Spearfish uses private-public model to launch affordable housing project
Construction is underway at Sky Ridge, an affordable home development on the northern edge of the Black Hills. The Spearfish project will have 150 houses, walking trails, and softball and soccer fields.
The development reflects some current trends in South Dakota housing projects. It's the result of a public-private partnership, and it blends housing with recreation, retail and other amenities.
On Thursday, workers drove heavy machinery and carried supplies across the site, which was lightly dusted in snow. Nearby, Spearfish city officials, developers and other workers gathered to celebrate the groundbreaking of the first home.
“We have had a lot of growth in the last several years," said City Planner Jayna Watson. "It’s a very desirable place to live, meaning that just causes real estate prices to continue to increase. But the wages locally don’t keep pace with the increase in housing, so we wanted to create a neighborhood that is geared specifically to affordable housing.”
Sky Ridge is on the east end of Spearfish, away from the downtown and other residential areas. Spearfish is home to Black Hills State University and is known for its outdoor recreation. The city has mountain biking trails, a public campground, a creek, and serves as the gateway to Spearfish Canyon and other Northern Hills sites.
The average cost for single-family homes is $280,000 in South Dakota and $338,000 in Spearfish, according to Zillow.
Sky Ridge will have 60 homes that cost up to $197,000, 60 homes that cost up to $247,000, and 30 homes that cost up to $300,000. Buyers will go through a pre-approval process to make sure they are in need of affordable housing and can stay on top of their bills.
A 2016 study found that Spearfish needed more affordable housing, and that the city would have to take an active role.
The city decided to use a tax increment financing district to pay for the roads, infrastructure and utilities in the Sky Ridge housing and sports development. That cuts down on costs for buyers.
The city is paying for the sports complex through fundraising and an $8 million bond. It hired Dream Design International, a Rapid City-based company, to build the homes.
Company president Hani Shafai said Dream Design should break even or make a small profit on the project, but that's not his goal.
"You know we do a lot of work and we don’t have to make money in all of the projects that we do," he said. “You have to provide housing and you have to provide jobs for the different various levels within the community. Some people have different levels of education, some people have different levels of experience. And that’s what makes a community sustainable, that’s what creates a healthy community."
Shafai said Dream Design is able to help with affordable housing thanks to the profits from its other projects. He said other companies can use this method, too.
The Workforce Housing Needs interim legislative committee and Gov. Kristi Noem have shown interest in such public-private partnerships.
Noem said at her budget address that she wants the state, municipalities and private companies to pitch in $200 million each for new workforce housing.
Another private-public partnership is Liberty Plaza in Box Elder — also a Dream Design project.
Like Sky Ridge, Liberty Plaza combines housing with other attractions. Liberty Plaza will have housing, a recreation center, retail and more. In Sioux Falls, the Steel District, Burnsfield Village, Cherapa II and other projects will mix housing with restaurants, office space, hotels and other amenities.
Construction at the Sky Ridge homes in Spearfish will continue for the next five years, with the 40-acre sports complex expected to open in the spring of 2023.
Residents can also take advantage of a nearby gas station, convenience store and Indian restaurant. Shafai said he hopes retail shops will open on vacant land across from the development.