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Column: Housing shortages force companies to think outside the box

WORTHINGTON -- Throughout Minnesota and particularly in rural parts of this great state, there exists a shortage in housing supply. This shortage varies in intensity within various housing segments.While other parts of the state and indeed the co...

WORTHINGTON - Throughout Minnesota and particularly in rural parts of this great state, there exists a shortage in housing supply. This shortage varies in intensity within various housing segments.
While other parts of the state and indeed the country have experienced wide swings within the market, most if not all of southwest Minnesota registered steady sure-footed - and some may argue boring - resiliency. This is mainly because the level of speculation in the southwest Minnesota market was at best measured, conservative in its approach and/or there was hardly any speculation.
It has been almost eight years since the mortgage crises and the bailout that followed. Nowadays unemployment is hovering around 3.7 percent, and companies are trying harder than ever to find and house qualified workforce. A recent article in the Star Tribune revealed that companies are not waiting for someone else to address the problem. They are taking measures to deal with housing and labor issues on their own.
With operations in Morris and Hancock, Superior Industries recently bought a $300,000 apartment building and now spends $250,000 a year on housing and plane tickets so 40 to 47 workers can migrate from Mexico to work at its concrete plant.
Alexandria Industries’ business grew 20 percent while 26 percent of its workforce is nearing retirement. It is now converting a shopping mall into a $300,000 employee health clinic. It is also paying workers’ tuition for employee training in engineering and machining.
In Glenwood, a town of about 2,500 people where the airfreight equipment firm WASP Inc. took measures to get more workers by buying FAST, a company in Windom, which makes crop sprayers, WASP gained FAST’s 100 workers. Creativity, it seems, is the name of the game as desperate factories around the state are trying to combat Minnesota’s worker and housing shortage problem.
The normal behavior when we face community challenges like this is to fall back on publicly funded housing programs. In other words, we stand in line until the coffers of publicly administered programs are funded either at state or federal levels or both.
Our experience had demonstrated that while the intent and applications of such programs are equitable and fair - and they do help reduce the burden of the cost of housing on many families - the same programs at times fall short to provide enough supply.
In Worthington and southwest Minnesota, we have tremendous growth opportunities in almost all economic sectors - retail, service, manufacturing, value-added agriculture, renewable energy, health care, biotechnology ... and the list goes on. This opportunity, however, may suddenly becomes a little less “tremendous” when we cannot house young professionals, skilled laborers, teachers, nurses, etc.. who may not qualify for public housing programs, but still need access to decent rental housing.
In Worthington and in southwest Minnesota, housing investment(s) that could generate the most positive economic and social impacts in the next five to 10 years are going to be market rate rental housing - multi-family units that are built either as a standalone, or as part of a mixed-use development/redevelopment.
The argument for private investment in rental housing makes sense given local experience. Here is a list of some of the benefits:
* It allows young adults an entry into market.
* It provides for ease of transition to newly adopted community.
* It increases buying power of local market.
* It helps create economies of scale to attract accessory investments (retail, services).
* It creates construction jobs.
* It increases the local tax base.
* It helps invigorate demographics.
Recently WREDC worked closely with JBS (the largest employer in Worthington) to create a local housing challenge fund and encourage private investment in rental housing units. JBS donated $50,000 to kick start the fund, and First State Bank Southwest added another $10,000 a week after.
The fund is open for contributions/donations from private and public sources and is available to local builders. The terms of contributions to each project are negotiable and will be determined by WREDC Board; they include a long payback schedule and very generous terms as long as new multifamily units were built within two years.
Coupled with the WREDC Housing Challenge Fund, District 518, Nobles County and the cities of Worthington and Adrian have all been busy approving new single-family units under the Nobles Home Initiative program. So far, the NHI program has resulted in the construction of 42 new single-family homes throughout Nobles County. The NHI program is also available in addition to the WREDC Housing Challenge Fund.
While other communities and employers are pursuing real aggressive solutions and taking matters into their own hands, I believe we in Nobles County have put together a nucleus for a workable local solution. All we need to do now is build it up as our own.
We need local, timely and real-world solutions if we are to create and sustain a dynamic marketplace - one that is capable of inviting healthy speculation. That type of speculation is based on real market data, plus the optimism and faith that many private sector partners have placed in Worthington and southwest Minnesota.
Government should not be viewed as the only resource to address community challenges. Private stakeholders and area employers have a role to play. Let’s begin by building on what JBS and First State Bank Southwest have already started.

Abraham Algadi is the WREDC executive director.

Related Topics: HOUSING
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