required in the RHID policy.
Hays city commissioners approved a change  (in red) Thursday to make exemptions possible for qualified non-profit entities from the ten-renter unit minimum that had been required in the RHID policy.

Local broker/owner Adam Pray, Platinum Group real estate, suggested the low-income units requirement could be eliminated entirely from the policy which "maybe would encourage more developers to use the RHID rather than continuing down the same path we've done for years and not having any results."

As part of the city's economic development incentive package, the RHID was approved in July 2013 but has never been utilized, according to Toby Dougherty, city manager. He said three development projects have applied for the tax break but were unable to meet other required criteria. 

"I don't disagree with you," Mayor Shaun Musil told Pray, "but I just don't think it should be a free-for-all."

Vice-Mayor Sandy Jacobs was concerned about risks to the local property tax base, including USD 489 and Ellis County, if numerous RHIDs were created in Hays.

Ron Mellick, who was on the commission in 2013 and voted in favor of the RHID, noted the policy was created to also meet the need for low-income housing. 

"What we were looking at mostly at that time were for-profit companies coming in and building apartments but yet we were leaving out low-income (units). ... We wanted to address the full gamut," Mellick said.

He echoed Jacobs' concerns about multiple RHIDs. 

The project's 21-acres has generated about $58 per acre in property tax annually the past 20-25 years. 

The RHID would last for 25 years.

"You're really not giving away any taxes that you're currently getting," Williams pointed out. "You're giving away the opportunity to collect taxes if somebody else were to go and develop on it."

 Heart of America purchased the land at a cost considerably lower than the original price of $50,000 an acre. The owner - the William Lusk family in Wichita - agreed to reduce the price after Williams asked them to be part of the community project. 

"If we open this up and have RHIDs all over, our tax base is going to go away," Mellick said, "and I don't think the school district or county is going to approve these willy-nilly, especially for a for-profit company because of the direct effect it's going to have on their budgets."

"I hope we have one applicant," Pray countered. "If we do get an applicant ... you still have the power to vote against it. 

"In placing these restrictions, I don't think it helps. I think it deters builders from coming in."

"To me," said Jacobs, "this is the cleanest way to take an existing policy - that works so far - and accommodate a non-profit that is meeting a need in our community (affordable housing) and not having to completely take stuff out."

Shortly into the discussion, commissioners changed their description of the project from "affordable" housing to "needed" housing or "workforce" housing.

Workforce housing in Salina  which would be similar to the Hays plan. (Courtesy photo)
Workforce housing in Salina  which would be similar to the Hays plan. (Courtesy photo)

The planned homes would cost between $175,000 and $225,000, a price Williams showed commissioners would be affordable for families with the Ellis County median annual income of $50,592.

"If I ask 20 people what 'affordable' is, I'll get 20 different answers," Williams said.

"It's not going to be a first home for most of the buyers."

After checking with a Hays realtor Wednesday, Williams reported there were just 10 houses in Hays for sale between $175,000 and $225,000. The average year of construction was 1966.

Williams and Pray both said there is a much larger number of houses on the market costing more than $300,000.

"We're not going to get people to come to town and buy these houses. We will have people moving up," Jacobs said. "We'll then free up another whole level of housing that, if they're moving up, is going to be less than this, probably, and it brings in another market."

Dougherty reminded commissioners the RHID policy can be amended repeatedly. 

Jacobs and Musil reiterated their support of the project and the RHID amendment regarding non-profits, but asked that the policy be revisited by the commission as soon as possible. 

A motion by Michael Berges to continue the discussion and postpone the vote to the next regular commission meeting died for lack of a second.

Berges was the sole "no" vote. 

"It's not because of a lack of enthusiasm for the project," Berges explained. "It's because I don't want to come back and keep amending (the RHID) each time. ... I am excited about the project."