By BECKY KISER
Hays Post
Following discussion about how much low- to middle-come housing is currently available in Hays, city commissioners last week agreed to support a proposed 48-unit income-qualified housing development in south Hays.
Overland Property Group, Leawood and Salina, hopes to build “The Reserves at StonePost,” with two- and three-bedroom apartments, on the site of the former Fort Hays Trailer Park, 618 E. Fifth. OPG has built three similar StonePost rental properties on South Main near Larks Park.
The resolution of support from the city is just the first step in applying for federal tax credits from the Kansas Housing Resources Corporation, a process which OPG Vice President of Development Matt Gillam called “highly competitive.”
“We’re talking about a $6 million development cost for affordable housing. It generates a lot of economic activity, not only in the city itself, but around the region. Each state is given a certain amount of tax credits and they are allowed to allocate them based on where they believe the needs are in the state,” Gillam explained.
“In Kansas, you have a pretty limited resource pool. You can fund six to eight developments. Hays is going to be competing with Kansas City, Topeka, Overland Park, Wichita and Manhattan, all in the running for these same funds.”
According to Gillam, there were 50 applications in 2016; eight were approved.
“We’ve done pretty well in the past to get Phases 1, 2 and 3 in Hays funded, but it’s not a walk in the park,” he said.
OPG would also ask the city for a Rural Housing Incentive District (RHID).
An RHID works to reimburse the developer for eligible infrastructure expenses over a 15-year period, capturing 100 percent of the incremental increase in real property taxes created by a housing development project.
Mayor Shaun Musil called the proposed project a “good idea in an area of town that’s in pretty rough shape.” But Musil also had a major concern.
“We have a lot of vacancies in town right now,” he pointed out.
“It would concern me if I saw a problem,” Gillam said, “which I don’t see right now. This is something that wouldn’t open until August 2018, at the earliest. I think the market will be better by then.
“We have done our own analysis and model, and paid third-party consultants to do this research. I’m not going to drop a $6 million hard-cost facility into a community if I know I can’t fill it.
“We have seen in the city of Hays an unhealthy rate of occupation over the past eight to 10 years. People have gotten used to it and they think that’s normal. There has to be some vacancy in the market, so that if somebody moves into town there’s a place for them to move into. If there’s nothing for them to move into and everything has a waiting list, they’re going to say no to that job offer…we’ve seen this in a lot of western Kansas towns.”
Musil was also concerned about what the proposed development might do to local owners of rental property.
“We have a housing study out. When we get that back, it may affect my thinking,” he said.
Commissioner Sandy Jacobs concurred, adding “I think it’s critical we look at unintended consequences of any kind of activity like this.”
Commissioner Lance Jones declared affordable housing the “No. 1 issue” in Hays.
“A lot of my colleagues choose to live in places like Ellis or Walker,” he said. “One guy even drives in all the way from Palco because he doesn’t want to pay the price of housing in Hays.”
Jones commended OPG on the quality and success of StonePost Phases 1, 2 and 3.
“These things are currently income-based and will fall off of having to be income-based. We need something there to replace these as things cycle in and out.” StonePost Phases 1, 2 and 3 are a 15-year compliance period. Phase 1 was built in 2006. In 2021, it will revert to regular housing and can be rented to anyone. Phase 4 would be a 30-year compliance period.
“I hope this isn’t the last project you look at here in Hays,” Jones told Gillam, “and I welcome other developers too.”
Longtime Hays real estate broker Doug Williams addressed the commission about his concerns of overbuilding in a declining economy with downturns in the oil and agriculture sectors.
“These guys (OPG) do a great job, but they’re not playing on a level playing field. Subsidized properties always rent. I hope we look at the housing survey properly because, if we don’t, I think there’s going to be some consequences,” Williams cautioned.
“If we’re going to have an RHID, we’re going to have a concise, good study that’s going to give us the kind of information we need, and I’ll guarantee you that,” Jacobs assured Williams, who thanked her.
Williams estimated there are currently at least 150 empty housing units in Hays with 50 new units under construction. Aaron White, executive director of the Ellis Co. Coalition for Economic Development, disagreed with those numbers. Both men said they talked to local housing owners and builders.
Two owners with multiple holdings told White their properties were full or nearly full. “There were a few indications it’s getting a little harder to fill the spaces and they’re having to get a little more aggressive in their marketing,” White reported.
Following the 4-0 vote in favor of the OPG support letter, Vice-Mayor James Meier said Commissioner Henry Schwaller, who was absent Thursday, last week said he “supported the development. He’s a large property owner in the community and has a lot of rentals, and he (Schwaller) supports it.”
The winners of the state tax credit housing proposals will be announced June 1.
OPG has a similar project, “The Reserves at Trail Ridge”, underway in Great Bend. Framing was scheduled to start this week.