Solving the Rural Housing Crisis: An Action Research Plan

Introduction

Charles City is a community of just over 7,000 people in Northeast Iowa. Having grown up in Charles City, my experiences reveal that four cornerstones constitute a thriving community: industry, childcare, healthcare, and housing. Charles City has a thriving industry base with recent employee and plant expansion, a dependable childcare center that recently completed a $1.5M move and expansion, and a hospital undergoing $24M in renovation and expansion. What we do not have is housing. The last major housing boom occurred during the 1970s and 1980s when Oliver Tractor Plant (later White Farms) provided most area employment and investments. Upon its closure in 1993, community reinvestment significantly declined amidst low morale.

Fortunately, this sentiment seems to be dissipating as area manufacturers have been awarded four Iowa Economic Development Authority (IEDA) high-quality jobs awards in the past five years. This is more than any other community of our size in that time frame and should be considered a good indicator of available positions in the community. IEDA defines a high-quality job as “jobs which offer an hourly wage of at least $20.58” (Steenson, 2022a). Additionally, between Zoetis, Cambrex, and Pure Prairie Poultry, Charles City will offer at least 275 new positions in 2024 (Steenson, 2022b). This is not to mention the variety of other manufacturers and their planned growth in the area.

To begin addressing Charles City’s housing crisis, the Charles City Housing Task Force formed and pursued an Iowa Thriving Communities (ITC) award from the Iowa Finance Authority (IFA).  This program is in its first year and aims to provide innovative solutions for Iowa communities facing a housing shortage.

In our quest of this designation, Charles City’s ITC team had to provide ample evidence of our current need, willingness to support through local government-level progress, available sites for development, and coming job growth. This required resolutions for Charles City Area Development Corporation to give their land to a qualified developer as well as a resolution from the City Council agreeing to a minimum of $375,000 in infrastructure improvements to support a new development. Furthermore, we had to show definitive evidence from local employers that there would be significant job availability and a need for more housing.

Description of problem

Tim Fox said, “We need housing more than we need jobs; we need housing badly. To maintain the level of services we need for our employers, we need housing” (Charles City Press staff, 2023).  Tim is the Chief Executive Officer (CEO) of Charles City Area Development Corporation (CCADC). In support of these statements, studies commissioned by the City of Charles City and CCADC show significant leakage of employed individuals from our community. Robin Bostrom, a business specialist with Main Street Iowa, shared, “2,311 people are employed in Charles City but live outside the community” (Steenson, 2021). Our most recent housing development, the Allied Division, began construction in the late 1990s. Beyond that, area properties are typically dated and require significant work to become move in ready or are simply uninhabitable.

The need for housing was not a universally accepted idea when citizens came to protest the location of coming developments. Those uninvolved with real estate and developments were quick to question why we needed housing and especially why we needed apartments. The reality is that customer sentiment has shifted in the last 20 years. USA Today finance writer Daniel de Vise (2024) wrote, “The spiraling costs of homeownership have turned the perennial rent-versus-own equation on its head. In most of the nation’s largest cities, renting is now far cheaper.” Where young people may once have chosen a starter home and enjoyed updating it, they now choose a fully updated apartment with no maintenance or yard work requirements for a cheaper rate than home ownership. This is not a statement reflecting all homebuyers but should primarily be considered in a community like Charles City where many of the largest employers operate on yearlong contracts.

The individuals our largest employers recruit are highly educated and even more highly paid, and they do not want to spend their one contract year rehabilitating a home. Moreso, they have no desire to buy the appliances that come with home ownership; an apartment is just a better option for these individuals. Residents uninvolved with housing again argue that we need to build single-family housing, not apartments, and that they should be in close proximity to industry. However, area developer and business owner David Rottinghaus was quick to point out that the cost of building single-family homes versus the benefit and scale of multi-family units is astronomical (Fischer, 2024b).

Goals and objectives

The Charles City Housing Task Force aims to solve the housing issue through five avenues.

• Construction of new homes

• Infill of existing vacant lots

• Preservation and improvement of existing housing stock

• Development of innovative financial incentives

• Facilitation of excellent investor opportunities.

To date (20 months after task force inception), four luxury townhomes have begun and will finish construction, a 40-plus-unit apartment complex has been proposed for affordable housing, new, very competitive tax abatement incentives have been passed and resolved at a city level, a new rental inspection program has been implemented, and nearly $15M in lucrative tax credits for housing developers have been secured.

Our next steps are focused primarily on using the tax credits and proper community education around affordable housing. We must provide a face to the apartments in our affordable housing and reassure community members that this is something they need and want. Residents ' perception of affordable housing may shift when they see that their pharmacy technicians, tellers, and paraeducators will fill these units. Additionally, the task force will work to make housing repairs more accessible to local citizens by administering a housing trust fund (with grants and loans) and helping to inform a new construction trades course at the local career center. The course material will focus on basic home repair and updating, a skill our contractors need more of in this area.

Literature synthesis

The housing crisis we face today is not confined to Charles City, Iowa, or even the borders of the United States. Extensive research reveals a global challenge, particularly for the younger generations of Millennials and Gen Z, who are struggling to find affordable and accessible housing. Moreover, while current homeowners often express a preference for single-family homes, the demand from prospective buyers is increasingly shifting towards rental apartments and other multi-family housing.

Max Holleran wrote a book on millennials and the need for affordable housing. Much of his content supported the generational divide between types of housing preference; more importantly, he demonstrated how detrimental current homeowners have been to new home seekers. Holleran said, “Places with single-family homes resist apartment buildings in order to minimize traffic or, more perniciously, to avoid living among those with less means” (2022, p. 3). He went on to lend context to another significant barrier for new, multi-family housing development: “The mismatch between growth and self-interest is exacerbated by the fact that most American cities have a small downtown that immediately gives way to blocks of bungalows, townhouses, and ranch homes rather than efficient apartment buildings” (2022, p. 3). In this, we see that the existing layout has served a community for decades, and there is confusion as to why it would not now. Further research revealed that not only do single-family homes not provide enough housing for our current needs, but they also do not provide the correct type of housing. Consumer sentiment has shifted to the rental of multi-family units, not the purchase of single-family homes.

Understanding the lasting impact of the 2008 housing bubble on current purchasers is crucial in formulating an effective response to the housing crisis. “The crisis exposed the risk associated with home mortgage debt, and just like other adverse events such as unemployment, the mentally scarring effects of the crisis may last long after the housing market recovers” (Young, 2012, p. 610). This underscores the urgency of our response to the current housing shortage, which should prioritize the construction of multi-family units with affordable rent, as suggested by Dwyer et al. (2016).

The housing crisis and the changes in lending practices that led up to it have shaken the status of home loans as good debt in the USA. The American norm of mortgaged homeownership grew out of a reasonably stable and predictable institutional context… the housing bubble, in contrast, was punctuated by … practices that shifted the risk from lenders to homebuyers and third-party financers, with disastrous consequences. We therefore expect this reframed home mortgage debt may be a source of anxiety rather than a path to security and well-being (p. 484).

Renters in San Fransisco became so frustrated with the lack of available options and high rents that they started a group called “Yes in my backyard (YIMBY)” (Holleran, 2022, p. 2). Founded by “a group of disgruntled millennials alarmed by rising rent prices” (Holleran, 2022, p. 3), YIMBY mobilized to attend gatherings where pivotal planning and zoning decisions were made. They were vocal about the effect of current homeowners refusing to let multi-family units develop on nearby properties. Like Holleran (2022), they said that the same people opposing multi-family units used them before they had the financial means to own a home. Sonja Trauss is considered the national leader of YIMBY and shared this about her impression of the affluent cities where the movement lived:

We see a three-caste social system in which each group studiously avoids the others: older homeowners who live in rent-stabilized apartments or, more likely, older homeowners who live in homes that had been affordable but are now worth millions; younger tech workers who can afford $4,000 in monthly rent or maybe even place a downpayment on a home; and the support class of service workers who struggle mightily: everyone from cleaners and fast food workers to nurses, teachers, and public-sector employees (Holleran, 2022, p. 5).

Suffice it to say that Holleran had no problem finding evidence of a nationwide housing crisis and the unwillingness of existing owners to respond adequately. Many things inform my passion for housing, but one of the most prevalent drivers is the foundational safety that comes from a safe and reliable home. Maslow’s hierarchy of needs states that physiological safety is the most basic need for survival (Gordon Rouse, 2004).

This was profoundly detailed in the book (and subsequent Netflix series) Maid, written by Stephanie Land (2019). Maid is a memoir of Land’s time after becoming pregnant and leaving an abusive relationship. She wrote about the difficulties of being a college student, raising a daughter alone, and working full-time. Maintaining housing was her top priority, and other items could not take precedence. She said,

As a poor person, I was not accustomed to looking past the month, week, or sometimes hour. That shortsightedness kept me from getting overwhelmed, but it also kept me from dreaming. Saving for retirement or Mia’s college education never made it on my radar. I had to keep an underlying faith that things would eventually get better” (Land, 2019, pp. 241-242).

Land also wrote about the types of homes she and Mia (her daughter) had to live in as part of government assistance. They were barely heated, in disrepair, and at constant risk of being taken away if Land missed even one document showing income. Land’s writing shows that not only are circumstances often set against a disadvantaged person desiring success, but the need for stable housing in that pursuit can handcuff them even more. The affordable housing project proposed through my work with Iowa Thriving Communities would have been a fantastic match for Land and Mia.

“The dominant federal subsidy program for construction and rehabilitation of affordable housing is the federal low-income housing tax credit (LIHTC) program.” (Leslie, 2024). The answer to this crisis is to zone for higher density, greater varieties of housing and support multi-family unit development. LIHTC standards stipulate quality requirements that ensure low-income individuals have a safe, quality residence to go home to. In short, “LIHTC offers tax credits to owners of newly constructed or substantially rehabilitated affordable housing rental projects” (Leslie, 2024). I have described LIHTC to our community leaders as the incentive tipping the scales for developers to build in smaller communities with significant housing needs. A town like Charles City is not relatively close to another community with existing projects, does not possess a large labor pool (of trade workers), and is not located near commercial material suppliers. Additionally, taking advantage of economies of scale in a community this size is nearly impossible. LIHTC credits have brought developers to Charles City who otherwise may never have considered building in rural Iowa.

Holleran wrote on YIMBY (as a movement) and said, “More importantly, it had redirected the public conversation around growth from “go somewhere else” to “growth is inevitable, so how can we make it better, fairer, and more sustainable” (2022, p. 6). All of this research supporting the assertion that multi-family housing is the answer to the United State’s housing crisis needs to be better disseminated. As evidenced by the residents at Charles City’s planning and zoning meeting, misinformation around current needs and solutions abounds.

Some existing ignorance bubbled to the surface of Charles City recently. A March 2024 Charles City Press article referring to citizen response to housing rezoning quoted citizen Randy Wiltse who said, “I do not want that across the street from my house” (Fischer, 2024a, p. 3). Minessa Wiltse added, “You’re bringing in more crime. That’s why we live in that section, because it’s quiet” (Fischer, 2024a, p. 3). Peggy Sweet, a former longtime local business owner, said, “What types of individuals do they intend to get in those buildings? Just look at the dynamics of (existing apartments in the city). We are afraid that’s going to happen to us” (Fischer, 2024a, p. 3). The kinds of people who would qualify to live in these units (becoming these citizens’ neighbors) include pharmacy technicians, paraeducators, and more. This assertion was made using Iowa Finance Authority’s established income requirements for section 42 affordable housing (Iowa Finance Authority, 2023). Note that some community members favored the project(s) as a whole, taking the time to discuss who it would serve and what management would entail.

My mistake and frustration in presenting this project was not better anticipating this reaction and having clearer talking points ready. The ITC team took time to establish a communication strategy once learning that projects would be going public. However, we considered one crowd- the corporate one- in crafting our message. We neglected to include the emotional reaction of neighboring residents. Sinek said, “The heart represents the limbic feeling part of the brain, and the mind is the rational, language center. Most companies are quite adept at winning minds; all that requires is a comparison of features and benefits. Winning hearts, however, takes more work” (2009, p. 58). This demonstrates further support the involvement of the need to consider the whole person in both leadership and adaptive change. However, I still failed to consider hearts when fully letting this project go public.

Brene Brown talks extensively about bringing your whole self to leadership and leading courageously (2018). Right now, that looks like time spent frustrated behind closed doors. I feel our community may refuse to let these developments succeed, further hampering our economic growth. As I consider next steps, I refer to Dainton and Zelley (2019), who wrote extensively about the importance of emotional intelligence in individual and social approaches to communication. Regardless of the cause or adaptive problem, understanding must be leant to the environment in which one is sharing information and who the information is going to for successful adoption of change. In support of this, they wrote, “The transformational leader considers each individual’s needs and abilities while supporting development and mentoring others… any given leader can be both transactional and transformational. Research has consistently shown, however, that transformational leadership is associated with greater individual and organizational outcomes” (p. 60). I will reconsider our media approach and better recognize the emotional response from neighboring citizens moving forward.

Results

Perhaps it seems counterintuitive, but the answer to my research question on solving the rural housing crisis is that there is no exact answer. Yes, there are approaches and programs in place. However, the solution will look vastly different for each community engaging in this problem-solving journey. Ultimately, my research and experience leads me to believe that we will only make significant progress housing people by zoning higher density neighborhoods focusing on mixed-use and multi-family units.

Some factors that will impact a respective community’s solution include their socio-economic makeup, existing neighborhood zoning and resident constitution, available workforce growth, and attitude of the community itself. To further demonstrate Charles City’s need for housing, we researched the occupants of a newer apartment complex in town. Multiple units are owned by corporations for their employees to use as they get settled into town. Additionally, we spoke with George Peichel, a senior official with Pure Prairie Poultry in Charles City and confirmed that most all of their executives live in corporate rented apartments in the area (personal communication, April 2024). We conversed with our local school district to understand the need from their perspective; their new hires have a very difficult time finding a place to live and have turned down teaching contracts because of this. We also spoke at length with area realtors. These are the people in the thick of having nothing to offer new residents. Finally, we referred to feedback from our local landlord's meeting stating that units are rented instantaneously by individuals. A healthy community typically has a 90% rental occupancy rate at any given time; Charles City has sat at 100% for years. Lastly, Katie Nolte, Director of the Charles City Housing Authority, noted that there are nearly 400 people on the city housing waiting list.

As a result of this overwhelming need, we were awarded the ITC designation and became one of eleven communities in the state to be eligible for nearly $15 million in saleable tax credits. While waiting for this program to ramp up, we pursued a 100%, ten-year tax abatement for developers and those who make significant improvements on their homes. The ITC team met regularly with a larger group of area stakeholders, including realtors, the local county assessor, landlords, and legislative officials. This led to the development of three more action steps, including:

• Semi-annual landlord meetings focused on information communication and code compliance.

• Collaboration with local community colleges for housing contractor development

• Use of local housing funds to establish a revolving loan and grant fund.

Thus far, outcomes demonstrate a slow but steady response to these action items. For example, attendance at landlord meetings tripled from the first to the second. A date has been set for the first meeting of 2024 to grow the relationship between area officials, services, and landlords. North Iowa Area Community College (NIACC) is investing in adult learning courses to develop a contractor pipeline for easier access to improving the existing housing stock. This will engage both hired project managers through NIACC, the expertise of existing legacy contractors in the area, and the development of individuals in unskilled workforce pools. Lastly, Charles City’s local Housing Authority has designated over $150k in home improvement and repair funds. These funds will be administered as a mix of low-interest micro-loans and grants for poor individuals.
The response to our first round of LIHTC developers has been disheartening and disappointing. Moving forward, I plan to converse with our state team at IFA on better-equipping communities working to solve this problem. Although we have reached out and conversed extensively over the finer points of the program and developer selection, we have not been given resources to effectively combat the response. In the future, I will recommend that IFA officials do a more thorough job of walking communities through factual responses to inaccurate claims about affordable housing, share more details of the developer recruitment process, and create more transparency with articles and resources online. At the moment, ITC has a nearly non-existent internet presence, which also provides a challenge. As we (our Charles City ITC team) worked to provide legitimacy for a new program, it was frustrating not having consolidated resources to refer to.

Conclusion

None of the aforementioned issues are new, nor are the suggested solutions revolutionary. However, it is necessary that communities clearly acknowledge their housing issues and create a plan to address them. Charles City’s plan is integrating support from state finance programs to build new affordable housing, connecting landlords for greater collaboration, communicating available resources for home repair, and educating the community on why housing is essential for survival. This plan will continue to grow and evolve as the needs of our community change.

References

Brown, B. (2018). Dare to lead: Brave work, tough conversations, whole hearts. Random House.

Charles City Press Staff. (2023, June 29). Charles City may try for Iowa thriving community housing designation. Charles City Press. https://www.charlescitypress.com/front/2023/06/29/charles-city-may-try-for-iowa-thriving-community-housing-designation/

Dainton, M., & Zelley, E.D. (2019). Applying communication theory for professional life: A practical introduction. Sage.

deVise, D. (2024, February 16). The least affordable housing market in recent memory: Why now is a great time to rent. USA Today. https://www.usatoday.com/story/money/2024/02/16/housing-market-favors-rent-vs-buy/72599444007/

Dwyer, R.E., Neilson, L. A., Nau, M., & Hodson, R. (2016). Mortgage worries: Young adults and the US housing crisis. SocioEconomic Review, 14(3), 483–505. Doi: 10.1093/ser/mwv018

Fischer, T. (2024a, March 15). Neighborhood residents express concern over possible apartments. Charles City Press. https://charlescitypress-ia.newsmemory.com/

Fischer, T. (2024b, April 5). P + Z recommends one housing project rezoning. Charles City Press. https://charlescitypress-ia.newsmemory.com/

Gordon Rouse, K.A. (2004). Beyond Maslow’s hierarchy of needs: What do people strive for? Performance Improvement, 43(10).

Holleran, M. (2022). Yes to the city: Millenials and the fight for affordable housing. Princeton University Press.

Iowa Finance Authority. (2023, May 15). 2023 LIHTC income and rent limits. Iowa Finance Authority. https://www.iowafinance.com/content/uploads/2023/05/2023-LIHTC-Income-and-Rent-Limits.pdf

Land, S. (2019). Maid: Hard work, low pay, and a mother’s will to survive. Legacy Lit.

Leslie, J. (2024). Representing the community partner in joint ventures using low-income housing tax credits. Journal of Affordable Housing & Community Development Law, 32(3). 381–391.

Rhodes, P. (2022). Imagine belonging: Your inclusive leadership guide to building an equitable workplace. Publish your Purpose.

Sinek, S. (2009). Start with why: How great leaders inspire everyone to take action. Penguin.

Steenson, B. (2021, April 22). Main street business specialist lays out the data for Charles City. Charles City Press. https://www.charlescitypress.com/front/2021/04/22/main-street-business-specialist-lays-out-the-data-for-charles-city/

Steenson, B. (2022a, November 21). Zoetis gets state aid toward $75.3 million expansion project at Charles City facility. Charles City Press.  https://www.charlescitypress.com/front/2022/11/21/287438/.

Steenson, B. (2022b, October 13). Pure Prairie Farms in Charles City expects to begin production next month. Charles City Press. https://www.charlescitypress.com/front/2022/10/13/pure-prairie-farms-in-charles-city-expects-to-begin-production-next-month/

Young, C. (2012). Losing a job: The nonpecuniary cost of unemployment in the United States. Social Forces, 91(2). 609-634. https://doi.org/10.1093/sf/sos071