The Mayor’s Task Force on Economic Development met Dec. 8 to discuss a critical need to provide more affordable housing. The housing crisis in Eureka Springs has accelerated recently with real estate prices going up significantly.
Sandy Martin, chair of the task force, said the city is progressing with plans for the establishment of a non-profit corporation designed to create incentives for housing construction.
“We’re definitely going to set up a 501(c)3,” Martin said. “There are two options we are researching. One is a CDC (Community Development Corporation) and the other is the CLT (Community Land Trust). We are still investigating which would be better for Eureka Springs. Either one of the two structures would qualify for state and federal grants, as well as tax exemptions for donors and/or funders.”
Martin said the task force is progressing with the priority on affordable rentals initially and then affordable homeownership.
At the January meeting, which will be held at 10 a.m. Jan. 12 at the Equity Bank community meeting room, a representative from HUD will be present to discuss options for Eureka Springs. The task force will also get more information about the affordable housing CDC that is set up in Fayetteville.
CLTs are most often used to retain ownership of the land for an affordable housing development with homeowners entering into a long-term renewable lease rather than a traditional sale. When the home is sold, the owner earns only a portion of the increase in property values with the intention of preserving the affordability of housing for future low and moderate-income families.
Martin also talked about a non-profit workforce housing project such as one in Vail, Colo., developed to provide housing for people who work in the resort area. Martin said $65 million has been invested so far in the project in Vail, which has developed some very attractive housing. People who provide land for such a development receive significant tax credits.
Berryville has a major employer, Tyson Foods, and is part of a federal Opportunity Zone that provides incentives for developments. The town has more flat land and lower property prices.
City alderman Terry McClung said the workforce housing option sounded very complicated to him, and expressed doubt that Eureka Springs could attract a major new company because of lack of suitable land and the fact that Eureka Springs is not on a major highway with ease of transportation to ship products.
McClung said you can buy a 950-square-foot home in Berryville for $140,000.
“You can’t buy a shack in Eureka Springs for $140,000,” McClung said. “An entry-level 1,400-square foot home with three to four bedrooms in Eureka Springs is going for $200,000. Few people can afford that.”
McClung said the problem has evolved. Five or six years ago, it wasn’t an issue to the extent it is now. “Now it is an across-the-board problem,” he said. “Eureka doesn’t have the terrain or infrastructure for a big housing development. There is some land outside the city limits that might be suitable, but it would be very expensive to provide water, sewer and electricity.”
McClung said the city should endorse whatever can be done to build affordable housing in Holiday Island and Berryville as that would help with people who can’t find housing in Eureka Springs. And he said the problem is not unique to Eureka Springs, but is a major concern all over the country.
Martin agreed saying, “The problem is not going away and housing is not going to be cheaper.”
Devin Henderson, director of operations for the Greater Eureka Springs Chamber of Commerce, said he used to work for several businesses around town and he could afford rent. Henderson said now few workers can afford to live in Eureka.
One option that has been under discussion is the conversion of hotel rooms to apartments. But Henderson said because of costs such as adding kitchens and sprinkler fire suppression systems, conversion of hotels to apartments is usually not profitable.
Another issue is that the city has such a small, year-‘round population. The city’s population soars during the tourism season but is much diminished in the winter.
Retail business owner Jim Nelson said encouraging more Section 8 HUD government-subsidized housing would be something to look at. The existing HUD housing complexes in Eureka Springs are full and have a long waiting list.
Martin said the city is looking at any and all solutions. One could include identifying empty city-owned lots and other available lots that could be sold for infill housing. However, that is not expected to be sufficient to meet the needs.
Martin said the city is working on preparing a package with tax incentives for affordable housing developments and hopes to have that ready in January.