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Workforce Housing Needs - Next Steps Work Session Copyrighted August 1, 2022 City of Dubuque Work Session - Top # 01. City Council Meeting ITEM TITLE: 5:30 PM - Workforce Housing Needs - Next Steps SUM MARY: City Manager transmitting information for the City Council Work Session on Workforce Housing Needs. Dave Lyons, Sustainable I nnovation Consultant for Greater Dubuque Development Corporation, will make a presentation. SUGGESTED DISPOSITION: ATTACHMENTS: Description Type Workforce Housing Strategies-MVM Memo City Manager Memo Staff Memo Staff Memo Presentation Supporting Documentation Dubuque THE CITY QF � All-Meriea Ciry DLT B E ; . � . � �� MaSt� Z�C� aYd t�Q Mt55ZSSZ Z zoa�•zoiz•�ai3 YP pp za��*zai� TO: The Honorable Mayor and City Council Members FROM: Michael C. Van Milligen, City Manager SUBJECT: Work Session on Workforce Housing Needs — Next Steps DATE: July 28, 2022 Housing & Community Development Director Alexis Steger is transmitting information for the City Council Work Session on Workforce Housing Needs. v Mich el C. Van Milligen MCVM:sv Attachment cc: Crenna Brumwell, City Attorney Cori Burbach, Assistant City Manager Alexis Steger, Housing & Community Development Director Dubuque THE CITY OF � All-qmeriea Ciq� DuB E ��,�,�,�� ' � II ��' M�ste iece on the MisSi6si i zoa��zoiz•zois � pp zoi��oi� TO: Michael C. Van Milligen, City Manager FROM: Alexis M. Steger, Housing and Community Development Director SUBJECT: Work Session on Workforce Housing Needs — Next Steps DATE: July 26, 2022 Introduction The purpose of this memorandum is to provide information for the August 1 St, 2022, City Council Work Session on workforce housing needs. Backqround The City Council identified quality affordable housing creation as a goal and priority for 2020-2022. Workforce housing has been identified as an affordable housing need that is not being met as quickly as it is needed in the City of Dubuque. This work session will detail the status and impact of the housing shortage and identifies several strategies to address the barriers to increasing the availability of workforce housing in Dubuque. This is the second work session on workforce housing. The first work session focused on barriers and historic data, this work session is focus on future strategy and opportunities. Discussion The need for additional housing has been clear in past studies completed for the City of Dubuque, such as the Consolidated Plan for Community Development Block Grant and the Comprehensive Plan: Imagine Dubuque. The population of Dubuque has grown since 2010 and the number of housing units has not kept up with this growth leading to low rental/homeowner vacancy rates, overcrowding, and growth outside of the City of Dubuque to meet the demands. There is a small margin of profit for developers that create workforce housing, so often developers focus on building houses that sell for over $300,000. To incentivize developers to refocus on workforce housing creation, several cities have implemented new incentives for developers such as Tax Increment Financing, building infrastructure before development, and supporting applications for funding from State and Federal funding sources. Workforce housing is required in a city to house childcare workers, nursing assistants, paramedics and teachers who would be cost burdened purchasing a home for over $300,000. A household is expected to pay 30% or less on their housing costs, as to not be cost burdened. This not only includes mortgage payments, taxes, and insurance, but also essential housing utilities such as electric, gas, water, sewer and refuse. More than 40% of renters in Dubuque spend more than 30% of their income on housing, and more than 25% of those spend more than 50% of income on housing. The need for affordable housing is so prevalent in Dubuque that 42% of businesses interviewed said housing should be a priority, and 7 out of 10 lowans support affordable housing development. Despite this community support and awareness, 1 in 3 housing projects are blocked by opposition. Where there is a need, there is opportunity, so this work session will identify several strategies that can be used together or separately to address different barriers to workforce housing. The first strategy is to increase support for workforce housing using tax increment financing. This strategy can assist with public improvements in a new development and create funds for low-moderate income families to access the housing more readily through down payment assistance and other financial programs to alleviate barriers to purchasing a home. The second strategy expands workforce housing tools. This strategy involves seeking opportunities for developers to access non-local funds for creating workforce housing. This strategy includes seeking a Distressed Workforce Housing Community designation to allow developers access to additional state funding, developing strategies to assist with access to HOME funds, developing "checklists" of funding opportunities to bring to a developer to ensure full use of programs available, and marketing efforts with area developers/builders to encourage a focus on workforce housing. The third strategy focuses on expanding buyers' capacity to afford home purchases. Several programs are available today, but additional marketing of those programs and preparing residents to be eligible for a mortgage. Strategy four focuses on stabilizing the rental market, so single-family homes are not used as often for rentals. This includes improving and maintaining rental stock, targeted enforcement to problem landlords, acting on nuisance properties quickly, and developing an early warning system for aging rental properties. This strategy also focuses on increasing capacity through development and rehabilitation of rental stock and continuing to support affordable housing. These strategies can work in conjunction with each other for the biggest impact, but a focus on staff time and ability to accomplish these, and a focus on other needed resources incentivize and market to developers is required. This may mean that resource allocation becomes a barrier to adopting all strategies at once, and may require a tiered approach to implementation of the strategies. Recommendation This memo is for informational purposes only; no action is required at this time. � u u ue ous � n • . . . or a � � . . . ccess � � � City Council Work Session August lst, 2022 AGENDA — � � 2 _ - Work Session #1 Work Session #2 • Status a nd I m pact of Shortage • Access a nd Afforda bi I ity • Ea rly Efforts on "M idd le- • Futu re Com prehensive Market" Workforce housing Strategy THE NEED IN NVMBERS 0.5% 1.3% Homeowner vacancy rate Rental vacancy rate 2021 (5% is 2020 (1% i s I ow) I ow) 0.5% 7.6% New u n its bu i It as a percent Projected em ployment g rowth of cu rrent housi ng stock by 2030 (2019 to 2021) Source: lowa State Profile, Volume III: Dubuque City; Dubuque Housing Needs Assessment THE NEED IN NVMBERS New housi ng u n its New u n its bu i It by 2030, needed by 2030 fol lowi ng present trend Source: lowa State Profile, Volume III: Dubuque City, 14.56; lowa Dashboard THE NEED IN NVMBERS • • Du buq ue renters that spend Du buq ue renters that spend more tha n 30% of thei r i ncome more tha n 50% of i ncome on housi ng on housi ng Source: lowa State Profile, Volume III: Dubuque City, 14.56; lowa Dashboard DISTRESSED WORKFORCE HOVSI NG COM TY � 20 11% Average days on the market in Increase in average sales price 2021 (90 i s ave ra g e) f ro m 2020 to 2021 "The data and subsequent analysis included in this report show a high need for housi ng u n its with i n the City of Du buq ue." Source: Dubuque Housing Needs Assessment CHALLENGE CHANGI NG TH IS TO TH IS MAR KET N O R M MIDDLE-MARKET LMI HIGH-END Housi ng development norma I ly fol lows dema nd across spectru m of household i ncome D V B V V E MAR KET R EAL ITY $$$ LMI HIGH-END New homes sig n ifica ntly trend towa rd h ig h -end, a nd represent the la rgest sou rce of fu nd i ng for LM I city prog ra m m i ng D V B V V E MAR KET D E MAN D Dubuque Inc�me Distribution zQ � �� 0 � � � 0 1� � � 0 � � � � � a� [L � �� g �g� �� g� �� o,�� °� �.� �y� �� a �,�' �`� o� o� � ,�o ,�� Incorne in Thousands of ❑ollars So u rce: ACS 5-Yea r Esti m ates 2020 DV BV V E MARKET SV PPLY � Mediansingle-familydwelling permitvalue in2021 � Average sales price 2021 ' Affordable home price for the median � Median household income 2020 Source: ACS 5-Year Estimates 2020, Dubuque Building Permit Activity Reports 2021 DV BV V E MARKET SV PPLY � Mediansingle-familydwelling permitvalue in2021 � Average sales price 2021 ' Affordable home price for the median non-white household � Median non-white household income 2020 Source: ACS 5-Year Estimates 2020, Dubuque Building Permit Activity Reports 2021 DV BV V E MARKET SV PPLY � Median single-family dwelling permit value in 2021 � Average sales price 2021 ' Affordable home price for HUD's median ' HUD median household income 2022 Source: HUD Median Family Income Documentation System, Dubuque Building Permit Activity Reports 2021 DV BV V E MARKET SV PPLY _ . .. � Median single-family dwelling permit value in 2021 � 1 Affordable home rice for median � p H U D household i ncome 2022 1 Affordable home price for median � household income 2020 Affordable home price for median non-white household income 2020 Source: ACS 5-Year Estimates, HUD, Dubuque Building Permit Activity Reports 2021 DV BVQV E MARKET TREN DS 269 000 , 380 000 � Median SFD permit value 2020 Median SFD permit value 2021 214 400 231 800 � � Average sa le price 2020 Average sa le price 2021 1631 1743 Properties sold 2020 Properties sold 2021 � 7� � �� For sa le I isti ngs 2020 For sa le I isti ngs 2021 Source: Dubuque Building Permit Activity Reports 2020-21, Ruhl & Ruhl Realtors Winter 2022 Facts & Trends CONVERSION TO RENTAL � �.�r:�:, :�:, ��. Du buq ue has 1,741 properties classified as si ng le-fa m i ly _ , .. . �#. ___ rental units . � - � ' � ' � f � �� , i � � � Y ! � ' '' � I' +�k, �ia � � ' . � s � . - - ' '� � � ,�w �� 4]Y + .. "' `��M i 1 t{ � � . , � � r{ *y y.�� r �,. 3�� + Eve ry co I o red d ot o n � � _ -- �- . __= f *:. -4 � ,�"• °• ��y -'�L i -7 J f+ � ' . ' 'y +. � _ , . . th is ma p represents � {�� .r- -�� "�,� �� a si ng le-fa m i ly ��'��-� home renta I L�.�� r-,�w,:�. Source: City of Dubuque ArcGIS �.'_ - - _ ='� _-�_; - '_� - - :� CATCH-22 �� `�� th is house is I isted at . �Send an Email - j- - $1,600 _ _- __�. _ r --- f,� f � �,,- � � � ,� � � �:. �- , � � ; �, - -:--� This property last sold in 1998 for _- ��'� _ ==- i-� ; --.��___-_ --1-!� $53,000 - --_=___- �. ;-_ -_-�� =-_ - = ==-=- - � � --- �: - - ---- _ - '` T�-� � - � .. - �� The assessed value of this property on __ I�i �v„4a�t� Beacon for 2022 is � �,� messeae � �140,880 The Highlights '�efe3fe9°'°e"'°2°,°a'°°F°'afd1e°"1eS '��°�= With $10,000 down and a 4.9% interest �� Em�� rate, the mortgage payment for this . ,,, °�SHwaSHER P°°°E�°°t�°°�� property including PMI, taxes, and _ : � M°�.e�°°� °5,°��°�Z would be around :��_� Floor Plans ��03� _� ,��a:.,ab�a a,�eo,,.��w._P�a��'=o��' � Source: rent.com, beacon.schneidercorp.com, dupaco.com STRATEGY I ncrease su pport for workforce housi ng th roug h tax i ncrement fi na nci ng (TI F) �. AI low developer expa nded use of TI F th roug h U rba n Revita I ization for developments that a re at least 50% m idd le- ma rket workforce housi ng 2. Place rema i n i ng TI F/U rba n Revita I ization fu nds i n a pool to su pport afforda ble mortgages for m idd le- ma rket workforce/LM I buyers, possi bly pa rtneri ng with loca I fi na ncia l i nstitutions CAPACITY TO BRI DGE TH E GAP what new housi ng costs TI F to bri ng costs down TI F to bri ng buyers u p what workforce ca n afford i ST RAT E GY h- Expa nd workforce housi ng tools �. Develop strategyfor developers to be able to use HOME p rog ra m 2. Develop su pport a nd tracki ng process to assu re Du buq ue is a pplyi ng for su pport from every fi na nci ng prog ra m 3. New engagement a nd ma rketi ng effort with a rea developers / bu i Iders STRATEGY Conti n ue to expa nd buyers ca pacity to afford home pu rchase • Housi ng Choice Voucher Homeownersh i p • Fi rst-Ti me Homebuyer Loa n Prog ra m • Single Family Affordable Homes • Wash i ngton Neig h borhood Prog ra m STRATEGY Sta bi I ize the renta I ma rket 1. Improve and maintain existing re nta I stoc k • I ncreased i nspection ca pacity • Ta rgeted enforcement to problem landlords • Ability to act directly on nuisance properties • Develop ea rly wa rn i ng system for ag i ng renta I properties AN V N FORTV NATE REALITY -, :s� . .. _ . _ � �� . . � � _�__ . , __ . ._.� . :�--_ - � � ___ . � _ _ , ,_ __ ._ ;.- . - - - r . -.��...,..._.. -� ;. , �-- � . �� L � ._ ,� ..:, - ,ti _ . . , � . � . . . � �. �.. � � r .. ,,. � ; � .�w�� _- & -- _ � - _ �. f� `� .-� � r� - � � � � � � �, � _, � �, � , 1 ; ; -�� - _ -� �-�..._-_ �� , , �� -_.�� , , ,� _ . � � � ,i ^� , , �. � , �; _ . , � I �� " � . � ; �� J ��4�;�n..� � d �� _ ti�� _` � `°� i �� _� �� , � �M�� ; �-�--:�----=--�a � � � _ — � � `- �� • � '•- � / � �"�q; _ � ' i ` / k�«^ , 1 . _ _ ): ,;:,._- � ,;�. �� --�.--., -_- _ _ - - , r ., _ , �`v..s'1 _ � • � � ;��,�'H� `�� ,� � � - _ x^�` � � '*'a' . � _' ._ --' �� f 7}�!�� f '� - � � ` , � � > �-�^§ ` ,t �> � _ zi, q e �:�:.. � � ,, , "'- a�o�Hj�vr� �� r�"r �. � { c / �. � . ; ,-�., . �.. �.. _ . r ' � �� , _,. . . v .� •a'� �rw�.. I� . \\ . � a+��-� '�^x� � ...� � � � .. _ .. � t T �� ;, _ � � ;� , •x. . . . . .r-. '�` _ . � {-�. . , 1 , �". _ ..._ , - ' w„o � , . . . _W,,,� .... �, .. . � , .: . . . . . . ..� .. - . . . . .s .� _ ' ..... � �. _� " � ,-u �,,. - . . . .. .� .�,.. � Y . , , ,,.:., m � � � .� ... .. 5 � -r. �. \:.. - �' �i ir"M�:r. .� �. .. -....:. . �..� �� . ` l' � . , . ..: ';.y .t ' �. �:.�•, a . i. .. + - � ,.. \ . . ; . � .. . ., ...x- -. . ... . . ._., aed:. _. �� _ . ^s_ ... • . . � �,Li,�. Source: Gronen Restoration ( 20 January & 17 March 2022) STRATEGY Sta bi I ize the renta I ma rket 1. Improve and maintain existing 2. Increase Capacity renta I stock • Work to prea pprove a reas for • I ncreased i nspection ca pacity m u Itifa m i ly a nd LM I housi ng to increase interest • Ta rgeted enforcement to problem landlords • Ability to act directly on nuisance properties • Develop early warning system for ag i ng renta I properties STRATEGY ;Edmor�ey '� � R�tladge .,� 't ''�,, .� Frith Spur '� '�,, ., t.. `v � �.. �''. �._.. , .._..� .` :� ;` S : Develop a n asset ma p � f � r �.. I' / : �••• '� : g Pa-nt 1 � •, ' ' .. :._... �._..._...�_-� ../� ..._..._.�..:� e �5 i a Bur.�' � � � ; j j/� `'_' 1 � '///////��/�"t, �l that housing developers r,,� ; ��. • �� ; ', a n d b u i I d e rs ca n u se to , ,.��-. r- �� , � r.._.. �� ,: �� / 'i�.;L�.iry • • • �,._..._. ..�.. /��/ "_.�J - �. quickly identify . .--. .; � ,,,, � �� - - � � . �i,ii,: ;> , , , ; � rF..nr.� i ^.._�/�j... j/ j�._..1 ��: . ._ —. • ._..._..._..._. -..� i:—... o p po rt u n i ty a n d �_. , ;~�-. °°b"q°e �� ! i ..i � � _ / �' q East D��ou ue ' ; __ : � : _ " __' .. c o n n e ct w i t h t h e i r �-��`�� ' = .- �-�. - ��._.___..._�� _..._ , Cenr�-�rnve . �.��.-.—..._..-�..��" y�..._.. � �•:I ' � 4. _ . �. .��.��,.L_1,: -r w �i � S �1 owners � � -° � � � . ..._; ,.... . �...: :_..._..._. . ; . �,,r, : � �i: :' : �� w , i �� j ` ,3 y� � � +-�i_ i. �4 . ' i � � %Jj,; r� �..._.. ; .._5_,,_�> : • . _...___._..._. � ,...�✓, � '• ;_.; �. � �� i / ,-j��f �� Rockdale j . , : � r j i;%,//�/ S.ti..._..._..r""'►..•� ! Cattese �.. �• ..i, � � • :..._�-••-•••-• L.._..._..� #;'l�"''i.._; ••��: STRATEGY Sta bi I ize the renta I ma rket 1. Improve and maintain existing 2. Increase Capacity renta I stock • Work to prea pprove a reas for • I ncreased i nspection ca pacity m u Itifa m i ly a nd LM I housi ng to increase interest • Ta rgeted enforcement to problem landlords 3. Continue to support affordability • Ability to act directly on nuisance properties • Housi ng Choice Voucher Prog ram • Develop early warning system for ag i ng renta I properties THAN K YO V FO R Y R ATTE NTI N OV O CREDITS: This presentation template was created by SI idesgo, i ncl ud i ng icons by _ - - -_ - - --- - - - - - - Flaticon, infographics & images by Freepik : - - - .- -.--.-.---�.�=: .-.--� ..��_--___.q�� .:.��:. .�;- and illustrations by Storyset