New State Program Hopes To Improve Workforce Housing

Jul 28, 2017

Some South Dakota cities and towns may be able to use federal grant money to tear down dilapidated and abandoned buildings.  The state is giving one million dollars to the new Bulldoze, Build, and Beautify program.

Each year South Dakota gets 5 million dollars in federal money for the Community Block Grant Program. The money is used on projects that help low and moderate income people. It can also pay for community improvement projects. Rapid City and Sioux Falls are excluded from this program because they have their own community development programs. Aaron Scheibe is the Deputy Commissioner of the Governor’s Office of Economic Development. He says Bulldoze, Build, and Beautify is designed to enhance communities and create usable workforce housing.

“We’ve heard, certainly over the last several years, that workforce housing is a huge concern for a lot of our communities, particularly in our rural areas where it can be somewhat difficult to build new housing on ones’ own, or could be difficult to secure adequate housing within a community for workers who are working in the local businesses.”

Scheibe says the program is aimed at people who don’t qualify for low income housing programs but also can’t afford to build new. The program uses grant money to demolish eligible blighted properties to make way for new housing. It’s the result of a collaboration between the Governor’s office of Economic Development and six South Dakota Planning Districts. The districts are an extension of city, county, and tribal governments. Each district provides assistance to communities on planning and economic development. Greg Henderson is the executive director of planning and development district three. His district covers a large portion of south central South Dakota.

Image Courtesy of South Dakota Department of Environment and Natural Resources

“The planning districts have been raising issues with the Governor’s Office of Economic Development for a long time from the perspective of what are things that communities need to address, especially the smaller towns and workforce housing is almost a universal issue in South Dakota.”

Henderson says a shift in small community economics is driving the need for improved housing.

“There’re a lot of towns that are transitioning from what used to be agricultural service centers 30-40 years ago into bedroom communities today. They need attractive housing in order to survive as a thriving community.”

The new program pays to tear down blighted residential properties owned by cities, counties, or non-profits. It also sets up some requirements. Those entities must construct new single or multi-family homes. They must complete construction within two or three years. Exact completion deadlines depend on the size of the community. Scheibe hopes one million dollars will tear down 150-200 buildings. It’s a small part of a much larger number.

“We came up with an estimate of somewhere around three thousand blighted properties throughout the state that we could potentially address. We’re going to have to work slowly towards that.”

The program offers a one to one match for demolition and site preparation. Small communities still might have a hard time raising money so the program allows in-kind contributions. Scheibe says this eases the burden of a direct cash match.

“If a local fire department wants to help by staging an exercise and burning a house down, and that reduces the amount it will cost to demolish the house we’re very open to that. Likewise, if the city has a crew that has a bulldozer or a pay loader and can help with some of the clearing and demolition and reduce the cost that way we’re also very open to that and will certainly consider that as part of the match.”

Counties, cities, and non-profits will own the home after it’s built. They can decide whether to rent or sell, but Scheibe expects most will sell.

“If you think about it that’s what we are really hoping for is people who will put down roots and will become a vibrant part of the community in a home that they own and maintain. It adds to the appeal of the community.”

Workforce housing is a huge concern for a lot of our communities.-Aaron Scheibe

The program goes beyond adding community appeal. Greg Henderson, who works with one of the states planning districts, says the program adds property tax revenue. That extra revenue pays for amenities in small communities.

“If you have a community of five to six hundred people within a half hour drive of a larger community such as a Yankton or Mitchell, in order for people to want to live there they have to have housing first, they have to have decent amenities, recreational facilities, probably some retail where they can get gas and milk. They don’t need a lot but they need things in their community that they can access and housing, again, is the key to that.”

Each community decides on the requirements for home owners. Communities needing low income housing can build governors homes. Some cities may need a place for key employees to stay if a new manufacturer is moving in. Scheibe says it depends on community needs.

“Somebody who’s working at the local coop and maybe their spouse is a teacher at the local school district. They may not qualify for more traditional affordable housing programs but they may not be in a position necessarily to build an expensive house in town either and those types of individuals who I just talked about are kind of the backbone of a lot of our communities so we needed to find a solution that works for them.”

The program only focuses on residential property. Scheibe says commercial buildings ad extra complications and expense. If the program is successful, some district leaders hope the program can expand to commercial properties.

“Somebody else can’t come in and save a community, but you can incentivize certain things that might help them help themselves so to speak.”

Cities and counties should apply for the program by August 18. Money is available to begin work in August if communities are ready. There is currently no timeline for the next round of funding. 

Below is the complete list of Bulldoze, Build, and Beautify eligibility requirements.

 

Property Type

·       Residential dwellings only; may be single- or multi-family.

·       Mobile homes are eligible, provided they are replaced by a permanent structure.

Property Condition

·       Must be in a blighted, dilapidated or abandoned condition.

·       Must be unoccupied and not used for another activity (e.g., a business).

Ownership

·       Must be owned by a county, city or local non-profit organization (e.g., economic development corporation, housing development corporation).

·       Title must be clear of any prior liens.

·       If not owned, the county, city or local non-profit must have an enforceable contract giving it the option to purchase the property within 18 months of the grant award.

Site Work

·       Blighted structure must be demolished and removed completely from the lot.

·       Lot must be restored to a build-ready state, including necessary utilities (water, sewer, electric and if applicable natural gas) to at least the property line.

·       Foundation/basement concrete must be removed and filled, unless it has been certified by an engineer for reuse within three months for a replacement property on the site.

·       Site work for demolition/removal must be completed within 18 months of award date.

Replacement Housing

·       Residential dwellings only; may be single- or multi-family.

·       No cost limits, but must either show it will be affordable based on the general wage level for the community’s workforce or priced to meet a specific need identified by a business in the community (e.g., housing for key employee).

·       Award recipient must commit to replace the demolished unit within two years of demolition and removal (three years for Class 3 municipality); failure to do so may result in obligation to repay CDBG funding.

Match and Limitation on Awards

·       Local match must be made at a minimum of 1:1 with CDBG funds, based on total project cost (i.e., inspection and remediation if applicable, demolition/burning, landfill disposal, site fill and prep).

·       Properties in which asbestos or other environmental issue is encountered after an approved project moves forward will be dealt with on a case-by-case basis.

·       Local match may be in-kind; in-kind contributions will be valued at the FEMA rate.

·       No limit on the number of units applied for; no lifetime limit on awards to a community; GOED may limit or partially fund applications if demand exceeds available funds.