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City, JDA meet on housing project

By Staff | Apr 8, 2013

Members of the Job Development Authority Board and Rugby City Council Finance Committee met on March 21 to discuss how to proceed on a housing project being co-operatively developed by the two entities.

In essence, the two groups tried to provide a roadmap for moving forward with the development, which will feature 52 lots for both single and multiple family dwellings in southeast Rugby.

Bids are set to be opened on April 1 for development of the project, which is bonded through the city at $2.7 million over 20 years.

According to city auditor Dawn Hauck, eight contractors have picked up specifications on the project.

Later on April 1, Interstate Engineering will make its recommendations on the bids to the city council.

At issue in the March 21 meeting, in the words of JDA Board President Kipp Johnson, were the “what ifs and unknowns” of the project.

At its last meeting, members of the JDA Board indicated some concern over the JDA’s ability to pay special assessments of properties in the development that don’t sell. Both sides discussed potential options for paying down the principle cost in order to lower the special assessments and make the property more attractive to prospective landowners.

Hauck said the lot prices will be competitive with other developments in the state.

“I’m hoping the bid will come in at $2.2 to $2.4 million,” said Finance Committee chair Arland Geiszler. “We need to discuss how much we can take from our infrastructure fund and how much the JDA can pledge. We need to cooperate and communicate.”

But the exact cost of the project won’t be known until the bids are unsealed, and at that point, the city and JDA may decide not to accept any of the bids if the price isn’t right to move forward with the project.

Mayor Dave Cichos estimated the cost of bringing water and sewer service to the development, called the Chalmers Addition, at around $375,000.

Much of the discussion surrounded the ability and responsibility of the city and JDA, both public entities, to fund the project.

“People have to realize the city share is going to be taxed back to the residents of Rugby,” Cichos said. “We have to look at how much we can put on the people of Rugby.”

Johnson brought up similar concerns from the JDA, which is funded by a portion of city sales tax, but added that the need for more housing is a top concern in the city.

“You look at it as an investment in the community,” he said. “If there is no place to grow, (then there won’t be any growth).”

But the JDA and city are both in a unique situation of being the developer of a project that would often be done privately.

“I think everyone in this room is in agreement that more available housing is needed,” Geiszler said. “The city of Rugby and the JDA are in the unusual role of being the developer. I don’t want the JDA, the city of Rugby or its residents to be straddled with that… No one has a crystal ball. We’re going on blind faith it will work out, and we think it will.”

JDA executive director Brenda Foster said she has received about a dozen inquiries about the development from potentially interested parties.

Once the lots are ready for sale, the JDA will advertise for bids on the individual properties, with developers getting priority. It’s likely that developers would have the option of the entire project or smaller chunks of five lots or more.

If the development sells well early, the payment of specials on the unsold lots will not be an issue, the group agreed.

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