As Iowa’s Corridor communities grow, workforce housing tax credits help fill rising demand for places to live

CEDAR RAPIDS — An influx of state aid to Corridor communities will fuel several new housing developments, helping to meet rising demand for more units as the population grows — particularly surging in the state’s urban areas.

The Iowa Economic Development Authority last week announced it was awarding five cities in Linn and Johnson counties over $11 million in workforce housing tax credits, out of $29.9 million granted across the state.

The tax credits awarded to 49 projects in Iowa will help with the construction and rehabilitation of 1,944 new housing units, according to the authority.

Linn and Johnson counties are among Iowa’s fastest-growing areas, according to recently released 2020 census data, as rural areas see their populations decline. Dallas County, west of Des Moines, saw the highest percentage of population increase in the last decade, followed by Johnson at 16.8 percent (21,972 more people). Linn came in fourth behind Polk, at 9 percent (19,073).

Although Iowa’s population growth is stagnating relative to other states, the Iowa Finance Authority projects Iowa will need 47,000 more homes by 2030 to keep up with growth. State officials have identified an affordable housing shortage as a key issue — and one that is linked to the economy. To attract new companies and keep employers in the state, prospective and current workers need affordable places to live.

In her January Condition of the State address, Gov. Kim Reynolds said Iowa faced a “growing mismatch between where job opportunities are thriving and where people can find affordable places to live.”

For the communities working to bring new housing units online, tax credits are a key tool to helping offset rising construction costs, IEDA and Iowa Finance Authority Director Debi Durham told The Gazette this summer, as Iowa grapples with its affordable housing shortage — driven by an aging housing stock, increasing construction costs and insufficient resources.

Tax credits allow developers to borrow less money for projects, passing on the savings to tenants and homebuyers. They’re a limited, highly competitive resource the state allocates across Iowa communities, but Corridor officials say they are part of their strategy of keeping up with population growth here.

Linn County

Cedar Rapids — which saw its population grow by 9 percent, to 137,710 people in 2020 — received $4,499,659 for five projects, to help build 436 new units.

One is the $32.6 million redevelopment of the former Terex site at 916 16th St. NE by developer The Hub LLC, an entity of Hiawatha-based Ahmann Companies. Phased construction of this multifamily rental housing would include 186 units — 72 one-bedrooms, 72 two-bedrooms and 36 three-bedrooms. Of those, the $1 million in credits is capped at 114 units.

Developer Steve Emerson will build 41 apartment units at the Iowa Building, in the upper stories of 221 Fourth Ave. SE, for a $10.75 million capital investment. City Economic Development Manager Caleb Mason said some state and possibly federal historic tax credits will be layered in, as it is a historic preservation project.

In the southwest quadrant, the Annex Group is pursuing a $29.4 million development of 180 units. Its Union at Wiley project, at 4227 21st Ave. SW, will include one-, two- and three-bedroom options. The units are entirely classified as affordable — targeting residents who earn up to 60 percent of the area median income. It also will provide amenities including green space, a trail connection and a playground.

Rose Cottage Villas, a $13 million project from High Development on Prairie View Lane SW, will bring 76 units online — 16 duplexes, 28 fourplexes and 32 eight-plexes. It will provide a mix of amenities, with green space, trails, a clubhouse, playground and pool.

Developers under Modern Home Builders LLC — an entity formed by Josh Bass, Tyler Oswood and Alex Frazier — will build a Czech Village pocket neighborhood at the former U.S. Bank building on Hamilton St. SW, between 16th and 17th Ave. SW. The $6 million project will build 25 units — five units as an adaptive reuse of the bank building, and then another 20 new row house units on the rest of the site.

Mason said the city team reached out to developers that did not receive the tax credits and many will reapply for future funds.

It also is possible that once the city launches its federal American Rescue Plan request-for-proposals process, developers with shovel-ready projects could seek a share of that funding, Mason said, as the city has said workforce and affordable housing are key areas the stimulus money could go toward.

Mason said subsidies such as workforce or low-income housing tax credits are often crucial to pursuing housing projects that are not premised on market rental rates. They help drive rent rates down to meet the needs for low- to moderate-income individuals.

The city helps show developers the existing demand with its annual housing needs study, prepared by Minnesota-based Maxfield Research and Consulting. Armed with this data, developers can know that they are pursuing a development based on projected need.

The demonstrated demand — particularly following the 2020 derecho, which damaged existing housing stock in the area — and recent census data seem to have spurred additional interest in housing development here, City Manager Jeff Pomeranz said, and has helped solidify ongoing projects.

Much of the city’s housing demand “is tied to our economic development strategy that has created jobs and strengthened our economy, causing a need for new and diverse housing in Cedar Rapids,” Pomeranz said.

The most recent Maxfield study, prepared in July, stated that “consistent employment increases among major employers and a strong manufacturing base” support the area’s population growth. And Cedar Rapids is an employment hub, Mason noted, with most residents both living and working here, as well as a higher number of workers commuting into the city than leaving for work.

To keep up with the population growth, the study projects that through 2026, the city will need 1,194 market-rate rental units, over 1,200 affordable units, 1,518 single-family for-sale units and 505 for-sale multifamily units.

Mason said that could even be an underestimate, as city staff have worked on projects that may “push employment numbers higher than the projections, if we can land a few of these larger deals that we've been working on.”

“We continue to keep our foot on the pedal in all areas,” Mason said — working in tandem to create jobs and build a variety of housing options across multiple price points.

The neighboring cities of Marion and Hiawatha — the communities that house the highest share of metro area workers following Cedar Rapids — also last week received workforce housing tax credits.

Marion saw almost 7,000 new residents over the last 10 years, according to census data. So providing new, affordable housing is a huge need, said Community Development Director and Acting City Manager Tom Treharne.

Green Park Living Apartments, located on the former YMCA site at the corner of 10th Avenue and 31st Street, and Boulevard Apartments, at 640 Marion Blvd., received $1 million in credits each.

“Marion and the entire metro area are experiencing a housing crisis,” Treharne said. “Together, these two projects will add 163 units to the city with an investment of nearly $6 million.”

Green Park Living will consist of 147 units in three buildings when finished, but the workforce housing tax credits are for the first building, which will have 69 units. Marion Boulevard Lofts, the former site of Hames Homes, will consist of about 94 units divided among two buildings.

Cedar Rapids’ Maxfield study, which examines the metro statistical area including Marion and Hiawatha, found that more people are leaving the Cedar Rapids for work as of 2018 than in 2017 — “likely because of employment growth in areas immediately adjacent such as in Marion or more people commuting to the Iowa City area for work.”

As the city and surrounding area grow, Treharne said the awards have provided Marion and other urban areas much-needed assistance to create essential workforce housing.

“I don’t think the public realizes the housing crisis before us and the connection housing has to economic development,” Treharne said. “Without decent, affordable housing, attracting business and industry is difficult. It is our hope that these projects will help fill some of the gap that exists here in Marion.”

Hiawatha also received $1 million in workforce housing tax credits for a housing project aimed to help revitalize Robins Road and the city’s core.

The HVCD housing project, being built by Hodge Construction, is estimated to cost $9 million and is just north of the Hiawatha American Legion Hall. Project Manager Andy Hodge previously told The Gazette the goal is to begin the 12-month construction project in the fall. Hodge said the project will be the first in Hiawatha to have underground parking and the units will consist of studios, one and two bedrooms.

Hiawatha City Manager Kim Downs said the housing project is “vital” to meeting the city’s multifamily housing needs and help with the shortage.

“This is going to be an outstanding project that will add so much value to our community and the goals we have set for our community,” Downs said.

Johnson County

Coralville and Tiffin received tax credits to help add a combined 257 new housing units in Johnson County.

Both communities have experienced growth in recent years, prompting the need for additional housing units.

Measured by percentage, Tiffin is the fastest growing city in Iowa — growing 131.7 percent in the past decade, from 1,947 residents in 2010 to 4,512 in 2020.

The housing units are filling a demand as the city continues to grow, Mayor Steve Berner said, adding that keeping residents in town is another goal.

“City staff and council continually work to stay ahead of the growth by planning and goal-setting and doing everything we can to keep Tiffin growing in a managed growth so it doesn’t get ahead of us,” Berner said.

Berner, who has been mayor since 2012 and has experienced Tiffin’s population growth, said the city doesn’t anticipate the growth ending any time soon.

“We actually are doing everything we can to help developers keep up with the demand by working with them as quickly as we can to develop areas,” Berner said. “We're always looking for affordable housing and ways to help people that are coming to town, making it affordable, because that is a never-ending battle.”

The city will add 60 additional housing units through the Hunt Club Housing Phase 3 project funded by the work force housing tax credits. The first two phases are ahead of schedule, with Phase 3 coming along as well, Berner said.

“It’s a nice addition to our town,” Berner said. “With the amenities they’re providing, we expect that to be a very popular destination.”

Coralville has also seen growth over the last decade, growing 18 percent in the last decade, going from 18,907 residents to 22,318 in 2020.

Coralville City Administrator Kelly Hayworth said housing has been a challenge in the area and “having additional units will really help with that.” The tax credits will help create nearly 200 new housing units in the city.

The three Coralville projects are in different locations, each with their own specific benefits, Hayworth said. “All three of them are areas that have been under redevelopment,” Hayworth said.

Hayworth said the city is looking forward to getting these projects finished, and the workforce housing tax credits are a “big part” of that.

With costs of materials and supplies going up over the last year, “the assistance came in at just the right time,” he added.

One of the projects is the Coralville Housing Group II, which will add 49 low- and moderate-income housing units for families. The project was awarded $525,436 in tax credits, as well as additional state low-income housing tax credits.

Work on the project is anticipated to start soon, as is work on the Iowa River Landing Parkview II, Hayworth said. Work on the Town Center One development at 411 10th Ave. is projected to start in March.

Hayworth said the city has had a number of housing units assisted by the aid. With how much interest statewide there was in the program, he said this is the first chance the city had to apply again in the last few years.

“We're really excited that this spurred some additional development in our community,” Hayworth said.

Comments: (319) 398-8494; marissa.payne@thegazette.com