The El Dorado City Commission hopes to encourage some new housing starts by partnering with El Dorado Inc. to offer incentives to builders.
The Commission approved the city’s participation in the program during their meeting Monday evening.
The recommendation came to the Commission from an ad hoc housing committee. It also was recommended and approved by Inc.
“One of the issues the committee had recognized was currently the number of homes on the housing market is very low with only four new homes available in the community,” said Linda Jolly, Inc. executive director. “With no new permits pulled in 2013 and only five in 2012, we felt we needed to encourage building with some spec housing.”
Jolly said they were asking the commission to designate funds to encourage four new spec homes for single families.
Through the program, they propose to take applications from builders, with minimum requirements of being three bedroom, two bath, with a two-car garage. The building plans would be reviewed by a committee for approval of the floor plan and location of the home.
“The ad hoc committee would be responsible for developing the details and parameters for the program,” Jolly said. “We’re looking for homes that appeal to a wide variety of buyers.
The builder would have 180 days to complete the home, then if it hadn’t sold within six months, they would receive interest reimbursements monthly for 1/12 of 5 percent of the building permit amount up to $10,000 or until the house sold, whichever came first, as well as special assessment reimbursement up to $150 a month. These would be available for 12 months.
“What we’re proposing is the allocation be up to $11,800 per home,” Jolly said. “The city would set aside $23,600 and El Dorado Inc. would do the same.
“It is our hope with the homes being built with the lack of housing on the market, the homes would sell within that first six months and we won’t pay much or a very small amount of reimbursement.”
The guidelines for what they want comes from people they surveyed in focus groups as well as a study compiled by WSU. From that report, the housing committee went back and amended their recommendations to the commission.
Commissioner Nick Badwey asked what other requirements they were considering.
“Some of the discussion that comes up is the need to look at a house that appeals to a wide variety of people,” Jolly said.
Some things that have been mentioned included if there will be a yard, how much of the home is finished and the livability of the home.
Page 2 of 2 - The committee looking at this is made up of an appraiser, realtor, lender and member of the Commission and Inc.
Badwey also asked how long the home would have to be listed on a multi-list and if that would require a realtor to sell the home rather than the builder.
Jolly said this came up after the presentation to Inc. so they haven’t discussed that yet.
She said the thought process was the home be available to be shown and everyone work to sell it.
She did say if it wasn’t on a multi-list a realtor not from El Dorado may not know about single houses being built in town.
“The way I’ve understood it it is more of an insurance policy than anything else,” Commissioner David Chapin said. “The good thing about it is it probably won’t cost us any money, the hope of it is.”
The program was modeled after a similar program in Newton 15 years ago. With that one, they payed a few months interest on one home.
“It’s a lot of risk for them (builders) to go out there coming out of the kind of market we’ve had and build spec houses,” Jolly said. “We hope this will spur additional housing to be built.”
Commissioner Shane Krause asked about the Neighborhood Revitalization Program, which would still be available.
Krause also asked from where they city portion would come.
Herb Llewellyn, city manager, said they have three different economic development funds and they would take it from one of those.
“I think this is a good program,” Commissioner Bill Young said. “I think it’s a good opportunity to get some spec homes in the town. We have a couple of new homes that have been on the market for a while and for some reason don’t appeal to people looking for homes.”
Chapin added that sitting on the outside looking in one may ask what they are doing, but from the inside looking out, a person would understand why.
“I was amazed what I learned through this,” he said. “I think it’s something, once again, government can do to move forward some development which pays for itself in the future.”
Mayor Tom McKibban added, “This was the first step to meet an immediate need we felt was surfacing right now.”
The commission approved committing half of the funding for the program 5-0.