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IOWA IDEAS 2019
OCTOBER 3-4 CEDAR RAPIDS

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$50K scholarships fuel wave of development in this Wisconsin town, and Cedar Rapids has similar goals

Cedar Rapids has forgivable home-loan program with similar goals to La Crosse, Wis., programs

Jun 17, 2019 at 1:11 pm
    Josh Wiedenbeck, owner of Wied Investments, walks through a 2,300-square-foot home he is building in the Powell-Poage-Hamilton neighborhood of La Crosse, Wis., on Thursday, Feb. 28, 2019. This home is the third new house constructed by Wiedenbeck that's eligible for the La Crosse Promise, a program that offers new homebuyers in the Powell-Poage-Hamilton and Washburn neighborhoods who meet the requirements a $50,000 college scholarship for the owners or their children. (Cliff Jette /The Gazette)

    LA CROSSE, WIS. — When the Lyons family was looking to move off French Island, a neighborhood on the outskirts of La Crosse that was closer to work and school in the core of the city, they discovered a housing incentive called the La Crosse Promise that offers $50,000 in college scholarships for building a new house in one of two older neighborhoods.

    They talked with a builder, loved the blueprints, lined up financing and in short order purchased one of a handful of new builds in Powell-Poage-Hamilton, a deteriorating residential area blocks from downtown. If Adam Lyons, 35, and Kelsey Lyons, 36, stay in the two-story home for four years, they will earn the scholarship that can help pay tuition for their boys Owyn, 13, and Cayden, 12, at any accredited college or university.

    “The scholarship was a big part of it,” said Adam Lyons, who works at Lincoln Middle School, where the boys also attend. “The scholarship allowed us to stress a little bit less about the cost. We would have never built a new house if not for the program, and not that the price was the problem, but if we built anywhere else, the house would have cost a lot more.”

    In Lacrosse, a city of 52,000 in western Wisconsin along the Mississippi River Programs, programs like La Crosse Promise target blight in the heart of the city, flight to suburbs such as Onalaska, falling school enrollment, and new investment neighborhoods that builders and homebuyers have long avoided.

    Cedar Rapids has just embarked on a public-private initiative with some similar goals called the Neighborhood Finance Corporation, an incentive-based neighborhood revitalization effort, in which property owners can get up to $10,000 in forgivable loans to upgrade their homes.

     

    From few builds to new builds

    In the 15 years before La Crosse Promise, only two new houses were built in the city’s Powell-Poage-Hamilton and Washburn neighborhoods, according Brian Liesinger, executive director of La Crosse Promise. By comparison, the Lyons’ $225,700 home is the 16th built through La Crosse Promise since the program’s launch three years ago.

    It’s one of the pricier homes in an area of $50,000 to $100,000 homes, which are 70 percent rentals, according to local officials. But that’s the point. Ramp up investment. Get more young families owning and living in the homes. Challenge the perception of what the neighborhood can be.

    “As soon as we launched our program, people noticed the Promise homes were being snatched up, and the city started to get more aggressive,” Liesinger said. “Then developers saw the opportunity. There’s this movement to bring people into these neighborhoods. New, younger demographics want to be closer to the city where people can walk to work and bike to school.

    “We expected to see this kind of change in 10 years, not two,” he said. “It’s changed the feel of neighborhoods, aesthetics, it’s changed attitudes. It’s cleared out some of the criminal element with the removal of drug houses. It’s been a really psychologically positive change.”

    A home renovation option also exists, in which property owners can qualify for scholarships on a sliding scale based on the amount of investment.

    Leveraging city grants

    La Crosse Promise and others such as Habitat for Humanity leverage a city-led housing replacement program in which the city uses federal Community Development Block Grants to acquire condemned and dilapidated homes in targeted neighborhoods, covers the cost to demolish the homes, and sells them to the private sector.

    Since 2010, when the housing replacement program began, 73 new homes have been built adding $4 million in new tax base, said Caroline Gregerson, community development administrator for the city of La Crosse.

    “It’s a very expensive program to run,” Gregerson said. “It costs $50,000 to $70,000 to purchase the property, and then $15,000 to $20,000 to tear down what’s there. Then a new development comes in. It’s not cheap, which is why a lot of cities go for it. The most we can do is five cleared per year.”

    But it’s been successful enough that there are no plans to slow down.

    “If it weren’t for the program, I wouldn’t be building here,” said Josh Wiedenbeck, president of Wied Investments.

    He has worked on three La Crosse Promise eligible homes on Farnam Street about a mile southeast of the downtown. The first was a half lot he purchased for $1,200 and sold to a dentist from Michigan for $170,000 who is using the scholarship for a medical business degree at Viterbo University, just blocks away. While buyers of the city property often get a good price, the sale also comes with requirements, such as upgrading sewer pipes, building to a certain square footage and not turning the house into a rental.

    The city’s involvement is key, but the other incentives like La Crosse Promise help, Wiedenbeck said.

     

    La Crosse County has incentivized demolition grants of up to $50,000 as the city has tried to reduce its role on that front. As more improvements and new construction come online, along with the incentives, it justifies investments far above surrounding properties, he said. And it appears to be paying off — some people are moving in to the area without taking advantage of the incentives, he said.

    Delores Spies, co-owner of Spies Construction, has started building in the neighborhoods after 30 years working in subdivisions. Until the city started buying up the lots, it was cost-prohibitive to redevelop in the core neighborhoods. She is glad to see people moving in to the city instead of out, but it still can be a challenge overcoming perceptions about the neighborhood when trying to sell.

    “I keep saying, ‘Give the city time,’” she said.

    The city has invested $500,000 in new lighting for safety and aesthetic purposes in the targeted neighborhoods, and spent $1.5 million to spruce up two neighborhood parks — Powell and Poage. The new features have made the neighborhood more appealing, some residents say.

    On a Thursday evening in February, Dawn, 43, and Jerry Wacek, 45, were preparing carnitas in a slow cooker and homemade salsa verde in a blender.

    They acquired the property from the city, landed a county grant to cover the cost of demolition, and hired a builder to construct their two story, three-bedroom, 2.5 bath craftsman style home valued at about $215,000 — one of three new houses on the block. In a few years, their sons Quinn, 12, and Baxter, 5, will be in line for Promise scholarships.

    They wanted to live close to downtown within walking and biking distance to schools and workplaces, the YMCA and farmers market, and are mindful of not wanting to gentrify the neighborhood.

    “The first year there was sparse trick-or-treating, but in just a year we noticed more kids walking around,” Dawn Wacek said. “There’s more people walking around the neighborhood, and the park is super active.”

     

    How Promise program works

    La Crosse Promise is designed to boost stability in the neighborhoods and schools by requiring a long-term commitment, increasing La Crosse County’s median home value through minimum investment requirements of $150,000, and also acting in a measured way to not gentrify the area or displace lower-income residents.

    Children can’t be in high school when their family buys the house to ensure children will be in the school district at a minimum of four years before benefiting from the Promise scholarship.

    Brian Fukuda, community development specialist for La Crosse County and board adviser for La Crosse Promise, first proposed the Promise concept modeling it after Kalamazoo (Mich.) Promise, which provides a full-tuition scholarship to any student who continues from kindergarten through high school graduation within the local school district boundary and a 65 percent scholarship for those who complete at least four years of high school locally.

    The idea was initially laughed off, but community leaders soon warmed to the idea, albeit a scaled-back version. It took 10 years to develop the program and required an array of partners from the city, county and school district.

    Providing scholarships made sense on a few fronts. The community has three higher education institutions and a strong school district, and the hope was the program could reverse falling school enrollment. It also created a “buzz” from a workforce development and attraction perspective, he said.

    “We chose to tie it to education because it amplified the benefits we were able to see,” he said.

    Anonymous donations of $1.5 million have supported the scholarship fund. Now that they program has hit the halfway point — 16 Promise homes out of 30 planned — organization leaders are starting to raise money to extend the program.

    The La Crosse city website has mapped building permit investments within a 500-foot radius of Promise homes and other replacement housing properties. For example, the area around a $193,200 home built in 2016 saw $161,550 private building permit investment in surrounding areas. Another home valued at $174,700 saw $95,937 in surrounding private investment.

    “We did find consistently more investment occurring where the new homes were built,” Gregerson said.

     

    The Lyons have been in their home only a few months, but are planning long-term and even built two in-law suites for their parents to eventually use. They have already noticed one neighbor replacing windows and another replaced their front door. Another neighbor is inquiring about making improvements through the La Crosse Promise program.

    “I think it’s contagious,” Adam Lyons said. “Things start to happen when they look across the street and there’s niceness.”

    • Comments: (319) 398-8310; brian.morelli@thegazette.com

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