Aggressive housing plan presented to council

City Administrator Bob Knabel proposed expanding the housing initiative through its local nonprofit partner the Newton Housing Development Corporation and directly entering the home construction business during Monday’s city council meeting.

Five homes would be constructed with the purpose of “priming the pump” for home starts in the community and giving examples for home buyers as well as builders of what could be done in Newton.

“The idea is to work with the NHDC to target a subdivision to build five homes. We would look right now to suggest Fairmeadows North be our targeted subdivision. The idea being not only are there vacant lots within existing infrastructure, but there are also properties north of it where, should momentum begin and we see a value there we could be a partner in promoting and moving it even further north,” Knabel said.

This step is to further the housing initiative which has had one $10,000 incentive issued since its inception. A total of $2.4 million was budgeted from the 2014 bond issue for the goal of developing new housing.

The city has been given positive feedback from builders, but little to no action has been taken. Many say the risk is too high in an area that has not yet been proven as a fertile selling ground.

The program would begin with the city council entering into a legal agreement with the NHDC. After holding a public hearing to authorize the repurpose of bond proceeds, the city would provide the NHDC with $990,000 to use to construct the five new homes.

“In broad terms, the city would give a loan to the NHDC, they would buy the property, they would build the homes, they would sell the homes and then the money would come back to the NHDC after the sale and they would reimburse us and we keep going and maybe doing what needs to be done to continue that approach,” Knabel said.

Knable said the new home initiative is not working and it’s time to try something different.

“If we’re not willing to do something different then maybe we do something in a different way and move in another manner,” Knable said.

Council Member Noreen Otto said she appreciates how staff continues to be creative in ways to further the program, but brought up concerns with the lack of interest from the private sector.

“The private marketplace typically reflects the demand and what we are seeing out there, that is my biggest hesitation,” Otto said. “That being said, as a person that is trying to sell an older home, I can absolutely tell you that what we hear over and over is that what we (buyers) are looking for is new construction.”

She also expressed concern that the council is being hasty — the project has not hit the one year mark and already a big change has been proposed.

“Here’s a part of my concern about that. Let’s say we wait another three or four months, that means we’ve lost another construction season. If we get into the fall and we don’t have it going, then what we are doing is probably putting it off until next spring,” Knabel said. “I think the idea is to push the market and I think that is exactly what we would be doing. I do believe there is a market out there for people who want to buy new and if we can offer that we can then begin to show the builder that have expressed some interest that Newton is a place where they can stake down some homes and see a return.”

Developmental Specialist Craig Armstrong said what the city does not have is new homes comparable in the market. He said when a builder looks at the market and wants to see the comparable homes, Newton has not established that market yet.

“We have a flood of email and interest and the biggest question is, ‘where are your new homes?’” Armstrong said.

Newton has been challenged in getting a contractor to come to town and take the time, money and resources out of Des Moines where their subcontractors are used to working. At this time, Armstrong said, the contractors know they can build 35 to 40 homes a year and get them sold before they are even done being built. With a couple homes now in the Fountain Hills development, Armstrong said he will work to get them sold quickly to help build a market of comparables for contractors to see.

The next step from the council was for staff to work up a more detailed plan with firmer numbers to consider.

In other business:

• Council approved the first reading of the outside parking and storage of trailers, watercraft and motorhomes ordinance. Further discussion is planned for the topic at future meetings.

• A professional services for preliminary engineering agreement was approved for the Lincoln Street Improvements Project.

• The Newton Park Board was authorized to use gofundme.com as a fundraising tool for the Fourth of July Fireworks Celebration.

Contact Jamee A. Pierson at 641-792-3121 ext. 6534 or jpierson@newtondailynews.com