Is infrastructure too expensive for new development?
Development
As part of the city’s ongoing vision discussions, the city council heard a presentation during their regular October meeting by Community Development Director Tory Niewiadomski on the affordability and feasibility of providing infrastructure to new housing.
Population growth charts show that from 1950 to 2000, the city grew by a rate of about 1.24% and then from 2000 to 2016, slowed to a rate of approximately .68%. By 2040, the projected population for Sulphur Springs is approximately 18,500, and in the county as a whole it is approximately 43,168.
“We’ve had this slow and steady growth over time,” Niewieadomski said. A major growth explosion happened with the opening of Interstate 30 in the 1950s.
Before 1960, the city installed about 50% of their infrastructure to include sewer and water lines, according to city data. Due to rapid growth post I-30, the city installed 31 additional percent of the infrastructure that exists today from the period of time between 1961 and 1985, according to Niewiadomski and city data.
Only 5% of infrastructure has been installed since 2010, according to Niewiadomski and city data.
“If we had a situation came up where a developer asked to build a subdivision in the city and he’s not going to ask for any help in the project … the only thing he’s going to ask is that, when he’s done, he’s going to turn it over to the city and they maintain it. The question is what would we say?” Niewiadomski asked the council.
Currently, Niewiadomski told the council, expenditures between current and optimal spending on sewer and water line maintenance and replacement essentially matches up. Water treatment and wastewater treatment as well as overall maintenance is matched in current and optimal spending.
However, that doesn’t mean that water and sewer lines in some areas of the city don’t need attention.
“It’s currently over 100 years old today, and they’re designed for about a 75-year life cycle,” Niewiadomski told the council. “We’re on borrowed time on some of these [lines].”
One of those examples, according to Niewiadomski, was Connally Street. The street, which contained 64 properties at an assessed value of $3.56 million had 2,780 feet of water and sewer lines that are, according to City Manager Marc Maxwell, “missing in action in some places.”
“There were some areas where there was no more pipe; it was just a cavern in the dirt,” Maxwell told the News-Telegram. “At that point, you might as well rebuild it, and the street wasn’t looking that good to begin with.”
The cost to rebuild Connally was $866,062, according to city data. With the amount of property taxes collected from the homes on those streets, Niewiadomski estimates it would take the taxpayers 105 years to afford the repairs to just one street alone. With the newly implemented street maintenance fee, it would only take 86 years to pay off the street, Niewiadomski told the council.
“Even with a million-dollar home, we’re still going to be $5,000 short to providing infrastructure to this home,” Niewiadomski stated, pointing out how property taxes are insufficient to pay for the totality of infrastructure construction and maintenance.
City council member Doug Moore added that in that case not only are property taxes insufficient to pay for infrastructure, they would also not pay for other services such as fire and police.
“Even if we raised property taxes a nickel it wouldn’t do much,” city council member Jimmy D. Lucas told the News-Telegram.
At this price tag, Niewiadomski says, “I think we’ll just be careful when we want to move forward how we grow as a city.”
“Those larger developments occupy a lot of space, and it’s a lot [of money] to serve those lots with infrastructure,” Niewiadomski said.
Local real estate agent and affordable housing advocate Jed Walker agreed.
“Track home builders … there’s no money for them to be made here,” Walker said. “It’s cost prohibitive in terms of infrastructure because you’re going to spend so much money before you even pour your first slab.”
However, according to Walker, the city can’t afford not to add new housing.
Walker estimates that the city needs to build 20 new homes each year “indefinitely.”
“Homes are not built to last forever,” Walker says. “We’ve got entire neighborhoods of homes post World War II. … There’s a huge drop off in quality, and some of those homes aren’t built to last. You have to start clearing out some of those old homes that aren’t kept to liveable standards and start replacing those homes with new homes of quality.”
Mayor Norman Sanders agreed. During the September city vision meeting, he mentioned housing as one of his top priorities, including stopping the growth rate from the city of Sulphur Springs into Hopkins County at large. The current growth rate reflects Hopkins County has nearly double the growth rate of the city at .98%.
“Naturally, we would like to have them [houses] built in the city,” Lucas said. “Ultimately, in order to attract business, … we’re just going to have to settle for wherever we’re built.”
The solution, according to Maxwell, may be in what he calls “onesies and twosies.” These lots are vacant or abandoned lots already served by city infrastructure and within city limits, Maxwell said. Niewiadomski calls this “redevelopment opportunity.”
In value per acre, these pieces of property rank well, Niewiadomski stated. They are currently provided with infrastructure although they contain no businesses. Although they don’t “yield per acre” because their owners don’t pay high property tax, Niewiadomski said, they have a city address and could pay more property tax if they contained residential structures.
“There are other builders who could come home and build two to five homes at a time, but they have to have the lots at a cheap price, and they have to work quickly,” Walker said.
Getting ahold of the lots for development might be a problem, though, Walker says.
“Some people that have those lots are not aware they can get a few thousand dollars for it. You’d be surprised that people don’t even know they own it because it only costs them $20 a year in taxes.”
Lucas, who is watching a housing addition go in behind his own home, is concerned with loosening city code inasmuch as it will drop home quality for new homebuyers.
“There are still builders that are willing to build in the city and go buy our codes,” Lucas said. “I’m concerned if you get too lax you’ve got houses 10 years from now our residents can’t sell them for what they paid for them.”
Lucas advocates for a coalition of the city, economic development corporation and local real estate agents to determine exact levels of housing needs in the city.
Walker, on the other hand, advocates for a marketing campaign to raise awareness of vacant or disused properties that would be ripe to attract affordable development.
Whatever course the city takes, according to Niewiadomski, they aren’t experiencing it alone.
“This is a nationwide problem,” Niewiadomski said. “This isn’t unique to Sulphur Springs. Most cities are dealing with this issue.”