Hevern on the spec house project
We’ve had a housing committee for years in Estherville. It includes folks from the general public, realtors, bankers, contractors, and elected officials. A community-wide housing survey was completed in 2015, indicating a big need for additional single-family homes in Estherville. We have heard from local industries, the hospital, ELC and the college about the challenges they have finding housing for potential employees. This spec home program is not the total solution, but rather a step in the right direction.
The housing committee assisted the city with the CDBG grant program that provided grant funds to match private dollars to improve dozens of homes. A state grant was received to demo uninhabitable homes, which got rid of many run-down houses. The city developed a new home grant program, which has been distributed to a bunch of new homeowners here, offering up to $10,000 per new home built.
When we changed the EIDC’s name to the Estherville Area Growth Partnership, we expanded our mission from just industrial projects to general community development, including housing. The Partnership is a private, nonprofit, 501(c )6 organization. It is not part of the city but we have a great partnership.
For a long time, the housing committee, the Partnership and the city have discussed developing a spec home program. We’ve talked to local contractors in the past and again more recently, including last week.
Timing is everything, they say. If you want a new home constructed, you start lining up a general contractor about a year in advance. Most of our contractors can fill up their schedule that far in advance. We didn’t get started on this spec home program until the February-March, 2018, time frame, which was way too late to pull together a stick-built spec home project this year. We looked at home builders outside of Estherville, from Spirit Lake, a couple from Algona, one from Minneapolis, but nothing worked out.
During this time, the Partnership started working with Monte Burrell and Green Acres Homes of Estherville on a modular home project. That is the project we are presenting for approval.
Generally the stumbling block to building a spec home has been finding the money. Who is going to take the risk? A few weeks ago, Northstar Bank approached the Partnership with a funding plan they felt they could provide to help move the spec home project forward.
Here are the details: The Partnership will own the spec home and will borrow up to $225,000 at two percent interest from Northstar Bank to fund the project. The Partnership will make the interest payments. With the city guarantee of the loan, Northstar Bank will waive the down payment requirement. And all the local financial institutions have home-buying programs in place to help the buyer of our spec home. We have developed a home with great curb appeal and feature-packed interior with no steps into the house.
A change has been made to the spec home development agreement between the city and the partnership. Each will share equally any profits or losses.
This is not a one-and-done effort. Our housing shortage is much bigger than that. We also need to develop apartment buildings. We have met with local and regional developers for new apartment buildings. We’ve looked at renovating vacant buildings into apartments with no luck. And we’ve talked a lot about second floor loft-style housing. We are always stopped by the lack of construction funding, or the project doesn’t pencil out financially.
We’ve worked with Iowa Lakes Corridor, USDA, Community Housing Initiative, Iowa Lakes Electric, Iowa Area Development Group, the Community Venture Network, the State of Iowa and individual and company housing developers exploring all kinds of ways to solve our housing problem.
It will take partnerships like this spec home program to make them happen. If anyone has an idea to help with our housing situation, I would be happy to meet with you. Call or text me at 380-7100 or send me an email at firstname.lastname@example.org.
Lyle Hevern, Economic Development Director