People at every level of the community seem to recognize that Sheridan needs to create more affordable, or workforce, housing.
The pending opening of Weatherby’s new manufacturing facility, combined with the expansion of local companies like EMIT, Vacutech and Kennon Products, means Sheridan will see an influx of employees from those companies in coming years.
But Sheridan’s housing stock has not grown as fast as its industries, and if the community does not address that disparity, it will struggle to accommodate not just the growth that has already taken place but future growth as well.
Robert Briggs, an administrator for the Sheridan Economic and Educational Development Authority, has said SEEDA, which has facilitated much of the industrial growth in the community, will be involved with finding a solution for the affordable housing demand as addressing it will be crucial to further economic growth.
Briggs said the first step to solving the problem will be conducting a needs assessment that will precisely define the housing needs so that the community can develop strategies suited to meeting them.
“We want to make sure we understand and really get our arms around what that need looks like and not just rely on anecdotal descriptions or a partial picture,” Briggs said.
The city’s community development director Brian Craig also said the needs assessment will be important for defining the scope of the problem but added that the city has heard from realtors that there is currently a shortage of houses that cost between $200,000 and $300,000.
The city has faced a similar challenge before, but perhaps not on this scale. Marie Lowe, who is currently a real estate agent at Century 21 BHJ Realty, Inc., founded the Sheridan Housing Action Committee in 2004 in response to rising housing prices, caused largely by the regional coalbed methane boom, that were shutting out low-income residents. The nonprofit worked to facilitate the creation of affordable homes and help people purchase them until it disbanded in 2014.
Briggs, who served as Sheridan’s community planning director from 2004 until 2017, said economic shifts lessened the demand for workforce housing around 2008.
“In 2008, we started to see the effects of the recession in Sheridan,” Briggs said. “…There were some adjustments in the local housing market that occurred as part of that, and people maybe thought the (affordable housing) need was not as dire at that time and other issues moved to the forefront.”
Lowe said the city’s current situation is nearing a crisis.
Considering community groups are still working to define the affordable housing need, Briggs said it’s too soon to say for certain whether the current need is larger than the need from years ago, but considering the community’s growth, and the industries driving that growth, it wouldn’t surprise him if the scale of the need has increased.
Lowe noted that she is confident the situation is solvable, but the solution is going to require a community-wide effort.
“We all need to be part of the solution,” Lowe said. “We accomplished incredible things through SHAC as a team.”
While Sheridan’s growth is fueling the need for more workforce housing, it also poses a fundamental challenge to meeting that need. It’s a matter of supply and demand: More people are moving to Sheridan and looking to build homes in Sheridan, which drives up the value of land.
With that higher demand comes a higher opportunity cost for developers who would take on workforce housing projects. Paul DelRossi, a developer with North Fork Partners, said higher-cost projects bring in larger profits and developers will, understandably, look to maximize their profits.
“Builders have a chance to build a $500,000 house where they could make 10 or 15 or 20 percent, or they can build a $150,000 house and be lucky to walk away with $10,000,” DelRossi said.
And though at some point the market will be saturated with higher-priced units, making them more difficult to sell and eliminating the incentive to build more, Sheridan likely cannot afford to wait that long.
“With EMIT, Vacutech, Weatherby, the VA, Kennon, the college -— there is a huge need coming,” DelRossi said. “And if I were to say there are 50 units needed, that isn’t spread out over five years, it’s 50 needed right away.”
Additionally, assuming there were local developers available to take on workforce housing projects, it would be difficult, if not impossible, to keep the price of the houses within the necessary price range due to high-base costs.
Jane Clark, who co-owns ERA Carroll Realty, said construction in Sheridan is simply more expensive than it is elsewhere in the country. Transporting building materials to Sheridan, which is not located along any major routes, tacks on costs. Wyoming weather also makes construction more costly. Houses, and their materials, need to be able to withstand temperatures ranging from 20 below to higher than 100 degrees, which means they need to include heating, cooling and extra insulation.
New developments also have a set of fees attached that remain constant regardless of the size of the development. A new house needs to be connected to the city’s water and sewer systems and the city charges fees to cover the costs of extending that infrastructure. But with lower-cost developments, margins are slimmer and those fees prove to be more significant.
“When you’re looking at spending half-a-million dollars on a house, having $7,000 in fees is nothing,” Lowe said. “But if you want to sell a house for $190,000, that $7,000 is a big deal.”
Tap fees let the city maintain and upgrade its water and sewer systems, but Lowe said charging a standardized tap fee hurts smaller developments that place less strain on the systems than larger projects.
All of those factors combined have led Lowe to conclude that it is unlikely Sheridan will be able to address its workforce housing shortage by building new units.
“I don’t think it’s possible to build a new house — even if it’s 1,000 square feet, two bedroom, two bath (or) three bedroom, three bath — for under $225,000, and that would be pushing it,” Lowe said.
Clark has come to a similar conclusion.
“The traditional building methods probably aren’t going to work,” Clark said.
When Lowe was working with SHAC, she said many of the developments the organization worked on were infill projects, which use vacant or underdeveloped land in already developed communities, essentially filling gaps between existing houses. Those properties are already connected to water and sewer infrastructure, so new houses don’t have to pay the city to extend it.
Craig said he believes infill projects could be part of the housing solution in Sheridan, and that he and members of city staff are looking through city building codes for ways to better accommodate infill projects, such as reducing set-backs or making allowances for greater lot density in some cases.
Infill projects, though, are what Craig called a “small-scale solution” — the number of lots available for infill are limited.
Developing large-scale solutions will require input from the entire community. The city, after all, is not going to develop housing; that will come through partnerships with other entities
Craig said the city’s role will likely be facilitating, rather than implementing, housing solutions.
“Our role is making sure the infrastructure is there and creating the venue for these opportunities to happen,” Craig said. “ [But] the city of Sheridan, and the staff here, also believe we have a role in community building, making sure we get all the right people at the table and that effective and productive communication happens.”
That approach is similar to the one that allowed SHAC to be successful, Lowe said.
“SHAC was a committee of realtors, bankers, some retired financial people, contractors,” Lowe said. “We were able to figure out some collaboration and solutions by the fact that we had all these different people from different perspectives coming together to talk about it.”
Lowe also believes she has part of the solution to Sheridan’s housing shortage figured out. She explained that there are small houses scattered throughout the city that are being rented or are currently vacant and need significant work, but if renovated, could serve as workforce housing stock. Even if the houses require $15,000 to $30,000 worth of renovation, Lowe believes they could be sold for less than $200,000.
“Our solution is right here down every street in town,” Lowe said.
Additionally, Lowe said the city could free up even more affordable housing stock by creating more senior housing in the city. She suspects that there are dozens of seniors currently living in homes that have become too difficult for them to maintain, but they stay because they don’t have an alternative.
Building new senior housing would not face the same cost barriers as low-cost housing units because most senior housing consists of multi-family rental units, which allow the building owner to recoup costs due to the scale of the operation. Lowe believes if seniors had the option to move into smaller, more manageable housing, they would be willing to sell homes that could in turn be used to address workforce housing needs.
Of course, Lowe’s suggestions are theoretical. Putting them into action will require funding and logistical planning, which Lowe said will require widespread collaboration.
“It’s a community decision how we solve it,” Lowe said.
RETURN ON INVESTMENT
Whichever solution, or combination of solutions, the community decides on will require an investment to implement. Part of the return on that investment will be indirect — the housing will support business growth which contributes to broader economic development in the city and county.
But investing in workforce housing could provide more concrete returns as well. In fact, if the community is going to develop a sustainable solution to its workforce housing needs, it will have to find a way to realize tangible returns.
“It has to be on the basis of a real business model, not a welfare model,” DelRossi said.
The Woodland Park subdivision, a local affordable housing development that Clark partnered on the development of, offers an example of the kinds of returns affordable housing can provide.
“It was a project that returned every dime and more,” Clark said. “And it’s continually returning money to the state, county and city.”
Woodland Park received $540,541 from the State Loan and Investment Board in 2008, which was applied as no-interest, no-monthly-payment liens on lots in the subdivision, as well as $211,741 from Sheridan County. The city also extended sewer infrastructure to the nearby Woodland Park Trailer Park, which allowed the subdivision to connect to the city sewer network.
Since its completion in 2009, the 50-lot subdivision has generated significant revenue for the city, county and state. Before the project, the Woodland Park subdivision generated approximately $1,800 in property taxes annually. Since its development, Woodland Park homeowners pay $170,452 in property taxes annually and have paid $855,782 in property taxes to date.
The development also generated $355,574.58 for the city in building permit fees, $388,700 in water fees and $350,750 in sewer fees, which amounts to more than $1 million in revenue realized by the city.
According to the county assessor, the Woodland Park project has added $25,094,191 to the sales tax base through 2017.
Briggs said he expects workforce housing and the implementation of the housing needs study to be a focus of SEEDA’s October meeting. He expects there will be a commitment of resources to that study this fall and acknowledged that SEEDA, and its partners, will have to move quickly in acting on the study.
“I think there is an urgency, and I think that is being communicated both by stakeholders in the community and by the elected officials and representation on the SEEDA board,” Briggs said.
As part of a rough timeline, Briggs hopes the community will have a game plan in place by the spring or summer 2019. That timeline will require all parties involved to work quickly.
If the community can devise a way to provide more affordable housing, Woodland Park, and the issue’s relationship to economic growth, seem to indicate the investment would pay for itself.
But making that initial investment is going to require the entire community to buy in.