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Axios
21-05-2025
- Business
- Axios
Federal affordable housing incentive faces a Des Moines pause
The City of Des Moines should pause new projects that utilize the low-income housing tax credit (LIHTC) until suburban communities contribute a larger share of the metro's affordable housing, according to new recommendations from an out-of-state consultant. Why it matters: The LIHTC is one of the country's most common tools for creating affordable housing, giving local and state governments billions of dollars in annual budget authority. Advocates say LIHTC-funded projects drive development, while critics contend the program creates an unequal distribution of poverty in some areas. Catch up quick: The LIHTC program, administered by the IRS and state agencies, provides tax credits to developers in exchange for maintaining affordable housing, usually for 10 to 15 years. Projects typically require approval from local governments before they are awarded incentives. By the numbers: As of January, DSM had 90 projects using the LIHTC to provide more affordable rents for low-income families, according to a report by the Iowa Economic Development & Finance Authority. West Des Moines had eight, Johnston had four, Ankeny had three, and Urbandale had one. State of play: DSM is developing its first comprehensive citywide housing strategy, which will shape the allocations of the LIHTC and other incentives for future projects. Charles Buki, president of Maine-based urban planning firm CZB, recommended the LIHTC pause, saying that developers can exploit the system in deals that don't always benefit the city in boosting its tax base as much as other types of projects. He recommends the city boost allocations to Invest DSM and Improving Our Neighborhoods (ION). The big picture: The debate over the usefulness of the LIHTC continues, with groups like the Cato Institute testifying before a congressional oversight subcommittee this month that it is an inefficient solution to housing affordability. What they're saying: Councilperson Josh Mandelbaum said a pause on using the LIHTC "abdicates Des Moines' responsibility to provide affordable housing" and would have prevented recent projects like Star Lofts along Ingersoll. Councilperson Joe Gatto, however, said residents in his south-side ward are becoming weary of having LIHTC projects in their backyards. "I bet if there was a project that came forward south of Grand, your neighbors might feel a little bit different," Gatto told Mandelbaum during last week's meeting. Zoom in: Matt Hauge, spokesperson for the Polk County Housing Trust Fund, tells Axios that the LIHTC plays a vital role in revitalizing neighborhoods and supporting economic development and that a blanket cessation of its use in DSM "is just a bad idea." Developer and former state Sen. Jack Hatch tells Axios that the proposal to pause the LIHTC is "misinformed" and rooted in a "lack of knowledge of housing finance."
Yahoo
18-02-2025
- Business
- Yahoo
Small homes called 'albatross' on Des Moines, consultant pitches city redevelop 280 blocks
Des Moines is primed to redevelop about 280 city blocks comprised of small, aging homes, partially through voluntary acquisition and rebuilds, under a draft proposal to tackle the city's housing challenges. Iowa's capital city should refocus a portion of its $64 million-plus annual housing budget to address roughly 45,000 single-family homes that tend to be old, small, and often neglected, under a recommendation Charles Buki, founder and CEO of czb LLC, made in a presentation to Des Moines City Council last week. The housing stock, which Buki calls an "albatross" on the city — hindering its ability to compete in the region — is ripe for a strategy called whole-block redevelopment. The proposal is part of the city's first-ever housing strategy, a guide to creating a balanced distribution of housing throughout Des Moines that aligns with Plan DSM, a vision to shape the city's growth and development through the year 2040. The city hired czb LLC for about $200,000 in 2024 to work with a steering committee to examine the city's housing market, affordability challenges, and its competitive position. More: Des Moines to develop first housing strategy amid affordable housing shortage A 2018 workforce housing study showed Polk County will need to add 57,179 new housing units at various price points by 2038 to accommodate the new workers moving here, nearly half of which will earn between $25,000 and $49,999 per year. What's more, 58,000 households in the Des Moines metro are already cost-burdened, spending more than 30% of their income on housing, the study showed. Buki called Des Moines a "Goldilocks market," because it's not expensive and it's made progress in keeping up with the suburbs in housing. The 45,000 homes make up a significant amount of affordable housing, he added. But Buki argues those homes, most of which have one bathroom, are in a "motivational dead zone," and aren't going to get better on their own. As they age, he said, the structures will cost more than they're going to provide in tax base over the next few decades. He also predicts the next 20 years will bring a slower growth rate for the city, county, state and region. Under the proposed whole-block redevelopment, a certain amount of the homes would be rehabilitated for marketability, a certain amount would be kept affordable and others would be acquired for new infill. For those slated for infill, the recommendation calls for people to take voluntary buyouts from the city. The idea would call for redeveloping three to six blocks at a time to complete over 20 to 30 years. He said areas such as East 14th Street and Euclid Avenue, Southwest Ninth Street and Watrous Avenue, University Avenue in Drake, and the Fairgrounds and Merle Hay neighborhoods are ripe for development. Buki estimates it would cost about $15 million to $20 million per block. The city would tap into private entities to redevelop the properties. Buki suggested redirecting funds the city uses for abatement, as well as funds from its sales tax and its capital improvement plan. He also recommended the city pursue a redevelopment bond. Under the plan, Buki also recommends the city increase its spending on programs like Invest DSM and the Improving our Neighborhood (ION) program to aid in rehabilitation. Each year, the city receives about $36 million from state and federal funds, another $11 million from sales tax and $5 million from Polk County to address affordability and market gaps in the Des Moines housing market. About $4 million comes from the city's capital improvement plan and between $8 million to $11 million from abatement. The city also allocates about $5 million to Invest DSM, $2 million to ION and $3 million to Blitz on Blight. The city also uses about $20 million in tax increment financing. The plan received pushback from City Council members, including Linda Westergaard. During the presentation, Buki painted a grim picture should Des Moines not change course in its housing approach. Residents will age in place and their child who lives outside of the city will acquire the house and become an absentee landlord who would not be able to upgrade the home, he described in one scenario. Westergaard called the idea a "scare tactic" and said the city should continue to rely on programs like Invest DSM, ION and the Neighborhood Finance Corp., which are filling gaps to preserve the housing stock and the people who live there. She feared that offering fair market value would not be enough for people to start over in another home, particularly for aging residents. "It is not a scare tactic," Buki replied. "For 30 years, I have seen neighborhoods across the country decline through attrition this way. The market is not strong enough for there to be an alternative outcome, I'm sorry." To Westergaard's comments, Des Moines City Manager Scott Sanders said the key to the whole-block redevelopment strategy is to "unlock private dollars" by building the interest of private entities. Sanders assured the acquisitions would all be voluntary. "If ION is working on one or two homes per block, if even that, you're not going to unleash the opportunities with private dollars until you say, 'This is an area we're going to fully address,'" Sanders said. City officials said more research in the proposal is slated for the spring. The plan will likely come back to the City Council, who will decide whether or not to adopt the plan, before the fiscal year ends June 30. Virginia Barreda is the Des Moines city government reporter for the Register. She can be reached at vbarreda@ Follow her on Twitter at @vbarreda2. This article originally appeared on Des Moines Register: Des Moines eyes redeveloping 280 blocks filled with old, small homes
Axios
13-02-2025
- Business
- Axios
Des Moines to consider redeveloping 300 blocks of housing
About 300 city blocks would be redeveloped through a mix of acquisitions, demolitions and infill reconstruction under a draft housing strategy presented to the city council this week. Why it matters: The annual $60-million-plus that governments spend to improve DSM's housing won't boost overall conditions without whole-block redevelopment, Charles Buki, director of Colorado-based urban planning firm CZB, told council members. DSM has "an albatross" of 45,000 small and often neglected homes, Buki said. Catch up quick: DSM has among the oldest housing stock in the nation, with nearly 28% of homes built in 1939 or earlier compared to 12% nationally, according to Census estimates. Hundreds of millions of dollars have been spent on revitalization in recent decades, but problems with housing conditions and affordability are still widespread. CZB was hired last year for $200,000 to help draft the first citywide plan to guide future housing decisions. Driving the news: This week's recommendations include voluntary property buyouts to help redevelop entire city blocks. The focus would be on a few blocks at a time that would be completed over decades. How it works: It's unlikely that some property owners would sell, which Buki told the council is fine because each block would be developed differently based on its characteristics and open spaces. Contiguous properties could be acquired mostly for new housing with market factors influencing improvements or redevelopment of the remaining older homes, he said. Zoom in: Specific blocks were not identified in this week's presentation, but examples given include areas along Southridge and Merle Hay malls, East 14th Street and the Fairgrounds neighborhood. Stunning stat: CZB estimates redevelopment would cost private, nonprofit and public entities around $20 million per block, which includes incentives to maintain affordability for families with lower incomes. Inside the room: Councilperson and real estate agent Linda Westergaard accused Buki of using "scare tactics" by predicting that property conditions would continue to worsen under the council's current housing plans. "The market is not strong enough for there to be an alternative outcome," Buki responded. "I'm sorry." Mayor Connie Boesen and the other five council members supported further reviewing the recommendation. The intrigue: A Baltimore pilot project using the whole-block approach in 2009 resulted in $58 million in reinvestment and about 200 new or rehabbed homes, according to nonprofit ReBuild Metro, which assisted in the development. The city is now adopting a widescale version. CZB was commissioned to study Baltimore's vacant property problems and recommended the concept in 2022. What's next: The city manager's office will provide the council with financing details in the coming weeks. Formal council consideration could take place as early as next month.
