New study reveals shortage of affordable housing in River Falls

By Sue Odegard

A 2-year housing study identified potential homebuyers with incomes at or below $50,000 annually and UW-River Falls students who want to live off campus as having the greatest need for affordable housing in the city limits.

It also revealed that developers could be discouraged from building here because of the high rates for development costs.

According to the report by Cedar Corp. of Menonomie, costs for the preliminary plat, park dedication fees, final plat, and letters of credit or bond are about 30-50% higher in River Falls when compared to Menomonie, Hudson, New Richmond and Eau Claire. Also, the time needed for approving those documents is "extremely lengthy," the report showed.

It's no secret that housing is in short supply in the city. The City Council has been focusing on meeting those needs in several ways.

The council hosted public meetings, approved a door-to-door study and directed staff to apply for a $750,000 Community Development Block Grant (CDBG) to help low and moderate income home owners get funding for no-interest home loans.

The city hired a consultant, Kathie Lenz of Cedar Corp., to prepare the grant. It would provide the city with funds so it can award no-interest loans for home repairs, the purchase of existing homes, and repairs to low and moderate income home rental units.

Grant funds could be loaned at zero percent interest to eligible low and moderate income home buyers to assist with the down payment, closing costs and needed repairs. Loans would not need to be repaid until the home is sold or is no longer listed as a primary residence.

Funds could also be used for repairs including siding, roofing, furnaces, door and windows, structural, plumbing and electrical repairs and for accessibility modifications for a disabled family member.

The grant would provide about 15% for administration of the program and up to 20% (about $110,000) for neighborhood revitalization activities. That money could be used to prepare sites for development, such as grading, seeding, topsoil, sidewalks, utilities, street and curb and gutter improvements.

Lenz said Monday the grant award winners had not been announced by state officials. She expected to hear by the end of February.

City staffers were also asked to look into donating 4-5 acres of land south of W. Maple Street and east of the city limits along a dirt road that leads to the sewer plant for the construction of homes for lower to moderate income families. There is an existing road and electric utility lines running north to south there, with water and sewer adjacent to the north side.

Seven units could be built at the site, some with cost-saving features like shared driveways. The home prices would range from $70,000-$110,000.

Study results

Meantime, the housing study is being discussed by city officials.

Ann McAlpine, executive director of the River Falls Housing Authority, chaired the local housing needs study committee. Other members include: Bob Baldwin, Paul Schwebach, UW-River Falls Campus Planner Dale Braun, City Finance Director Julie Bergstrom, City Planner Buddy Lucero and City Senior Planner Tony Steiner.

Five housing goals were identified:

Provide an inventory of housing types and costs

Identify target populations lacking affordable, appropriate housing

Identify parcels within the city to develop or redevelop

Identify policies that inhibit housing development within the city

Recommend actions and programs to alleviate the identified problems

The study showed there are an equal number of owner-occupied and renter-occupied residences in the city (2,073 owner units, and 2,059 renter units, with another 100 available this year). The vacancy rates for both is "substantially below recommended guidelines," the report showed. That is driving up costs and limiting choices for city residents.

In addition, the costs for owner-occupied housing appear to have increased dramatically since 1998 - nearly 16%. However, household income has not kept pace with the increased housing costs.

That means the majority of local jobs no longer provide wages at a level needed to purchase a home in River Falls and the number of homeowners who work in other communities (particularly in the Twin Cities area) appears to be increasing, the study showed.

To counteract the problem, a number of developers are building more twin homes (side-by-side homes) and duplexes. From January through September of 1999, more building permits were issued for twin homes and duplexes (32) than for detached homes (23).

The study showed that rental rates have been driven up by low vacancy rates, in addition to pressures from the student rental market. The rates for many single family homes converted to student rentals can exceed $1,200 per month. As a result, landlords find it more profitable to rent to students who can share rental costs than to traditional families, who typically can't afford rents at that level.

Target populations

The study outlined several target populations as having the greatest need for affordable housing:

Potential home buyers with household incomes at or below $50,000 annually

Renters who need or want affordable housing with three or more bedrooms

Low and moderate income renters

UW-River Falls students who want to live in decent, affordable housing off campus within the city limits

Owner and renter households in substandard housing who need financial help to make needed repairs

The elderly - especially those who are frail

Households who want handicap-accessibility modifications

Currently there are 330 acres of property within the city limits that offer a potential for additional residential development.

The two largest properties that have existing platted lots and preliminary plats in process are the 40-acre final phase of Rolling Hills off W. Maple Street - which will allow for 120-130 single family homes - and a 20-acre property south of Rocky Branch Elementary School.

The largest parcel for multi-family housing is a 7-acre plot on Cemetery Road, the future site of Stonewood Apartments, a 100-unit project recently approved.

How to minimize the existing problems

The study outlined several suggestions for correcting the problems.

Modify subdivision policies and procedures

Develop an annual Housing Action Plan - incorporating programs, activities, policies and funding sources the city selects as most appropriate for the community

Establish a Housing Coordination Team to monitor the implementation process, address issues as they arise, and maintain data for developing and amending the annual housing action plan

Work with the River Falls Economic Development Corporation and/or the River Falls Housing Authority to develop affordable owner-occupied housing

Establish a goal of ensuring that 20% of all new owner-occupied and renter-occupied housing developed each year is "affordable" (defined as paying less than $600 per month for mortgage, taxes and insurance.) A priority is also to provide housing that is available for rental or to purchase for low to moderate income families at 30% of their gross annual household income.)

Local tallies

Of the 315 surveys mailed out to local residents who are now renting their housing space, 93 were returned (about 30%).

For rental housing, a market with less than 5% vacant units is considered "too tight" or undesirable. According to the 1990 census, the renter-occupied vacancy rate was 2.7% in River Falls.

For those who are in the home buying market, it is important to know that the average sale price for a home in River Falls increased about 39% over the past 5 years - from $80,000 to $112,000.

Nearly half of the homes sold in the city through Realtors in 1999 sold at or above the asking price (nearly a quarter sold for more than the asking price).

Property taxes and utility costs add approximately $175 per month to the cost of an $80,000 home and $380 per month to the cost of a $200,000 home.

The minimum vacancy rate for owner-occupied housing should be no less than 1.5% in order to allow sufficient choice for homebuyers and to keep prices from becoming artificially inflated. Census figures from 1990 show that in River Falls, the rate was 1.3%.

Here is a sample of the responses from those who filled out the survey.

"We can qualify for a $90,000-$120,000 home, but could not really afford those kinds of payments."

"There is no happy medium in housing. You have either low cost (under $100,000) housing that needs major work or you have houses that most can not afford unless they find employment outside of River Falls. It's very difficult to afford to live and work in River Falls."