By CRISTINA JANNEY
Hays Post
The construction of the Tallgrass Addition, using housing incentives, has had an economic impact of $24.4 million on the Hays area.
Doug Williams, Grow Hays executive director, gave a presentation during the agency's quarterly luncheon on Tuesday, explaining how Reinvestment Housing Incentive Districts work and how they have been utilized in Hays to promote development.
The nonprofit development group Heart of America purchased land for the second addition of the Tallgrass Addition in 2019.
The first 3 phases of the Tallgrass Addition have added 66 lots for development, with 101 more lots to be in the fourth addition, which will stretch north to Interstate 70.
Williams said the Tallgrass addition would not have happened had it not been for the incentive district.
The cost of developing infrastructure, such as streets and sewers, would have been too expensive, he said. Heart of America has invested more than $3 million in developing infrastructure for the first three phases.
In a larger community such as Kansas City, the developer could pass the cost of development on to consumers in the form of higher lot prices. He gave the example of lots selling for $100,000.
Without the incentive district, the lot prices would have averaged $47,738. With the incentive district, the lots averaged about $14,000.
Using special assessments would also push the cost of housing beyond the reach of most buyers, he said.
Had the cost of infrastructure been recouped through special assessments, homeowners would be paying an additional $340 per month to cover the infrastructure costs.
"If you look at the cost of home ownership, that is a significant reduction," Williams said.
The community benefited from the development because Heart of America chose to reconstruct Wheatland Avenue instead of doing an overlay. This created a better street not only for the development but for those entering Fort Hays State University Tech North Central.
"Had that been a private developer, no one would do that," Williams said.
Developers in larger urban areas can build on a larger scale. They built many homes at once. However, local developers might be able to build only one or two houses per year.
The Tallgrass Addition has several basements poured that need to be framed, but Hays only has one framer.
The Tallgrass home buyers were distributed between people who were new to Hays, first-time home buyers, people who were upsizing or downsizing and investors.
"I hear all the time about people coming to our community to accept a job, look for housing, and find out they can't find an acceptable house. [They] end up not coming," he said. "It's happened numerous times."
When you look at the upsizers and downsizers that added another 15 homes to the Hays housing inventory. People are buying the homes that Tallgrass buyers vacate, Williams said.
"The more supply we have, the more likely we are to be able to maintain stable prices," Williams said.
Many of the houses that were vacated by Tallgrass buyers sold for less than the Tallgrass homes. Those vacated homes filled a niche in the housing market, Williams said.
Economic impact
The total revenue from Tallgrass construction was estimated at more than $19 million. This is estimated to have a multiplier effect in the community of 1.26, resulting in a total economic impact of $24.4 million.
The sales tax impact alone was almost $900,000.
Homeowners still pay property taxes. Only the local incremental increase in property tax is allocated toward repayment of the developer's infrastructure costs.
The 20-mill state levy for schools is still in place. The new homes will raise an additional $969,000 for schools over the life of the incentive district.
"There are really no levied tax dollars that have been put into this project, but there have been a whole bunch of dollars that have come back the other way," Williams added later in his presentation.
"In my view, without a doubt, our taxes are lower than they would be because of this development."
The construction has also created jobs in the community, Williams said.
An estimated 116 direct construction jobs and 40 indirect jobs were created. Direct jobs could be carpenters or roofers, people working to build the homes. Indirect jobs could be landscapers.
Another 104 jobs have been created in industries such as retail or restaurants when the construction workers eat out or shop.
Williams said homeownership benefits the community at large.
It increases and stabilizes the workforce. Homeowners are more likely to stay in the community. Their children attended local schools, and they stimulate the economy by shopping, eating at restaurants and using services, such as medical care.
The city agreed to bond the initial $3.1 million Heart of America investment, allowing it to develop the fourth Tallgrass Addition.
Engineering on the latest addition is almost complete. Bids will likely go out in the next 30 days and construction on the infrastructure will likely start this fall, Williams said.
Within eight to nine months, work on building houses is expected to begin, he said.
"There still remains to be strong demand for these [homes]," Williams said.
Williams said the land on which the Tallgrass Addition now sits was producing $127 in property taxes.
"That's the trade for an RHID," he said. "I think it is a pretty good trade because of all that has happened because of the RHID and because the city, county, school district and Heart of America, all of those people were willing to step up to the plate and make something happen."
Mayor Sandy Jacobs lauded the collaboration that went into creating the Tallgrass Addition.
"No one entity could go out and do this on their own," she said. "I think we should be really proud of the collaboration, starting with Heart of America, because that was your first stop, looking for the money. They were able to see that future. I think it is amazing what this community can do when they all put their heads together."
She also said she thought the Tallgrass Addition stimulated development in the community because it highlighted the demand for housing in Hays.
"Success breeds success," she said.