Ellis County’s economic development arm, Grow Hays, and the nonprofit Heart of America Development Corp. are planning a $15 million, 21-acre residential development in northeast Hays.

The 45-year-old Heart of America, an investment consortium of Ellis County businesses, closed a week ago on land at 22nd and Wheatland Avenue.

Plans call for a 75-home residential development, said Doug Williams, Grow Hays executive director.

“I would like to see streets going in sometime late this spring, and homes being built sometime in the summer,” Williams said. “I’m admittedly aggressive in that timeline; I’m probably more optimistic than I should be.”

Designed in four phases, houses will be priced from $175,000 to $225,000, he said, which is cheaper than the new homes currently going up in Hays. There are 18 lots in Phase 1. Phase 2 would start when those are 75% sold, he said.

Heart of America’s mission traditionally has been to purchase real estate to lure business to the area, said Deron O’Connor, chair of Heart of America and senior vice president of Commerce Bank, 2200 Vine.

This will be Heart of America’s first venture into residential development, O’Connor said.

“There are a lot of voices out there that say we need affordable housing in Hays,” he said. “We’re having a difficult time attracting commercial businesses to town for lack of workforce and lack of affordable housing. This is part of our attempt to solve some of those issues.”

Williams takes the plan to the Hays City Commission on Thursday evening during its regularly scheduled work session at City Hall, 1507 Main.

Grow Hays and Heart of America are asking the city to approve a Rural Housing Incentive District for the development. RHIDs are a state program that allows residential developers to recover their costs of building out sewer, water, streets, and curb and gutter with some proceeds from the property taxes paid on the district.

The first step in that process is to ask the city to modify its RHID policy to eliminate a requirement that the development include at least 10 low-income apartments.

An RHID makes housing more affordable, Williams said, because it reduces the developer’s costs, and also eliminates special assessments for infrastructure that are typically charged to the home buyer.

In an RHID, the city, county and school district forfeit a portion of the property tax paid by home buyers over 25 years to reimburse the developer for 85% of the water, sewer, street and curb and gutter costs, he said.

If city commissioners decide at their regular meeting Jan. 23 to approve the policy change, Williams said, then Grow Hays and Heart of America will submit a formal RHID application to the city, along with a housing study.

“You have to show that this is needed in order for the city to justify giving these incentives to a developer,” he said.

Heart of America’s investors include most of the financial institutions in town, Hays Medical Center, Heartland Building Center, Midwest Energy Inc., APAC Shears, the area’s large accounting firms, and some car dealerships, among others.

The nonprofit currently owns about 100 acres, mostly around Commerce Parkway, but only about 10% of it is developed, said O’Connor.

The organization has been quiet in recent years, Williams said.

“There just hasn’t been a whole lot of industrial development out here with our workforce issues,” he said. “It’s pretty difficult to attract companies to come in here when they have a difficult time finding employees.”

Williams approached Heart of America with the idea of an affordable housing program, since tackling the workforce problem could draw commercial and industrial development.

“And the housing issue is causing us to have a difficult time attracting the workforce,” Williams said. “So I encouraged them to consider residential development for affordable housing, and they agreed.”

The Bill Lusk family of Wichita declined to donate their land, and were asking considerably more than Heart of America ultimately paid, but the Lusk’s eventually agreed to sell the land considerably below market price, he said.

“Affordable housing has to start with affordable land, and that’s a problem in Ellis County, finding affordable land,” Williams said, noting the housing development will ultimately help the value and salability of the remaining adjacent 53 acres the Lusks own.

“This is a community effort,” said Williams, noting Heart of America’s purpose is to promote economic development. Local government plays a key role, the builders are willing to work at a more aggressive price point since they get economies of scale building four homes at a time, as well as material suppliers, and subcontractors. The hope is to involve construction and design students from Fort Hays State University and North Central Kansas Vo-Tech, as well.

“There are really spin-offs to this that I think are going to be exciting,” Williams said.

The Hays concept is not unique in Kansas, O’Connor said, noting Dodge City, Garden City and Salina have all succeeded with RHID projects like the one envisioned for Hays.

“There are a lot of people in support of this,” O’Connor said, explaining that Heart of America’s board members have met individually with the Hays City Commissioners. “We’ve been visiting with them one-on-one and they’ve been very supportive of our organization moving forward with this.”

Because they haven’t been residential developers, Heart of America didn’t take the decision lightly, O’Connor said, but rather after “good, heartfelt discussions among board members, and based on some of the issues we’re having, such as a lack of population growth.”

“We decided we’d try something different,” he said, “to see if we could attract commercial business.”