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COTTONWOOD CROSSING: ADDRESSING A HOUSING SHORTAGE, BOLSTERING ECONOMIC DEVELOPMENT IN NEWTON

Cottonwood Crossing developmentIn 2010 the city of Newton, a community of 19,000 located 25 miles north of Wichita, conducted a housing market study. The results revealed what city officials and local residents already suspected—Newton was experiencing a housing shortage. Occupancy rates for rentals held steady at 98 percent with months-long waiting lists. The shortage of entry-level rental housing made it difficult for young professionals, young families, seniors and downsizing retirees to find homes. Companies considering locating in Newton cited the lack of housing options for new employees and took their business elsewhere.

City officials worked with KHRC to secure $400,000 in Moderate Income Housing (MIH) funds to help finance the development of 44 rental units, including 10 MIH units. The city partnered with Anderson-Crain Investment Group in McPherson to bring the project to completion. In addition to being an MIH grant recipient, the development benefitted from its designation as a Rural Housing Incentive District by the Kansas Department of Commerce. Thanks to close collaboration between city leaders, developers and housing officials, the complex celebrated its grand opening in May 2018. 

At a cost of $5.5 million, the development features two 16-unit garden-style apartment buildings and six duplexes, including corporate units. It serves a broad segment of the Newton community, housing a mixed-income population of young families, single professionals and seniors. The development’s proximity to local highways, shopping and dining options, Newton Medical Center and the YMCA make it an attractive option for Newton residents, and the easy access to Wichita and a new wind farm in Marion county make it appealing for commuters and construction workers. Others are drawn to the prospect of a home with an attached, two-car garage but no maintenance or lawn care.

Cottonwood Crossing leveraged $14 for every dollar of MIH funding invested. City officials are already exploring the possibility of a second phase to expand the development as market demands increase.
 
“The project is incredibly successful and has helped us meet a long-standing need for affordable housing in our community,” Assistant City Manager Kelly McElroy said. “Cottonwood Crossing provides Newton residents -- both current and future -- with affordable rental housing for both the short and long term.”

Moderate Income Housing

HISTORY: In 2012, KHRC created the Moderate-Income Housing (MIH) Program after the Kansas Legislature allocated $2 million to the SHTF for the purpose of administering and supporting housing programs.  Since that time, the Legislature allocated an additional $2 million per year in continued support of MIH activities.


PROGRAM OVERVIEW: The MIH program serves the needs of moderate-income households, those families that cannot afford market-rate housing, yet don't qualify for federal housing assistance. MIH grants and/or loans are awarded to cities and counties to develop multi-family rental units, single-family for-purchase homes, and water, sewer and street extensions in communities with populations fewer than 60,000 people. MIH awards also help finance construction costs, rehabilitate unsafe or dilapidated vacant housing, and offer down-payment and closing-cost assistance to homebuyers.

 

Defining the Need

The need for moderate-income* workforce housing in Kansas is great. Currently, there are 97 counties and over 600 communities in Kansas, which have a population of fewer than 60,000, that are eligible to apply for the MIH Program. These communities comprise approximately 68 percent of the State of Kansas’ total population. Many areas are experiencing or have opportunities for economic development and job growth, but the lack of adequate, affordable housing is making new expansion extremely challenging.

 

State Housing Trust Fund

Created in 1991 and administered by KHRC, the State Housing Trust Fund (SHTF) is essentially a discretionary, interest-bearing trust account for the purpose of administering housing programs and services. While many state housing trust funds around the country have robust designated revenue streams from taxes on such things as real estate sales or recording fees, the Kansas SHTF does not have a sustained funding source. Kansas SHTF activities are funded instead through infrequent and diminishing revenue streams, such as MRB and multi-family bond issuance fees. A summary of SHTF activities can be found here.

Leverage Factor

The leverage factor the MIH program has achieved to date is impressive. With approximately $6.3 million in state funding, local municipalities leveraged an additional $51.5 million in private investment, a rarely seen leverage ratio of $8.20 for every $1 in state resources.

Eligible Applicants

Cities and counties with a population fewer than 60,000 are eligible for MIH funding. Applicants are allowed to partner or contract with outside entities or individuals, including but not limited to public housing authorities, non-profits, community housing development organizations, developers and local employers.

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