"We had to find our little niche, and right now that will be to get people to live here," said Mayor Pat Wuestewald. "Then, hopefully, the retail will follow."

Along 10th and 11th streets, shiny new one-story modular homes are lined up in neat rows in the hopefully named Sunrise neighborhood.

"Too good a deal to pass up," said Dwayne Pittman, a retiree who was the first to get free land in 2002 and moved from Adel. "The cheapest lot we could find in Adel was like $40,000."

It was such an attractive offer that his son built a home next door.

"Once you get a little community established, people think, 'Gosh, I want to be out there,' " he said.

The foundation was poured Thursday on the first home in the new development.

Across the street, retired farmer Dale Bueltel also said he might not be living in town without the free land.

"All that was here were older homes, which would have been cheaper to buy but not after you made all the improvements," he said.

Manilla's seven-year effort began as the free-land idea was taking root in Kansas and Nebraska. Marquette, Kan., offered 80 lots and Kenesaw, Neb., 15.

"The cities will ultimately have the rewards of increased population and that land eventually goes on the tax rolls," said Mark Tomb of the Iowa League of Cities. "Some in Kansas are even based on the number of people in the house. They are really trying to get kids for the local school district."

The "mini-homestead acts" are working, said Kim Preston of the Center For Rural Affairs in Nebraska. But to be successful, jobs must be available within a reasonable driving distance and the city must have money to buy the land.

Few Iowa towns have followed Manilla's example, although the oft-flooded town of Chelsea did offer three free lots in 2002.

And south of Manilla in Marne, Mayor Randy Baxter bought two lots and donated them to launch the free land program in 2006. He figures they are worth $5,000 each.

Marne's total of four lots are part of a long-term goal to increase the population from 149 to 200.

Recent census estimates show Marne's population has dropped to 141, and only one of the lots has been taken.

"It's never going to be a land rush," Baxter said. "But it's a good place to start."

It attracted Kelly Jensen, 22, and her fiance, Aaron Williams, from nearby Atlantic two years ago. Now they live in a small ranch-style home with a wood deck overlooking the sleepy town.

"It would have never crossed my mind to live here," Jensen said. "I love it."

The couple was required to appear before the City Council for approval. Free land doesn't come without promises.

To get the 200-by-150 lot in Manilla, the home can't be a trailer and must be at least 1,400 square feet.

City officials estimate the improved lots with roads and utilities installed are now worth $20,000. The city of Manilla bought the land from a farmer, using money from its city-owned utility company.

Gruhn, of the Manilla Economic Development Corporation, says he thinks the town's population has grown since the 2000 census, but 2008 American Community Survey population estimates show a decline of 31.

And in Tiny's, the small, wood-floor grocery on Main Street, owner John Blom says the free land hasn't done him any good.

"I can't think of a person who lives there that are customers of mine," he said. "They shop in Denison."

But there is hope. Add another 16 homes, and who knows?

"You get up to 900 or 1,000 people and the next thing you know, you might need a little drugstore or hardware store," Gruhn said.