Study won’t create housing

By ART CULLEN

Give credit to the City of Storm Lake for trying anything it can to provide more and better housing for its residents. It has gone so far as to develop what was a storm sewer project into a potential residential development. It has solicited developers for South School, and has helped apartment builders scout locations and secure tax credits for workforce housing. That’s all good.

The city council was asked on Monday to approve spending $16,000 on a housing study. City Manager Jim Patrick said it can be difficult luring developers without solid information that helps them determine they can be successful.

We disagree.

The market itself should inform developers of their risk. No study can predict what the market holds. And the market is telling us this: Despite a perceived chronic shortage of blue-collar housing in Storm Lake, new projects are not popping up to keep pace; yet, rents do not reflect such a severe shortage. Rents here are lower than in most college towns, lower than Des Moines, not so much more or less than Carroll or Spencer.

Housing will go up when rents demand it.

The problem is not necessarily development costs (installing sewer and gutter). The problem is not over-regulation. The problem is money.

Spirit Lake was building houses like crazy because people with lots of money wanted to live near the Iowa Great Lakes. Carroll saw a housing boom several years ago that coincided in an expansion in high-tech manufacturing. Storm Lake sees no housing boom because wages do not support it. We have had landlords and bankers tell us that over the decades. City officials have acknowledged that the only way a developer can make an apartment complex pencil out is with low-income federal housing tax credits.

Storm Lake has several open lots with no housing imminent. A new housing development will take shape south of West Lake Estates. The problem is not lot availability in nice locations.

The problem is finding enough executives to occupy new executive-level homes, that in turn free up older housing stock at entry-level prices.

We have been told that Storm Lake is 400 units short. Or 500. Or 1,000. The fact is that employers in Storm Lake are able to recruit employees at the existing wage scale. Those workers are able to find housing, obviously. It might not be in Storm Lake. It might be in Alta, Fonda, Early, Nemaha or Truesdale. Storm Lake might be short of housing. The area might not be short, which might be why Storm Lake sees so little development. The older white people who emptied homes in Fonda are replaced by Latinos working in Storm Lake. They like Fonda.

Until rents get to the point where employers cannot find workers, then we do not have a housing shortage. We might like it if there were more residential property tax base, but we do not have a housing shortage that limits the community enterprise, it would appear.

Any developer who drives through town can see it is a growing community that probably could stand more housing.

Also, we have developers with experience in Storm Lake who know the market and are willing to expand as tax credits will allow.

If the study is used to argue that Storm Lake deserves more low-income tax credits through the Iowa Finance Authority, then it might be $16,000 well spent. But if its purpose is, as Patrick states, to help assure developers that this town is a good bet then we have spent our money needlessly.

The city council passed a budget last winter that contained real pain for economic development, public safety and the arts. The council passed a hefty tax increase onto residential properties to help make up for state-ordered cuts in multi-residential property tax valuations — the very kinds of properties we are trying to attract. We have made cheap land available, we abate property taxes, we help with infrastructure, we write letters to the Iowa Finance Authority. And still, we do not see a housing boom. In fact, the new housing we have created is putting an extra burden on single-family dwellings as they shoulder a higher share of the total tax load.

If we are that hard up for cash, we cannot afford the $16,000 study that is not really needed. We should forget the study and let the market do its work. Storm Lake will develop housing when developers notice that rents are rising well beyond the city’s peer group. That is the main indicator they read.