Wisconsin’s lack of rural affordable housing dampens economic development when people have no place to live near well-paying jobs. (WHEDA)
Last spring, the U.S. Navy and Fincantieri Marinette Marine (FMM) reached a deal worth up to $5.5 billion to build a new generation of ships in northeastern Wisconsin. The global shipbuilding corporation is spending hundreds of millions of dollars upgrading the shipyard in Marinette County to accommodate the project.
“I value the partnership we have with FMM, our area’s largest employer,” Marinette Mayor Steve Genisot said at the project’s groundbreaking. “They are making a significant investment in the community, creating numerous jobs and bringing economic growth to the entire region.”
At the same event, the corporation’s CEO, Dario Deste, touted the high-paying jobs the shipyard expansion and naval contract will bring to the region.
“We are improving our facilities, but also adding to our workforce, with engineers, project managers and nearly every skilled trade,” Deste said. “We are increasing our technical training pipeline, with solid partners like Northeast Wisconsin Technical College.”
A massive federal contract, a $200 million construction project and job creation are all good for a local economy. But for all the good a large, permanent employer like FMM can do for a community, it doesn’t mean as much if those potential employees have nowhere to live.
Marinette, like communities big and small across Wisconsin, faces a lack of affordable housing. In some rural areas in the state, the benefits of a large employer are hindered by a lack of housing for employees — forcing long commutes from outside the city or county.
“There are many areas of the state where the housing market is kind of stuck,” says Kurt Paulsen, a professor of urban planning at UW-Madison. “They have open jobs but nobody to fill them because of the housing issue. That becomes a chicken and egg thing.”
Paulsen says he’s heard of meatpacking plants providing busing services to their employees who live 50-70 minutes away from work.
The fundamental problem is that the existing housing stock is aging — requiring expensive renovations and refurbishments — while the cost of new construction has gotten so high that it’s not financially reasonable for developers in rural areas. The same is true for multi-family housing. If developers can’t turn a profit by charging the market rate for rent, apartment buildings won’t get built.
“The real challenge for rural housing or small town housing is this gap between the price the market will bear, or rents for rental housing, and how much it costs to deliver a new unit of entry level housing,” Paulsen says. “It is a math problem.”
Rural communities and the workers who live in the state’s rural areas are ending up on the wrong end of the equation in that math problem.
“Employers [are] telling you, we have open jobs, we can’t get people to fill those jobs,” Paulsen says. “Building housing in rural areas pays for itself in terms of economic development, but there’s this significant cash flow gap on any particular project.”
In a report Paulsen wrote for the Wisconsin Realtors’ Association, he says that in the aggregate, this problem harms the whole state.
“Communities increasingly recognize that workforce housing is economic development because a home is where a job goes to sleep at night,” he wrote. “The shortage of workforce housing makes it harder for businesses to recruit or retain workers and harms our economic competitiveness. If workers are unable to find decent, affordable homes near where they work, they either have to live further away and travel long distances or pay a higher portion of their income for housing. Some workers might leave the state altogether, or never come here.”
In Marinette, the opportunity of high-paying manufacturing jobs is an attractive one. But FMM employees are having to live farther and farther away, according to Jennifer Short, the Marinette County economic development director.
Short says the county’s current housing stock needs to be updated and a diverse stock of new housing needs to be built. The problem is that development is expensive and growth is difficult when one of the Great Lakes is a border.
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“Marinette County is in a great position of economic expansion with the expansions of the shipyard and some of the other industries are poised for growth as well,” Short says. “But we need a variety of housing. A Fincantieri executive officer here in Marinette recently mentioned that they have employees who travel two hours one way daily each day because they haven’t been able to find anything yet. There are people who would like to shorten that commute but the housing situation hasn’t been right for them.”
Marinette isn’t the only community facing this problem.
A 2019 study of Barron County’s housing needs found that some of the area’s largest employers were holding back on expansion because of the lack of housing for potential new employees.
In the City of Arcadia in Trempealeau County, the home of Ashley Furniture’s headquarters, the corporation has to bus employees in from Eau Claire, La Crosse and Winona, Minn, according to city administrator Chadwick Hawkins.
In a small town like Arcadia that doesn’t have much room to grow, Hawkins says he’s constrained by the need for more housing, the cost of building it and the community desire to keep a small town feel.
“We have some very large companies here and housing is certainly an issue,” Hawkins says. “We’re landlocked between us and the Town of Arcadia and with very little areas of growth for housing. It does have an impact with our larger employers. Our census is 3,000; Ashley Furniture alone employs 4,000.”
Many single family homes in the community have been turned into duplexes, he says, but that isn’t a long term solution. At the same time, a small community like Arcadia can’t attract developers to spend millions of dollars on downtown mixed use developments with commercial space on the street level and apartments above that are popular in larger cities in the region.
“It’s not that we don’t have some spaces that could be more multifamily larger complexes, but when I look at it, there’s a lack of investors,” Hawkins says. “With the housing prices and construction costs going through the roof, I think it’s going to compound. I come from the La Crosse area and I’ve seen what they’ve done to their downtown. They’ve put in some nice complexes, mixed-use. Those work, but you need somebody willing to invest $20 million.”
The challenge to untangling the policy questions of the affordable housing crunch stems from the fact that almost all of the housing market is private and people tend to balk at government involvement, according to Paulsen.
“There’s this tradeoff … having safe, decent, affordable homes near jobs is good for workforce and economic development, but housing is mostly a private market activity. So when we get government subsidies involved, people raise all sorts of objections,” he says. “But if we don’t find a way to write down the cost of construction in a rural area or small town, this gap doesn’t go away.”
There are some efforts to ease the burden. The Wisconsin Housing and Economic Development Authority is in the opening stages of building a pilot rural workforce housing initiative — a program in which Marinette County has been selected as one of three communities to participate.
There are also federal and state grants, though Hawkins says those can be tough for small communities because they require a matching appropriation in the local budget.
All across the state, according to Short, the housing crunch can only be solved with outside-the-box thinking.
“It’s not that we’re an anomaly,” she says. “It’s every community, just about, around the state has this issue. Here in Marinette, we’re blessed with a lot of water, so in ways that landlocked us we’re limited to what areas we can grow. Houseboats maybe? Crazier things have been discussed. It does require unconventional thinking.”
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