By BECKY KISER
Hays Post
"It's a very hot topic in the state of Kansas," according to Collin Bielser, Hays asst. city manager, who recently presented a report to city commissioners about the growing use of Rural Housing Incentive Districts (RHIDs) in the state.
Earlier this year the Kansas legislature approved a bill expanding a rural development program to address housing needs and revitalize downtowns.
The change to RHIDs now allows renovations on the second floor or higher of buildings located in central business areas in any city or county in Kansas with a population smaller than 60,000.
The buildings must be at least 25 years old and the renovations must be for residential housing. Cost of such RHID projects would be covered by the incremental increase in property tax value.
City commissioners have begun discussing possible changes to the Hays RHID policy to reflect the change in the state's policy. Bielser said Dodge City, Garden City and Pittsburg are all using RHIDs to build more affordable housing.
The state also requires housing created with an RHID to be identified as a need in a housing study.
Hays' latest housing study from the Fort Hays State University Docking Institute was conducted in 2017. An updated needs analysis should be completed by Docking at the end of September, according to City Manager Toby Dougherty.
Grow Hays released its own housing report in April. The findings were shared with city commissioners.
The RHID policy for the city of Hays was created in 2013 and intended for higher density, income qualified and low-income housing.
City commissioners modified the policy in 2020 to allow not-for-profit developers to utilize RHIDs for single-family homes.
To date, the sole RHID in Hays is located near the intersection of Wheatland and 22nd, spearheaded by Heart of America, a non-profit investment consortium in Ellis County. Doug Williams, exec. director of Grow Hays, the economic development organization for Hays and Ellis County, is overseeing the project.
The RHID is in effect for 25 years.
Under Hays' current policy, the developer has a 100% stake in the land and infrastructure and assumes 100% of the financial risk. There is no financial risk to the city.
There is an incentive for the developer to sell the lots and build homes quickly because they are only reimbursed for development costs if there are homes to tax.
The city of Hays and Ellis County forgo 100% of their property tax increments during the term of the RHID. The Hays school district, USD 489, forgoes all but the state-issued 20 mills.
"I guess that's where 'tax delay' is better than 'no tax now'," said Mason Ruder, commissioner.
"You have a 40-acre piece that's sitting there that gets the county $600 a year in taxes. Then you develop it. Now you have 168 units that brings in $33,000 a year in property tax. It's delayed, yeah, but at what point do you not offer these incentives to grow?"
Commissioner Shaun Musil, owner of Paisley Pear Wine Bar, Bistro and Market in downtown Hays, said "you can't grow your business if you don't have employees to work. Everybody is struggling. ... We need more people in this town. If this is what would make that work, I think we need to have it."
"We're looking at the chicken and the egg," said Sandy Jacobs, mayor. "Mr. Williams and I have this conversation all the time. If we don't have the housing, we don't have anything. But we need people to go in the housing."
Commissioner Ron Mellick said he met awhile back with Ron Wilson, USD 489 superintendent, who told Mellick he wants student numbers to keep growing.
"[Wilson] wasn't speaking for the school board, but said he was more concerned about delaying their tax revenue as to getting more students," Mellick related.
"It's all the taxpayers that are subsidizing this," Mellick said. "It's one thing to give up city revenue, but what about the school district and the county? Would it affect the fair board, extension services? We have a lot of things to look at," he added.
Ellis County Commissioner Neal Younger was in the audience but made no comment.
Williams told commissioners he believes the housing problem in Hays is a bigger immediate threat to the community than is the water situation.
"We're okay right now with the water. We've had enough rain. I get the long-term implications. But these [RHIDs] are real, and they're right now.
"Housing and workforce tie very closely together and certainly we have a huge workforce problem right now.
"I think it's a bet whether [housing] would develop with or without an RHID. I think the cost of development has gotten to the point where you're not going to see a lot of private developers do it," Williams said.
Several local realtors and developers attended the May 6 city commission work session in which the RHID discussion began.
Robert Readle, Coldwell Banker Executive Realty, supports expanding the city's RHID policy.
"I look at it as though the Kansas legislature has created a mechanism that gives opportunities to everyone in Kansas and our local government has chosen to limit those opportunities," Readle said.
The city commission had a second in-depth discussion of the RHID policy last week and will do so again in June.
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