Housing cash one step closer for South Dakota builders

The rules for a $200 million infrastructure funding program are headed to lawmakers for a final sign-off.

The board of the South Dakota Housing Development Authority voted unanimously to approve its rules for the program on Wednesday after about an hour of public comments from local economic development offices, attorneys, home builders and others.

For-profit businesses in, tribes out in housing infrastructure rules update

Commenters largely supported the rules, with a handful asking questions to clarify which kinds of projects are eligible and what the timeline might be for accessing funding.

The hope is for the Legislature’s Rules Review Committee to take up and vote yes on the rules on June 13, according to Chas Olson, interim director of the housing authority. The authority could begin taking applications 20 days later, he said.

The hearing puts the money one step closer to available for the home builders who lawmakers had hoped to boost a year ago. The housing money first passed the Legislature in 2022, but legal wrangling held it up until a rewritten bill cleared up those concerns early in the 2023 legislative session. Hiccups in the rulemaking process have further delayed the funding. 

The authority released its draft rules in early May. 

By Wednesday afternoon, the authority had already revised them based on written comments and a review from the Legislative Research Council. Among the changes: for-profit entities are once again entitled to apply for funding, but tribal entities are not. The latter adjustment is tied to the language of the bill authorizing the program, which requires that a “political subdivision” of the state take over the maintenance of streets, sidewalks, water and sewer or street lights built with the aid of program dollars. 

Tribal governments are not political subdivisions of the state.

Olson told the virtual and in-person audience Wednesday that South Dakota’s nine tribes could still access the funding to boost housing projects if they partner with a city or county to apply for the funds.

“Aside from that, we feel it would likely take a legislative fix,” Olson said.

Rep. Tyler Tordsen, R-Sioux Falls, intends to bring such a fix to the Capitol next year. Tordsen is an enrolled member of the Sisseton-Wahpeton Oyate. 

Lawmakers did not intend to write tribes out of the program, he said, pointing to the infrastructure program’s support from tribal entities earlier this year. 

“Everybody thought it was good to go,” Tordsen said. “It was just kind of an unintended consequence on some of the language.”

Tribal communities often have greater housing needs than the rest of South Dakota. They also represent the kinds of rural communities where housing projects struggle to get off the ground for lack of funding.

The lawmaker hopes to address the verbiage in the infrastructure program early in the 2024 session, but he also said the situation should spark a conversation on how to update state statutes on political subdivisions and economic development in general.

“It could also be a good precedent going forward to find a way to make sure we get the language right in state law, so that we can do future grant and loan projects with tribes as partners,” Tordsen said. “We can turn it into a positive.”

Some of the infrastructure funding will likely be gone by the time any bill on tribal access passes. The money is split in two, with $50 million in grants coming from federal American Rescue Plan Act (ARPA) dollars and another $150 million in state funding coming in the form of loans.

Because ARPA dollars must be spent by next year, Olson said Wednesday, builders who launched their projects as long ago as March 2021 could apply for the federal money. The $150 million in revolving loan funds will be available to anyone who broke ground after February of this year, and will continue to be available in the coming years. 

The Rules Review Committee meeting on the infrastructure rules is set to begin at 10 a.m. Central on June 13. Audio of the meeting will be streaming on SD.net.