Iowa City to pilot city‑led 36‑unit affordable housing project using ARPA funds

Neighborhood and Development Services presented a city‑led affordable housing pilot to the City Council on Jan. 21 proposing development of up to 36 permanently affordable rental units on two city‑acquired lots on North Summit Street.

Tracy Heishew, Neighborhood and Development Services, said the city used ARPA funds to acquire the lots and has hired advisory firm Baker Tilly as a centralized development manager. Heishew estimated the project cost at just under $11 million and said the city committed about $2.7 million in pro‑housing dollars toward the effort. She said the project must be completed by 2029 and that 24 of the 36 units will be rent‑restricted to fair‑market rent as a condition of some potential funding sources.

Financing and occupancy goals

Heishew described a multi‑source financing approach: housing trust fund and workforce housing tax credits, Federal Home Loan Bank conversations, and applications to other state programs. She said the city is exploring a mix of funding that would allow many units to be rented by Housing Choice Voucher holders and that the development will aim to be financially self‑sustaining as an enterprise operation. "Our goal is that all 36 will be either limited to the fair market rent or the payment standard that the Housing Choice Voucher program requires," Heishew said.

Design and community engagement

Staff said they will hire an architect and return to council for the architect selection; neighborhood meetings and design checkpoints were described as part of the process. Heishew said unit mix is under consideration with a focus on one‑bedroom units to meet high demand; she gave a conceptual mix in discussion as approximately 18 one‑bedroom, 12 two‑bedroom and 6 three‑bedroom units, but said exact counts will be determined with the architect and site design.

Questions and constraints

Councilors asked how rents will be calculated and whether vouchers will increase; staff said no new vouchers are being created and emphasized the project will rely on existing voucher holders and curated financing to reduce debt service. Staff also noted the city will sell the Chauncey to help finance the project and will continue seeking grant and tax credit awards.

Next steps: hire architect, return to council with preliminary designs and conduct neighborhood meetings. No binding commitments or final financing approvals were given during the CIP presentation.