LOUISBURG — Superintendent Brian Biermann did a quick search on realtor.com to find out how many houses were for sale in Louisburg’s 66053 zip code before the start of the school board’s July 8 meeting.
He put the results up on two large projector screens in the board meeting room: 27 homes were for sale in the local zip code, and many of those had pending contracts. Of the available stock, only six homes were priced under $335,000.
“As you guys know there’s a shortage of housing in Louisburg, especially affordable housing,” Biermann said to school board members.
The superintendent also pointed out rental property is scarce and expensive.
“The subdivision right to the west of Rockville (Elementary), those are all rentals,” Biermann said.
The monthly rent for those housing units is reported to be $1,500 to $1,750.
“That’s a mortgage payment, but people are paying that,” Biermann said. “When they were being built, I said I don’t think anyone will pay that. Now, that place is completely full.”
The preview of the real estate market served as a segue to a presentation by City Administrator Nathan Law about the city’s desire to establish a Rural Housing Incentive District (RHID), which would provide incentives for contractors to build homes and rental units in Louisburg.
RHID captures 100 percent of incremental increase in real property taxes created by a housing development project for up to 15 years to help pay down the cost of extending streets, utilities and some building costs.
“The developer would pay out of pocket up front the cost to install that infrastructure, those utilities …,” Law said. “The increased value of property taxes from having homes built on the approved land then goes to pay back that initial cost of extending the streets and utilities as well as some of the other development costs.”
RHID projects are privately financed by the developer, he said.
“The developer carries that obligation in this circumstance, and if a developer didn’t recoup all the reimbursable costs within that 15-year period, the developer is just out that money,” Law said.
Without an RHID, the margin for success for a developer in Louisburg is slim, especially with the distance a developer has to haul materials to build in Louisburg, Law said.
Louisburg has already qualified for RHID through the results of a housing analysis that was approved by the Kansas Department of Commerce. The study satisfied the state’s four requirements: shortage of quality housing, shortage is expected to persist, shortage is a substantial deterrent to future economic growth, development of quality housing is dependent on incentives.
The housing analysis showed 40.5 percent of renters pay more than 35 percent of their household income on monthly rental fees. The study also showed that 45 percent of homeowners lived in houses valued at $250,000 or higher.
“I find it striking,” Law said of the housing analysis. “In summary, it appears our workforce population can’t afford to live in Louisburg. And that’s where the whole idea of RHID came from.”
In addition to a lack of affordable housing, new housing starts in general have stagnated. The city issued 14 new residential building permits in 2018. In 2005, the city issued 133 new housing permits. After the 2008 financial collapse, the city’s best year for new housing starts was 48 permits in 2016.
Contractors have expressed interest in developing the remaining phases of three subdivisions in Louisburg — Summerfield Village, south of the aquatic center; Prairie Crossings, southwest of the city lake; and Southtrails, in the northern part of the community off Metcalf Road.
Proposed development would include a mix of rental and single-family housing through incentives provided by RHID, with an additional 83 housing units in Summerfield Village, 96 homes in Prairie Crossings and 64 housing units in Southtrails.
Law said RHID is not a low-income housing project that one would find in a Housing and Urban Development program. These are houses targeted at working class individuals and families who cannot afford to reside in Louisburg, based on current market conditions, he said.
Ross Vogel, one of the developers interested in Louisburg, told school board members that establishment of an RHID would reduce the listing price of a single-family home in his development from $275,000 to $225,000. Without the RHID, Vogel previously said proceeding with a development in Louisburg would not be feasible.
Under RHID, three taxing entities — the city, school board and county — would have to agree to forgo incremental increases in property taxes for 15 years to cover development costs. All three taxing entities would continue to receive the property taxes they are currently collecting on the vacant residential lots.
The City Council on Monday, July 15, voted 4-1 to approve a resolution which set a public hearing Aug. 19 for Louisburg Landing Partners LLC’s proposed development of townhomes and single-family homes along Danford Drive in Summerfield Village. Council member Thorvald McKiearnan cast the no vote. The council also voted 5-0 to approve a resolution which set a public hearing Aug. 19 for MBB,LLC’s proposed development of single-family homes in Prairie Crossings. The public hearings for both developments will take place during the council’s regular meeting that evening, at which time the council could vote to establish the RHID and approve the development plans.
If county commissioners or the school board vote to oppose the city’s RHID, the proposal would not move forward, Law said. He said the county and the school board were not required to vote on the RHID. They could allow the project to move forward by not taking any action or they could vote to support it.
Biermann said the increased development would bring more students to the school district, which also would likely mean more state aid. The school district’s facilities also are in a position to accommodate growth, he said.
Biermann said Dale Dennis with the State Board of Education was not aware of any school district ever opposing an RHID project. RHID projects have been completed in communities across the state since the program was established by a legislative act in 1998.
School board members asked questions but showed no opposition to the proposed RHID.
Biermann said he didn’t foresee a need for the school district to raise its mill levy to accommodate the additional students these developments likely would bring to the community. And Law said he does not anticipate property owners seeing an increase in taxes to pay for additional services — such as police and fire protection — that might be required to handle the influx of population, based on the number of new housing units proposed in the three subdivisions.
School board member John Payton said the district is not losing property taxes it is currently receiving.
“We’re just not getting something we don’t have yet,” Payton said, referring to incremental tax increases on new housing starts in the next 15 years in those subdivisions.
And are not likely to have after 15 years without the incentive program, Law said.
“Rather than taking a passive approach and hope development comes, it’s trying to make sure that it does come,” Law said.