Starting From Scratch

City leaders in Newton developed a successful comeback strategy to reenergize their community.

When Whirlpool Corporation closed the Maytag corporate headquarters and manufacturing plant in Newton in 2007, nearly everyone—residents and experts alike—saw it as a crippling blow for the city. The Maytag plant was the largest employer in the area, and the ripple effect from its closing extended far beyond the employees themselves. To make a bad situation even worse, when the nationwide housing bubble burst a year later, Newton’s fate seemed dire.

But residents, business leaders, and city officials refused to bow to predictions. Instead, they put together a plan to turn the city around.

Step 1: Leadership

By 2010, home sales had dropped by one-third, and many of those on the market were foreclosures. The hiring of a new city manager set the tone for a more proactive approach to the situation, according to Bruce Showalter, Housing Director of Newton’s nonprofit Newton Housing Development Corporation.

“The new city manager, with support of the City Council, was active in pursuing housing issues,” Showalter explains. “One of the first things he did was get the economic development team, the board of REALTORS®, and other professionals together to talk about the situation.”

The Newton Housing Development Corporation already existed. But the organization had not been active in recent years, so the city reactivated the nonprofit to help lead and implement any future programs.

In addition, the city commissioned a housing study in 2011 to identify specific needs the city could prioritize and address. Then city leaders put together an informal survey of city residents and employees who work in Newton but live elsewhere to determine what they viewed as the most significant housing concerns.

Step 2: Planning

“The main thing mentioned was that there were too many properties around town looking rundown, and that was hurting property values and the city’s image,” Showalter says.

The formal study revealed that no permits had been filed for new construction in more than a year, and home sales themselves had dropped well below 200 units annually.

To address the issues raised in both the study and the survey, the city resurrected and funded a Dangerous and Dilapidated Housing program (D&D) and established an incentive program for new construction. Both programs have been funded by municipal bonds.

Step 3: Action

“The Dangerous and Dilapidated program has been really popular with residents,” Showalter says. “With that program, the city purchases and demos D&D properties or provides grants for private individuals or contractors to remove or improve dilapidated properties.”

Depending on the situation, grants are available for demolition costs, improvement costs, or restoration costs.

Showalter says the biggest challenge has been the development of new construction projects. “The city passed a $3.6 million bond for the housing initiative, but then we had to go out and find builders to do the work. We called on nearly every builder in central Iowa.” But builders were hesitant to take on a spec project, and lenders were leery of loaning funds for projects in a community that hadn’t seen a new home built in months.

In the end, the City of Newton guaranteed the first builder that he would be able to sell five homes within a year. If the homes didn’t sell, the city would purchase them. With that guarantee, financing was guaranteed, and construction began in 2015. All five homes sold within the 12-month period, and more builders got involved.

The Newton housing initiative provides numerous incentives to builders, developers, and buyers, including discounted permit and inspection fees, up to $10,000 reimbursement of construction loan interest, $10,000 cash for buyers of new homes, and a Get to Know Newton Welcome Package worth over $3,000.

The initiative was funded by the Newton City Council in 2014. Sixty homes have qualified since then. Three new homes were sold in each of the first two calendar years, and 2018 saw 18 new homes sold.

“The original plan for the program was to cover 40 new homes,” Showalter explains. “The city renewed the program, and we’re at 60 so far.”

Showalter says a community’s survival—and growth—depend on three things: jobs, housing, and amenities. “Maytag laid off about 1,600 people,” he says. “We’ve replaced all those jobs now. Our unemployment rate is at 2.2%. Housing is still catching up with the job market. We have one employer driving vans back and forth to Des Moines every day to bring employees to and from work here.”

To address that need, a couple of multifamily projects are under construction or open for leasing, including the $16 million renovation of the historic Hotel Maytag on the square in Newton. At its grand opening in June, the 45-unit building was praised by Governor Kim Reynolds as “an excellent example of public-private partnerships.”

Showalter says there are positive signs everywhere. There’s a new KwikStar in town, a Hardee’s opened recently, and development continues on a 38-unit market-rate apartment complex near the town square.

“We really had to start from scratch,” he says. “We went from one builder up to 10 working in Newton this year. The Maytag Corporation buildings are being repurposed; DMACC has taken that over. And the city has a new subdivision with 40 lots in development.”

Losing its largest employer may have looked like the beginning of a downward spiral for Newton, but it turned out to be the beginning of something else. It’s a great comeback story, one that keeps getting better.

Learn More. Bruce Showalter and Craig Armstrong (City of Newton Economic Development Specialist) were featured on the Workforce Wave podcast's Episode 8 "Home Sweet Home". Click here to listen!