Providing workforce housing in Pella

Aug 24, 2020 | Keeping PACE with Pella, Uncategorized

Work has begun on a $36 million housing development that will add 94 new single-family houses to the Marion County community

BY KATHY A. BOLTEN, Senior Staff Writer
Business Record
Friday, August 14, 2020
[Note after print corrections designated in parenthesis within article]
Pella, Iowa – The housing report confirmed what most in this Marion County community already knew: Thousands of people travel to the city each workday to jobs in manufacturing plants, educational institutions, medical facilities, grocery and big box stores, and other businesses.
At the end of the workday, the commuters travel back to their homes 10 to 30 or more miles away from Pella, a community known for its annual spring Tulip Festival and deep Dutch roots.
“The biggest issues potential employees had when they turned jobs down or left jobs in Pella was housing,” Pella Mayor Don DeWaard said. “We want to keep our employers here and we want to attract new ones.
“To do that, we need to address the housing shortage we have.”
The city of Pella, in collaboration with Marion County and private landowners and developers, has begun work to increase the housing it has for its workforce, a common issue for many rural communities across the country. 
This spring, work began on a $36 million development east of Iowa Highway 163 that when the first phase is completed will include new infrastructure, 94 single-family houses and 25 townhouses, helping provide the nearly 1,000 new housing units needed in the Pella area by 2025. A 17-acre commercial area is also planned.
Prices for housing in the development will range from $180,000 for town homes to $250,000 for single-family houses.
Prairie Ridge includes more than 140 additional acres that can be developed.
That development, as well as others underway in Pella, is coming at an opportune time.
Lely USA is expanding its Pella facilities, adding a 40,000-square-foot production facility and offices on the campus of Vermeer Corp, The expansion is expected to create 25 new full-time jobs, according to a news release from the Netherlands-based company that produces robotic milking equipment.  (Correction: Lely’s facility will be 108,662-square-foot located south of interchange 44 off highway 163.)
Vermeer, which makes agricultural and industrial equipment, is completing construction of a nearly 500,000-square-foot production facility and office space, replacing two plants that were destroyed by a tornado in 2018. In addition, the company added a new 100,000-square-foot engineering and research and development facility last year, and in January it opened a new Eco Center that processes and manages waste.  (Correction: Vermeer Corporation’s new facility square footage will be 536,510.)
Karen Eischen, executive director of the Pella Area Community and Economic Alliance, estimated that Pella-based companies have added about 800 jobs in the past three years. At least 800 more jobs are expected to be added in the next five years, she said.
But while companies in Pella are expanding workforces, the city’s population has remained stagnant. In 2009, 10,358 people lived in Pella, according to annual U.S. Census estimates. A decade later, the city’s population had slipped to 10,237, the estimates showed.
DeWaard and others attributed the lack of population growth to a shortage of affordably priced housing for the nearly 11,000 people who work in the community. Marion County, Pella, Knoxville and other communities in the county commissioned a study that was completed about four years ago to help identify housing needs.
“The study was prompted by a lot of conversations with our employers that they were having a hard time recruiting employees or keeping them because they couldn’t find anywhere to live,” Eischen said.
The study, conducted by Minneapolis-based Maxfield Research and Consulting, found that 6,567 people who work in Pella commute, some traveling more than 50 miles to their place of employment. Employers told those conducting the study that the lack of entry-level and mid-range housing options negatively affected recruitment and retention. 
“Employees turn down positions, or leave positions, for [jobs] where they can reduce or eliminate their commutes,” the report said.
“When people have to drive more than 30 minutes to work, that’s when job retention really decreases because workers can travel in any direction to find a job,” Eischen said. “It’s really not a big secret: The closer you live to your work, the more likely you are to stay within that community.
“We want our companies to grow and to have the workforce to be able to do that.”
Eischen said the outbreak of the novel coronavirus will likely have little impact on Pella’s expected job growth. The community’s manufacturers produce a diverse range of products needed in the U.S. and worldwide, she said.
Pella Corp. produces windows and doors, and Vermeer produces ag and industrial equipment. “Homebuilding is going very well across the country right now and while there’s been a little bump in the ag economy, the companies make other things as well,” Eischen said.
The housing study concluded that by 2025, Pella needs an additional 966 housing units ranging from rentals and affordably priced single-family houses to high-end condominiums and housing designed for those over 55. 
Pella is not alone in its need for additional housing. Just 82,000 single-family houses were built in rural areas of the U.S. in 2019, representing 10% of new home construction in the country, National Association of Home Builders data shows. In Iowa last year, 20% of new houses — 1,671 of 7,877 single-family homes — were built in the state’s smallest communities, data collected by the Census Bureau shows.
Without the additional housing, recruiting new workers to the area is difficult, especially during times of low unemployment, DeWaard said. Last August, Iowa’s unemployment rate was 2.8%; in Marion County, it was 2%.
While the outbreak of the novel coronavirus caused a spike in unemployment, Pella officials believe that within a couple of years the percentage of unemployed will be similar to what it was pre-pandemic.
A few years ago, RDP Holdings LLC, managed by the Pella Corp. shareholder family, bought about 170 acres of farmland where development of Prairie Ridge is underway. Two years ago, the family approached Ankeny-based ATI Group about developing the ground for single-family houses and some commercial, said BJ Stokesbary of ATI Group, which initially bought 29 acres for the first phase of the development. 
Earlier this year, Marion County agreed to provide financial assistance for the developers of up to $4.7 million to help with the cost of public infrastructure. The financial assistance allows lots to be sold at prices that allow the construction of moderately priced houses, DeWaard said.
Typically, ATI Group starts housing projects with 20 to 40 lots, Stokesbary said. 
“Pella is a very unique market,” Stokesbary said. “You’ve got global manufacturing companies with really good-paying jobs. You’ve got the hospital, [Central] College, and on top of that, it’s a tourist town that attracts thousands of people each year not just for the Tulip Festival, but to its downtown and Red Rock [Lake].”
Existing houses that are for sale don’t stay on the market long, he said.
“It’s a huge gamble to take a job here and then try to figure out whether you’re going to commute or live here in transitional housing,” Stokesbary said. “The demand for housing is just huge.”
Stokesbary said he expects existing homeowners to purchase some of the new houses in Prairie Ridge. Demand will also come from people currently living in rentals and those moving to the community, he said.   
Two homebuilders – Olive & Oak Design Co. and Sage Homes – will construct eight speculative houses with work expected to begin in the fall. Other homebuilders will also be able to buy lots, Stokesbary said.
Newly built houses must meet the pricing goals of the development, he said. “We don’t want to build a $250,000 house and sell it for $300,000.”
Site work at the development began shortly after the outbreak of COVID-19. Stokesbary said there were discussions about whether to delay the project. 
“We decided to move forward,” he said. “The need for new housing is so great here that we believe the demand will exist even with COVID-19. And with interest rates so low, people are feeling confident about homebuying.”