City addresses housing shortage, hundreds of new units planned

Apr. 14—CUMBERLAND — The creation of housing doesn't typically fall within the purview of the city's economic development department, Matt Miller said.

But housing inventory levels in Cumberland, as well as across much of the country, are critically low, to the point that industry experts are using the term "crisis" to describe the situation across Maryland and many other places.

Local employers need more housing for their workforces, Miller, executive director and president of the Cumberland Economic Development Corp., said.

"They will tell you there's a huge need for it," he said and added that 60% of the city's housing stock predates 1939.

"That's a telling number ... a serious issue that needs to be addressed," he said.

"We just don't have the housing that they're looking for," Miller said and added the lack of market-rate housing "is becoming more and more paramount."

Plans are underway to change that, however.

'A big development' and enticing location

While there's not much buildable land suited for new, larger housing communities in Cumberland, and city officials have no desire to compete with the private sector, the CEDC owns property slated for a "micro neighborhood," Miller said.

He expects at least 200 residential units, including townhouses and apartments, to be built on the former Memorial Hospital site in South Cumberland.

The issue was discussed during a city work session Tuesday.

"It's a big development," Miller said. "We haven't seen this type of development in the city."

The location should entice folks interested in attractions such as the nearby bike trail, Miller said.

The CEDC has until July 31 to fulfill terms of a contract with RAZ Development to construct the $36 million residential housing complex.

RAZ "is extremely experienced," Miller said.

As part of the agreement, the CEDC would contribute $3.6 million over three years to RAZ.

"That's an award they'll receive for production," Miller said of the money that will be paid on a construction draw type of basis.

A 10-year tax rebate, which involves the city and county, for the developer is also being negotiated as part of the deal.

"It helps incentivize the progress," Miller said.

The project could begin next year, and the developer will own, operate and manage the units, he said.

If you build it, they will come

The housing will be "market rate," Miller said, which means "priced according to what the market will yield."

The development might include amenities such as a private swimming pool and coffee shop.

While details haven't been finalized, rents will be established by the developer and likely cost roughly $1 per square foot, Miller said.

The idea is for market-rate properties to attract tenants that can pay for them, which in theory would ultimately bring more commerce and jobs to the area.

"Our average household income is extremely low," Miller said.

Businesses including large-scale chain stores investigate details of an area's population data to determine whether they should move in.

Cumberland's demographic statistics for income are lower than what 90% of many of those types of companies look for, Miller said.

"It's a bit of a conundrum," he said.

"That's why we're involved," Miller said of the CEDC's role in the project. "It's addressing a void that we have found."

Ready-to-go, low-maintenance

Stu Czapski is the economic development specialist for the CEDC.

Previously, he was the executive director of the Allegany County Chamber of Commerce for 10 years.

The Memorial Hospital site project is the "first major new housing" in the city in decades, Czapski said.

There's a significant need locally for reasonably priced housing, he said.

"We've been hearing from our employers for a long time," Czapski said.

While there are a few "fixer uppers" for sale on the local real estate market, some folks want to move into ready-to-go, low-maintenance homes, he said.

"We're very short on that," Czapski said.

He talked of the historic, four-story Footer Dye Works building that was renovated in recent years and includes residential housing.

"It's booked solid," Czapski said.

'A housing crisis going on'

Plans to build diverse housing on the former Memorial Hospital site exemplify one way to address what real estate experts call "the missing middle."

The industry term describes the lack of multi-family buildings such as duplexes, row houses and courtyard apartments.

"There really is a housing crisis going on," Maryland Realtors President Yolanda Muckle told the Cumberland Times-News on Wednesday.

Maryland is short 120,000 housing units, she said and added that many homes currently cost too much, and there are too few of them to buy.

A Maryland Realtors 2023 housing poll shows 76% of voters said the cost to buy a house in the state is too high.

In Allegany County alone, online property history shows current asking prices for some houses range from about $51,000 to $182,000 more than what they sold for a just a year or two ago.

Typically, a lender won't issue a mortgage for more than a house's appraisal, but some desperate buyers use cash to make up the difference.

But if a buyer isn't looking to stay in a house for at least five years, "it doesn't make sense to pay above appraised value," Muckle said.

As another way to help alleviate the housing crisis, Maryland Realtors advocates for zoning changes that would allow accessory dwelling units, also known as "granny flats" or "in-law suites."

Additionally, many areas have vacant commercial properties such as shopping malls that could be converted to residential housing, Muckle said.

"They already have the parking lots, the water," she said of necessary infrastructure.

Housing costs top inflation data

According to a U.S. Bureau of Labor Statistics report Wednesday, housing costs were the biggest contributor to March inflation data.

"The index for shelter was by far the largest contributor to the monthly all items increase," the report stated.

"This more than offset a decline in the energy index, which decreased 3.5% over the month as all major energy component indexes declined," it stated. "The food index was unchanged in March with the food at home index falling .3%."

According to the Joint Center for Housing Studies of Harvard University, the number of cost-burdened renters "reached a two-decade high in 2021, while more homeowners were burdened than at any point since 2012."

There is a clear need for strategies to increase existing housing supply, "which would keep housing costs in check and ultimately benefit households at all income levels," the center stated.

Moody's Analytics earlier this year reported that the rent-to-income national average "reached 30% for the first time in our 20+ years of tracking history," and was up 1.5% from a year ago.

"Rising mortgage rates caused many households to be priced out from home buying and would-be buyers to remain renters," the organization reported. "Apartment demand surged as a result and drove rates sky high."

As the disparity between rent and income growth widens, Americans' "wallets feel financial distress as wage growth trails rent growth," Moody's reported.

New housing planned for area

Due to the redevelopment of Baltimore Street and incentives that accompany it, buildings that house businesses downtown are expected to include roughly 40 market-rate rental apartments on their upper levels.

Additionally, Allegany County officials have discussed plans for a residential subdivision at the site of the former Allegany High School along Sedgwick Street on the West Side.

The site, owned by the county, could include single-family houses and townhouses.

Additionally, some area residents have expressed interest in senior housing at the site.

The county is expected to seek recommendations for the residential housing development on the former high school's land.

"It will be up to the developers," Allegany County Administrator Jason Bennett said earlier this month.

"We will take whatever the developers recommend and think they can sell," he said. "We obviously need the housing."

Teresa McMinn is a reporter for the Cumberland Times-News. She can be reached at 304-639-2371 or tmcminn@times-news.com.