HOUSING

Strategy 1: Construct a variety of new housing types at multiple prices across the region.

About The Objectives

Communities experiencing population decline may not appear to need additional housing units, but a lack of quality and affordable homes may be preventing new residents from moving there and prompting existing residents to move away. Many of the communities in the IND15RPC area have an above-average age of single-family homes. While this does not mean older homes are necessarily in poor condition, it does suggest a need for new housing starts. These new homes will be critical to slowing population declines and central to ongoing and future business growth and attraction efforts. When new subdivisions are created, they should contain a mix of unit types, sizes, and prices, and not a homogenous housing stock that caters to only one market segment. Individuals rarely have the same housing needs or preferences throughout their entire life and may find they need to relocate outside of their neighborhood or community to meet these changing needs. Integrating different housing styles and types within the community can have a major impact on the long-term viability of neighborhoods and the ability of area residents to stay in the community as they age.

Land Developers & Production Home Builders

Production home builders, as compared to custom home builders, can often construct and sell homes for less money. This is due to the economies of scale; as materials are purchased in bulk and labor contracts are signed for longer periods of time or more homes built, the more cost-efficient construction becomes. Additionally, production builders often offer multiple house plans that have been designed for material efficiency and ease of construction. Homebuyers are able to select a house plan that suits their needs and customize certain items from that plan. Some of these home builders also act as land developers to acquire property, design, and construct necessary infrastructure improvements, and ultimately build houses on the lots created. Other production home builders will partner with a land developer who purchases the land and constructs the roadway, sewer, water, and other utility requirements. They then sell the buildable lots to the production home builder.

In either model, the upfront land development costs and home construction expenses will be passed on to the new resident when they buy the house, along with builder/developer profit. Because of past project experience, established relationships with contractors, and the ability to acquire financing at better terms, production builders and land developers are able to deliver new homes in a more cost-effective manner. The region’s ability to attract new production builders is critical to capturing new home construction at price points affordable to new home buyers and “move up” buyers. Move up buyers are existing homeowners who may be looking for a larger, newer, or nicer home. As they move up, their first home will likely be for sale and may be affordable to a “firsttime” buyer.

Revolving Loan Fund

Too frequently, infrastructure, or a lack thereof, is the limiting factor in being able to achieve new residential construction. Even in communities with adequate sewer and water capacity, replacement of undersized or outdated pipes or the need for mainline extensions to serve new development areas can be so costly that the project is not financially feasible. However, few municipalities have the financial resources to proactively extend utilities to desired growth areas, so it is incumbent upon the developer to pay for these extensions.

An infrastructure revolving loan fund would help bridge initial financing gaps so that these housing projects on the cusp of being feasible could move forward. As projects are completed and homes sold, some of that revenue would go to pay back the loan and then could be used for the next project. The program could be applicable across the region or based on how municipalities help to initially fund the loan pool. Loans would be issued at low-interest rates with repayment of principal plus interest being made over a specified period.

Residential TIF Toolkit

Since 2019, the State of Indiana has allowed Tax Increment Financing (TIF) districts to be established specifically for the purpose of facilitating housing growth in counties with a population of fewer than 100,000 people; all of the IND15RPC region counties are substantially below this threshold. TIF districts are typically used to fund infrastructure to promote development that would not occur were it not for the infrastructure financed by the TIF revenues. TIF districts can be created by a county, city, or town, but only after they have established a redevelopment commission. Additionally, residential TIF districts require that the number of new houses constructed in the jurisdiction in the last three years represents no more than one percent of the total number of singlefamily houses in the jurisdiction. They also require approval by the applicable school corporation board.

A residential TIF district could be incredibly helpful in attracting production home builders and realizing new subdivision construction. There are upfront costs for the municipality to legally establish a TIF district. By creating a series of legal templates and a detailed “how-to” guide for municipal leaders, this potential cost barrier to TIF creation can be significantly lowered.

Objective Priority Actions

1. Host an industry roundtable with builders and developers currently operating in the region to better understand their project requirements and common impediments.

A. Attract land developers and production home builders to the region to help increase housing choices and values.

2. Market development opportunities to builders and developers operating in adjacent counties that have not yet entered the IND15RPC region market.

3. Utilize the programs and incentives recommended as part of other objectives to bridge financing gaps and make more new housing developments feasible across the region.

B. Create and provide initial funding for a revolving loan fund to help fill financing gaps associated with infrastructure development for new residential construction.

1. Determine county, city, and town financial resources that could be used to seed the loan program.

2. Partner with regional financial institutions to assist in the loan process.

3. Create a loan program committee to evaluate applications and award loans.

4. Market the program to land developers and residential builders within the IND15RPC region and beyond.

5. Evaluate loan program successes and amend eligibility requirements and awards as needed.