How southern Indiana companies are addressing the affordable housing shortage
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Some cities and counties in southern Indiana are working with developers to build housing near employers to help deal with a lack of affordable options, an issue across the state and nation.
For example, The District, a Princeton apartment complex, is expected to be completed next year. Tami Hack, president and CEO of Gibson County Economic Development Corp., told Inside INdiana business the project will help the area’s housing shortage, which affects everyone from teachers to Princeton-based Toyota Indiana employees.
“We just don’t have the single-family housing that we need. And a lot of people are putting off selling their houses. The interest rates have affected that,” she said.
Meanwhile, some employers are taking matters into their own hands by building homes themselves. For example, Bloomington-based Cook Medical Inc. is investing in 300 homes across south-central Indiana, the majority of which will be sold to its employees. Steve Ferguson, chairman of the board for Cook Group, told INside Indiana Business employers looking for a workforce aren’t going to find one without housing.
“Companies are going to have to step up because we’ve had a gap in people building large numbers of homes,” he said. “Over the period of years where we didn’t have demand, and we didn’t build housing, now we’ve got ourselves a crisis.”
‘Deepening unaffordability’
Record unaffordability and near-record housing shortages are contributing to the nation’s housing problem, according to the State of the Nation’s Housing 2023 study. The Harvard University’s Joint Center for Housing Studies report revealed the cost of homeownership skyrocketed in 2022, with housing cost burdens reaching their highest levels in years. The for-sale home supply also remained at a near-record low.
Indiana’s housing affordability gap and severe housing cost burden are statewide. However, extremely low-income renters are the most affected, with a shortage of more than 120,000 affordable and available rentals based on a report by the National Low Income Housing Coalition (NLIHC) and Prosperity Indiana. This gap means lower earners must compete for leftover inventory that’s affordable at their income level after higher earners take their pick.
Around Evansville, “there is a notable need for housing among all affordability levels,” according to a housing needs assessment update by Bowen National Research. The report indicated the demand for more than 2,800 rental units and more than 3,000 for-sale units over the next five years. Most of the need was split between low-income and moderate/high-income households.
Workforce housing developments near employers
At least two workforce housing projects are in the works near major employers in the Evansville region, and one development has already been completed.
The Forge on Main
The Forge on Main opened on N. Main St. and W. Franklin St. in the Jacobsville area of Evansville in December 2022. The city contributed a $1.5 million bond and a 10-year property tax phase-in to the $28 million project financed by House Investments of Indianapolis. The complex, located near CenterPoint Energy, Berry Global and Deaconess Midtown Hospital, houses 180 apartments and a Dollar General market.
Kelley Coures, executive director of Evansville’s Department of Metropolitan Development, told Inside INdiana Business the mixed-use, workforce housing development is designed to help renters close to or just above the median income.
“Workforce housing generally goes above that 80% area median income that federal housing assistance stops at and goes up to 100%, sometimes 120% of the area median income to capture higher income earners that need some sort of income controlled housing,” he said. About 10% of Forge on Main’s units are at 60% area median income—the remaining units are at 80% to 120% AMI.
Karges Lofts
Federal historic rehabilitation tax credits, a $3.7 million Indiana Regional Economic Acceleration and Development Initiative grant and tax increment financing are helping fund the Karges Lofts workforce housing development near downtown Evansville. The $37 million project will transform the former furniture factory at W. Maryland St. and N. 7th St. into 150 apartments. Coures said renters must be under 100% of the area median income to live at the complex.
The Karges building, which is on the National Register of Historic Places, is also near Berry Global and Deaconess Midtown Hospital as well as Heritage Petroleum. Fred Mulfinger, president of the adjacent Lamsaco Neighborhood Association, believes restoring existing structures for new purposes is a good investment.
“This whole adaptive reuse of a commercial building to me is phenomenally exciting because Evansville is filled with big commercial buildings that are empty. They’re not being used,” he said. “If Karges Lofts can be a model for other projects like this, it could be a significant milestone in Evansville’s history.” An opening date for the complex has not been made public.
The District
In Princeton, 18 apartments are predicted to be available for rent in October at The District workforce housing development on S. Second Ave. A READI grant of $2.5 million and local public funds from the city are helping finance the $21 million project. The rest of the 144-unit complex, which is near Toyota Indiana and its suppliers, should be finished by mid-2024. There are no income requirements for renters.
Hack said there hasn’t been a new apartment complex in Princeton in more than 20 years. However, she’d like to see more houses and subdivisions built in the area. “That’s what we really need. With the price point of $200,000 to $250,000,” she said. “Where The District is, there’s additional ground across the road. I would love to see a large single-family development out there.”
Hack also recognized that getting someone to develop single-family homes is a challenge. “It’s expensive to build, so if you don’t sell the house very quickly, you could end up not making as much money,” she said.
Employer-funded workforce housing projects
Ferguson said developers carry a greater risk when it comes to building affordable houses. “With less expensive homes, there isn’t enough of a margin for the banks. They’d rather do one $450,000 house than three $150,000 houses,” he said.
That’s why companies like Cook and Santa Claus-based Holiday World are coming up with their own solutions. “To find housing that’s in that price range is really difficult. And you can’t have jobs unless you’ve got housing because people have a place to live. We wanted to demonstrate this was feasible, that we could solve this problem,” said Ferguson.
Cook Medical Inc.
In Owen County, Cook bought 62 acres on Texas Pike across from its Spencer facility in 2022 to develop nearly 100 lots. Ferguson said 12 homes have been sold, and another 12 lots will be developed this fall, with prices ranging from $188,000 to $212,000. READI funds are being used to pay for water infrastructure.
Cook employees get first dibs and enter a lottery on these houses, which they must live in for three years. If they want to sell their home during that time, Cook can repurchase it at the original price. After the three-year mark, homeowners may sell their homes at market price for four more years, with Cook getting priority access.
In Orange County, Cook invested in the Abydel Pike project in West Baden, which has room for about 75 homes. The first four houses were sold at $155,000, and the next eight ranged between $165,000 and $185,000. Requirements are similar to Texas Pike, except the public can also buy select homes. Currently, infrastructure is being built for future houses.
Chelsey Thomas, assistant executive director of the Orange County Economic Development Partnership, explained her organization’s role in the Abydel Pike project to Inside INdiana Business. “Our office acted as the real estate office. That way, there were no realtor fees and things like that. That’s how we were trying to keep it the most affordable,” she said.
“We get to make that phone call to new homeowners, and they’re so excited that they get a chance to get one of these houses, and we know what it means to them,” she added.
Cook’s also working on the Klondike development in French Lick, where construction on about 25 homes is expected to begin this fall. Prices range between $155,000 and $185,000 with similar sale requirements. READI funds are helping pay for roadways, sidewalks, drinking water and wastewater infrastructure.
Ferguson said there hasn’t been a new subdivision in Orange County since 1964. “Young people have trouble financing older homes. They’re not in a position to do repairs once they get them. So you need new housing stock if you’re going to solve this housing crisis that we have in Indiana,” he said. The company is also looking for ground in Lawrence County to develop another 100 lots.
Holiday World
This past May, Holiday World opened a new apartment complex for its employees called Compass Commons in Spencer County. The nearly $7 million development funded by the theme park has the capacity for 136 employees who must be at least 18 years old and live at least 50 miles away. During the summer, 125 employees from ten countries lived in the complex.
Matt Eckert, president and CEO of Holiday World, told Inside INdiana Business that Compass Commons replaced a new theme park attraction in 2023 to help accommodate the 2,000 employees needed for the season.
“We knew the workforce was an issue, staffing was an issue, but we said, you know what, this isn’t going to determine who we are and how we operate. We’re going to look at what the issue is, and we’re going to fix it, and we’re going to try to think outside of the box and find a way to address the issue in a way that no one around here has,” he said.
Eckert said Compass Commons will be winterized in the off-season and possibly used for other purposes. There’s also room to expand the complex with three more buildings. Even though this year’s company investment wasn’t a new ride or feature, Eckert said the guests will directly benefit from the addition.
“If we can’t fully staff all of our rides, if we can’t fully open all of our restaurants, people who are paying money to come here, that’s what they pay to come to do. If we’re not providing resources to keep those things open for them, then we’re not doing our job,” he said.
Reinvesting in ‘contribution to the community’
In Posey County, Houston-based plastics recycler and resin producer Avangard Innovative is expected to create more than 200 jobs by the end of next year with its new $100 million, 500,000-square-foot facility. Officials acknowledged the shortage of housing for employees in the area when the announcement was made in October 2022.
”We do not have enough workforce housing, that’s just a given,” Bill Curtis, mayor of Mount Vernon, told 14 News. “That’s something we work on constantly. We are in the process of completing a comprehensive plan, and housing is one of the number one things in every area.”
Jenna Richardt, chief regional economic development officer at Evansville Regional Economic Partnership, also said the housing issue was being handled. “We’re working on all the factors that have to come together for an opportunity like this to come here and be successful,” she said.
Ferguson suggested businesses needing a workforce take responsibility and invest in housing. He referred to the company towns of the Industrial Revolution as an example. “Companies were more participative in the way of life and helping the economy. The more we become international, we lose that sense of community. We need to get them to reinvest not only in the expansion of their manufacturing or service but in their contribution to the community,” he said.
Ferguson advised companies to work with cities and counties to build the infrastructure needed for these developments. “Look for communities that are within your hiring area that are interested in having workforce housing so that you can get some partnership with them in providing the sewer, water and streets that are necessary,” he said.
“We’re spending a lot of money, and we’re doing a great job in bringing new jobs to Indiana. And the state is doing a great job. But if we don’t have housing for them, you can’t locate them in areas that really need it,” he added.