Jump-starting construction of single family homes
County commissioners look at offering financial
incentives for new homes meeting FHA loan requirement
By Neal A. Shipman
Will financial incentives help spur the construction of much needed affordable single-family homes in Watford City, as well as Arnegard and Alexander?
The McKenzie County Board of County Commissioners hopes so. And the board is now giving serious consideration to allocating $1 million of county funds in the way of financial incentives to help jump-start the construction of new single-family homes that meet the $315,000 FHA maximum loan restriction in the county.
“There is a big backlog of people wanting to secure FHA loans,” stated Commissioner Gene Veeder, during the commissioners meeting on Tuesday, Feb. 19. “We want to do something that the developers can move forward with. This program is designed to help the first- or second-time home buyer who can’t meet the FHA requirement.”
The lack of affordable single-family housing in Watford City and elsewhere in the county is at a critical stage, Joel Brown, McKenzie County Job Development Authority (JDA) chairman, told the commissioners.
“In the past several years we have seen a shift in people wanting to work and live here,” stated Brown. “The issue is we don’t have affordable single-family houses. And we can’t attract workers without housing.”
A little over a year ago, the commissioners tasked the JDA with addressing the housing issue in the county and since then Brown says the board has been trying to come up with a plan that would use incentives to get new home construction started.
According to Brown, if the county commissioners give their final approval to the proposed incentives, county funds would be used to help buy down the infrastructure costs associated with the purchase of a new home that qualifies for the program.
“What we have learned in our research of new home construction costs in Watford City is that there is about a $50,000 cost that is associated with providing water and sewer, street, curb, gutters and sidewalks to the price of a home,” states Brown. “And that puts the price of a $315,000 home at $365,000, which is outside the FHA loan limit.”
It is Brown’s and the commissioners’ hope that if the county can help reduce that $50,000 cost, contractors will begin building new stick-built homes that meet the $315,000 FHA limit. And buyers will start snatching up the new homes.
But according to Brown, there will be several restrictions on homes that are eligible for the financial incentive.
First, the home cannot sell for more than $365,000. And second, the new stick-built homes must be within the city limits of Watford City, Arnegard or Alexander.
“Right now we are looking at the incentive as being a five-year forgivable mortgage,” states Brown. “And the homeowner must live in the home as their primary residence for five years.”
Brown says the five-year requirement will help protect the county from having people purchase a home and then being able to flip it for a profit.
“Meeting the demand for new homes in the $315,000 housing market is what we are targeting with this program,” states Brown. “New homes that are selling for over $365,000 will not qualify for the incentives.”
According to Brown, he is hoping that the county’s $1 million will help jump-start the construction of between 20 and 30 new homes this spring and summer.
“Right now there is a big gap in the market for the first-time home buyer,” states Brown. “There really aren’t any homes that are on the market in the $315,000 price point.”
While creating financial incentives to help spur new single-family home construction is an arena that the county commissioners have never stepped into before, the board was unanimous in the JDA moving forward with holding a series of public meetings on the proposal.
“We have to have homes or we can’t grow,” stated Tom McCabe, Commission chairman.
And calling it a job development issue, Veeder said he was comfortable with the concept.
“If we can get 20 to 30 new homes built, it would be a big piece of work for us,” stated Veeder. “There are other communities that do this.”
Veeder also shared with the board a conversation he had with one company which had 19 workers that are commuting to Watford City to work.
“They want to live here,” stated Veeder. “We want people to live here and not in Williston, Dickinson or Minot.”
While Watford City has seen a quadrupling in its population in the last several years, Brown believes that more growth is coming. All that is holding that population growth back now is the lack of housing.
“The heavy oil development in the future is going to continue to be in McKenzie County,” states Brown. “I’d like to see this incentive program happen and to have an immediate impact on our housing issue.
According to Dan Stenberg, JDA executive director, there will be public forums at 12 noon and 5:30 p.m. on March 12 in the commissioners room at the McKenzie County Courthouse to help explain the program and as an opportunity for public comment.