News & INSIGHTS
To improve housing affordability, Des Moines considers changing policies, financial incentives
BY Kim Norvell
Feb 24 2020 | Original Article
Des Moines is considering asking businesses seeking city tax incentives to also provide housing options if they employ low-income workers.
It’s just one proposal for how the city could use its policies, zoning ordinances and financial incentives to ensure its mix of housing includes options are affordable for its workforce.
A workforce housing study released in May found central Iowa is short 57,179 new housing units for the region’s anticipated job growth in the next 20 years. Nearly half of those new workers would need housing priced below $175,000 for an owner-occupied home or below $1,250 a month for a rental.
The Des Moines Area Association of Realtors reported in December that the median home price in its listings was $229,000, while CBRE/Hubbell Commercial, a brokerage that tracks the industry, said median rent across the metro is $935 a month. Downtown, it is $1,189 per month.
Still in the planning stages, the new policy may require businesses seeking incentives to report how many low-wage workers they employ and show where those employees would live. There may be conversations about contributing to nearby housing projects or to Section 8 rental subsidy vouchers, which are offered to two-income households that earn a combined $17 per hour or less, said City Manager Scott Sanders.
“We will need to have that conversation with that employer, which they will not like,” Sanders said Monday at a Des Moines City Council workshop.
The study’s biggest concern is aligning affordable housing with low-wage job centers, such as malls, fast food restaurants and data centers. Housing is considered affordable when it costs no more than 30% of the household’s income.
“We very much have a segregated housing pattern” in the region, said Erin Olson-Douglas, Des Moines’ economic development director. “ ... At the lowest income levels, (workers) don’t have choices about where they are living.”
And that gap will only widen unless cities and counties take a proactive approach to attracting and/or preserving affordable options for their workforce, she said.
While the 2019 study looked at cities across the Des Moines metro, Iowa’s capital city is leading efforts to ensure housing is affordable for its low-wage earners, starting with the downtown core. It plans to study neighborhoods and other job corridors in the coming months, Sanders said.
About 25% of downtown’s housing units are affordable; the rest are market rate. Given that a majority of downtown’s workforce earns higher wages, that seems to be the right mix that is “meeting the market,” Olson-Douglas said.
But the city is acutely aware that 25% gap could widen, she said.
Apartments built a decade ago used federal block grant money that required income restrictions. But those requirements will eventually expire, giving landlords and developers the authority to charge market rates.
The city’s economic development team is actively gathering those deadlines for each downtown building, and is starting conversations with developers about keeping affordable units open and available.
“It would be less expensive for us as a community to participate in the preservation of affordability, than it would be for us to participate in future new construction and making those (new) units affordable,” Olson-Douglas said.
Des Moines also is considering:
Requiring affordability as part of its urban revitalization plan, which gives tax abatement to homeowners or developers who make substantial improvements to existing homes.
Requiring developments on city-owned land sold to developers to include mixed-income housing. The city has discussed this type of requirement for the East Village’s planned Market District.
Strategically purchasing land in areas where affordable housing is needed to hold and sell to developers willing to build that type of housing.
Requiring anyone seeking city financial incentives for housing projects to reserve a portion of their units for low-income renters. Under an informal policy, the city currently asks downtown developers to hold back 10% of units for renters earning 80% of the area median income. It is considering lowering that requirement to 50%.
Councilman Joe Gatto said while he’s happy to hear the discussion happening in Des Moines, he hopes all communities in the metro begin to plan ahead to tackle the problem.
“This is a regional problem. Everyone needs to do their part,” Gatto said. “If you have low-income paying jobs in your (city), then you need to have a form of affordable housing for folks to work (there).
“This is a fundamental problem we need to solve — all of us together.”
Other metro communities plan to meet in the coming weeks with Polk County Housing Trust Fund and other housing advocates to discuss their next steps.
Kim Norvell covers growth and development for the Register. Reach her at knorvell@dmreg.com or 515-284-8259. Follow her on Twitter @KimNorvellDMR.