Rural Economic Conference: Session 4

SPEAKER: It's time to talk about housing. And while we've already talked a little bit about it, I mean, when we gather information for the Beige Book, for the contact call memo, for round tables, at any other conference, it seems like we end up talking about housing. The supply issues of just not enough supply, whether it be new and existing, add in affordable housing. Affordable housing, then is it really affordable for where it's going up? Since it's related to just to an area median income, and that can be distorted given the definition where you are.

Then there's demand, structural, and cyclical issues plaguing the housing market and holding that back. So we thought not only the conversations we've already had about it, but we're going to have a dedicated panel to it today. And then, of course, we're going to talk about zoning, land use, and housing more tomorrow, and then of course, be on site at the housing development tomorrow as well.

So we've got Lisa, Matt, and Ray for the panel on housing, and introducing the deputy Illinois State director for the USDA who's going to moderate, is Molly Hammond. So Molly.

MOLLY HAMMOND: Thank you. And we truly have met the last session before the reception, so we will keep it nice, succinct, but very informative. Thank you. So I'm the Deputy State Director for Rural Development in Illinois. Our State director, Pam Monetti, is in the room. She drove with me from Galesburg, Illinois, today.

And Theresa Greenfield is the Iowa State Director for Rural Development. And I know she had planned on being here at some point during this conference. And many of you probably know her. She's a great neighbor to our West.

For those of you who are unaware of the USDA Rural Development's role in housing, I wanted to share an example of a project that we just funded today. So I mentioned that Pam and I met in Galesburg, and we have an office there. We have 11 offices throughout Illinois.

So we went in and said hello to the loan specialist that was working at the front desk this morning. And she was just grinning from ear to ear. I said, how was your day going? And she said, it's great. I got a grant funded this morning. And I said, really? What was that for?

And she said, it was for a elderly gentleman who needed new windows in his house. And he's been working on his application, and he really needs these windows before winter. And we just got the funding this morning, and I got to call him and let him know.

And so that's just a very simple example of how important the work that we do at USDA Rural Development in the housing space is making health and safety and important modifications to existing homes in rural America. We also do, of course, home purchase loans, and we help thousands of people throughout rural America have either first-time home ownership opportunities or purchase a second home.

And while these programs are amazing and they do help thousands, we constantly help people approve. We approve them for the loan. They're ready to go purchase a home, and then there's no housing stock to actually follow through with it.

So our three panelists are going to dive into this issue, and they're going to talk about the innovative ways that they're addressing it in their regions. So I'm going to introduce each of them separately, because I failed to print off their bios. I'm going to read them from my phone.

So we're going to start with Ray Lai. Raymond Lai joined McLean County Regional Planning Commission as its executive director in early 2020, and that's McLean County, Illinois. He has practiced urban and regional planning for decades, both in public and private sectors for various local governments in Illinois and Missouri and a global consultancy in Asia,

Lai has often served as an invited guest lecturer or panelist at planning workshops, training seminars, and local universities. He has also given presentations at national, state, and local planning conferences. He holds an advanced BA in regional and urban planning from the University of Saskatchewan, Canada and a master's in city and regional planning from Southern Illinois University at Edwardsville. So I'm going to turn it over to Ray to start us off.

RAYMOND LAI: As one of the speakers said earlier, planning is one of the things I have to start with planning and all these implementations that you have many presentations on. How many of you have been to Bloomington-Normal, Illinois? Great. I know one of the former panelists used to work for State Farm, so that's great.

We're in Central, Illinois, as you may know. Let's see. Is it this one?

AUDIENCE: The green button.

RAYMOND LAI: The green. To the upper? We are located in between Chicago and St. Louis, about 2 hours

southwest of Chicago. Bloomington-Normal is what we call the Twin City. It's the urban area in McLean County, and the county population is about 170,000. And then with the County, also, with the Metro area, the Bloomington-Normal area being over 140,000.

So you can do the math. So the rest of the county in the rural area is about 30,000. The land area, actually, the county is the largest county in the state of Illinois in terms of the land area. What we call MCRPC that I work for, the regional planning commission, actually, we wear two hats, one as an MPO, a metropolitan planning organization, and also, we are one of the county departments, and we did not become part of the county until about 2018, 2019.

We have a number of employers, State Farm. I think. Megan, one of the panelists, State Farm Insurance headquarters is in Bloomington, Rivian. You might have seen some cargo vans and trucks and SUVs is in our area. Actually, it's their manufacturing plant.

And then Country Financial, Ferrero, I call it, the chocolate factory, is their North American headquarter. And then Illinois State University has about 20,000 student population. So those are major employers, but we have a few also.

Just to give you a sense, the county lab outside Bloomington-Normal, then there are 20 other rural communities with different sizes. This represent the population shift. There's some growth, and there is some decline, some of the rural communities. It's kind of interesting, but this is not the purpose, but someday we'd love to see why. Because it's not the proximity to the urban area. It's just kind of scatter.

We got a grant. MCTPC got a state grant from the Department of Commerce and Economic Opportunity to develop a regional housing recovery plan, basically, to look at recommendations and analysis. How do we recover from the impact of COVID on housing in our region.

So went through a seven-month planning process. I'm not going into the details, but a seven-month process started in September of '23, finished and got the plan adopted in late March of '24, just a few months ago. So went through a lot of steps with the assistance of consultants based in Indiana.

I did a lot of community engagement activities, just to get public input, and those include a trilingual housing survey. We did in English, French, and also Spanish, but largely amazed that we got about 1,200 responses from the rural and urban area.

Interviews. We did interviews and also, the focus groups, stakeholders, workshops, and also, give people the public opportunity to review draft plans and before we finalize the plan. So there was a public forum also was held in January, a very cold January night, but we got a full house, standing room only.

People did come out, and we did it hybrid so that the people who could not come out or people in the rural area who didn't want to drive to the city that they can participate also. So we had a draft plan released for public comments. And also, we had assistance of the consultants and they're working with the staff that we together to work on the engagement. And the next picture shows you the standing room only public forum for that really cold January night.

Next, I'm going to just show you some samples of the survey that we have conducted. But the full survey results, they are on our website. So feel free to expand to look into some of the questions or the difficulty in affording the housing costs. Most people say, yeah, it's just hard to afford.

And then one of the questions is, if you said, yes, what's the reason. And we find that because they pay rent, mortgage, and then the other reason was food, health, education that they do spend on non-housing related costs.

Another question was how do you maintain any difficulty-- can they afford to maintain their home, because they have to spend money on maintenance and other repairs. And many of them said yes. No, about 23%.

And then the other question that we had was, if they were going to buy their next home, what would they consider. And it's quite interesting. It's not all single family. And so actually, only about over 1/3 said they would consider single-family homes, but then the townhomes, duplexes, multi-family type that they would also consider.

Housing options. How much of their income would they consider for housing costs. They wished it would be less than $1,000. We know it's not the case.

Proximity to job to home importance. How difficult. How do they rate the importance of proximity to work in home. They said very important. So they don't want to drive, basically, commute.

Multifamily are they open to that. Because sometimes people so in our community, primarily single family, so would they be open to multifamily type. They said yes.

Housing policies. I'm not going to read this because hard to read too, I suppose. But again, it's the full report is on our website. Some of the key findings-- limited affordability, housing diversity also very limited, and also, barriers to access. People have upfront costs to rent, to buy homes, that's actually a heavy burden to a lot of renters and homeowners or potential homeowners.

Competitive market. We know the interest rate has impact the rising prices and also, limited public concerns, limited transportation, NIMBYism, not-in-my-backyard attitudes and other factors really affect how people don't want a different type of housing, for example, in their neighborhood.

Housing shortage. You all know this, but just want to mention Vivint. We know about 50% to 80% of the workforce do commute 45 minutes one way at least every day, just housing and other reasons.

Just a couple slides showing we, meaning the local government, they have approved a number of housing units, but it's still not enough to catch up with the demand. And for the incorporate McLean County, which primarily rural, there hasn't been that many new construction. And if there were, those are only single-family homes.

This housing value equals to housing costs. We all know that. Most of the homes in McLean County were built between 1960 and 1980. So it's the aging housing stock.

There are seven goals with recommendations that the consultant recommend, and they were adopted. Just really quick. Regional resource coordination, we all talked about earlier. I'm not going to use the detail. And the housing coordinator, we just recently applied for an out-of-state grant for implementation to hire a housing coordinator.

Because all these cross-sectoral intergovernmental collaboration really takes somebody to do it. It's hard to have each of the governmental entities to do all the work, and it's hard. We need somebody, overall, to work with the implementation committee.

Access to information. Information hub is like one-stop-shop type, and then housing development opportunities, looking at zoning, land use codes, other incentives, programs that are available.

Funding and partnership. We talked about trust fund earlier and land trust. That's another tool and land bank. There's a lot of different tools out there that could be considered.

Vulnerable population. Again, we talked about behavioral health earlier. That's an important issue.

McLean County has behavioral health, what they call mental health action plan, and housing is on many of the pages. There's also working with IHDA, Illinois Housing Development Corporation. That's important.

Last but not least, is to work with employers to support housing. We also cover by other panelists earlier, ready to work with the employers and the childcare service needs. We find that, also, is a major need in McLean County.

Landlord Risk Recovery Fund. That is a fund that could be set up to minimize the risk landlords will have to take so that they be more prone to lease or rent out to people who may not be able to afford the extra deposit or extra month rent and things like that.

So there's a number of recommendation ideas, action items that we trying to start implementing, including the next steps, the committee presentations. We have conducted and make presentations to different groups and organizations, not just the governmental, but community groups, just to educate them about the housing.

Sometimes they know there's a housing crisis, but when it gets to how do we do it, they need to be educated so that when we do the implementation, then it will be easier to collaborate with them. Forming this cross-sector and also intergovernmental implementation committee also is important.

There are so many players in housing as we all know, not just affordable housing, but also, the market rate housing, and that we all need this implementation committee from all different sectors to work together. Again, funding opportunity that we always look out to see if there's any funding to help us to implement the plan.

This is my contact information, also the link to the housing plan on our website, mcplan.org and feel free to take a look. Thank you.

MOLLY HAMMOND:Thank you, Ray. I look forward to the question and answer. I know there will be a lot of

good questions for Ray. Next, I'd like to introduce Lisa Leedy. She's the executive director of Builders Exchange of Northwest Michigan. You may have heard her bio earlier if you were in the room.

But if you weren't, Lisa has served in public, private, and nonprofit sectors. Leedy's roles include her current position as executive director, a construction trade builders exchange, which is a Construction Trade Association; executive director of Alliance for Economic Success, a regional economic development organization; director of grants; and founder of the real estate development firm, Grand Traverse Economic Development, Corp, a federally recognized tribal LLC; and serves as village president two terms, then as township supervisor.

She has served on numerous boards, including current roles as vice chair of the regional planning and Workforce Development Agency Networks Northwest and as co-chair of the Michigan Region D Housing Partnership Ecosystem Committee. She is also a certified economic developer from the International Economic Development Council, certified zoning administrator, and citizen planner from the Michigan State University Extension Office.

Leedy has also educated other leaders, serving as a test proctor for the CECD program, educator for the IEDC Economic Development Ethics course, and teacher of Michigan Township Association, courses related to economic development in rural communities. Leedy has a BS in organizational leadership and a master's degree in education, in community engagement, and government affairs. And I love acronyms because I work for the government, so that was a lot of good acronyms in there. Thanks, Lisa.

LISA LEEDY: Thank you. Hello, everyone. Remember me? I was here before. I'm not new here. OK, wait. Let's just start for a second because I forgot to do this the first time. Who knows what this is? This is how a person from Michigan says, this is where I live.

So I live right here, and I want to talk a little bit about a regional effort that is right here. As Molly-- thank you, Molly. As she indicated, I am on the Ecosystem Committee for the Regional Housing Partnership, and I don't want to spend a lot of time on the history, but I to give you a little bit of history of how that came about, because our regional agency that formed about five to six years ago is actually the driver for a lot of our State legislative incentives and different resources that got put forth, because we were the first one in the State that did this or this, the different things, studying housing and digging right in.

So through our regional planning agency, they started a housing initiative that ended up branching out into its own nonprofit and has become an advocacy group for housing. It's called Housing North. It represents a 10 County, very similarly populated region in Northern Michigan. And we have been struggling, like all of you, with housing and how do we move the needle, and how do we get people to understand the need, and how do we show people the faces of the people that need housing and how to remove any barriers.

So ultimately, funding was achieved for that group. They stood themselves up as a nonprofit, and they've been doing the work. As a result, our State has developed-- we've done two housing needs assessments, actually, one in the beginning when they first started, and I think one last year. And the State has recognized all of the recommendations based on our group showing that collaboration between all of these similar communities, trying to pull together and put our resources together, there are some tools that the state could implement that would help all of us.

So I'm really appreciative to be part of the housing side of it as well, because it does impact every other aspect of all my other roles. So I think for those of you, I think I said the theme for the young people to get involved, getting involved in whatever your community that you want to live in is housing initiative to show them who the faces are of the people that need housing is really important.

Because I think, at the local level, it takes a little bit of nudge for some of those that have of been set in their ways for a while to realize that in order to bring housing for young people, they need to try to change some policy and do some different things. So as a result of that organization's initiatives and some of the other initiatives from our groups in Northern Michigan, our State Housing Development Authority created several pilot tools that are tools available for basically, any size of housing development.

In the past, everyone goes after LIHTC, which is the Low Income Housing Tax Credit, or they go after a pilot for a multifamily apartment or something in a larger community. For us rural communities, most of that is not applicable, or it's too complex for our communities to understand or to try to work on.

So our state has developed some incentives to offer four different levels of new housing incentives. Actually, I think it's five because our Brownfield tax incentive financing program has become housing. Housing is an eligible activity for that. It can be one home, and it's eligible. So your local community has to participate.

We have the traditional pilot programs that have been modified to be more expansive, to allow more different kinds of housing. There's the neighborhood enterprise zone, which is creating a housing zone in your community and set rules according for that. There's attainable housing incentives for housings. Anyone that wants to do a development, a small-scale incremental development from one to four houses.

So Lisa Leedy owns some property. Lisa Leedy wants to put a duplex on it or a one house for rental or something. I could actually apply. If my community is willing to participate in the program, I could actually apply for some sort of tax relief to help offset the costs for housing in my small community.

And then there's the residential exemption, which is for five and up, which is smaller than a pilot, but a little bit larger than that attainable housing. So our Housing Development Authority is taking the lead statewide to allow this.

Now, the community has to get the lift off the ground. So that's where some of these partner agencies come into play, because I don't have anybody who can write that ordinance or that process. I probably could do it if I put a lot of time into that, but I need help. What does that look like?

So our partner agencies in that collaborative environment are creating some of those model. Here's the pathway. Here's what it looks like. Here's what a TIFF is. Some of our community members don't know what a TIFF is, and they don't know how it works.

So explaining that in layman's terms so that every person can understand it and to do that education. There's been a lot of education about terminology and people understanding if it's affordable with a big A or affordable with a. Our community had a lot of resources available in that region. I'll say a lot. We had some resources available for supportive housing, but we had nothing available for workforce housing when this all started.

So we've kind of leapfrogged and been the model for other areas around our State to create some of these, here are some ideas. The other thing we've done is that the same group has created zoning recommendations and a housing-ready checklist so that your community can go through and give this to your town board or your planning commission or your city.

And you can start working through these checklists to see what is your zoning look like. I have a big lift in front of me because my community, we just formed, I'll say just, five years ago, we formed a joint planning commission-- our village, which is 500 people in our township, which was 1,500-- we formed a committee. We're trying to get a master plan off the ground with this joint group, and then we're going to have to write a joint ordinance.

My ordinance right now says I can't have a house less than 1,000 square feet that's 20 by 20 core living space. That means no mobile homes, no small homes, tiny homes, anything like that. And our lot sizes are very large. We're very behind the times on that. But our group is committed to trying to move that needle.

So now, there's a lot of resources available to us through these different partnerships, through the checklist, through some of these other resources, through Michigan Association of Planning. Those agencies are making those tools available to the local units of government to be able to get those things off the ground.

And each community gets to decide what is right for them. So while the legislation and the things have made the tools available to us, each community gets to decide what's the best fit for them. I have sewer in some areas because I'm a Lake Community. Our main industry is tourism and agriculture, but I don't have sewer everywhere, and I don't have municipal water.

So I'm not going to attract some sort of multifamily development. That's not a good fit for me. What's a good fit for my community is incremental development, maybe allowing ADUs or maybe allowing a smaller square foot home, or maybe allowing a quad plex on a piece of property that they normally would only allow a single-family home.

So those are decisions that my community gets to make on their own to try to move the needle of what the right fit is for us versus taking on that whole-- well, here's a pilot, and we're going to try to work on attracting something that doesn't fit our community. So it's a lot easier to get over that not-in-my-back-yard mindset if you're getting the right fit for your community, for the right size.

And for places, those urban areas, they have a team that works on it, and they kind of work in their group, and they move it forward. For those of us in the rural area, I rely completely on all of my partners at the State and at the local level. Lisa works for the Office of Rural Development. Her boss, the Director of the Office of Rural Development, is actually the one who created the housing initiative that we now have that we call Housing North.

So we have looked at this from lenses of how can the local community impact policy. We can't do all of the work ourselves, so how can we work together to create this model for success in our areas? So we have done outreach to developers or groups of people that want to do small infill development and things like that.

We have brought ideas for incremental development, I will say, and how to teach young people. Maybe you want to buy a small building in my downtown and you want to live in the back and do some sort of shop in the front or something like that. How can we make that happen? How can we make resources available to community members so that they can allow things like that to happen.

So those are the things that are moving the needle in our region, and we have had significant progress with that. We had 30-- I think our leakage study or our last one said we needed like 30,000 units in combined with rental and ownership in our area. We haven't closed that gap completely, but we are inching along in each individual community that's working toward it. Thank you.

MOLLY HAMMOND:Very exciting stuff. Look forward to more success stories. So when I was putting this panel

together, I wanted to make sure we had good representation. So we've got someone from Illinois, we've had someone from Michigan, and then I was looking for that perfect person from Iowa to round us out. And more than one person-- I'm not from Iowa, and I have two friends here.

But more than one person that I kept talking to kept talking about Matt Daniels. So I'm so thrilled to introduce Matt. He's the director of operations for Origin Homes. Matt Daniels serves as the director of operations, a custom home builder specializing in build-on-your- lot, single family, new construction.

In this role, he oversees all business activities, including budgeting, managing trade, partner relationships, profit and loss, staff supervision, and customer relations. He has the experience and expertise to help guide buyers through the entire homebuilding process, from selecting the perfect floor plan to choosing the best finishes and from adding personal touches to delivering keys to the finished home.

A seasoned professional, Daniels brings more than 17 years of residential construction experience and knowledge to Origin Homes. He was most recently employed by Iron Crest Homes, where he started as a project manager in 2013 until his promotion to vice president of operations in charge of all high-end custom homebuilding projects from permit to closing.

Besides his work in the field, Daniel's responsibilities included building and maintaining quality customer relationships throughout the entire building process. Prior to that time, Daniels was a construction project manager for eight years, overseeing day-to-day operations and staff in the field. Matt.

MATT DANIELS: Jeez, quite the introduction there. Thanks, Molly. That was longer than I thought it was

going to be. I don't know who sent that to you. OK, so my perspective today is from the building side of it, the developer, the builder piece. And so you've heard a lot about some of the ways to get to, OK, now we have houses on the ground.

So in a quick nutshell, I'm going to try to zip through this because I know I'm standing between, again, you guys and some drinks and some food. So again, just want to say thanks to the USDA, the Federal Reserve Bank of Chicago. Molly, great introduction, again. We are a general contractor of single family homes, and we specialize in the rural areas of Iowa. We bring custom homes and the more affordable workforce housing line.

So our goal is to build in all 99 counties across Iowa. For those that aren't familiar with Iowa, it's a pretty good job from one side to the other. I was at a conference earlier today in Northwest Iowa, and I think I tracked about 300 miles today. So I'm kind of losing my voice, so bear with me. Did that work? There we go.

I won't go through this whole thing, but quickly, my team, a bunch of rock stars. We've been around for about 2 and 1/2 years, but we are a subsidiary of Hubbell Realty Company, for those that are familiar, Hubbell Reality has been around since about 1856. Multiple divisions, multiple subsidiaries.

I'm 1 of 4 home divisions that fall underneath that category. So I always like to say people, process, and our product. When you have a great team, anything is possible-- efficiency, transparent communication, and then quality built, timely homes. Staying authentic, staying honest, staying trustworthy. These are the characteristics of people that you want to work with, both in local government and your builder.

Here's a quick view of where we're at today. Again, 2 and 1/2 years into this operation, and you can see our outreach. We're based out of West Des Moines there, but we're starting to really expand. I think we're into about 15 counties now.

We're as far south as Keokuk and Wapello. We recently signed one over in Harrison County, which is about two hours west of here. So again, we've got the platform for the custom side, but we're going to talk a little bit more about the affordable housing piece as we get into it here.

We're seeing a big demand. So we've got people all over the state that are looking for all ranges of housing, and affordability means different things to different people. So if you've got land that's been passed down to you, if you've got land that you inherited or you're trying to build that dream home, that's the fit for the custom side. So we'll just quickly touch on that.

Here's a few of our projects. Carroll County. This is down in Warren County, south, down in Lucas County. And again, for the out-of-staters, I don't want to lose all of you in the details of where's that. But these are all two hours from the metro.

So just to give you a perspective, large focus on outdoor living space, green space, and having their dream home built on their property. A lot of people, this is a long-term investment. People come to us and it's very important to them that this job gets done correctly. So it's not just OK, I'm going to pick a random builder and hopefully, it works out. You gotta do your homework, find the right builder, and make it work.

But a lot of builders, just simply, they don't want to travel. When you're in that metro and you're in that pocket, 45 minutes is about as far as you're going to see. So we've decided to flip the script and say, OK, that's going to be our niche. We're going to go outside the metro and figure out a way to do this.

So here we go. Rural housing. How do we creatively reconsider how to grow rural Iowa for long-term success? Each community is slightly different. The need is slightly different from one to the next, as you've been hearing all day. So that's why we're taking this unique approach.

So a few years ago, when we started this campaign, I was getting emails, I was getting calls, I was getting texts, and I needed a way to bridge the gap and bring all the information together. So what you're seeing here is a spot on our website. This is our Building Your Community page.

We've had over 40 communities fill this out. And some of the questions that you're going to see on here, who you are, where you're from, what are your homebuilding opportunities, who are your major employers. It was great to hear from the folks down from Knoxville, from Weiler because I'm actually going to talk about Knoxville today.

But what are their incentives with those major employers. How can we attract people to your communities? And have you completed your housing readiness assessment? That's something that Lisa was just talking-- sorry, just talking about was the housing needs assessment.

The ICU extension office is familiar with that. That's one of our requirements that you're going to see on this page. If you don't have a readiness assessment, come back and talk to us in a little bit because you're not ready for us.

One of the most critical pieces. Do you have shovel-ready, buildable lots? Some people think that they're ready. Some people have an idea that they're ready. But you gotta show us. Show us that your infrastructure is in place. Show us that you're ready for it with all your utility connections and that you have a paved road. And if you have that, you just jumped down the list of where we're headed next. So again, there's dropdowns on there that talk about all of this stuff, but again, I won't go into all the detail on it.

We created this just as a quick guideline. What I was just talking about. Right in the middle now, you're ready. We could come to your town and start digging tomorrow. We have shovel-ready lots, and we have city approvals. We have local support, and it's time to get going.

Next, you've got some work to do. Maybe you've met with your local economic development group like Dan that was here earlier. You've had a few visits maybe from city and county combination. You're actively vetting that out. But we need to talk more and get things moving.

And then later on, you're kind of on the radar, but your funding is not in place, your infrastructure is not there yet, but you're getting closer, and so we're having these talks. Something to remember when you're trying to attract builders and developers is, I'm not going to dump it. But if I did, path of least resistance.

Where are we going to go? We don't want to run into hurdles. We don't want to have a bunch of issues with-- I understand change is hard. And when we say boots on the ground, we mean it. These are the boots I wear every day. There's drywall dust on the bottom of these. We come out into the communities, we shake hands, we talk.

I want to meet with employers. I want to meet with people so that they can get excited and we can get excited. It doesn't work if I have products sitting in your town around the community that's not moving. So it's on the city's best interest, the county's best interest, my best interest that we do our homework, we come together, we make this work.

OK, sorry. Quick one. So what does our research show? Of the 40 plus housing assessments that we've had, the discussions we've had, we've got little to no new housing inventory and no market movement. So we've got a lot of buyer-to-buyer stuff going on. Small towns, rural Iowa, Facebook.

Hey, my neighbor selling his house, so these things don't hit the market. So we've got no comps, which makes it hard for the banks. We've got no appraisals. That makes it hard for the builder. So we've got work to do here. We need to grow our population.

People want to live, where they work. We were just talking about that with Knoxville. The labor shed studies are showing commuters are traveling 20 minutes or more to a lot of our rural communities. Businesses need and want to invest and grow in their communities, and we can't do this without housing.

Lastly on there, it's not affordable. It's out of our price range. OK, think differently. We have to think differently so that we can create differently. And how are we going to do that? Well, here's a few ideas. So we need the support of the city councils, the city officials, the local regional economic development organizations.

That's your GDCs, your CDC dance team, Up in Ames. That's just a few, but there's a whole bunch of them in Iowa that have band together, 11 counties here, 7 counties there. And how can we move as a region and stop thinking about my city of a thousand people. Let's keep it a bigger picture.

The Housing Readiness Assessments through the ICU extension, region 12. These are critical to our paths forward, and this really helps determine those things I was talking about earlier, of which plans to build, which price points, those types of things.

Quickly, our funding mechanisms. Some of these tools that you see up here, this is going to mitigate builder risk. So we can lower the price for the home buyers' We can still create the sense of community and hopefully, gain interest of other builders, local builders.

These options can create. We've seen up to $50,000 in savings.

Again, a quick snapshot of how we vet a community. I'm happy to go into this in more detail, but I don't have time to go through all 10. The reality is, every year, we vet our communities. We try to get seven or eight by January. We try to narrow it down to three by March, three or four. And then we apply for the workforce housing tax credits, and we start going.

So we've got community visits. We've got market analysis that we do. A whole bunch of stuff goes into that. I don't have time to talk about it today.

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- Oh, it's got sound. I didn't know that. Here's a few of our communities.

Veterans district in Knoxville. We're up in Gowrie. Getting ready to go to Conrad, Jefferson. Currently, we have 15 projects underway right now. We're going to start 13 next year that we have in our pipeline.

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These homes range in square footage is, anywhere from 900 to 1,400 and price range from $255,000 to $309,000. And we also have a slab on grade option.

AUDIENCE: I'm coming to Michigan.

MATT DANIELS: You're come to Michigan? Yeah. Road trip. Yeah, I mean, essentially, you're getting the

picture. We're trying to bridge the gap between a whole bunch of stuff, and I could go on and on about each one of our communities.

They're all great. They understand what we're trying to do. But this is a community-- I don't know where it went. Anyway, that was Knoxville.

So we're on to Gowrie. Same idea. Same concept. The reason this one moved quick, this is a town of 1,000 people. They put a road in five years ago. They put 10 lots in, and nothing happened. Nobody did anything. Everybody was scared.

Well, we found it and said, OK, here we go. So within eight months, we were in the ground. Two of those were sold before we started. Manning, another great example, private and public partnership. A local farmer working with the city, trying to figure out how to bridge the gap.

You can see how it's outlined here in blue and in red of what the city owned versus what the local farmer owned. He was willing to sacrifice some stuff for the greater good. The city was willing to work with him, and everybody came together. We applied for the workforce housing tax credit, and we have five homes going over there.

There's me talking again. There's a picture of me talking. That's great. You can see me. Why are we showing a picture of that? But this is versatility. And the reason I'm showing you guys all of these communities is because they're all unique. There's cities selling us lots, counties selling us lots, cities working with the betterment foundations to get us the lots. So we're being creative in how we can acquire the lots.

Then we're also being creative on the product. So in Knoxville, it's an alley-load product, because that's what the community wanted. That's the new development that they put in. So those are 1,200 square foot. Alley-load product. We go to Manning, they're doing a pocket neighborhood, so that's 1,000 square foot house, with lots that are 10 feet, houses that are 10 feet from each other.

So the versatility, taking the custom home side and implementing it to the affordable side, you're not getting the same exact house in 10 different communities. You're getting the house that fits your community needs. So again, here's a quick glance at some of the organizations that we work with.

Great leadership teams. Great people. And these are tremendous resources. If you want to connect with any of them, I'm sure they'd be happy to.

Some quick FAQs. I know we're going to have some more process. Takes about a year from introductions to starting, and then it takes about four to five months to get the houses up and running. For us, local trades, very important. We're actually in the process of trying to grow our regional trade base.

So if we can figure out a way to now bridge the gap with the trades, that's the goal. So if you're within an hour of that city or community, I'm trying to get in contact with those trades. I'm trying to figure out ways to partner with them.

Quite honestly, local trade pricing is a little higher. And so the trades that we have that travel with us from West Des Moines, they competitively bid multiple houses with us, so they understand the quantity. And that's the message that I got to get through to some of our local trades.

Again, I won't go through all of these. I talked about shovel-ready lots already. So thank you, guys. I appreciate the opportunity to present and ready for questions. So appreciate it.

MOLLY HAMMOND: OK, I have so many questions, but I want to start with the audience because I want to make sure everyone gets their questions answered. So we'll go ahead and start here, and then I can just sprinkle some in.

AUDIENCE: Me? OK. So this is mostly towards Matt on this question, but feel free for anybody else to answer this. So in my State, at all levels of government, community organizations, everything, we have done a lot of needs, assessments. We know what the need us. For 30 years, we've known what the need is, and it's--

MATT DANIELS:We need housing.

AUDIENCE: Exactly. And we know exactly what housing we need. And we need 40,000 rural units, and we know exactly what that looks like. Actually, getting builders to come out to those areas is where the actual challenge is. And I saw your slide about incentives and some of those things, but I was hoping maybe you could push a little bit more on that side and give-- I mean, if you have any really unique ideas, anything really out of the box that isn't what you had there.

Because we've done all of those things and it still hasn't really worked for us. So if you have anything else, I would love to hear it.

MATT DANIELS: You bet. I have a whole list for you, actually. Some of the things that we do, we try to get discounted pricing on lots. And when we started this initiative, and I went to some of these cities, they said, well, we can get you this lot for 10 grand. We can get you this lot for 20 grand. I said, how about we take five lots, but I want them for free.

And they kind of looked at me like, you're nuts, dude. Well, of the five communities we're partnering with, that's the case. And they're not always free, but we get them discounted pricing. A lot of times, they waive permit fees. They waive connection fees. They do all the trenching for us. If there's any boring, they step up.

Sometimes they'll provide bedding materials, rock I've got one community that's providing a credit on sidewalks up to $10 back to the builder per square foot. A lot of those types of things will start to attract builders. If you can do more than one house at a time, for us, the benchmark we try to stick around is five.

Because the economies of scale to get your trades to travel. That makes the most sense. You bring an excavator in, they dig five in a row in a day or two. Foundation crew follows right behind them. Framers, I mean, you're off and running at that point.

So trying to figure out ways to get creative on that front and then partner that with those local employers that are willing to throw some skin in the game, as everybody always says. It gets overused. But like what Wyler is doing, $1,000 sign on bonus. And if you're still here within city limits, within a year, you get another $1,000.

And I think if the demand is there and the employers need it, they got to step up too. So it's a combination of all those ingredients.

LISA LEEDY: So just to add to that, in Michigan, we actually have some communities that are putting RFPs out to builders to attract builders. Sometimes it's a rehab project for 10 homes in a downtown area that are blighted or in bad condition. Other times, it might be for a community that wants to build new housing, that wants to provide an asset or some sort of incentive or infrastructure to do that.

And I'll say that that gets communicated a lot of times in the newspaper and on their website. But if you go to your local builders exchange, like mine, there are all over the country or a plan room or your Home Builders Association, you can get that message out through those agencies.

So creating an RFP for development, like you would for Developer Day, having a Developer Day for home builders and tell them all the things that are out there, those types of things would help attract some of the builders that you're trying to reach.

MOLLY HAMMOND: I saw a couple more hands earlier. I want to make sure we get the questions answered,

AUDIENCE: So yes, very interesting conversation. So when you say shovel ready, I come from the public sector. So normally, that means that water is accessible within, let's say, 500 feet, and then the developer extends it to serve the rest of the lots. When you say shovel ready, do you mean the lot or the water is already in the sanitary, sewer has already been extended to those lots?

MATT DANIELS: Yeah, it's right in front of the lot so that our plumber can tap into that. So you've got

everything ready in front of those lots. Power, gas, water, sewer, so that we're not hunting to try to go find that. That's an additional cost that we would have to accrue. So anything to lower and mitigate that risk is what we're looking for.

And again, there's a few different ways to do it, and water is a great example. Over in Manning, they didn't put the stop boxes in. They said, well, can you cover the cost of that? I'm like, OK yeah, this is $500 per lot. We're going to go ahead and do that. It's not a big deal, but at least they had the main line right there.

Other developments like the one in Gowrie, they had the stop boxes in. It was ready to go. So we're seeing all sorts of different things from overhead power to underground and more conventional that we'd see in the bigger metropolis areas that have what I would consider those shovel-ready lots.

But yeah, they're all a little bit different.

AUDIENCE: Hi. I have a question in terms of the market trends and real estate. We're seeing that prices are continually rising, making it less affordable for individuals living, whether it's urban or rural. And so when you think of the rural parts of the US, you generally think of individuals that, perhaps, earn less than those in the urban areas.

So I'm curious to know how do you all deal with the rising cost of real estate to provide housing in your different areas? Thanks.

MATT DANIELS: OK. Yeah, We had to be creative. So one of the funding mechanisms that our first house in Knoxville was actually the people that bought that house, they used the USDA Direct Loan Program. No money down. It was a 4% interest rate. Income qualified.

So our marketing team put together a very large USDA push. We reached, I think, we had eight or 900 people a year reaching out. But that part comes down to the education piece, because of those 800 or 900, he had one contract. So you can imagine the amount of marketing dollars we put into that to get that one contract.

But really, the education piece, people don't understand those funding mechanisms. They don't know that they're out there. And so if we can figure out ways to educate people to get them the information, you'd be shocked. $70,000 $80,000, $90,000 for household income can qualify, and that's combined.

So there's ways to do it, but then, yeah, I mean, as far as the rising costs, the answer that's tough is it's never going to be cheaper to build than right now. I hear people say, well, I'm going to wait for the market to turn, and then I'll build my house. I'm like, why are you waiting?

Right now, we're in a really good bubble of interest rates are kind of-- and they came down, but they're kind of holding and the demand is holding steady. So materials are still down from where they were around COVID, post COVID. So it's a really good time.

I have a lot of custom clients that are like, I'm so glad I'm building right now, because it's kind of that pendulum. With high rates, we get lower building materials. When the rates go down, materials in demand go up. And so one way or another, you're paying for it. So just keep in mind the refinancing, and if you can get to that point and then you can refinance it when those rates go down, that's what I would recommend.

LISA LEEDY: So aside from the financing tools that I talked about that Matt just talked about, informing people of the financial tools is a big piece of that, but also, removing the regulatory barriers. Any additional regulatory barriers create added cost to a home build.

So right now, we have legislation in Michigan that there are 12 bills sitting in our house or Senate, depending on how they got introduced. They all impact land use and construction. Then we had another bill that came through that's being proposed that's going to change the ratio of journeymen to apprentice, plumbers, and electricians. All of those things are going to drive the cost of housing up more.

Requiring EV hookups in every single home is going to drive the cost of housing up. So every time someone has a good idea to do that, there are not very many people in my region that have electrical vehicles or whatever that aren't hybrid. So requiring those to be put in every home drives the cost up for affordable homes that people aren't likely, in my region, to do that.

So then the third piece, I guess, would be education, as far as educating the buyer, the developer, the community is probably the first place you have to start, and then all of the different financing agents. So our region, I'll say, different agencies have collectively brought people together, all of the financing agencies and said, what do you have? Tell us what you have available and throw it on the table so we all know so that all of the economic development partners out there know what financing tools are out there and which ones are changing.

And then the last piece of it is philanthropy, because it's going to take philanthropy in some capacity on some of these to get your community foundation or get some of these groups together to try to move the needle.

RAYMOND LAI: For our area, McLean County, Central Illinois, we're not there yet, but as outlined in the slides, that list of 20-some specific recommendations, the ultimate goal is, really, to address the rising cost issue from the public education to deregulations or loosened regulations or incentives to different incentives available, looking for different opportunities, working with the banking industry, the development, the developers, builders, even nonprofits.

I mean, there are nonprofits trying to address homelessness and housing issues. That's another aspect. So we are starting to implement some of the local governments. They have started looking into revising, updating the zoning code. And so yeah, their efforts, hopefully, it takes time, but that's our blueprint to address the housing issue.

MATT DANIELS: And one thing I would add to that too, I was actually just talking to one of our executive

teams yesterday. One of the biggest issues is the 2021 International Energy, So the IECC, which you guys are talking about. And we need to encourage some consistency. And if we can get to the 2024, it's going to roll back some of the insulation requirements. It's a better perspective, like a prospective path that provides that consistency and better return on investment.

So some of the things with solar, some of the other things that-- there's just such a high cost, and it's becoming a requirement for a lot of places. We don't necessarily need all of that in order to build affordable houses. So there is some legislation involved with getting those codes uniform.

AUDIENCE: Hi. I have a question? Can I jump in? I had the microphone. So my name is Jane Rongerude, and I'm faculty at Iowa State University in the Department of Community and Regional Planning. And I was super excited to hear about these homes being built and hear that they're smaller homes and that there's an effort on affordability.

But I quickly looked up the AMI, the area median income of Knoxville, and saw that it was $57,000 a year, which puts a $280,000 home or a $300,000 home well out of the range of affordability. And I was also excited, Mr. Lai, in your presentation to see that there was an interest in apartments and see that there was an interest, high interest in multifamily and in density.

And so if we think of housing as where workers go at night, I know all of our communities have many workers who can't afford even these new homes with a mind on affordability. And so I'm wondering what you're doing in each of your communities to expand housing choice and address the affordability needs, the full range of affordability needs when you're already struggling to just get housing on the market to begin with.

RAYMOND LAI: Go ahead. A couple of the slides showed that, actually, 2024 or 2023, between the city of Bloomington to Normal, they have approved over 2,000 units of single family, mix of single family, multi-family duplexes. But then we also know that although the developers got the permit or got the zoning approval, they not moving forward as what they had intended. Because the interest rate, because the supply chain issues, because some of the banking institutions, financial institutions, they hesitate to fund public infrastructure.

So there are a lot of issues. So it's not just relaxing government regulations. I mean, they got the plants, the building permits, but they're not moving forward. And that address more than a couple thousand units. So it's not easy. I mean, there are some other factors beyond our control even.

And yeah. So don't have the solutions. We have the same thing. Our AMI, it's almost like what you just said, $57,000, whatever. And it's inflated because some major employers. But we also have the issues of school districts. They're telling teachers, students living in cars.

We have Vivint workers living in cars because they are also people just making just a little bit above minimum wage. It's not everybody. It's no engineer or IT folks making higher wages. So university, they also are facing the same, got different issues. They're looking for more affordable units for PhD students, for students who graduate, but looking for their first job. How do they want to keep them in the community. Have to have affordable housing. How do we attract faculty when there's not enough housing units.

So yeah, we're facing that too. But there are certain things we can do whatever we can within our control from the public-private sectors or nonprofits. But there are things on the federal level, interest rates and shipping and other things that are beyond our control.

MATT DANIELS: Yeah, and for us, in Knoxville-- and that's a great example. When I say affordability, that means different things to different people. There's not a specific demographic that had purchased our five homes down there. There's a young family in one. There's someone close to retirement in the other. There's someone that's a factory worker. So it just really depends on the need of that individual.

So what we're trying to do is specialize in that specific single-family product. We're trying our best to keep the costs down. But our hope is that if you can't afford that house, one of the cases they were living in a house in Knoxville that was probably a $90,000 house that they'd been in for five years. They were ready to upgrade. They were ready to now put that house back in circulation.

Same thing in Manning on the two custom homes. They were living in houses for 10 or 15 years. And then they were getting ready to sell them for the market rate was $185,000 for that house.

So there's part of that mechanism of the housing ladder. I kind of joke that's the ladder. You might start in an apartment. You might go buy a fixer upper. You might be able to make some money in equity on that. It just really depends on that individual.

I mean, my first house I bought as a foreclosure, college students. I didn't have any money. I bought a foreclosure, fixed it up, made some money, and went on to the next one. So it's really going to depend on the individual.

LISA LEEDY: I would answer to that. I would take that to the community and ask the community to participate in that discussion. For me, my community, I said earlier, OK, let me just ask a question. How many of you could not survive if you didn't live in a 1,000 square foot home or more?

So why should I dictate that you have to live in a 1,000 square foot home to live in my community? What gives me that right to do that? What do I care if you live in a 500 square foot home? I don't. I will say that some of our communities, as part of this housing initiative we've had have done some drastic changes to their zoning ordinance to permit those smaller square foot homes, the ADUs.

Now, there's even an initiative to do a second and a third home on that same parcel. Actually, Marv's community changed their zoning. They were one of the first ones in our county that changed their zoning to allow for 500 square foot or up.

Honestly, why should we have a limit on it at all? Construction codes already does. So the construction codes at the State level already has a minimum, so why should we have one at all? It doesn't matter to me if someone wants to live in a larger or smaller house. They'll build what they feel is right for them.

That's not for me as a community leader to make that decision, but we've already done that. So now, we have to back out of the room and unravel that a little bit, because we live in an age where we those of us my age, grew up with big, giant parking lots and malls, hardly ever were filled except for once a year, and a lot of sprawl. So now, we have to think differently because our young people are looking for a different type of housing and a different type of community.

And there's, I'll say, evidence because I've seen studies that show the value of real estate and what it brings to market is actually more viable when it's a smaller square footprint. So we don't need large parking lots or parking requirements for you've got to have a driveway that holds three cars or things like that. We need to remove some of those barriers and let the property owner decide what's best for them.

AUDIENCE: I have a question. This is probably for more on the homebuilder side of things. You talked a little about incentives, and I'm familiar with some of the TIF incentives and how those work. But you mentioned banking, partnering with local banks. And I was wondering if you could give any examples of what some of those partnerships look like or what some local programs look like.

MATT DANIELS: Yeah. So one that comes to mind is Marion County Bank down there in Knoxville. If you purchase a home in the newly established veterans district, they will give you a certain amount of money back or pay for the closing costs on that loan. That's one big one that comes to mind.

When you get into rural Iowa with 1,000 population, a lot of the banks-- the vice president of the bank is serving on the Economic Development Committee or the Betterment Foundation. And so they've got their own creative ways that they're working collectively. I don't know all the ins and outs of how those are working.

But one of the examples I have up in Gowrie is, before I was able to get discounted pricing on those lots-- and the reality is the lots were about $20,000, and I was able to get a discounted price by purchasing five. Before that, they had tax abatement in place. So you pick. If you were going to build a house there, you could pick. Do you want to do a 10-year tax abatement, or do you want to get-- I think it was up to 10% back on your build, up to a $400,000 build.

So how they were funding that, I'm not sure. I doubt it was just the bank. Here you go. But a couple ideas, anyway, that could maybe facilitate something.

LISA LEEDY: If you're a community leader or an economic development in your area, if you invite all your lending people, including the USDA and all that and you just ask them, they'll tell you all their products, and you'll find out that every one of them has something different than what the other one has, every single bank or every single lender.

AUDIENCE:I have a quick question to piggyback. I'm sorry, I'll keep it quick, on the idea of the housing ladder. I was at an event on the Future of Vermont's Economy a couple of weeks ago, and I'm a novice in the world of housing policy, but very, very aware as a young person currently renting on my mother-in-law's land and trying to figure out if we should build or buy in this really, really wild housing market, particularly bad where we live.

So Vermont has about 650,000 people in the entire State. And I think this is probably a uniquely rural problem. But the issue that it seems we are facing is a very large percent of our housing stock. I mean, we're talking upwards of 30% of our housing stock in the State is being underutilized.

So we have a super aging population that's sitting in homes with multiple bedrooms because that's where they raised their kids. And there is no housing for them to move into that's a more right sized capacity for them. And this totally blew my mind. As a person who's not spending as much time as I should be thinking about housing, and it occurred to me, are there other rural places that are facing, what I imagine is a uniquely rural problem, just the sheer lack of housing stock to fill out that ladder.

And if so, are there concerted efforts on the front end to find solutions for folks to transition into housing, just to free up the existing capacity that places have while you wait to build additional stock or--

MATT DANIELS: I wish I had the magic answer for that. But the pocket neighborhood in Manning is a good example of an idea anyway, that these are smaller footprints, and they have HOAs. So of the three we've sold there, they're all either retired or widowed, and they don't want to take care of-- they're moving from the farm, and they're getting closer to town.

They don't want to take care of the grass. They don't want to have to worry about the snow. So it's a really good spot to be in for the pocket neighborhood, a smaller footprint house.

We are seeing the need for slab-on-grade quite a bit, even though we've had some crazy disasters this past year in Iowa. The need for slab-on-grade is there. And I think the aging population would really appreciate having those options, quite honestly, because they don't want to go in the basement to do their laundry.

They want to have everything on the main floor, smaller footprint, and that's what they're after. But as far as the initiative, It's really back to when we talk to our communities, what do you guys need, and how can we bring that, and how can we design it for you? So yeah.

LISA LEEDY: In our more populous areas, there are places that are being built that are that agent place type of community, where they have resources that are a la carte, and you pick and choose. They're typically apartments. Sometimes they're slab-on-grade condos, and they have those resources available.

If you need the laundry services, you can subscribe to that, and you can pay for that. If you want to do the meal service, you can subscribe to that. So they have a la carte things that would help. And those aren't necessarily a fit for my community because I don't think a developer would get the incentives to do something like that in my community.

But we know Marv's stepmother just moved last year into a facility just like that from her home in the rural area because it was too much for her to take care of. My parents, during 2020, decided to sell their house and move into a condo slab-on-grade, and of course, couldn't find a mover, so guess who moved them?

But legitimately, though, I mean, that is a key. And even in my small community, we're looking at, OK, we have a small, little piece of property here that was supposed to be a senior center at one point. And we've talked to that group about what if we did a little small, six unit or something like that, that would free up six homes, that would be single- family homes that they would have, potentially, maybe a young family or somebody to move into to keep moving that stock. I mean, we haven't been super successful at it yet, but it's being talked about, and we're looking at what can we do.

RAYMOND LAI: We don't have anything to add just to say that, also, it's happening in our community. We know people who are became empty nesters, and then they said, OK, we want to buy a newer home because they stayed in their home for 30 or 40 years. But then when they look around, what are my choices and more expensive that they cannot afford. They want to downsize, but actually smaller units, but pay more.

So yeah, that's something. But it's good to raise that, some of the creative ideas to address those.

MOLLY HAMMOND: I think we've hit the end of our session, and it was so riveting. Thank you all so much for being part of this panel.

SPEAKER: Thank you all. I think we could talk housing for about another hour, at least. So just to add on to your question, Norah, senior housing seems to be one of those niche development sectors that aren't encountering the same delays as single family. So there are options, affordable or not. That can be debated.

Then you have the reverse housing ladder, where my parents want to keep their house. They want a place where the grandkids can go. And they feel like it would be a-- near the end of their life, if they wanted to move out of that house. So I totally empathize with that.

OK. What a tremendous day, a tremendous amount of content. How about we give everybody round of applause to the participated.