EDC tries to solve affordable housing puzzle

The Hill City Economic Development Corporation (EDC) is looking at completing another housing study, partially in the hopes of creating an affordable housing project in the Hill City area. Shonna McBride, vice president of the EDC board, said the EDC is making “good progress” on the affordable housing initiative and will explain said progress to the Hill City Common Council (HCCC) at the April 13 meeting.

A new housing study benefits the EDC and the city with things like zoning recommendations and the ability for either entity to apply for grants. McBride said South Dakota Housing pays for half of the housing study while the EDC pays for the other half, for an $11,500 total.

McBride said she is in the process of completing the application for that money and wants the city’s blessing moving forward, but EDC funds will be used to pay for the study. 

“The study arms us with more information to further justify if we’re going to be applying for grants,” McBride said. 

It also gives the EDC and city clear demographic data, which can help guide future directions. The last housing study was done in 2022 using 2021 data, and although a housing study is good for six years, McBride said that a lot has changed since then, indicating the “median home sale isn’t even close” to what it was then.

The EDC Housing Advisory Board was formed, in part, as a means to get Housing and Urban Development (HUD) funds that are available to Black Hills communities now. Those funds had been earmarked and then on hold during the government shut down. They are facilitated through the Black Hills Area Community Foundation (BHACF). Communities must apply to receive any funds.

Sarah Hanzel, strategic housing manager at BHACF, explained the strategic housing position of the BHACF, saying, “The Strategic Housing Initiative of the BHACF works on increasing the supply of affordable housing across the Black Hills through new construction and rehabilitation.”

It works with communities in seven counties in the area. The funds for the program come as a result of an award to the South Dakota Ellsworth Development Authority as congressionally directed spending in the 2024 HUD Bill, said Hansel, saying, “the foundation is expanding the revolving loan fund model into communities across the Black Hills through administration of a $30 million US HUD grant.”  

The money is earmarked into a fund known as the Black Hills Strategic Housing Trust fund, although it is not physically located in a bank account, but is allocated via the federal treasury department. 

Locally, BHACF helps to establish these advisory committees in communities across the region and works with HUD staff to coordinate program requirements and procedures. The entity acts like a bridge, so to speak, shouldering much of the burden of navigating the correct requirements that federal programs often come with. The BHACF also works closely with towns to see what projects are eligible for this money. 

That is the “puzzle” McBride said, saying  the hardest part for the Hill City EDC is identifying a piece of property in the area that may work with the available funds, to accomplish a housing project in a price range that’s in line with the targeted median household income of earners in Hill City. 

“For the foundation, affordable housing refers to housing that is accessible to people earning 80 percent or less of the community’s median income, and spending no more than 30 percent of their monthly household income on their housing cost, which includes utilities,” Hanzel said.

The project the EDC hopes to create could be located within Hill City proper or in a five mile range outside of city limits. Funds can be used to tear down an existing structure, refurbish an older property or renovate an existing one. 

“It’s just hard to make the numbers line up,” McBride said.

She said an eight-plex  would be the sweet spot. 

Hill City isn’t the only community applying for these HUD funds. Custer and Spearfish are further along in the process than Hill City, according to  Hanzel.

Rapid City has its own non-federal fund, too, known as the Rapid City Strategic Housing Trust Fund that was created in 2020 and sits in a physical bank account trust earning interest. Private donors, businesses and foundations, as well as grants, civic organizations and vision funds were used to create the fund. Despite the differences, this fund also addresses the affordable housing shortfall in Rapid City. Any town or city could create such a fund for this same purpose. 

The $30 million HUD grant extends until 2032, but since the program is “based on a revolving loan fund model, any communities who didn’t have projects occur during that period would still be able to work with the foundation in the years following the end of the official grant period,” said Hanzel. 

McBride said for EDC to have gotten to this point it has required a “pretty big commitment,” which is done by EDC members, all of whom volunteer their time.

McBride said the EDC is open to all suggestions on potential properties to address the housing needs the city faces. 

“We don’t know how many people would live here if they could afford to do so,” said McBride, who is happy to entertain questions and take suggestions when she appears at the April 13 HCCC meeting.