$200 Million for Workforce Housing & Business Caucus Results

Workforce Housing.  As US Senator Everett Dirksen (Illinois) is often quoted, “A billion here, a billion there, pretty soon you’re talking about real money."

With all due respect for the late Senator, the same can be said about the South Dakota scale of measurement with “$100 million . . . here and there”.  The housing market in South Dakota is close to overheated, with homes selling in mere minutes for record prices.  A fiscal note attached to SB 114 reported that the median purchase price of a new home in Sioux Falls is $227,979 while the median price of a new home in Rapid City is $259,007. 

This "median” price includes many homes that are small or very old and sell at lower prices.  Bringing a new house onto the market in most South Dakota cities will cost closer to $280,000 to $300,000 or more.  People often ask who can pay $250,000 for a house, with a $200,000 mortgage?  The answer is anyone making about $60,000/year or roughly $30/hour.

The next question is what can communities do to make a few housing units, whether they are homes or apartments, available for workers making $17-20/hour?  Many readers may remember when that was a good wage.  Today, it is a starting wage at a fast food operation.  It doesn’t buy that “mansion in the sky” of rather dated musical lore.

$200 Million for infrastructure.  A legislative committee spent the entire summer looking at the pressures on housing prices and guiding a proposal to take $200 million dollars, made available by Governor Noem in her budget, to underwrite infrastructure proposals with a goal of saving these common costs and thereby having developments still profitable at lower price points. 

These funds are being equally divided between the Governor’s Office of Economic Development (GOED) and the South Dakota Housing Development Authority.  Here is a basic overview of how these funds will be used to make at least some housing available below market rates and more affordable for some of the skilled workers essential to South Dakota’s economy.

The First $100 million: SB 53.  This is $100 million for infrastructure that will be used for grants by GOED.  This money is divided into two pools of $50 million dollars each and will be aimed at slightly different population groups. 

The first half ($50 million) is reserved for cities with population of fewer than 50,000 people, which is all cities in South Dakota except Rapid City and Sioux Falls (the price of success it would seem).  The second half the funds (also $50 million) is for all cities including Rapid City and Sioux Falls.  This means Rapid City and Sioux Falls can only apply for half of the money and will compete for that half of the funds with all other cities and towns while they are allowed to compete for the entire $100 million. 

Grants to Leverage More Investment.  The $100 million dollars that will be available through GOED can be no more than one-third of any proposed development.  These funds must be matched with one-third coming from cities or local organizations and one-third from developers themselves.  This is in keeping with the Governor’s goal of matching up the initial grant by three fold.  This way the $100 million will have a $300 million dollar impact.

There’s more.  To paraphrase Senator Dirksen, “. . . pretty soon we’re talking about real money”.  SB 53 also allocates another $100 million to South Dakota Housing Development Authority and requires that these funds also be used for infrastructure.  This second $100 million is to be allocated for revolving loans with a program known as the South Dakota Opportunity Housing Fund.  All of this second $100 million dollars are allocated by Senate Bill 65.   

The South Dakota Opportunity Housing Fund has been used to address “affordable housing” which is different than “workforce housing”.  The South Dakota Housing Development Authority has helped many lower income people attain secure housing using several programs.  SB 65 is designed to increase the income levels to allow this fund to help people with higher incomes get housing through projects that will use these funds to underwrite infrastructure.   

Wait – what is infrastructure?  With apologies to readers for not thinking of this earlier, infrastructure is all the stuff that makes an empty field ready to build a house or apartment building.  Infrastructure includes water lines, sewer lines, wires and pipes for electricity and gas and most important fiber-optic cables for internet services (which some think is more important than all the rest of that stuff).  Then there are important items that sit on the land like streets, curbs and gutters, sidewalks, and fire hydrants for walking dogs.

The $100 million being put into the Housing Opportunity Funds is to be used for revolving loans so that it will have an active role in helping with making housing available for workers well into the future.  These funds are not required to leverage local investment in the same manner that the GOED grants will. 

It seems a bit murky at this point just how these loans will be administered.  SB 65 leaves the operational details to the South Dakota Housing Development Authority which renders a number of questions without answers during the legislative process. 

The South Dakota Chamber of Commerce Board of Directors will support making this investment in workforce housing and will work to answer some of the same questions as legislators are asking, if for no other reason than the Chamber agrees with Senator Dirksen, “Pretty soon we’re going to be talking about real money here.”   
  

Business Caucus – Business Leaders Weigh in on Legislative Issues

Last Thursday, a group of business leaders heard issue briefings and then cast votes on the issues being debated by legislators during this legislative session.  The results of the business leaders caucus are available below and represent a collection of people attending Business Day at the Legislature and those who voted virtually.  Send a quick reply to this message if you would like an invitation to attend Business Day 2023 or are interested in attending virtually in order to vote with everyone else during the caucus.