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Polak resignation comes as SDHDA prepares $200 million fund

Questions remain around the departure of the head of South Dakota’s Housing Development Authority.

The move comes as the state agency creates rules for a new infusion of $200 million into the housing infrastructure program.

The debate over who has authority over these funds has been a point of contention between the legislature and the governor's office.

Gov. Kristi Noem appointed Lorraine Polak as executive director for South Dakota Housing in January of 2021. Polak had worked for the agency for 25 years.

Bill Hansen, chairman of the board that oversees South Dakota Housing, said the board has received limited details regarding Polak's resignation, other than that her last day will be Friday.

“We don't have any information as to the appointment of the new executive director by the governor," Hansen added in an email.

A spokesperson for the governor's office has not responded to requests for comment.

Polak's departure comes as the state housing authority begins to spend $200 million on low-interest loans and grants to spur infrastructure development for housing projects across the state. The money pays for land acquisitions for water and sewer lines, as well as streets, curbs and gutters and sidewalks for new housing developments.

Three-quarters of the money is coming from the state general fund and the other quarter from the federal American Rescue Plan Act.

Several lawmakers say Polak’s resignation was not voluntary. They worry the move will delay getting infrastructure grants and loans out to communities.

State Sen. Lee Schoenbeck, R-Watertown, called Polak’s departure a firing and says it “absolutely” has to do with differences over the housing program lawmakers approved.

Former South Dakota Housing Executive Director Lorraine Polak
Former South Dakota Housing Executive Director Lorraine Polak

“Governor’s office held up rules being submitted to rules review. That should have happened already and they missed it by a month. So, they’re delaying the housing projects in every community in South Dakota,” Schoenbeck said.

“Now, the head of the program—who is extremely talented and would have been the perfect person to administer it—they fired her. So, it doesn’t matter who they put in there, it’s going to slow down creating housing in communities in South Dakota," Schoenbeck added. "I have no ability to understand why a governor would do that kind of damage to our state.”

For two years, legislators have tried to get $200 million in housing grants out to communities. There‘ve been competing visions about which agency would administer the money.

Initially, the money was earmarked for the Governor’s Office of Economic Development, which is headed by former state lawmaker Steve Westra.

Westra is also the vice-president of Sioux Falls developer Hegg Companies.

Instead, Senate lawmakers heavily amended a companion bill to place that money within South Dakota Housing Authority.

“It has been simplified so that it is really clear that this is for housing infrastructure,” said Sen. Casey Crabtree, R-Madison, during a floor debate on March 7, 2022. “It’s not unusual for us to focus on an infrastructure project. We have done that in the past, including with rural access infrastructure funds as recently as last year.”

However, the governor opposed the move.

“The proposal that appropriators brought to us… puts all the money in Housing Authority, which is less accountable to taxpayers,” Noem said on March 8, 2022.

The amended bill passed both chambers and was signed by Noem on March 25 of last year.

Then Argus Leader reporter Joe Sneve, BFM Commissioner Jeff Partridge, Governor Kristi Noem and chief of staff Mark Miller during a budget roundtable discussion in March of 2022
Governor Noem YouTube
Then Argus Leader reporter Joe Sneve, BFM Commissioner Jeff Partridge, Governor Kristi Noem and chief of staff Mark Miller during a budget roundtable discussion in March of 2022

But the money went unspent.

And it's remained unspent, even after the legislature's executive board issued a letter of intent on May 16, 2022, saying the housing authority can administer the funds.

During the 2023 session, lawmakers presented a new bill to get the money spent, and the governor signed it.

Just a couple of weeks ago, the housing authority's board of commissioners approved draft plans for public comment.

Housing authority commissioners have set a public hearing date on the proposed rules for early May. The rules will not be effective until they receive legislative approval and are filed with the Secretary of State's office.

State Rep. Rodger Chase, R-Huron, was a prime sponsor of the new bill.

Chase said lawmakers hoped the fund would start accepting applications for infrastructure projects by June 1. He said he’s concerned about the funds being distributed in time for this year’s construction season.

Chase said Polak made good progress on getting the housing infrastructure fund ready.

“I don’t know who, if anybody, is going to be in charge of it now,” Chase said. “I’ve not been told that. We had every confidence in the world. For whatever reason… I don’t know what happened.”

The housing commission chair Bill Hansen said he's hopeful the state’s housing authority can continue working on rules so developers can start using the money on some projects this construction season.

"As a board, we thank Lorraine for her 25 years of exemplary service to SDHDA," Hansen said.

Lee Strubinger is SDPB’s Rapid City-based news and political reporter. A former reporter for Fort Lupton Press (CO) and Colorado Public Radio, Lee holds a master’s in public affairs reporting from the University of Illinois-Springfield.