Fillmore City Council members voted last week to host a public hearing on Oct. 5 regarding the potential sale of two parcels of city-owned property to real estate developers.
One developer is willing to pay fair market value for 2.24 acres of city land north of the Bureau of Land Management office.
Another group, however, is seeking a substantial reduction in price for 7.26 acres in a bid to entice the city into a quasi-partnership in order to develop 42 affordable housing units in five phases.
Dan Davies, a real estate agent with Davies & Company Realty, presented a plan for the affordable housing tracts to city council members on Sept. 7 along with Wayne Wasden, a developer.
The two men said their plan was a response to the persistent high cost of housing in Fillmore and in many other Millard County locales.
Davies said the idea started after conversations with local employers revealed frustration over an inability to attract new employees to the area because there was simply no place for them to live. The problem is actually so acute, city officials have lately tolerated instances of code violations regarding temporary housing occupied in places in the city normally set aside for visiting RVers.
The average home in Fillmore is currently valued at $215,000, according to Zillow, an online real estate marketplace. That’s up 14 percent in just the last year alone. In 2019, the average home was valued at about $180,000. In 2017 it was closer to $150,000. According to the same website, the cheapest home currently for sale is listed by owner, a three-bedroom, one bath, 1,620 square-foot brick abode for $255,000. The other handful of homes for sale are listed for far more.
Wasden and Davies said they envision essentially building two spec homes—a three-bedroom, 2.5 bath home and a two bed, one bath house—on about 20,000 square feet of property bounded by 500 West and W. 300 South. Should those homes sell, they see building the other 40 homes on 7,500 square-feet lots in four additional phases, providing the developers and contractor flexibility to respond to any unanticipated market changes during each phase. Wasden said entering into an option contract for the purchase of the entire 7.26 acres for the new subdivision at a substantially reduced price would help alleviate any risk to the developers or their financing partners, including Rock Canyon Bank.
“Our project goal is to create a win-win situation for all the various stakeholder who are currently involved in the problematic aspects of affordable housing not being available in the area,” he said.
Wasden said homebuyers would be prescreened for financing and a “buy-build” method of construction could further reduce costs. The goal would be to provide no-frills housing for about $1,000 a month at the lowest end—no frills being limited options, no basements or fireplaces, infrared heating to avoid typical HVAC expenses, and perhaps a bit of leeway on sidewalks, curb and gutter, something the city currently requires on any new residential construction, in order to save further on development costs.
“Our target price for a small affordable home would be in the $250,000 price range. Or lower,” Wasden said during the Sept. 7 council meeting.
While the amount the developers were willing to pay for the underlying city property was not public, Davies said the price break helps ensure the feasibility of the project.
“That option part is the key right now to be able to move ahead…to see where that value is,” he said. He admitted there would probably be some questions from the public regarding such a deal, but hoped the push for affordable housing would assuage any concerns.
The developers said if stars aligned in their favor, construction on the spec homes could begin as early as next month, finishing in January. They envisioned the first phase of 10 homes would commence in March, with completion by end of 2022.
“If we were a typical developer,” Wasden told council members, “we’d want to come in and we’d buy properties and then we’d build houses in the $350-$450,000 price range. Because that is absolutely where the market is today…but the goal is not to do a development and make a big bunch of money out of the thing.”
The plan met with some skepticism from city council members.
Councilman Kyle Monroe said he worried about the “appearance of favoritism” if it both sold city property at a discount and then also turned around and changed its own development policies to benefit just one entity. He also said he researched city-owned properties to see how many were in close proximity to infrastructure—the 7.24 acres has sewer, water and electric nearby or at the property already—and discovered that there aren’t any other easily developed parcels available owned outright by the city.
“That opportunity doesn’t exist for anybody else,” Monroe said when council members met again on Sept. 21. “This has been cherry-picked to a singular source and one entity is going to benefit 100 percent off of that. And I am not real sure I can support changing policy due to the appearance of potential favoritism toward one party.”
Terry Messersmith, owner of TNT General Contractors in Nephi, who is developing a subdivision in Fillmore, was at the council meeting on Sept. 21. He said he was interested in purchasing the city’s 2.2 acres near the BLM office because it would help round off some of rough edges of his subdivision.
Council member Dennis Alldredge asked Messersmith for his comments on the idea behind selling city property at a reduced rate in order to make affordable housing development more feasible.
“I have to be real careful…I don’t want to sound self-serving. But my hope, and I hope my credibility has always been that if my project won’t stand on its own, then I probably don’t have any interest in doing it,” he said, adding that buying land at a reduced price is not the same as participating in other city economic development programs, such as the increment tax funding proposal the city had recently sought to fund sewer infrastructure near land on which the developer also hopes to build in the future.
“I wouldn’t look at any project if it didn’t stand on its own merits,” he said. “I don’t know that I could come in good faith to this council and say I need your financial sup- port. Because if a project is that close, I just think private enterprise always has to carry the day… it’s not always easy, and sometimes we just have to walk away from it.”
The public hearing on the city’s proposed land sale starts at 8 p.m. at city chambers during the council’s regularly scheduled meeting.
