OSAGE | The Mitchell County Economic Development Commission is preparing for Phase 2 of its incentive program for commercial and residential housing construction.
During a public meeting hosted by the MCEDC board and staff on Feb. 28 in Osage to review Phase 1 and discuss Phase 2, MCEDC Executive Director Tony Stonecypher said the program has been "fairly successful" so far.
Information released by MCEDC indicates $1.2 million in forgivable loans was awarded through the incentive program in 2018, which will lead to an estimated $4.4 million in new valuation for the county.
This increased tax base will bring more financial support for schools as well as services such as roads, according to Stonecypher.
The loans awarded in Phase 1 were for five commercial properties, 13 spec homes, and 20 rental housing units.
The projects are in Osage, St. Ansgar, Riceville, Stacyville and McIntire.
The money for the incentives came from tax increment financing revenue.
Stonecypher said some of the loans in Phase I were given to spec home projects already in progress rather than just new ones, but that's something the MCEDC is "leaning heavily toward not doing again."
Phase I guidelines stated a project had to cost at least $150,000 to receive a loan.
One thing the MCEDC is considering for Phase 2 is lowering that threshold, according to Stonecypher.
During Phase I, reconstructive/substantial rehabilitation and adaptive re-use of unoccupied properties were among the projects eligible for loans.
However, MCEDC has received lots of requests from property owners who want to do smaller rehab projects, according to Stonecypher.
The MCEDC wants to limit those rehabilitation projects to exterior work such as roof replacement and foundation repair that could raise the valuation of neighboring properties as well to "leverage our funds a little bit further," Stonecypher said.
Only properties in each town's urban renewal district are eligible for the incentive program.
Approximately 600 parcels in the county are in an urban renewal district.
Kevin Kolbet of Kolbet Realtors in Osage said the original intent was to put the entire county in an urban renewal district, but the bonding attorney advised against it.
Stonecypher said the intention was to only put properties that might have a chance for eligibility for the incentive program in the urban renewal districts.
He acknowledged some people were upset and fearful when they learned their property was in an urban renewal district because they associated the name with "urban blight."
However, being in such as district "by no means attaches any kind of stigma to the property," he said.
Stonecypher said the term "urban renewal area" is a hold-over from the 1950s when the goal of TIF was to improve blighted areas, but the purpose of TIF has changed over the years toward the improvement of communities as a whole.
Stonecypher said property owners can call the MCEDC office to have staff do a parcel number search to determine if their property is eligible for the incentive program.
When asked if those whose properties were initially not included in an urban renewal district could have them added, Stonecypher said if enough requests are received, they could be added all at once.
However, he said it would be cost-prohibitive to do this for just one property.
A recent study indicated a housing shortage in Mitchell County.
Josh Byrnes, director of Osage Municipal Utilities, asked if the shortage is in low-income housing, homes in the $350,000 range or some other level.
MCEDC Board President Amanda Adams said the study indicated the greatest shortage is in rental housing.
However, the MCEDC couldn't just do an incentive program for rental housing due to regulations, she said.
Several people at the meeting cited a need for rental units for people who are moving in from outside the area due to employment and are looking for somewhere to stay short-term while they explore long-term options.
Stonecypher said the rental units created through Phase 1 of the incentive program were good quality, with rates that were affordable but "not rock-bottom."
He also said they were rented quickly.
Jessica Marzen, marketing and administrative assistant with MCEDC, said of the seven spec houses from Phase 1 that have been sold, two have opened up an existing house in the county and one opened up a rental unit.
The rest were purchased by people moving in from outside the county.
Stonecypher said when he spoke to businesses in the county, particularly manufacturers, they said their biggest need actually was for homes in the "high-dollar" range for engineers and mid-level and upper-level management "who have certain expectations."