PRESCOTT – The City of Prescott has a lot going for it but attracting new housing developments to keep up with demand for new residents wanting to move to the city will be a challenge.

That was one message from a housing analysis conducted by consulting firm WSB of Golden Valley, Minn. Jim Gromberg, Economic Development Coordinator for WSB, presented findings of the study commissioned by the council last year at its meeting Monday, Feb. 27. The study’s main findings were:

• Prescott is growing faster than neighboring communities.
• The population is aging, meaning there’s a need for senior housing.
• Prescott housing values are lower than nearby communities.
• Lack of land, high development costs and higher property taxes are why developers aren’t doing more projects in Prescott.
• The lack of housing stock means many people who work in Prescott have to live in nearby communities.

Gromberg said the lack of senior housing – apartments or townhomes – means that older citizens in Prescott are remaining in their homes. Those homes then aren’t available for the next generation of families to move in.

Gromberg described “life-cycle housing” as, “You buy your first house, a starter home. It’s usually affordable. Then generally the rule of thumb is you move into a bigger house. The smaller house you lived in is now available for that next generation,” he said. “Then, you get older and where do you go? You go to senior housing, usually single level, usually a townhouse or condo type. That’s where some of the problem lies right now.

“People are staying in their houses. There might not be housing for people to move up to. They can’t move into senior housing because there isn’t any.”

Prescott’s population is now 4,431, and WSB projects that to jump to 4,830 by 2027. However, that’s predicated on more housing being developed.

“These projects point to Prescott as a place that will attract the ever-growing suburban community looking for quality of life with comparatively affordable land and housing,” the study states. “With this anticipated population growth, an increased and diversified housing stock will be needed to enable the city to meet the demand.”

The study showed that Prescott housing rental is on the high end, as well. Median gross rent is $991, compared to $880 in Pierce County as a whole.

“One of the issues is that rental is very expensive. It’s not hugely expensive, but it’s not affordable,” he said.

There are available apartments, however. The study showed a rental vacancy rate of 9.5 percent, more than double nearby communities and the Pierce County rate of 4 percent.

“This could be the result of a variety of factors. The average rent charged may be higher in Prescott than renters are willing to spend,” the study states. “It may benefit the city to investigate the higher rental vacancy rate before pursuing the development of new multi-family projects.”

Prescott’s homeowner occupied residences have a 0 percent vacancy rate.

“Prescott’s estimated homeowner vacancy rate of 0 percent points to both the lack of available land for new developments and the restricted housing stock causing homeowners to age in place,” the study states.

The median home value in Prescott is $194,100, compared to $224,900 in Pierce County as a whole.

“The lower median value in Prescott suggests that there is less new development and demand occurring than in other nearby population centers. While Prescott may be able to utilize its increased affordability to attract lower income individuals, it will be difficult to retain higher-income families if they see housing values growing at a slower rate or that Prescott does not have the new inventory with the necessary amenities,” according to the housing study.

To develop in Prescott, land will have to be annexed from the Town of Oak Grove or the Town of Clifton. The study states Prescott should work on agreements with the townships.

“Annexation of land could provide new greenfield opportunities for the city. However, the most amenable land to develop lies primarily to the north in the Town of Clifton. A vital aspect of annexation is that the proposed land to be annexed must be approved by the corresponding property owners. Developing a cooperative boundary plan with the neighboring townships is a proactive approach to determining the future growth boundaries and density of the City of Prescott while providing an opportunity to focus on shared community values,” the study states.

The city will likely have to offer incentives to developers to get them to do projects in Prescott.

“There are other problems that are limiting interest in landing new projects in the city. While land, wherever available, is relatively cheap, the state and local tax rates along with rising construction costs are making it difficult for developers to justify the expenses for a potential project,” according to the housing study. “In essence, developers feel that to not lose out on profit, they would have to charge a rate of rent that is too high for the local market. If Prescott wants to attract developers to the city, and especially multi-family or senior living developers, they will need to incentivize those groups using federal, state and local funding mechanisms.”
Gromberg said the study will be a vital tool for the city council as it makes decisions about growth.

“The reality is you’ve got some great things going on,” he said. “There are some hiccups coming in the future for the City of Prescott.”

Alderperson Thomas Oss said one problem is the number of housing units being developed across the river in Hastings and Cottage Grove.

“They’re looking across the river,” he said of homeowners. “They’re transitioning over there.”