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Housing Limits and Workforce (Sponsored Content)

SBJ Economic Growth Survey: Workforce Development

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Limitations on housing in Springfield may hinder efforts to grow and develop a strong workforce, according to city leaders.

“Workforce and talent recruitment are essential for the health of our business community and the future of our region,” says City Councilperson Heather Hardinger, whose career has focused on workforce and economic development. “We are not exempt from the national dialogue regarding a workforce shortage.”

That’s why developers say closing the gap on available housing in Springfield that low- to middle-income earners can afford is an important part of the community conversation.

“The quality of housing, or the affordability of the housing, is one of the things that influence people to move to a location,” says developer Titus Williams, president of Prosperiti Partners LLC.

That’s reflected in Springfield Business Journal’s 2021 Economic Growth Survey. Respondents ranked talent acquisition and a skilled workforce among the top three most important business concerns over the next five years. And according to nearly half of the respondents, housing prices have a somewhat to very large impact on recruiting and retaining efforts.

It’s a challenge when there’s high demand and lack of quality housing supply, says Springfield City Manager Jason Gage.

“We have homes in really bad shape that need a lot of repair and are not energy-efficient, and really don’t serve all the needs that we have,” Gage says. “Yet they are typically more costly, in many cases, than the incomes of people who would be more likely to live there and they can’t afford them. So, we have a disconnect.”

Quality rentals that people can afford have long wait-lists, Hardinger says. Craig Edwards, director of development for Bryan Properties, confirms that’s true for middle-range rental properties his company has developed. While Bryan Properties doesn’t develop low-range rentals, Edwards says the gap in housing is a clear barrier for low-income workers.

Housing plays a role also in talent attraction and retention, especially among college graduates and younger professionals who seek an urban lifestyle with quality-of-life amenities.

“Walkability is a big factor for us, with the bike paths or pedestrian trails to markets and restaurants and entertainment venues. It’s really important, and I think towns like ours in the past have kind of ignored that,” Edwards says. “That’s something that we, as developers in the area, should focus on,” he says.

Cost to Build
Factors contributing to building costs impact a developer’s pro forma analysis to project financial returns on an investment. As costs rise, so do resulting rents. Developers won’t invest if projected cash flow doesn’t work and a profit isn’t achievable, according to Edwards and Williams.

“That’s just economics 101,” Edwards says. “We have to pass that cost to our clients.”

Developing in Springfield can be more costly than in outlying areas. For one thing, there’s a lack of undeveloped land – common in growing cities, Williams says. Plots that do exist may be undesirable. That’s why redevelopment is more prevalent inside city limits, Williams says. Whether purchasing land with existing structures to demolish and build new, or to rehabilitate an old building, both are more expensive than starting a ground-up project, he says.

One problem with repurposing land for multifamily units: Unhappy neighbors. In his Commercial Street development, Williams had to reduce the number of planned units because neighbors objected to his project’s density. Neighborhood objections to a Galloway Village development have made several local headlines. It’s a known issue.

“There’s a whisper in residential neighborhoods that they don’t want multifamily in their backyard,” Edwards says.

Zoning issues – sometimes related to neighborhood objections – can drive up costs with delays or reworked plans.

“Zoning is a huge issue,” Williams says. “It’s not something to go into lightly. You have to make sure that you have your zoning before you buy the property – or don’t buy it.”

Meeting Springfield’s stringent building codes is another expense, Williams says. “Building codes increase cost of construction because of what you have to do to the property to get the certificate of occupancy and permits,” he says.

Neither Williams nor Edwards say codes are excessive, but they are more strict than in surrounding areas.

No matter where someone builds, rising material costs and lack of availability have added to the bottom line. “Lumber, copper wire, PVC pipe, windows, appliances – all those other things that go into a structure are at all-time highs,” Williams says.

Development of any kind is inherently risky, Williams says. That’s why some municipalities offer economic incentive packages, such as tax abatements, to attract developers. A tax abatement can offset cost by locking for a period of time the assessed taxable real estate value on purchased property, he explains. That can help a developer forecast the potential cash model. Reduced costs can result in lower rents. Municipalities have the right to restrict how tax abatements are used, and Springfield has made them more difficult to obtain in recent years, Williams says.

While there are benefits to building in Springfield, such as infrastructure, it’s generally less costly to build in surrounding areas, Edwards says. With more land available, you can increase density, which further mitigates cost. That’s why the same type of apartment in Nixa or Ozark might rent for $800 versus $1,100 in Springfield, Edwards says: “That’s why a lot of people do move outside the city.”

A Community Problem
Hardinger says taking a regional approach to housing can be part of the solution. There are great communities with more affordable housing in the 417 area, whether renting or buying, she says. Gage agrees that housing in outlying areas helps ease the issue of availability, especially for new single family home construction. Even so, he says, “We don’t want to, over time, cycle downward like we’ve seen other core cities do. So we need to figure out how to be more competitive.”

City Councilperson Richard Ollis says development is harder in Springfield with its current city codes and plotlines. He thinks the city needs to modernize zoning practices for more creative housing options like some being implemented in other communities. Housing and development are part of community discussions related to Forward SGF, the comprehensive blueprint plan in development for Springfield’s growth over the next 20 years. The key is variety, Ollis says. For instance, Springfield lacks what he calls the “missing middle” – townhomes, row houses and condos for mixed use. If done wisely, Williams says, the city’s comprehensive plan will embrace development, strategically determine locations for expansion and explore tools the city can use to encourage it.

Gage says Springfield really can’t compete with outlying communities for new single family homes so the focus has been on developing higher density housing areas, including those with amenities that appeal to young professionals or empty-nesters. “We can create a quality of place that draws people into our community,” Gage says. While the city can’t really influence market forces and costs, helping contractors work through government processes is important. “Our approach is to try to have efficient processes, try to eliminate surprises and try to be fair,” he says. “We know that if something delays, that creates more work, it can add costs.”

Rehabilitating older houses to facilitate entry level purchases could also narrow the housing gap, Ollis says. That’s a goal of Restore SGF, an initiative patterned after a program in Des Moines, Iowa, that encourages public-private partnerships to renovate existing homes so they can be purchased at affordable rates by first-time buyers. Springfield’s northwest area is particularly ripe for redevelopment, Ollis says. The first step, Ollis says, is to conduct a comprehensive study to examine factors at play in Springfield’s housing limitations. It’s hoped funding for the study will be approved through the American Rescue Plan Act.

The program is not meant to replace what’s going on in the development community, Hardinger says. Rather it’s another way to invest in our community by rehabilitating rundown neighborhoods and abandoned houses that could “use a lot of love,” she says. “Programs like Restore SGF and other initiatives around housing are really crucial, not only to our talent attraction efforts as a community but also to keeping folks local,” she says. “Restore SGF wants to help provide some additional support to families who want to become homeowners and help folks know that this can be in their sights.”

Also, she says, projects like daylighting Jordan Creek and the Grant Avenue corridor plan will encourage development because people like to live near those kinds of amenities. Adding infrastructure like high-speed internet and improving schools enhances Springfield’s attraction to businesses, workforce and a growing trend of remote workers. Edwards agrees: “Jobs, housing, lifestyle, convenience, it’s all one package. When I’m choosing a place to live, where am I going to have the happiest, safest lifestyle? It all comes into play.”

Edwards and others say it’s especially important to improve the community message about housing limitations, and how development can help ease those limitations. Neighborhoods have been very resistant to change, Ollis says. “If Springfield wants to become a city of the future, neighborhoods need to be educated about modern zoning and what modern living arrangements look like as we move through this century to the next,” he says.

Gage agrees some new developments in Springfield have caused concern. “That’s because we have a sense of history. We have a sense of scale; we have a sense of preservation. Those are all good things and we have to be conscientious of that.” The city’s job, he says, is to help facilitate compromise by working with developers on scale and scope and to find the right character for a neighborhood as best they can while still encouraging development.

Bottom line, to compete with similar markets like Des Moines and Bentonville, Arkansas, for new business, workforce and talent attraction, Springfield must reduce the gap in quality housing a workforce can afford, increase multifamily complexes with modern amenities, and make it possible for families to sink roots in Springfield with the purchase of their first home.

“Development is not a bad thing. Your neighborhood growing and your town growing is good for everybody,” Edwards says. “We as a community as a whole need to concentrate on uplifting our community, and development is key to that.”

Solving the housing shortage would help ensure Springfield’s strong future, Hardinger says: “What are we creating for our future generations? In five years, 10 years, what opportunities and assets are we leaving behind for our kids and our grandkids? Those are the things I think about.”

This content brought to you by Prosperiti Partners LLC and Bryan Properties.

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