Concordia City Commission Approves Development Agreement for Hospital Land for Developing Moderate to High Income Housing

A Map of the Proposed Rural Housing Incentive District in the City of Concordia
A Map of the Proposed Rural Housing Incentive District in the City of Concordia

With the new North Central Kansas Medical Center scheduled to begin its first day of operation on Monday, November 7th, the Cloud County Health Center Board of Trustees desired a viable re-use of the current hospital property in a manner that improves the community, and they have voted unanimously to gift the existing hospital land to the City of Concordia land bank for the purpose of developing moderate to high income housing.

The Concordia City Commission unanimously approved a Development Agreement with Cloud County Health Center for donation of the property during their regular meeting on Wednesday, September 21st.

The Development Agreement describes the formal boundaries of the property, and its intended use.  The city and CloudCorp have offered a proposal for housing on this property that would include eleven moderate income single-family homes and three to four high income single-family homes.  In order to mitigate risk to the general contractor, no more than two speculative homes may be constructed at a time.  Upon the sale of one home, construction of another home may begin.  Custom homes with a known buyer may be constructed at any time, but must meet the terms of financing methods if applicable.

According to the terms of the agreement, the city will have eighteen months to commence construction and proceed with due diligence, or the hospital may reacquire the property at no cost.  The city bears responsibility for the costs of the housing project; the hospital has no financial obligation.

The Cloud County Health Center Board of Trustees will consider the Development Agreement for approval at their regular meeting on Friday, September 23rd.

Cloud County Health Center Administrator Dave Garnas says housing isn't just a need for the hospital, but a need for every employer in the county, and they are pleased to take the first step in growing the community.

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The new North Central Kansas Medical Center will be opening this fall along College Drive, while the existing hospital building will be razed to useable acreage at the end of the year and into early 2023.

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Mayor Ashley Hutchinson, Director of Governmental Relations/Affiliate Marketing and Public Relations for Salina Regional Health Center, who has an operational and clinical affiliation with Cloud County Health Center, chose to abstain from the vote.

Prior to approving the Development Agreement, the commission met in two Executive Sessions for Confidential Business Data, totaling 30-minutes in length, with Garnas, Cloud Health Center Board President Phil Gilliland, Concordia City Manager Amy Lange and Concordia City Attorney Justin Ferrell.

The Concordia City Commission has identified housing as a priority during the past three years.  Last fall, the Concordia City Commission authorized FIVE RULE Rural Planning of Kearney, Nebraska to proceed with a housing study and market analysis.  A draft copy was presented to the members of the Concordia City Commission and the CloudCorp Board of Directors on August 3rd.  The study revealed that local businesses are struggling to fill current vacancies due to lack of available, affordable, quality housing.  A gap of 245 moderate income homes and a gap of 12 high income homes in Concordia was found.

This year, $5 million has been made available statewide through the Kansas Housing Resources Corporation's Moderate Income Housing program to support either actual housing development, including acquisition of real property, new construction, modular or manufactured housing and/or rehabilitation of existing housing, or infrastructure in combination with actual housing development.  Previously, the Moderate Income Housing program had been funded at a rate of $2 million annually since its inception in 2012.

The Concordia City Commission on Wednesday authorized the city to participate in the competitive Moderate Income Housing grant proposal, submitting an application for $650,000.  The grant proposal, due September 30th, is being written for 15 new moderate income homes to be built over the course of six years.  The new homebuyers will be required to prove their income falls within the moderate income range for Cloud County, and if they choose to sell the home within five years, they will be required to repay a pro-rated portion of the grant funds used to construct their home.

If awarded the grant, City Manager Lange says a portion of the grant funds will be used to pay for construction materials costs, thereby minimizing financing costs and risk of local contractors building new moderate income homes in both the anticipated new subdivision and infill lots throughout the community.  A portion of the grant funds also will be used for property acquisition costs (infill lots) and down payment assistance for homebuyers (new subdivision and infill lots) in an effort to keep these new homes affordable for moderate income earners.

Additionally, the city believes the use of a Rural Housing Incentive District to finance infrastructure construction for the new subdivision will be necessary to keep these homes affordable.  Specifically, the target mortgage for these new moderate income homes will be $200,000 or less depending on homebuyer qualifications and available equity.

Kansas Senate Bill 90, signed into law by Governor Laura Kelly in April 2021, significantly expanded the types of projects allowed in Kansas Rural Housing Incentive Districts to address housing shortages in rural Kansas in particular.  The legislation opens an opportunity for housing developers and communities to fill housing gaps.

The Kansas Rural Housing Incentive District Act provides a financial tool for cities with a population less than 60,000 in a county with a population of less than 80,000, or any county with a population of less than 40,000, to address housing shortages within their communities.  The district works by allowing a city or county to capture the incremental gain in property tax created by the housing project for up to 25 years.  The process involves using the property tax increase created by the new housing project to pay for or reimburse certain eligible improvements. The property tax "baseline" is determined at the time the district is created.  As the developer adds infrastructure and the housing itself, the incremental gain in property tax over the baseline may be returned to the developer as reimbursement for the infrastructure costs.  The incremental increase can be used to pay debt service on bonds issued to fund the project or transferred to the developer for reimbursement for costs incurred.  The city intends to use the revenue generated in their proposed district to pay for the public infrastructure required to serve the newly created buildable lots, including streets, storm sewer, water and sanitary sewer extensions.

On Wednesday, the Concordia City Commission adopted a resolution making certain findings and determinations regarding the need for housing in Concordia and providing the legal description of the property to be contained within the district.  After publishing the resolution, a copy of the resolution and the Housing Needs Analysis will be sent to the Kansas Secretary of Commerce requesting agreement with the findings in the report.  If the secretary agrees with the findings, the city may proceed with the establishment of the district.

Effective combining of the use of a Rural Housing Incentive District with the city’s Moderate Income Housing grant application improves the chances of the grant award.

Mayor Hutchinson publicly thanked the Cloud County Commission and the USD 333 Concordia Board of Education for voting unanimously this month to approve resolutions of support of the planned establishment of a Rural Housing Incentive District.