Stafford – Construction on the new house in Stafford is quickly progressing. But with the progress has come questions. We want to clarify the process that Economic Development went through to begin the housing project.
Stafford County Economic Development secured two major statewide grants for constructing housing in Stafford County; a $168,000 grant from the Moderate Income Housing Program at Kansas Housing Resources Corp. in 2013, and an allocation of Community Service Tax Credits equating in $214,285 for the same year.
The initial grant applications were written with projections that a duplex could be constructed for $225,000 and that a total of three duplexes could be constructed. Competition was strong statewide for the limited grant funding available, and all applicants’ allocations were reduced from their requests. Stafford County was fortunate to be one of the few selected, so EcoDevo proceeded to develop plans and solicit bids for constructing only one duplex. A house plan was selected and the bids were collected in spring 2014, with companies both inside and outside the county participating. The winning bid was submitted by Troy Willinger Construction, at a cost of $302,000.
The duplex was built in Macksville in 2014 beginning in the spring and completed by November. With $80,000 remaining it was not sufficient to construct another duplex, but neither was it appealing to return unspent grant funds. A one-time opportunity to receive an additional allocation of Community Service Tax Credits in December 2014 raising $90,000 was offered to Stafford EcoDevo. This provided a total of $170,000 for additional housing construction, which was estimated to be sufficient to construct a single-family home.
It may be worth noting the process through which an organization actually receives funds through the Community Service Tax Credit program. Through a competitive application process, KS Dept. of Commerce selects projects to receive an allocation of tax credits. In Stafford EcoDevo’s case it was initially a $150,000 tax credit allocation, then an additional $63,000 allocation. The organization must then find businesses or individuals that are willing to provide a direct donation to the non-profit organization in exchange for a 70% tax credit on their Kansas Income Taxes. This meant that to fully utilize the allocation that had been awarded to Stafford EcoDevo, a total of $304,286 was collected in donations from businesses and individuals in 2014 and 2015. Particularly with changes in Kansas tax law that have reduced income tax liability for many, this was a long, time-consuming process to identify donors. We are very grateful for the 23 contributions, ranging from $1,000 to $71,429 that provided the means to carry this project forward. About 22% of contributions came from within Stafford County, and 78% from outside Stafford County.
It may also be worth noting that the Economic Development Board and Housing Committee considered several different strategies for constructing housing economically, both before the construction of the duplex and the single-family residence. Options to buy a kit of materials and hire labor, to use prefabricated Structural Insulated Panels to reduce labor costs, and modular housing were all discussed. A Hutchinson-based contractor constructed houses in Rice County under the Moderate Income Housing Program that would have met Stafford EcoDevo’s grant requirements, but this option was never seriously pursued because of the desire to keep business local. The impact of using local suppliers and contractors was weighed, as was developing a house that the board thought potential renters/buyers would find appealing.
Therefore, the EcoDevo Board suggested gathering bids from local contractors to build a single-family home with the same layout as one side of the duplex. The process for having the architectural plans revised and bids collected took four months. These bids came in around $225,000. Economic Development simply did not have sufficient funds to construct this.
With an awareness that housing is being constructed at the desired price point in surrounding parts of Kansas, and in particular in Garden City, the plans used in Garden City were obtained and shared informally with local contractors. We wanted feedback before going to the full extent of asking for bids, which we recognize takes considerable time and effort. EcoDevo was told that those plans were not practical to build in Stafford County and would cost more than the budget would allow, so actual bids were not collected. This highlights one of the challenges of building new construction: no one knows what the cost to build is for a particular plan just by looking at a floorplan. Until the actual materials needed for a particular plan are priced out, the actual cost is not known. And going through that bid process takes time; indeed, usually at least a couple of months.
Meanwhile, the deadline for expending the grant funds and having an independent audit was to be December 31, 2015. A request for extension was approved, but funds must be expended in time for an audit to be complete by June 2016 or funds may be forfeited.
Housing Opportunities Inc., a non-profit housing agency serving central Kansas had received a Moderate Income Housing Grant to construct single family residences. HOI had developed three single-family house plans, each with three bedrooms, two bathrooms, full basements, and attached double car garages – the fundamental features desired by Stafford EcoDevo. HOI was originally chartered to serve Stafford County, and two people from Stafford, Phyllis Hager and Kim Hoffman had served on its board in the past. Apparently, it was difficult to make a project in Stafford County fit the requirements of HOI funding sources (primarily HUD) and a project was never completed in Stafford County; interest then waned in maintaining representation from Stafford. However in this case, with funding in place, the HOI board approved carrying out a project in Stafford County.
The remaining funds to build a house totaled about $165,000. Based on the deadlines for expending Community Service Tax Credit funds and the fact that a building option was available at a predictable price, the Board decided to go forward using Housing Opportunities Inc. HOI does not complete the construction work itself; it uses subcontractors. HOI’s on-staff general contractor for HOI was given a list of local subcontractors to contact for this project. He reported that he contacted a number of Stafford County based subcontractors, and heard back from only one. We were also told that that contractor ultimately did not submit a bid. Stafford Lumber and St. John Lumber were included on the list as suppliers, and Stafford Lumber was chosen for primary building materials. HOI is committed to completing the project by April 30, allowing for compliance with the audit requirement by June 1.
This process highlights some of the challenges there are in building rural housing that are the fault of no one in particular. Homebuilding in Stafford County is oriented to custom homebuilding, unlike in urban developments where a buyer may choose to “build” a house by choosing from a defined set of house plans that have pre-determined price points.
In the end, because of the housing work Stafford EcoDevo has undertaken, there is a new duplex in Macksville with two young families that have moved here from outside of county. The property pays $4,400 annually in property taxes and buys an insurance policy from a local agent that costs approximately $1,500 per year. A renovated house in Hudson used over $40,000 in local contractor services, and an offer to purchase is pending from another young adult from outside the county. The new house in Stafford will add approximately $2,500 in property taxes to the tax base. We hope Stafford County residents can feel good about those accomplishments, which have come with minimal expense from local taxpayers.
Will someone purchase the property? Will someone choose to rent it? Will it bring in a new resident from outside the county? Only time will tell. With progress, there is risk, and this is no exception.
For more information, contact Carolyn Dunn via email at firstname.lastname@example.org or call at 620-549-3527.
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