Housing for small towns, reservation school teachers hit by infrastructure hold-up

Teachers in Pine Ridge, workers in Deadwood and students in Madison were among those waiting longer for a place to stay because of a hold-up in workforce housing money last year.

“Our members are waiting for these funds,” Denise Hanzlik of the South Dakota Multi-Housing Association told lawmakers. “We’ve lost one construction season already.”

The wait could end soon.

A bill designed to release a $200 million pool of housing infrastructure funding and set those projects in motion sailed out of a House committee on Wednesday, bringing it within one House floor vote of Gov. Kristi Noem’s desk.

The 12-1 vote on Senate Bill 41 came on the heels of testimony about the impact of the delay on millions of dollars in housing projects across 10 South Dakota communities.

The bill aims to resolve confusion that rendered the funds unusable by the South Dakota Housing Development Authority (HDA), the agency tasked with disbursing the money to developers to help alleviate the state’s housing shortage. 

The $200 million is split, with $150 million in state funding and $50 million in federal funding. The HDA opted not to use the $150 million pool of funds last spring, citing a mismatch between the authority’s affordable housing mission and the money’s purpose – to support housing with or without income restrictions for buyers and renters. 

The HDA was prepared to award the remaining $50 million to shovel-ready housing projects last fall, but ultimately shelved the applications over similar concerns. 

The HDA did not disclose the locations or details of those projects to South Dakota Searchlight in October, citing proprietary information in the applications.

During Wednesday’s House State Affairs Committee meeting, a financial consultant for a range of cities, counties and school districts talked publicly about them. 

“We represented several of these communities last summer when the first $50 million was allocated,” said Toby Morris of Collier Securities. “And my intent is to show you the wide variety of the applicants that actually came forth.”

Reservations, tourist destinations await funding

The Morris list included developments in Mitchell, Madison, Summerset, Pierre, Colton, Deadwood, Pine Ridge, Box Elder, Brookings and Rapid City. Some homes and units were income-restricted; others were intended for first-time home buyers. The Pine Ridge project would have built 172 bedrooms’ worth of apartments, duplexes and single family houses for teachers on the reservation.

When the Oglala School District added a career and technical education program, Morris told lawmakers, 399 students enrolled – 125 more than the district had projected.

 

The multimillion dollar housing project on the reservation became a priority, Morris said, but the Mni Wiconi Rural Water System lacked the capacity to serve the expanded district. Pine Ridge sometimes runs out of water due to stress on the system, so a new system is needed to serve the housing project.

“On the application we submitted to housing last summer, it was to be a self contained water system,” he said. “Two great benefits happen on this: one, the district is able to provide water for themselves on a 12-month basis, but they also pull themselves off the Mni Wiconi system, freeing up further capacity for the Pine Ridge Reservation.” 

The city of Summerset took out a $10 million loan to upgrade its wastewater treatment plant, “anticipating the growth that was coming,” Morris said, and its leaders had hoped to use $2 million of the federal infrastructure grants to help connect 393 single family lots and 200 townhomes to the wastewater lines.

“The best way to keep those sewer rates low is to add on more users,” Morris said.

A lack of restrictions for income doesn’t equate to a lack of interest in affordable homes, he said, as communities that partner with developers for grant funding have a strong grasp on local needs and craft their development strategies accordingly. 

Community leaders in Deadwood, for example, hoped to bring in $2 million to help develop 120 lots for single-family and twin homes, with 46 designated for first-time homebuyers. Infrastructure for 80 multifamily units were also part of the city’s plan for the tied-up funds. 

The goal, Morris said, is for Deadwood to avoid becoming “the next Jackson Hole,” referring to the Wyoming resort community where wealthy residents have pushed prices higher than working class residents can afford. 

The delay has been expensive, Morris said, pointing to one project that will cost $3 million more this year thanks to higher interest rates.

“This money is desperately needed, responsibly needed,” Morris said.

Supporters line up for SB 41

Morris was just one of around two dozen supporters speaking on behalf of SB 41, including lobbyists for home and apartment builders, retailers, county commissioners, rural water systems and a policy adviser for Gov. Noem. 

The bill explicitly grants the HDA the authority to dispense the funds, but it also creates a revolving loan fund, which prime sponsor Sen. Casey Crabtree, R-Madison, called a key provision that will ensure it continues to help communities for years to come. 

It also carries an emergency clause that would free up the funds with Noem’s signature. To pass with that clause, however, two-thirds of the House would need to vote for it. 

It’s unclear if the bill will clear that bar in the House. The 2022 bill saw more opposition in that chamber, with some representatives arguing against government interference in the private market.

Brian Burge of Beresford was the lone opponent to the bill at Wednesday’s committee meeting. The former independent House candidate argued that subsidies disrupt the market and create government dependence.

“The notion that we have to rely on government to be the fundamental source of producing our, our shelter and our needs … It’s a sad day in South Dakota and a huge disrespect to the way we were founded,” Burge said.

Rep. Jon Hansen, R-Dell Rapids, voted against the bill. Hansen was among the 22 House members who voted against the 2022 infrastructure proposal.