EDC helps secure money for affordable housing in Hill City

By Leslie Silverman

 

Hill City is poised to receive a portion of a $30 million pot to advance affordable housing in the Black Hills.

The money was spearheaded by Sen. Mike Rounds, who included the request in the 2024 Consolidated Appropriations Act, H.R. 4366, which awards the funding to South Dakota Ellsworth Development Authority.

The Black Hills Area Community Foundation (BHACF) will administer the funds and distribute  $10 million to Rapid City and the Ellsworth area. 

Shonna McBride said Hill City will see a portion of the remaining $20 million. McBride said about seven communities had set up trust funds and advisory boards to receive those funds in advance, including Hill City.

McBride said about two years ago the Hill City Economic Development Corp. (EDC) was contacted by the South Dakota Ellsworth Development Authority which said the “good luck” it had with affordable housing projects in Rapid City. McBride said that group went to ask for more money from congressional entities  and  was encouraged to bring the idea to smaller communities in the Black Hills.

“At that point we got an email at the Hill City EDC if you could participate in this, would you? And if so could you write a letter of interest?” McBride said.

McBride said the funds are needed due to elevated housing costs and limited land to build on and can be used to purchase property or provide low-interest loans to developers.

The EDC was just the  kickstarter of all of this and Hill City will see its portion of the money in a branch of the BHACF  called the Hill City Strategic Housing Fund.

“It’s a completely separate entity from the EDC,” McBride.

The Hill City Strategic Housing Fund has its own board that had to be established and has meetings at least quartlery to be eligible to receive these funds. 

Current board members include McBride, Dan McNamara, Jim Scull, Chuck Voorhees, Isaac Almanza, Ron Rossknecht, Ethan Walker, Stacia Peters and  Curtis Tyler.  McBride said the volunteer board is always open to additional people and having input from the community.

McBride says the local advisory board has not discussed anything in particular but says that low-interest loans are the main mechanism the board is looking to use to create affordable housing. 

Purchasing land does have some benefits to a land holder. 

“Let’s say you own property and it’s assessed at $500,000 and we want to purchase that property for affordable housing. Let’s say you sell it to the fund for $400,000, you can  then take a tax write off for the other amount as a charitable donation,” McBride said. 

The board has defined  Hill City within its operating agreement as “Hill City and a five-mile buffer.” That can be modified by a vote of the board, McBride said.

“If somebody has a project they submit it to the board, we see if it fits the parameters of what we’re looking for and then we vote on it,” McBride said.

McBride said those parameters are based on the  area median income (AMI) of a family and the board uses Pennington County numbers.

“You take that number and you work it backwards and say here’s the area median income for a two-person household,” she said. “And then you take 30 percent of that total for your housing. That’s what we’re looking at when we’re trying to build housing that would fall into that parameter.”

McBride said Rapid City has had success doing this by “stacking” capital.  This might mean using a grant, a low-interest loan and a Tax Increment Finance district.

McBride described the process as finding “the right property, the amount for which it can be purchased, and then figuring out how much can you build it for as well as what kind of funding do we have available ... do we have a grant we can stack on top of it? So that’s kind of the whole process to try to get it down to that level to make it affordable.” 

The Radiant, Sagebrush Flats and Springs Edge are all such affordable projects in Rapid City.

McBride said there is also a way that once a community is created homes within the community can be deeded so that property can only appreciate so much, making it affordable if the home is resold.

McBride said her board has done its research to learn more about salaries for local residents. They spoke, for example, with Hill City School district superintendent Blake Gardner to find out the average teacher salary in the district.  

“We want a new teacher to come here and be able to  live and work in the community. We  put a lot of thought into where these levels would be and the AMI levels really kind of lined up with the school and the firefighters,” McBride said.

McBride said her board is still in the beginning stages of everything but that the general thought is  that some sort of multiplex might be ideal for the area. 

“Something a small family can afford, but a single-family-home neighborhood sounds great. You need a lot more space, a lot more land, and a lot more money. So we’re thinking a more feasible opportunity might be something like that (multiplex) but it’s hard to say at this point,” McBride said.

McBride stressed members of the Hill City Strategic Housing Board  have invested interest in the community. 

“It’s for the good of the community,” McBride said, and that board volunteers see, for example, teachers not being able to afford to live in Hill City as a detriment.

The first step in creating an affordable housing project in Hill City is to identify a property and contact the  owner to sell if they’re willing to sell it. Next is to assign valuation, to figure out what the property is worth and figure out what  the fund can pay for it to keep the project affordable. 

“At that point if it’s a potential project you submit everything to the board and then we look at whether it falls into the parameters and AMI ranges,” McBride said, adding, “Does it look like what the town needs for housing?” 

The final approval comes from the BHACF.

McBride said the board is open to opinions as to what is best for the community and encourages people to attend its quarterly meetings. 

The next Hill City Strategic Housing Fund board meeting is Oct. 23 at 3 p.m. at Oak and Key Realty in Hill City and anyone is welcome to attend.