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ARP dollars could fund affordable housing development in Park Rapids

The Hubbard County Board is considering using American Rescue Plan (ARP) funds to make an affordable housing development more feasible – and attractive to private developers.

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This is one of six possible designs for a housing development in Park Rapids.

The Hubbard County Board is considering using American Rescue Plan (ARP) funds to make an affordable housing development more feasible – and attractive to private developers.

Mary Thompson, executive director of the Heartland Lakes Development Commission (HLDC), described the project at a July 13 work session.

It would cost an estimated $1.55 million to build infrastructure – streets, water, sewer – on HLDC-owned property in Park Rapids, which could then be developed into single-family and multiple-family lots by private contractors, she said. Engineering and permitting would likely cost another $50,000, for a total of $1.6 million.

Because the property is within Park Rapids’ city limits, it is a qualified census tract.

“We would still want to target that moderate-income household, so those with incomes of about $50,000. Using prudent lending practices, they should be able to afford a house of approximately $200,000, and that would really fit within the price parameters of this,” Thompson said. “This design would be relatively attractive for single-family housing developers. The market should be there.”

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Thompson said the project may require an affordability gap, where the appraised value is less than the home buyer can afford in the mortgage. In this particular case, the home purchaser would put 5 percent down and need down payment assistance, she said, which is readily available.

Calling it a doable project, Thompson noted it could be built out quickly and provide another 29 single-family houses within a five-year time period.

The multiple-family housing is “more challenging” because the numbers don’t work out perfectly to make it appealing to developers, she said.

The city of Park Rapids will likely need to acquire some easements, which would be an investment. The city may also need to assist with expenses, she said.

Without ARP support, infrastructure costs to create this subdivision wouldn’t be affordable for developers or potential homeowners, Thompson said.

“We currently have lots sitting undeveloped because people cannot afford the assessments,” said county commissioner Char Christenson.

Business owners have regularly told Thompson that employees are not coming to the area because they don’t have anywhere to live.

“Once you have stable housing, you have stable employees. Once you have stable employees, you have stable businesses and you create economic growth. So it really is something that helps the community as a whole,” she added.

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County Administrator Jeff Cadwell said this $1.5 million investment will generate $6 million in tax capacity.

Cadwell said the ad hoc committees that are reviewing ARP requests could potentially allocate funds by August.

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This is one of six possible designs for a housing development in Park Rapids.

Owner-occupied rehab program

Depending upon the pool of ARP dollars, Thompson said an owner-occupied housing rehabilitation program could be funded.

This program would target substandard homes occupied by very low income households and focus on correcting problems related to health and safety, she explained.

Thompson said, potentially, the maximum amount of assistance could be $25,000 per unit. The term would be a five-year forgivable loan.

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Five years gives an incentive to the owner to stay in the home rather than fix it and sell it immediately.

Thompson said she’s been talking to township boards about this as an eligible use of their ARP funds.

“We’re hopeful townships will be willing to participate and expand reach countywide,” she said.

Related Topics: GOVERNMENT AND POLITICS
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