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Webster City Council moves forward with 218-unit housing plan for SW part of city

Harrenstein: 'If you’re not growing as a city, you’re dying.'

—Messenger photo by Robert E. Oliver This is the site where Kading Properties of Urbandale proposes to build 218 new apartment units on Webster City's southwest side. Buildings in the background are, from left, the Peterson Apartments at 1720 Lynx Avenue, Windsor Manor Assisted Living Community, and Westside Villas at 1515 Wall Street. Wall Street itself runs along the extreme right of the photo.

WEBSTER CITY — Urbandale-based developer Kading Properties received approval from the City Council of Webster City Monday to build a 218-unit apartment community north of Wall Street on the city’s far southwest side.

The majority of the apartments will be built in single-story four-plex and six-plex buildings; there will be a few two-story six-plexes, and 24 semi-detached units.

If fully built, Kading would invest $28 million in the project, which will cover 26 acres.

Chase Hauschilt, development specialist for Kading, told the City Council “we have the land under contract now.”

The apartment complex isn’t a new idea. Kading first approached the city council with a proposal to develop apartments on the same land on October 19, 2020. The council referred the plans to the city’s Planning & Zoning Commission, which approved it, with the understanding Kading would alter its plans to meet the following four conditions:

This map shows where the parcel is located in Webster City.

∫ First, storm sewers serving the new development should discharge separately to the south rather than through two small ponds owned by residents of 1300 Wall Street and 2109 Beach Street.

∫ Second, Kading must deed the half of Wall Street it owns to the City of Webster City on a fee simple basis. Fee simple ownership means the street would be owned outright by the city, with no restrictions or limitations.

∫ Third, to improve movement of automobile traffic, Planning & Zoning recommended the city extend Lynx Avenue to provide a north-south connection between Wall and Locust streets.

∫ Finally, it suggested land be reserved to extend Locust Street to serve the new complex, thereby providing more access and taking some of the expected traffic off Wall Street.

Planning & Zoning held a public hearing on the project December 18, 2024. As there were no objections to the project from the public, it recommended the City Council approve the project.

This map shows the boundaries of the land where the new apartments are planned.

Although not spelled out in detail in the council memorandum, the city would have to extend both Lynx Avenue and Wall Street, and related utilities to support the development. These improvements would, over time, pay the city back with higher utility and sales tax revenues.

A housing study completed by the city in 2021 projected a need for 235 rental and owner-owned units through 2030. If all 218 units of the Kading complex are built, it would represent a large increase in the number of rentals in Webster City.

In her resolution memorandum to the City Council concerning the project, Development Director Ariel Bertran said: “This development addresses a significant portion of the city’s housing needs, particularly workforce housing, as outlined in the Comprehensive Plan and Housing Study.”

Developers often use the term “workforce housing” in place of “middle-income” or “market rate.”

No mention is made as to affordability of the new apartments, but a quick check of its website at press time shows Kading’s 1,008-square-foot, three bedroom, one bath, one-car attached garage units renting for $920 in Perry; $995 in Storm Lake; $1,045 in Boone; and $1,150 on Des Moines’ east side.

The Webster City development will include similar units.

Full lease terms aren’t shown on the website, but one month’s rent security deposit is required at time of signing. There’s also a $45 application fee.

Kading calls its units townhomes rather than apartments. Seeking to give renters the feel of a traditional, detached home, Kading’s designs in other Iowa cities include private entrances, a small yard, and a door leading from an attached garage directly into the unit. Most also include hookups for a washer and dryer in a small, dedicated laundry room.

Kading owns 26 developments in cities and towns across central Iowa.

Presently, it has new housing complexes under construction in Boone, Corydon, Knoxville and Pleasant Hill. It has been in business since 1976, and is family-owned.

Kading plans to build out its Webster City development over three years, beginning in fall 2025 with completion of the entire project by fall 2028.

Pat Chambers, of Webster City, questioned the project during Monday’s council meeting.

“I’d like to know a little more about this project before we get going,” he said.

He suggested a performance bond might be in order to ensure the developers complete the project as planned. He also referenced the failure of developers to complete projects on the city’s southeast side that would have seen Fair Meadow Drive completed as a through street a few years ago.

“As things stand today, if Edgewood Drive were closed for any reason, many residents would have no alternative way to get in or out of their neighborhoods,” Chambers said.

These and other questions about the development can be answered after two required public hearings; the first at 6:05 p.m. on January 20 will outline details of a development agreement between the city and Kading Properties; the second, to be held at 6:05 p.m. on February 3 will update Webster City’s Urban Renewal Plan and open the way for the use of TIF (Tax Increment Financing) financing for the project.

John Harrenstein, Webster City’s city manager, talked about the prospect of new housing in Webster City.

“It’s no surprise to residents or employers in Webster City there’s a shortage of available housing for existing and new residents. If you’re not growing as a city, you’re dying.

“There is no standing still for cities. Webster City experienced population loss in the last 10 years and must reverse that trajectory to ensure the community remains vibrant. The Kading development will positively affect this, and hopefully stabilize the population forecast for the next census.”

We asked the crucial questions

Here’s more detail about the proposed new housing development for Webster City

To learn more about Kading Properties’ proposed 218-unit apartment/townhome development, which was recently approved by the City Council of Webster City, the Daily Freeman-Journal examined the Request for Business Incentive form Kading submitted to the city to qualify for tax increment financing (TIF).

Here’s what we learned:

Q. Who owns the site where the complex would be built?

A. It is presently owned by the Williams, Marilyn Living Trust. Kading has an option to buy the entire 26.71-acre site, if it and the City of Webster City can agree on terms of a development agreement. The site is on the north side of Wall Street, west of Windsor Manor Assisted Living Center.

Q. Does Webster City need new housing now?

A. The city’s Comprehensive Plan, and a 2021 Housing Study, projected a need for 235 new housing units through 2030, to keep up with demand. This total includes both owned and rental units. Kading’s new development would provide 218 units, which city Development Director Ariel Bertran noted in her Council Memorandum “addresses a significant portion of the city’s housing needs, particularly workforce housing, as outlined in the Comprehensive Plan and 2021 Housing Plan.

At the January 6 City Council of Webster City meeting, City Manager John Harrenstein told the council that only four new homes were built in the city in 2024, which, he remarked, “does not begin to address our needs.” It is known that city staff are investigating up to 30 residential units in Webster City which may be unoccupied. Utilities are not currently being used in these homes, and there is no sign of occupant activity.

Q. What are the terms of the development agreement?

A. The city and Kading are working now to finalize the agreement. The agreement will be the subject of a public hearing, scheduled for January 20, 2025, at 6:05 p.m., at City Hall, 400 Second Street. Citizens may see the details of the agreement in advance of the meeting by looking on the city’s website. It will be posted under the “government” tab. Search for “city council agendas” and find the agenda for the January 20 meeting. These are posted the Friday before Monday meetings.

Q. What will Kading spend on developing the new housing units?

A. Figures from the company’s project application, filed with the city, show the following:

Land acquisition — $480,000

Site development (public improvements)* — $4,451,303

Building costs # — $21,205,724

Soft costs — $379,705

Financing costs — $1,208,422

Contingencies — $253,137

Total costs — $28,068,291

*This refers to extensions to Wall Street and Lynx Avenue, as well as electrical, sanitary and storm sewer, and water utility improvements to support the 218-unit development

#This refers to costs associated with building 218 housing units.

Upon completion, Kading estimates the complex will have a market value of $32.395 million.

Q. Is Kading seeking Tax Increment Financing (TIF) for the development?

A. Yes. It has requested a 15-year term TIF, which means, in practice, the company will not pay property taxes on the development for 15 years.

There are, generally, two categories of TIF financing: an up-front payment of the entire amount, or a “pay-as-you-go” plan. Kading is requesting pay-as-you-go financing. Under this approach, the city and Kading essentially agree to share tax revenues that the new development will generate. This kind of financing is common in developments of this nature.

Q. When completed, how much can the city expect to collect in new real estate taxes?

A. The present estimate is $452,071 per year.

Q. What other companies will be involved in designing and building the development?

A. In addition to Kading, who will serve as general contractor, the complex is being designed by Plum Building Systems, architects of Waukee, and engineered by Lee Chamberlain, Urbandale. The partners have worked together on other developments in Iowa.

Q. When will construction begin?

A. An unspecified date in fall 2025. The project will be completed over three years, with a third completed each year through fall 2028.

Q. Did the City of Webster City seek an outside evaluation of the project prior to approving it at Monday night’s City Council meeting?

A. Yes. Kading first proposed building the complex in fall 2020. For several reasons, it did not proceed at that time. These reasons included Covid pandemic-related supply chain interruptions and materials cost increases. The city’s Planning & Zoning Commission was asked to review the project in 2020, which it did, making four specific recommendations for change to Kading’s plans. All four are included in Kading’s present design for the project.

In addition to its own internal review, the city sought the opinions of consultant RDG Planning & Design, Des Moines, which submitted its assessment in early December 2024. Some of its findings include: the new development would have “no adverse effects on adjacent property;” and the planned development is “generally consistent with the zoning ordinance (R-3) and Comprehensive Plan for future land uses.”

RDG found Kading’s present plans are “inconsistent with mobility recommendations in the Comprehensive Plan.”

Specifically, it found a need for a connecting street north from Wall Street, and west from Lynx Avenue, through the development. Additionally, it recommended the privately-built streets in the development should be designated “open for public use in perpetuity” and that Kading’s planned 24-foot width for streets inside the development are “below public street standards.” It specifically cited the movement of fire department apparatus (ie. fire engines) through the development, in case of fire.

RDG also found the sidewalks planned for the new development inadequate, and recommended sidewalks be built on at least one side of all streets inside the development, as well as a sidewalk connection to Lynx Avenue.

The report found parking in the development adequate, but suggested 12 planned parking spaces along Wall Street “could cause intersection conflicts and could create unnecessary conflict points.”

Long-time city engineering consultant Snyder & Associates of Ankeny completed a preliminary plat review in November 2020, which contains a few specific design details relating to cluster mailboxes, use of street signs, suggested routing of storm and sanitary sewers, and street lighting. Snyder reserved final opinion of the project until City Council approved more detailed plans for the development.

Q. What economic benefits to the City of Webster City does Kading expect the new development will bring?

A. Kading claims a number of expected benefits would arise from the new development on its project application form, including: an increased tax base, additional support for existing local businesses, additional housing in the community, and affordable housing, among others.

City Manager Harrenstein added that if the development brings new residents to Webster City as is expected, there will be two additional benefits: increased sale of utilities (electricity, water, wastewater and sewer services) and increased sales tax collections on purchases the new residents would make in Webster City.

Q. Will the development contain provisions for low-income housing?

A. Yes. Iowa law requires that 36% of TIF financing must be used to support low and medium income housing in the new development. In Hamilton County, this presently equates to an annual income between $43,500 and $69,350 per year. Rental rates for units reserved for low and medium income tenants would be lower than market rates charged for other units.

Q. What are the next steps for the project?

A. The City Council hopes to discuss aspects of the development agreement with Kading at its next regularly-scheduled meeting, which is on Monday, January 20, at 6 pm. It will also hold a public hearing on the new TIF ordinance on the same date.

Finally, the council will adopt an update of the city’s Urban Renewal Plan at its regularly-scheduled meeting on Monday, February 3, at 6 pm. The updated plan will include the new development in a designated urban renewal plan, a requirement before TIF financing can proceed.

Q. Is there a name for the new development?

A. Kading’s 2020 plans referred to the development as “Wilson Estates.” It is not clear if Kading will continue using this name for the development it is now planning for the site.

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