Housing in Bentonville unaffordable for many, study finds

BENTONVILLE — Fifty-one percent of Bentonville’s residents would have difficulty paying for a place to live if they were moving there today, according to an affordability study by local builders, city government officials and experts.

Roughly two-thirds of those 51%, who are at or below the median family income for Bentonville, would only be able to afford multifamily rental units, says the study by the Bentonville Housing Authority Workgroup.

Those rents are rising rapidly, the study found. The wealthiest remainder of the 51% would be able to buy a home only if they could find one in the city’s tight housing market.

Bentonville’s housing market is so tight “more affluent households are often choosing to buy homes that are below their means, taking up much of the available supply of mid-tier pricepoint homes and leaving substantially fewer options for families” who make less money, the study says.

Any home appearing on the market gets snatched quickly.

The group’s figures are based on pre-covid pandemic figures from the U.S. Census Bureau, the work group report says. Therefore, the pandemic, the resulting economic disruptions and inflation in recent months probably drive the cost figures higher, the study concludes.

“These numbers only represent the number of current residents who have been able to find housing inside the city limits,” the study says. “The estimated 34,000 daily commuters into the city, some of whom could choose to live in the city if affordable housing was available, point to an even bigger need.”

The Bentonville City Council formed the Housing Affordability Workgroup on Nov. 9, 2021. The work group presented its report to the council Jan. 21.

Its recommendations include revamping the city building codes and ordinances to speed up the permitting processes for housing, encouraging mixed business and residential use projects and allowing more units per acre. The group also proposes a fast track process to approve housing affordable to most people, dubbed ARROW. ARROW would give such projects priority on matters from approval to lowering of city impact fees.

“Supply never caught up with demand since the great recession” of 2008 to 2009, said Bill Burckart, a City Council member who is also a past president of the Arkansas Home Builders Association and a member of the work group.

The nationwide collapse in the housing market those years ago dispersed a talented workforce that had built up in Northwest Arkansas, he said. The recent covid pandemic and the supply chain disruption that followed set the region’s housing supply further behind demand, he said.

The city administration including the planning and city code staff are fully aware of the challenges the city faces on the housing issue, he said.

The work group took a yearlong, detailed look at the city planning process and city codes. Among other findings, the report says current codes allow up to 52 units per acre in an apartment development — in theory. But city requirements for the number of parking spaces, easements and limits on the heights of buildings mean the actual number of units a builder can get onto an acre is closer to 20, the study says.

The Northwest Arkansas Council, a nonprofit group of the region’s community and business leaders, declared rising housing costs the most serious threat to the region’s growth.

“This is threatening a core pillar of your economic life,” Richard Florida, a University of Toronto professor who specializes in urban studies, told a crowd of about 150 at the council’s annual meeting in July. Housing prices ballooned 43% in the past five years in Benton County and 47% in Washington County, Florida said.

The Arvest Skyline Report on housing, reviewing the first half of 2022, found a 2.3% overall vacancy rate for multifamily housing units, which is functionally zero, said Mervin Jebaraj, director of the Center for Business and Economic Research. The average price of single-family houses is up 26.8% compared to one year ago, the report also noted.

The problem is particularly serious in Bentonville, said Mitch Moore of Newell Development, a Bentonville-based company specializing in downtown residential, commercial and mixed-use properties. Bentonville was a small town up until quite recently, he said. Now it’s seeing not only an increase in demand, but a major change in the type of demand, he said.

“Bentonville is developing into a larger urban center,” Moore said. “They understand they need to correct and edit their building codes to allow unique infill development. They need to build not to the city’s code, but to the city’s future.”

Bentonville codes require one-and-a-half parking spaces or more while, in a recent project Newell Development completed downtown, between 15% and 20% of the tenants do not own a vehicle, Moore said.

The biggest package of reforms proposed by the work group is a fast-track approach for approving and encouraging less expensive housing. The group wants to allow any project affordable for most residents to have a fast lane through the approval process.

Overall, the group wants about a year cut off the threeyear residential permitting and approval processes.

The work group’s proposed solutions appear practical, said Duke McLarty, executive director of the workforce housing center of the Northwest Arkansas Council.

“I think it’s extremely well thought out,” McLarty said. “They’ve done an incredible job of finding best practices from all around the country.” The solutions they chose fit local conditions very well, he said.

The three-year development time cited in the study is typical for the region and is a good target for change, McLarty said. That threeyear timeline makes federally funded housing assistance such as low-income housing tax credits unachievable, he and the study say. Such federal incentives require a project to finish within two years.

Even if the process is streamlined to shave a year off, builders would still face a tight race to finish in time to qualify for such federal credits, McLarty said.

Both Burckart and Gayatri Agnew, another council member who was on the work group, say the city government has the political will and public support needed to pass at least some of the major changes proposed by the group.

“Candidly, I think that we do,” Agnew said. “You can’t work on the council without hearing about the housing shortage. Even our city workers are having trouble finding places to live.”

Burckart agreed, saying even people in Bentonville who bought homes in the past who are not caught in the housing squeeze have friends and family who are.