Housing development a go in Phillips

Progress is visible in Phillips this week, where several large, fresh holes in the ground reflect major steps forward in a 56-lot housing redevelopment project announced earlier this year.
Jeff Reed, who is working with Darren Bartunek on the Barrcon Workforce Housing Redevelopment Plan, reported local enthusiasm about the significant progress being made, despite timing delays and pricing increases caused by the COVID pandemic.
“There is a ton of excitement about the project,” Reed said in a Thursday phone interview. “I mean everybody is excited.”
County planners gave the thumbs up in March to a housing redevelopment project expected to add 56 single-family dwellings on the east edge of Phillips. Reed and Bartunek have been working hard to clear the necessary hurdles to break ground, which finally happened earlier this month.
“I think they’ve got four holes dug and three foundations,” he reported. “Plumbing is in one of them so we’re going to be pouring a floor here this week, too. They are going to keep going down the line and they’re not going to stop until they’re done.”
The initial plan was to build and sell 10 to 12 houses in 2021, though Reed said that target number has since been increased to 14.
“We’re still trying to nail down when we can get the streets and sewers put in,” he added. “We’ve had some discussions with the engineers and the final plan took a little longer than what we thought, but we’re hoping to have the street, water and sewer put in by September or October. It all depends on the availability of contractors right now.”
As planned, the project will feature 1,350 sq. ft. homes on 80x140 foot lots. All will be built as spec houses, with varying exterior colors and floor plans, two-car garages, unfinished basements, grass and underground sprinkler systems.
In March, Reed announced that the target price for each home was $217,000, though the rising cost of lumber has since driven that up to $259,000. There is buyer interest even with the higher price tag, he said, though at this point all marketing activity has been put on hold.
“Another thing we ran into is that we had to pre-buy a bunch of lumber,” he said. “We have decided not to market them right away, only because we can’t guarantee when we’re going to get our cabinets. So the backlog due to the COVID demand is kind of making it tough for us to try to pre-sell them as early as we thought.
“As a matter of fact we don’t have any sold because we couldn’t control the lumber prices,” he continued. “That’s kind of what happened all over, even in Grand Island. The new-build construction builders there took their houses off the market.”

Project background
The biggest housing surge in Phillips’ history was began to become a reality when Reed and Bartunek were able to purchase a 20-acre parcel of land on the east edge of Phillips. The village board approved the redevelopment plan in March, agreeing to annex the property and tie the utility infrastructure into the village system, thanks in part to a $500,000 grant that will help fund the $1.2 million improvement.
Another key factor in the project, Reed explained, was the town’s “blighted property” status, based on state development standards, which allows the use of Tax Increment Financing. The partners had a workforce housing study done, partly to confirm that the project could utilize TIF funding, and partly to evaluate the market demand for housing.
“That housing study gave us the growth rate and told us that all of them need housing,” Bartunek said of area communities including Hastings, Grand Island, Aurora, Giltner and Phillips.
Bartunek is familiar with Tax Increment Financing, having utilized that tool five or six years ago to help fund infrastructure costs for several townhomes he built just across the street from the proposed new housing subdivision.
The partners requested and received $2 million in TIF for the infrastructure. The developers are matching the curb and gutter with the village’s specs.
TIF for this project will utilize the increase in taxes on the developed property to pay the infrastructure costs over a 15-year period, rather than be distributed to the various local taxing entities, including the county, Village of Phillips, NRD, etc. Reed clarified that it is not a subsidized program, adding that the Village of Phillips will have no liability if homes don’t sell and the project fails.
“In Grand Island, the issue with TIF is usually with the schools because what you’re doing is bringing all these families in fast and you’re increasing the load on the schools, then the schools don’t have the money to spend to take care of the kids,” he said in March. “It’s a little bit different here because they need the students,” he added, specifically mentioning Aurora and Giltner. 
The tax factor is another reason Reed said he believes the project will succeed.
“Compared to Grand Island on the real estate taxes, living in Hamilton County is the draw,” he said. “We’re close enough to Grand Island and Aurora that this actually makes a lot of sense for us where the tax base is a little better. I wouldn’t be jumping into this unless I knew that there was a market for it. In our last sales meeting (where Reed works as a broker with Berkshire Hathaway Home Services in Grand Island) agents were all saying ‘How quick can we get the floor plans?’”