- Associated Press - Sunday, July 19, 2015

SIOUX CITY, Iowa (AP) - After a long day at work, Joel Simental blithely returns to his rental house in Sioux City’s Morningside neighborhood.

Four years ago, Simental moved from Houston, Texas, to live with family in Sioux City. After some time passed, he wanted a place of his own, the Sioux City Journal (https://bit.ly/1K37hp8 ) reported.

But the first place he moved into was less than perfect, he said.

“It was a dump. But when I moved in, there was nowhere else to go,” Simental said. “It was either there or the streets.”

Simental struggled for months to find a better place to live, even after his lease was up. He searched online and across town every day until he found his current home.

“God, it was impossible,” he said. “It’s a short list of places to live, especially somewhere decent.”

Simental’s dilemma is not unusual. Rental housing has become more scarce in the metro area, amid a raft of major construction projects and a growing economy.

“I’ve been a landlord since 1976 and I’ve never seen anything like this,” said Maynard Porter, president of the Siouxland Rental Association. “I get a couple of calls per day. They say, ‘Do you have anything available? Do you know anybody that has anything?’ They’re absolutely desperate.”

Porter said the demand is so great that he and other landlords have to lock the doors of vacant rentals while they’re cleaning them or making repairs. Otherwise, prospective tenants have been known to walk in and plead to rent the unit on the spot, he said.

The soaring demand and low vacancies are driving up monthly rents, which landlords say have risen by high single- to low double-digits over the past year or so, squeezing workers in an environment of largely stagnant wages.

The tight rental market also has prompted more prospective renters to purchase dwellings instead, shrinking the supply of single-family homes on the market. Overall, the housing crunch imperils local leaders’ efforts to recruit more workers to help ease the severe labor shortages many businesses are experiencing.

State Sen. Rick Bertrand, R-Sioux City, a businessman and housing developer, sees the housing shortage as a “good” problem. He said many communities wish they had high demand for affordable housing.

“It’s a good growing pain for the area to have,” he said. “But I think we need to fast-track the process for rental properties to get permitted.”

Responding to the demand, Bertrand and some other developers have moved ahead with projects that would add hundreds of new rental units to the market.

That would bring some relief to a community that historically has had a higher percentage of renters than some other large Iowa cities. That’s due largely to the metro area’s meatpacking industry, which has long attracted a number of immigrants, according to local officials.

From 2009 to 2013, 32 percent of households in metro Sioux City were in rented homes. In South Sioux City, which borders Dakota City, home to the 4,000-plus employee Tyson Foods beef plant, more than half of the housing consists of rentals, according to city officials.

Another mega meat plant is on the way. In May, Seaboard Triumph Foods announced plans to build a $264 million pork plant in Sioux City that would create up to 1,100 new jobs. Many of the positions are expected to be filled by newly arrived workers.

By the time the pork plant starts hiring in late 2017, local leaders are hopeful the current housing crunch will have eased somewhat.

The $2 billion expansion of CF Industries’ fertilizer complex at Port Neal has attracted hundreds of out-of-state construction workers. More than 2,500 laborers are currently on site, with the mega project on track for completion in mid-2016.

“CF is gobbling up a lot of the rentals and homes in our market right now,” Kyle Kelly, broker owner of Century 21 ProLink in Sioux City, said in May. “A lot of those temporary workers that are coming are going to be leaving at the same time (the new pork plant) is ramping up, so there could be a very good and natural transition into them taking over some of (the units).”

With most apartments full, many workers are staying in hotel rooms and even campgrounds or making long daily commutes to more distant cities with vacancies.

“If people don’t find a place to live here, then they go elsewhere. Kingsley, Emerson, Lawton, they’re seeing more development,” Bertrand said.

However, Bertrand does not expect a flood of excess housing in the region once construction wraps up at the CF site and other projects, such as the $90 million expansion of Ag Processing Inc.’s complex near Sergeant Bluff. He said the current high demand is pushing slumlords out of the market and forcing landlords to make property updates.

“The idea that they’re going to overwhelm the market and bail isn’t right,” Bertrand said.

Bertrand, who gets multiple calls every day from prospective tenants, said growing demand for rentals has been fueled by much more than temporary construction projects. Additionally, more aging baby boomers are moving out of their homes and into rentals.

Tonya Vakulskas is vice president of sales and recruiting for United Real Estate Solutions. She said the housing sales market is as stressed - if not more so - than the rental environment in Siouxland.

“We have a real shortage of homes in a certain price range, at about $75,000 to $130,000,” Vakulskas said.

With mortgage interest rates at historic lows, some home seekers are buying houses instead of renting, she said.

The shortage is due primarily to a lack of housing, she said. Millennials entering the market are also putting pressure on the short supply, she said.

“We need a combination of more homes and apartments,” Vakulskas said. “We need new, affordable builds.”

Several big-ticket projects that would add hundreds more rental units are nearing completion or in the works.

In North Sioux City, a 65-unit addition to the River Valley Apartments is nearing completion. In Sioux City, a Lincoln, Nebraska-based developer, Perry Reid Properties, recently announced plans to build a 225-unit apartment complex at Sunnybrook Village, near the intersection of Sunnybrook Drive and Sergeant Road. That $20 million project is anticipated for completion in June 2016.

More apartments also are being added in the Historic Fourth District, where upper floors of turn-of-the-century warehouses were first transformed into housing in the 1990s and 2000s.

The nonprofit developer, Community Housing Initiatives Inc., is turning former office space on the second and third floors of the Call Terminal Building into 22 new apartments. The units will be from $511 to $650 per month, according to the group’s website.

At the Riverview Apartments, rents will cost up to $675 for one-bedroom units, and $895 for two-bedroom units, said property manager Erik Meyer.

Monthly rents at the new Summit Village apartments will start at $800 to $900 for a one-bedroom unit. Development manager Alex Perry said the costs could change and that the target demographic for the apartments includes empty-nesters, young business professionals, families and singles.

“They’re very nice apartments. I think they’re better than anything currently available in Sioux City,” Perry said. “There’s not one group that could move here. They’re kind of for everybody.”

Porter, head of the Siouxland Rental Association, which counts more than 60 landlords as members, said he usually sees efficiency apartments run upward of $300 per month, with single-bedrooms at $500 and two-bedrooms starting at $700.

That’s in line with the U.S. Department of Housing and Urban Development’s “Fair Market Rents,” or FMR, for the Sioux City Metropolitan Statistical Area, defined as Woodbury County in Iowa; Dakota and Dixon counties in Nebraska; and Union County in South Dakota. Fair Market Rents are used to determine rental voucher amounts for government housing-assistance programs such as Section 8.

For 2015, Sioux City’s monthly FMRs are calculated at $421 for an efficiency, $550 for a one-bedroom, $708 for a two-bedroom, $929 for a three-bedroom and $1,045 for a four-bedroom.

Abbie Gaffey, community development specialist with the Iowa State University Extension Office, said the current shortage of rental housing is due to years without investments into updating and expanding housing.

That problem stems from a limited number of landlords in Sioux City, she said.

“When a small group of players control it all, where is the incentive to put money into maintenance?” she said. “Without that, things stagnate, and blight creeps in.”

Sioux City Economic Development Director Marty Dougherty echoed the sentiment that a lack of housing growth has existed for the past 20 years or so due to lack of demand.

The market is beginning a strong response to new demands, he said.

“We have projects going online,” he said. “I think that is very encouraging.”

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Information from: Sioux City Journal, https://www.siouxcityjournal.com

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