Business Record Daily PM 7.18.19

‘Houses being built today in Des Moines would not be built tomorrow,’ local real estate expert says

By Kathy A. Bolten | Senior Staff Writer

Area homebuilders and real estate agents provided a preview of what they likely will say tonight during a public hearing in Des Moines about changes to the city’s proposed zoning code.

The Home Builders Association of Greater Des Moines and the Des Moines Area Association of Realtors today sponsored a panel discussion about housing affordability and how changes to Des Moines’ zoning code could affect homebuyers’ ability to purchase newly constructed houses.

Eric Webster, general manager of Berkshire Hathaway HomeServices First Realty, told the more than 150 people at panel discussion that the price gap between newly built houses and existing houses is already wide. In Des Moines, newly built houses sell for about $200 per square foot; existing houses sell for around $130 per square foot, he said.

The proposed changes to the zoning code are "going to drive that price per square foot up significantly," Webster said. "And that’s going to widen the gap even further between resale and new construction.

"Houses being built today in Des Moines would not be built tomorrow based on [the city’s proposed] minimum square footage requirements, garage and basement requirements," he said.

Webster said he estimated that about 60 houses currently under construction in Des Moines could not be built under the proposed zoning code.

Des Moines is in the midst of updating its zoning code, which provides development guidelines for its industrial, commercial and residential districts. The proposed code spells out the types of materials that can be used in various types of developments, including housing. It also sets minimum square footage requirements for different styles of houses and mandates that new houses have basements and garages.

City officials have said the new requirements will provide Des Moines higher valuations that will generate more in property tax revenue to help pay for city services provided to both existing areas and new development areas. About 40% of the property in Des Moines is tax-exempt, so the city must look for ways to create valuation that generates property tax revenue, officials say.

In addition, city officials say homebuilders can ask for variances from city staff, the Plan and Zoning Commission and the City Council if the houses they want to construct don’t comply with the proposed city code.

Officials have said that the city provides homebuyers with affordable housing through Des Moines’ existing housing stock and multiple-family housing.

"Basically, they’re saying, ‘We don’t want to have housing affordability,’ " said Karl Eckhart, vice president of intergovernmental affairs for the National Association of Home Builders, based in Washington, D.C. Eckhart is originally from Iowa and worked with former Iowa Sen. Tom Harkin.

"I never thought Des Moines would be a place that would want to get rid of housing for nurses or teachers or firefighters," he said.

Webster said it’s problematic for governmental officials "to mess with the free market."

"Builders that are here in the room should be able to decide what they think is the right [type of house to build] in certain areas … and what features to include," he said.

The Des Moines Plan and Zoning Commission is holding a public hearing on the proposed zoning code at 6 p.m. today at the Richard A. Clark Municipal Service Center, 1551 E. Martin Luther King Jr. Parkway.

The average value of a building permit for a single-family house in Des Moines in June was $155,785, city records show. The average square footage, 1,251.

And that type of housing is what’s needed to meet future workforce needs in the Greater Des Moines area, a recent analysis showed. The study showed that 16,500 newly constructed houses priced below $175,000 will be needed in the next two decades to house workers paid low- and moderate-income wages, workforce segments expected to grow in the next two decades.

The city of Des Moines is inching closer to adopting a new zoning code that includes development guidelines for single-family houses. Several homebuilders say the guidelines will make newly built houses unaffordable for buyers with moderate incomes.

Why Des Moines officials want to eliminate a portion of the home buying population from the newly built home market baffles builders. City officials, though, said Des Moines’ existing housing stock is affordably priced, as are new houses built on infill lots.

That response doesn’t satisfy builders, however.

"We’re seeing a shift in our market – from custom built to houses that are affordable for the blue-collar worker, teacher, police officer, firefighter and nurse to buy," said Dan Knoup, executive officer of the Home Builders Association of Des Moines. "These are people Des Moines desperately needs, but they are eliminating their ability to buy a newly built home in the city."

Continue reading to learn more about homebuilders’ stance on Des Moines’ proposed changes to its zoning code and city officials’ response. Read more

MORE INSIDER CONTENT: See all Business Record Insider content and become an Insider.

NEWS BRIEFS

Iowa Restaurant Association names 40 Women to Watch in Hospitality
The Iowa Restaurant Association today released its inaugural 40 "Women to Watch in Hospitality" list. The honorees hail from nearly every segment and function in the industry, from purveyors and entrepreneurs to chefs and business development professionals. More than 100 nominations were submitted from across the state. "Women are building meaningful careers in every segment of the restaurant industry, and the numbers back that up," said Jessica Dunker, the association’s president and CEO. Women make up 58% of food service supervisors and 49% of food service managers, far above the averages in nearly every other industry, she said. The honorees will be featured in the summer issue of Food and Beverage Iowa Business Quarterly. A synopsis of each woman’s industry story will be launched on the Iowa Restaurant Association website on Aug. 1.

Nelmark named district judge
David Nelmark of Urbandale was named a district judge in Judicial Election District 5C, which includes Polk County. Iowa Gov. Kim Reynolds made appointment. Nelmark is a lawyer with the firm of Gislason & Hunter LLP in Des Moines. He previously was with Belin McCormick PC in Des Moines and served as a judicial law clerk for Judge Michael J. Melloy on the U.S. Court of Appeals for the 8th Circuit. Nelmark received his undergraduate degree from Drake University and his law degree from Stanford Law School.

UI Stead Family Hospital begins national search for executive director
A national search for executive director of the University of Iowa Stead Family Children’s Hospital is underway, the university announced. The executive search firm WittKieffer has been retained to help with the search. Amy O’Deen has served as interim executive director of the UI Stead Family Children’s Hospital since December 2017, after Scott Turner left the hospital for a position in Wisconsin. O’Deen will continue in this role until a permanent executive director is named. She also maintains her responsibilities as senior assistant director of UI Hospitals & Clinics. Dr. Ian Law, division director of pediatric cardiology at UI Stead Family Children’s Hospital, has been named chairman of the search committee.

THE INSIDER NOTEBOOK
Weld: What federal STEM plan?

BY PERRY BEEMAN: When Jeff Weld, who runs the Governor’s STEM Advisory Council, traveled to Washington, D.C., to help the federal government come up with a new STEM plan, he was surprised there was already one on the shelf. It had been there since 2013 in the wake of the America COMPETES Act, a real mouthful that officially is the America Creating Opportunities to Meaningfully Promote Excellence in Technology, Education, and Science Act. Read more

MORE NOTEBOOK ITEMS: Read more Insider bits and bites of the finer side of Iowa business online.

NEWS BRIEFS

Heartland Express reports strong 2Q earnings
Corridor Business Journal: Heartland Express today reported 23% higher earnings per share for its second fiscal quarter. North Liberty-based Heartland reported quarterly earnings per share of 27 cents, up from 22 cents in the year-earlier quarter. Net income grew from $17.8 million during the second quarter of 2018 to $22.4 million in 2019, a 25.6 percent increase.

Toys R Us is coming back to the United States
CNN Business: Toys R Us' long-awaited comeback is finally official. Its owner, Tru Kids Brands, announced today that Toys R Us is being reborn in the United States with two new stores in Houston and in Paramus, N.J. The return comes more than a year after the chain collapsed, resulting in the closure of all 700 of its American stores. Tru Kids Brands, which bought the brand last October, said it plans to open more Toys R Us stores next year.

Today’s extra briefs:
- House passes $15 minimum wage bill (CNN)
- Union Pacific cuts costs, bolsters profit (Wall Street Journal)
- Corteva closing central Illinois seed plant (Associated Press)

BUSINESS RECORD CALENDAR
NEWLY ANNOUNCED EVENTS

Aug. 8: From Diapers to Dogs: How Disruption Transforms Business
Host: West Des Moines Chamber of Commerce
About: Innovative benefits and a cultural transformation, including "bring your dog to work day" and infants at work every single day, have caught the attention of media outlets across the country and made sizable impact on employee engagement. From the "Today Show" to the National Academy of Sciences, people are interested in what makes the culture of Girl Scouts of Greater Iowa so unique. Beth Shelton, CEO, will share how they make decisions and support their 120 staff members, and the business outcomes they've experienced.
When: 11:30 a.m. to 1 p.m.
Where: Des Moines Golf and Country Club
Learn more

View our full calendar to see the latest curated business and community events, or suggest an event.

Submit press release: newsroom@bpcdm.com
Advertising info: sarabrown@bpcdm.com
Membership info: jasonswanson@bpcdm.com

Copyright © BPC 2019, All rights reserved.
Reproduction or use without permission of editorial or graphic content in any manner is strictly prohibited.