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'It's easier to find a place:' Landlords say metro Sioux City rental market balancing out

SIOUX CITY | When Seaboard Triumph Foods began hiring 1,100 employees ahead of its startup in September, local real estate agents and landlords described the housing market greeting the new recruits as tight but manageable

Eight months later, professionals say it's beginning to balance out. 

"Instead of five people looking to rent one house, maybe it's 1½ or two people looking to rent one house. And they're not desperate for it," said Kerry Fladung, vice president of the Siouxland Rental Association. "It's easier to find a place."

Fladung, who is an administrator for the "Siouxland Rental Houses, Apartments, etc." Facebook group and owns 16 rental homes himself, said he's seeing more advertisements online and more "for rent" signs outside apartment complexes. That means those in search of a rental unit don't have to scramble as soon as a vacancy opens, he said.

"It looks like the market has come more into balance, instead of people having to drop everything they're doing and call immediately," Fladung said. 

Julie Fischer, a Sioux City real estate agent who also owns 30 rental units, said she also sees the city's rental market slowing down, compared to mid-2017, although she said the market remains strong.

"It was crazy back then. You could rent your closet," said Fischer, an agent with the Premier Realty Group. "It hasn't cooled -- it's still good -- but it's not quite as hot as it was."

Such is the market that relocating employees could find themselves stepping into as Seaboard Triumph begins ramping up its staffing for its second shift operations later this year.

Seaboard Triumph expects the second shift to bring approximately 900 more employees to the plant by summer. Company officials say they have started the process for hiring management positions and will soon be accepting applications for hourly production employees, who will constitute the majority of the new hires.

Tim Hynds Sioux City Journal 

The Seaboard Triumph Foods pork plant in Sioux City in September created 1,100 jobs. Employment will rise to approximately 2,000 in mid-2018 as the plant ramps up its second shift. 

In the midst of a low unemployment -- Sioux City metro's 2.5 percent jobless rate in October was the lowest since the Gateway boom of the 1990s -- officials have acknowledged they may need to bring in more people from elsewhere. 

"We aim to hire locally but realize there may be limitations such as low unemployment rates," said Tori O'Connell, Seaboard Triumph's communications coordinator. "So we look at several options to attract and hire employees to work at the plant." 

Landlords have said it's impossible to know how many workers flooded the market during the initial hiring process last year, but the aftermath has been much better than the tight rental pinch for a three-year period ending in late 2016, when as many as 5,300 short-term contractors worked on site at CF Industries. The majority of the temporary workers came from states beyond the Midwest.

During that time period, some people began renting out homes, some landlords increased their prices, and some employees opted for extended stays in hotels.

Despite three consecutive years of record growth, Sioux City's rental units decreased slightly last year, dropping from 11,334 permitted rental units in mid-2017 to 11,178 in early January 2018, according to the city's Planning Division. 

Senior planner Chris Madsen said he attributes that drop to the exodus of construction workers assigned to CF's $2 billion expansion, which took about three years to complete. Madsen said he believes many houses that were rented out to the temporary workers have since been sold.

Fischer added that while apartments would be leased the day they were listed back in the heydays of the CF project, now that period is more in the line of a few days. 

"They're still getting snapped up," she said. 

Fladung said while the market isn't as flooded with demand as it was, he hasn't seen market-rate rents decrease. Fischer said she has seen some go down slightly. 

Meanwhile, developers are continuing to add to Sioux City's housing stock. In 2017, the city set a new single-year housing record for its third straight year by adding 274 housing units. That broke the previous record of 241 set in 2016, which had broken the 2015 record of 205. 

The past five years have seen a resurgence in construction of multi-family housing. Of the 274 building permits issued for units in 2017, 182 were multi-family units and 24 were condos.

At Summit at Sunnybrook, the brand-new 225-apartment complex completed in mid-October, assistant property manager Steffanie Danke said the complex doesn't currently have many Seaboard Triumph employees but did see high demand and currently sits at 91 percent occupancy.

"This time of year the rental market isn't the greatest," she said. "(But) we're still on track to meet all our goals."

City officials are optimistic for continued housing development, including additional construction in the Whispering Creek and Eagle Ridge housing developments, as well as renovations of the former Everett School Building, Hatch Furniture Building, Commerce Building and former St. Luke's Methodist Hospital.

Downtown, the renovation of the five-story Bekins Moving and Storage Co. building into 70 loft-style apartments could conclude in late spring. Rent is expected to range between $700 and $750 per month. 

Tim Hynds, Sioux City Journal 

An exposed brick wall is shown in a fifth-floor apartment Thursday in the former Bekins Building at the corner of Wesley Parkway and West 4th Street in Sioux City. The project helped propel Sioux City to its third year in a row of record housing growth. 

As the construction continues, Fladung said he continues to see a large demand for affordable housing like the Bekins project that's in the $500 to $900 range.

Fischer said she's also seeing more of a demand for two-and-three bedroom homes. 

In metro Sioux City, the "fair market rents" set by the U.S. Department of Housing and Urban Development for its subsidized housing programs for low-income residents increased in all categories in the last year. Monthly rents for one-bedroom rental units jumped from $567 in fiscal 2017 to $606 in fiscal 2018, for example, while three-bedroom went from $942 last year to $1,011 this year.

The federal agency defines low-income as annual household incomes no greater than $35,800 for singles and $51,100 for a family of four.

South Sioux City's odor issues have now cost nearly $3.2M

SOUTH SIOUX CITY | Sewer odor issues in South Sioux City that began in fall 2016 have now cost the city and Big Ox Energy nearly $3.2 million, according to reports obtained and analyzed by The Journal. 

The city has paid most of the expenses, about $2.5 million, through a fund financed with water and sewer fees. Big Ox Energy, whose renewable energy plant in the Roth Industrial Park has been tied to the odors, has contributed around $700,000.

The odor-related costs include a wide range of expenses related to noxious sewer gas issues that forced more than two dozen families from their homes beginning in October 2016. Some families accepted assistance to restore their homes and settled back in more than a year ago. A smaller group has yet to move back into their homes and have filed legal claims against the city and Big Ox, seeking millions of dollars in damages.

The hundreds of transactions detailed in the expense reports mainly include hotel and food accommodations for displaced residents, air testing, home restoration, design and construction of a brand-new sewer force main and legal fees to handle multiple legal issues associated with the incident. 

City Administrator Lance Hedquist has said the city is in "sound financial shape" and was in a good position to handle the large, unbudgeted expenses. So far, the city has been able to swallow the costs by drawing down utility reserves, rather than increasing fees for ratepayers. 

The City Council did approve a 20-cent water rate increase in August, but the increased revenue is for a new water tower, not for odor-related costs, he said. 

The city has also been approved for a $1.5 million, low-interest state loan to cover a sewer construction project that has rerouted sewage from the Roth Industrial Park around the residential area that was affected by the gas issues. The project was completed in mid-June, and the associated design and construction costs are included in the report The Journal examined. 

Mark Albenesius Inc., the contractor that completed the sewer line work, received the most money of all the vendors listed in the report, more than $1.3 million. McClure Engineering, an engineering firm which assisted with the project, received more than $450,000. 

With the sewer project now complete, the frequency and amount of the city's expenses has decreased over the past two months. Most of the listed costs are now ongoing legal fees for several pieces of litigation related to the incident. Legal fees paid to a handful of law firms over the past 14 months have exceeded $110,000.

More legal fees will likely be on the way, as the city faces a rising number of lawsuits from the homeowners, who left their residences in October 2016 as a result of sewer odors. As of Thursday, 15 homeowners had filed suits against the city and Big Ox in Dakota County District Court.

More than half of the city's legal fees, $64,345.16, have been paid to Remboldt Ludtke, the Lincoln, Nebraska-based firm representing the city in a lawsuit against two of its insurers. The city filed the suits in August, seeking to require the Charter Oak Fire Insurance Company and Philadelphia Indemnity Insurance Company to cover $35 million in tort claims that were filed by 16 residents and one business against the city in May.

Under Nebraska law, plaintiffs contemplating legal action against a local government are required to first file a tort claim and then wait at least six months before filing a lawsuit in district court.

The city's sewer odor issues started shortly after Big Ox fired up its plant in September 2016. Residents began reporting putrid odors in a five-block area of Red Bird Lane and Le Mesa Way, along 39th Street, both indoors and outdoors. More than two dozen residents left their homes during the odors' height. The odors were traced to sewer gases coming up from the line the homes share with Big Ox Energy and the rest of the Roth Industrial Park. 

Big Ox and the city have contended faulty plumbing, not the plant or sewer line, was at fault for the odors, citing a study prepared by an engineering firm hired by the company that showed plumbing deficiencies in several affected homes.

According to the Nebraska Department of Environmental Quality, during October 2016, Big Ox had on a number of occasions received and released water with a low pH level into the sewer system, contributing to the generation of hydrogen sulfide gas in the sewer line. 

Each of the lawsuits filed against the city and the company allege that both entities knew or should have known that after testing the plant's operations prior to its opening that the city's sewer system would be unable to handle the pressures and waste being released into it, leading to the release of gases that escaped through manholes and into residences near the plant.

The lawsuits are initially seeking more than $7.4 million in damages. The total could increase if the houses are razed and rebuilt because they can not be repaired safely. 

Asked about the potential effect that a loss of the lawsuits could have on the city's finances, Hedquist emphasized the city is prepared for any major issues. He declined to offer an estimate of how much the city would need to come up with if it loses, saying it was "unknowable." 

"I could guess, but I don't think that's fair to the public to do so. We will be fine," he said.  

Hedquist also didn't rule out additional financial assistance from Big Ox to help cover the city's odor expenses. He said the two entities were "still in discussion" and didn't have a specific date by which they would need to reach a decision. 

Kevin Bradley, a spokesman with Big Ox, said in an email that the company has an "open line" with the city and is "always open to discussions." 

Big Ox's more than $30 million plant extracts organic nutrients from animal, grain and other waste to create methane, which is sold into the natural gas pipeline.

The facility was expected to save South Sioux City an estimated $75,000 each month by pre-treating the industrial waste it sends to Sioux City's wastewater treatment plant. 

Over the past year, Big Ox has resolved a trio of Occupational Safety and Health Administration citations after investigations into three separate worker incidents at the plant.

The plant paid more than $60,000 in fines for the citations, which detailed a lack of protection, education and safety practices for employees, which at times left employees vulnerable to hazardous gases inside the facility. 

The plant in June received a consent order from the Nebraska Department of Environmental Quality concerning compliance with state air and water regulations and, in December, agreed to pay nearly $50,000 as part of a settlement with the Environmental Protection Agency for alleged violations of the Clean Air Act. 

Journal kicks off annual Progress sections

Siouxland continues to build on its economic success, as a result of new construction, new quality-of-life amenities and new advances in a host of fields.

Today, in its annual Progress edition, The Journal begins a series of stories exploring significant new developments in the tri-state region. Each Sunday, reporters will spotlight different sectors, highlighting the progress made in the last year and what's to come in the coming months and year.

The retail sector takes center stage in today's special sections. In sections I and J, you'll learn about new stores and restaurants that are helping the metro area build on its reputation as a regional retail hub.

On Feb. 18, we'll focus on the education and medical fields. Growth in the industrial and housing sectors will be next on March 11. New recreational and leisure amenities will be spotlighted on March 22. In the final Sunday sections, on April 15, we'll detail key developments in Siouxland cities beyond the metro area.

After you've read all of our Progress reports, we think you'll be even more convinced: This is a great time to be living and working in Siouxland.