July 13, 2024

Housing Finance Development

It's Your Housing Finance Development

Sturgeon Bay Focuses on Affordable, Single-Family Subdivision

Sturgeon Bay’s Finance/Purchasing and Building Committee recommended an agreement for engineering and surveying services for 5.5 acres of city-owned property on the west side where the Common Council wants to develop affordable, single-family housing.

The committee backed a $58,000 agreement with Stantec for the land fronting the west side of South Hudson Avenue and the south ends of South Fulton and South Geneva avenues.

Community development director Marty Olejniczak said the city has been looking for a developer that could build homes in the $250,000-$300,000 price range.

“It’s been tough,” he said. “As you all know, everything’s out of whack when it comes to infrastructure and construction, but recently we’ve been working with [developers] Paul and Joe Shefchik, and they were able to design some homes that are pretty cool designs that we think would work well for young families in the Sturgeon Bay area that would price out around [$260,000-$310,000], depending on which floor plan they picked.”

Olejniczak said the city contacted Stantec to see how much it would cost to design a subdivision with those types of homes.

“For about $58,000, they can do all the subdividing work, the staking work and the design of the utilities and stormwater,” he said. “Not a bad price. It works out to about $2,500 a lot.”

Olejniczak said the surveying and engineering would need to take place for the property, regardless of which firm the city selected as a developer.

City administrator Josh Van Lieshout said the first step in developing the property was subdividing it and doing the design work for utilities and streets.

“I don’t have an issue going forward with this, and I think a price per lot of $2,500 is reasonable for the design, engineering and project staking and so forth,” he said.

Van Lieshout said Paul and Joe Shefchik would like to begin developing the property “sooner rather than later.”

“There’s a strong demand for this housing at this price point, and it doesn’t do anybody any good not starting,” Van Lieshout said.

He said the goal of the development is to build a house that is of “sufficient quality that it will last and be a home that retains value,” yet won’t be “so big that you’re paying a premium for the size. Those things will be fleshed out in greater detail when we get into the development-agreement stage and specify floor plans and materials.”

Van Lieshout said a developed lot with sewer and water, street, curb and gutter usually has around $40,000 worth of costs, which the city would likely absorb to keep a house in the development in the $260,000 price range.

“Otherwise, you’re in that [$300,000-$350,000 price range],” he said.

Olejniczak said the amount of land needed for a stormwater pond will affect the number of lots in the subdivision.

“If it turns out to be not really favorable to the city, you’re going to get 23 lots,” he said. “If we don’t need that much land and we can reduce the size of the pond and get the 24th lot, that would be awesome.”

Van Lieshout said the council’s vote in 2022 to extend the life of Tax Increment District (TID) #1 in the industrial park for an additional year under a provision in state law to provide more revenue to use for affordable housing could be applied to this development.

The council approved a resolution last year authorizing additional property taxes generated from development (i.e., tax increment revenue) in the final year of TID #1, which was created in 1991 for the industrial park, to be used anywhere in the city.

The resolution directed 75% of the final increment funds to be used for affordable housing, and it defines “affordable” as costing no more than 30% of a household’s gross monthly income. The remaining 25% of the funds may be used to improve housing in general.

City treasurer/finance director Val Clarizio said that just under $845,000 was generated by extending TID #1 for another year.

“That’s the beauty of holding the TID district open for an extra year,” Van Lieshout said.

Based on the development being able to generate an estimated $7.5 million worth of housing on the property, and the city receiving around $8,000 annually in property taxes for each $1 million, Mayor David Ward said that would bring in another $60,000 in city property taxes each year.

“That’s the one element that we’ve worked hard to try to find – single-family options, and it’s the toughest nut to crack,” he said. “We have this affordable-housing pool [of money], and to my knowledge, it has no expiration. It could be used to pay for engineering, street development.”

Ward called affordable, workforce housing the “last frontier in housing.”

“It would be nice to have a project where we could start getting some design features, knowing that [we could] use that over and over,” he said.