Housing study points to need for incentives, senior housing

Brian Smith, of Maxfield Research and Consultants from Golden Valley, Minn., gives his findings of a Lee County housing study at the Lee County Economic Development Group offices Tuesday afternoon. Photo by Chuck Vandenberg/PCC


KEOKUK – A countywide housing study has given local economic and housing development groups plenty to think about in the near future.

The Lee County Economic Development Group, in conjunction with the cities of Keokuk and Fort Madison and Alliant Energy, contracted with Maxfield Research and Consultants to take a look at housing needs in the county over the next five to seven years.

On Tuesday, the research firm outlined its findings to economic development officials including LCEDG CEO Joe Steil, Fort Madison Partners Executive Director Tim Gobble, Keokuk Chamber of Commerce Executive Director Shelley Oltmans, Keokuk City Administrator Aaron Burnett; Southeast Iowa Regional Planning Commission Planning Director Zach James; Fort Madison City Councilman and state representative candidate Bob Morawitz. Several real estate experts, including Green Oak Development owner Michael Mohrfeld and Keokuk Realtor Tim Peevler, along with about five other interested parties were also at the wrap-up held at the LCEDG offices in Keokuk.

The draft of the study’s findings is more than 180 pages long.

Some of the key findings of the study concluded: the county’s decades-long decline in population may be stabilizing through 2025, county population is aging and will impact alternative housing needs, the northeast part of the county is a job importer (people commute into the area to work), rental housing stock is aging; there will be a strong senior housing demand by 2025; home prices are high with lack of quality inventory; a difficulty cash flowing new development, a need for private/public partnerships and housing programs; financial incentives needed for development.

Steil said the biggest takeaway he had was the transitioning of the aging population to senior-housing.

“The biggest thing that I would say I grasped is that it’s not new news to us that our aging population is getting older on an average basis,” Steil said. “What this is telling us is that at some point in time that age level will look for a different type of housing and there’s obviously a need for that. The biggest question for me, though, is how does that study get impacted by the turnover of that property.”

Mohrfeld has been developing homes through Green Oak Development on Fort Madison’s north side, including some new maintenance-free condominiums and future single family units above Bluff Road.

He said his biggest hurdle to construction is tax rates.

“Right now taxes are my biggest obstacle. I’ve got $1,200 mortgages with $500 or $600 in taxes. Taxes are 100% my challenge.”

Mohrfeld said the biggest incentive for him to build more homes is tax abatements. Mohrfeld received some tax increment financing from the city of Fort Madison for his development. The county also offers three-year abatements, but he can’t take advantage of both incentives.

James said the two main instruments are tax abatement and tax increment financing and you can’t have the two together.

“If nobody’s paying tax, you’re not going to increment.”

Mohrfeld said the cost of the construction coupled with the tax rates paints a clear picture of why, outside of his development company, not much new construction is going on.

“Part of that’s just the cost of building, but put it all together and it’s no secret why nobody’s doing it,” Mohfeld said.

Brian Smith, the consultant giving the presentation, said research shows that it’s difficult in the county to break even on new housing projects given the costs of infrastructure, lack of skilled construction labor, and rising construction costs.

“As a result, the price points for new construction will be significantly higher than existing housing products in Lee County,” Smith reported.

Aaron Burnett told the group he helped model a lot incentive program that Clarion, Iowa where a new subdivision was created with TIF support and city-financed infrastructure. The development was led by a non-profit group of local businesses and stakeholders where lots were marketed at $20,000 to $38,000, but were auctioned to builders to spur interest.

Smith said other cities in Iowa are using incentives such as free building permits, free utility hook ups, low interest local bank loans to developers, and five-year tax abatements on new construction.

Smith said the household size in the county has reduced steadily since 1960 when the population peaked at almost 45,000. In 1990 the average household was 2.54 people, but in 2010 that had reduced to 2.38 people. He projected a stabilization of 2.42 by 2025. The firm’s research also found that in 2017 Lee County’s average weekly wage was $876 per household compared to a $900 per weekly wage for the state of Iowa.

He said major employers such as Siemens, Pinnacle Foods, Henniges Automotive, Roquette America, and Scotts Miracle-Gro, cited difficulty in the housing market in recruiting new hires.

Steil said the study was countywide, but has benefits for the county and its municipalities.

“LCEDG acted as the engine to get the study done,” he said. Before, Keokuk and Fort Madison used to do their own. And at different times Lee County did their own and so we said let’s do one study and make it as comprehensive as possible. We all sat at the table and interviewed the potential vendors as well as deciding what is it that we wanted to know. The cities definitely need this type of a plan to go out and, based on a review of their information, go look for grants and different things to file for in the future. Automatically, part of that is having a study done, and this satisfies that criteria.”

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