Ames seeks affordable housing in latest 5-year Community Development Block Grant plan

The City of Ames is searching for solutions to address the concerning housing trend in which rent has nearly doubled in over a decade, leading families to spend almost a third of their paychecks on housing.

The city is workshopping its five-year consolidated plan for the federal Community Development Block Grant funding, which will run through 2029. Each five-year plan establishes goals for the city's annual action plan programs.

Ames has been making a five-year Consolidated Plan since 2004. Ames Housing Coordinator Vanessa Baker-Latimer said the city's goals have remained the same in the two decades since.

"It's about affordability, availability and sustainability of our housing," Baker-Latimer said. "The issues that we have in this community have not changed since 2004. We're still trying to make that affordability and sustainability happen."

The city received just over $500,000 in CDBG funding last year and an additional $324,000 in HOME funding. While Ames does not yet know how much it will receive in 2024, Baker-Latimer said the city can expect it to be similar to last year.

The current consolidated plan was approved in 2019 and must be updated this spring.

Recent HUD data indicates that 52 percent of Ames households are spending more than 30 percent of their income on housing, while rent rose sharply by 15 percent in a five-year span from 2017 to 2022. The average rental price in Ames was $651 in 2012, while the average rent in 2022, according to HUD, was more than $1,000, nearly doubling in 10 years.

That housing data was presented to the city council on Tuesday to help set their goals.

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Opportunities fueled by CDGB and HOME funding

The CDGB program is part of the Housing Community Development Act of 1974, and is one of the largest running programs administered by the Department of Housing and Urban Development.

Congress appropriates the funds to states and localities called entitlements, like the city of Ames. The city became an entitlement community in 2004. The CDGB program looks at the inadequacies of the housing supply, incidents of poverty, physical distress, and other factors in each community, Latimer said.

"The purpose of the program is to provide decent housing, a suitable living environment and expand economic opportunities, principally for low and very low economic persons," Latimer said. "CDGB has always been an important tool to help us tackle our serious challenges that we face in our community."

Ames became a HOME entitlement in 2018. Another large federal program, HOME is designed exclusively for affordable housing for low-income households.

The difference between the CDGB and HOME programs is the latter can be used to actually build houses, and funds can be rolled over from that program as well. Conversely, CDGB funds cannot be used to build housing and its funds must be used that year.

Latimer said it is better to utilize the two programs concurrently to access the full benefits of each and not be bound by one program.

"(CDGB and HOME) help us stretch our dollars, and each program can address activities the other cannot," Latimer said. "But when you combine them together and use them for one program, it's going to be the most restrictive rules that apply, and HOME is more restrictive to use than CDGB."

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Housing data demonstrates cost burden

The city of Ames collaborated with Iowa State University to survey housing producers and consumers. Both groups were asked to rank factors of housing by importance.

The most important factor renters consider is the cost of housing, followed by overall condition. Housing location was considered the second most important among general renters, while subsidized housing renters and Iowa State students marked it third.

Cost of living was also the most important factor to homeowners while location and interest rates were second most important. The overall housing condition came in third.

HUD revealed Ames is home to 25,140 households, 58% of which are rental properties and 42% homeowners. Their studies revealed a vacancy rate of 7.4% for renters and 0.2% for homeowners. HUD data also indicated that 21% of Ames homeowners had issues with housing costs.

Baker-Latimer said the numbers show the effect rising housing costs have had on Ames residents.

"We saw that on our own survey side compared to what HUD is telling us, the cost burden of housing (matches)," Baker Latimer said. "Our own community recognizes it, and so does HUD in their data."

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Community members want to reduce cost burden

During Tuesday's meeting, council members and city staff took time to discuss future goals with some Ames community members.

Many were adamant about finding a solution to reduce the cost burden. Tara Brown, executive director of emergency housing Martha's House of Hope, said the increase indicates a significant problem.

"You saw in the presentation from 2004 to currently, the median rent increased from $651 to $1,000," Brown said. "And then if we're not seeing any increase in the amount of income they're receiving to be able to offset that huge, almost double the amount of housing cost, I think that's a real concern."

Brown said a recent client, who lived with three roommates in community housing, was spending almost $500 a month on rent. High rent will not solve housing problems, she said, and suggested finding a way to incentivize landlords to have lower rent for low-income families and renters.

Lauris Olson, president of Ames non-profit Home Allies, said the interest rate has risen since the last time the city made a consolidated plan, which she believes should impact the city's goals.

"A big difference today versus 2019 would be financial strains," Olson said. "Go back and look at the interest rates in to buy in home or to finance a property in 2019, and now look at what our interest rates are today."

According to the Iowa Department of Revenue, interest rates for taxpayers were 0.6% monthly and 7% yearly in 2019. Interest rates for taxpayers in 2024 are 0.8% monthly and 10% yearly.

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Timeline to set Ames' next consolidated plan

City staff will use the next few weeks to draft goals and priorities for council approval.

A public forum will be held in March, after the city has been notified of its CDBG and HOME funding allocations for 2024. The city will seek public input on specific Annual Action Plan projects that address the goals and priorities of the consolidated plan.

A tentative timeline outlines a 30-day comment period in May, along with a public hearing. The city plans to submit the final consolidated plan to HUD in June.

Celia Brocker is a government, crime, political and education reporter for the Ames Tribune. She can be reached at CBrocker@gannett.com.

This article originally appeared on Ames Tribune: Ames eyes affordable housing in latest Community Development Block Grant plan