Bentonville, Arkansas, plans to create more affordable housing with the Arrow Program. But how will they manage to cut housing prices in half?
Bentonville will cut home prices by half by defining tiers based on income, generating a cost savings funding pool, expediting development, and organizing compliance and stipulations with developers to ensure the housing stays affordable.
Keep reading for a more in-depth discussion of how Bentonville plans to create more affordable housing.
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The Arrow Program
If you want to read a 66-page document about housing development and the Arrow Program, I encourage you to do that here. However, I will summarize and discuss the document’s content in a more digestible way.
First, I will set the stage for this discussion based on this one long phrase I pulled from that document.
The article says they “want to create an environment in which developers will build affordably priced housing in neighborhoods with convenient access to jobs, services, and amenities that promote a variety of transportation options, such as hiking, biking, e-scooters, and one-wheels, ensuring our target population lives there and that the city developers, businesses, and the workforce of Bentonville all benefit.”
So, they want to incentivize developers to ensure that they develop the type of housing that everyone can afford in Bentonville, Arkansas. Before we jump into how they will do this, let’s review the “why.”
Why Bentonville Is Cutting Home Prices
Why would Bentonville, Arkansas develop all these trail systems and promote them, and claim that you can easily travel anywhere in Bentonville and Center 10 and all of Northwest Arkansas just using bikes, only for people to not be able to afford Bentonville? It seems silly.
So, I understand why the Northwest Arkansas Council is doing this because if their big promotion is to “live, work, and play” here, people must be able to afford it. So I understand why they’re doing this, and I’m totally on board.
How Bentonville Is Cutting Home Prices
Now, let’s get into how they’re going to do this. That’s the big question of the day: how will Bentonville reduce costs by half? The first part of this is defining tiers.
They’ve identified three tiers in Bentonville: Tier Three, Tier Two, and Tier One. They’re really trying to solve housing for all of Tier Three and most of Tier Two and ignore Tier One because Tier One’s been solved.
Tier Three housing will be a salary between $20,000 and $40,000. Tier Two housing is between $40,000 and $60,000. Basically, if you have a salary between $20,000 and $60,000, they want to ensure you have affordable housing here in Bentonville, Arkansas.
Tiers Three and Two will usually be teachers, police officers, firefighters, EMTs, hospital employees, etc. So, the people in those two tiers will eventually have more affordable housing in Bentonville.
The second part is determining “what tools can be used to generate a cost savings funding pool.” Now, I’m going to break this down for you to make it more understandable.
So, essentially what’s happening here is that there are many funding options between local, federal, and state that developers can come in and use to design and build different scales of places. There are different pools of money that can be leveraged by developers that are not being used at all.
So one thing Bentonville is doing is helping developers come into play and use these pools of money from different entities across America to help subsidize, lower interest rate loans, or get grants to help subsidize that housing. This way, there’s not a massive cost for the developer. Therefore, the cost of building the housing is cheaper, which then lowers the cost of the housing.
Essentially, there are pools of money that developers aren’t using because how would they know where to search for this money to develop affordable and multi-unit housing in different areas? So that’s one part of how Bentonville is planning on cutting home prices, is by helping developers access this money.
Another cool thing is that the city owns a lot of land, and they’re planning on gifting or granting certain areas of land to developers if they meet some criteria, so it’ll be interesting to see how that pans out. Obviously, they don’t have an infinite amount of land, but I’m curious to see how the city could grant certain parcels of land to developers for certain areas to help them along the process.
The third thing is probably the most important, which is expediting the process of getting things done. Speed always has a cost: the longer things take, the longer the developer has to hold the loan, and the higher the interest rate, which means that the cost of the housing will go up too. So, what Bentonville is going to do is hire a position called the Affordable Housing Manager.
The person in this position is dedicated to helping developers expedite the process to ensure their housing projects get done. According to the article, they anticipate cutting the development stage by a year. This significant reduction in the time frame should reduce the cost.
The fourth thing is compliance. If Bentonville does all of these things for developers, there are going to be stipulations for affordable housing. They’re developing this housing for Tier Three and Tier Two salaries, so they can’t be charging Tier One prices. There will be compliance and regulation involved as part of the package.
The Big Wins
Let’s talk about why this is such a great thing for Bentonville. The biggest thing is that Northwest Arkansas has a large job shortage because there are so many businesses that have moved here and businesses that are expanding rapidly, so we need more people to be here because of all of the job opportunities.
It’s going to be difficult to convince people to live here if there isn’t affordable housing, even though there are so many amazing trail systems and great activities, such as mountain biking. Check out my article on Bentonville mountain biking for more information about this pastime.
The second win is the speed of development. It’s difficult to put a price on speedy development and cutting red tape because you never know the people and opportunities fast development will bring.
The third win is that with more people moving here and faster development, more people will be spending money here, which means businesses will be doing better. More tax dollars can go into the city to help them improve the trail systems, the university, and other things in Northwest Arkansas.
To read more about how lowering housing costs will affect the local community, check out my next (and final) post in the Bentonville home price cut series.
Final Thoughts
Bentonville hopes to cut its housing costs by half for people making $20,000 to $60,000 a year by helping developers access funding and expediting the development process.