Last year was rough for new construction and building permits in Mitchell.
The city saw large decreases in both total permits and the valuation of those projects in 2018, with 141 projects valued at $15,422,274, a nearly 58 percent drop in estimated value from the previous year. In each of the four years prior, Mitchell had at least $34 million annually in valuation from building projects in the city.
In conjunction with that, the city of Mitchell collected $59,245.50 in permit fees in 2018, down from $116,415.50 in 2017.
Just two projects in the city in 2018 were valued at more than $1 million. In February, Dakota Wesleyan University was issued its permit for a $4.5 million residence hall, now named Dakota Hall, which opened in August. Also in August, Performance Pet filed its permit for a $1.5 million addition at its 915 E. Havens Ave. location.
Upgrades at Dakota Wesleyan University ended up accounting for more than 30 percent of the estimated building permit value in 2018. In addition to the new residence hall, DWU conducted the remodeling of the Rollins Campus Center, valued at $339,000 and some remodeling work done in conjunction with the Dakota Discovery Museum, valued at $101,240.
Aside from the DWU's two projects and the Performance Pet addition, no other project in the city in 2018 exceeded $300,000 in valuation. And in the case of DWU's upgrades, those properties will be exempt on the tax rolls due to the school's status as a university.
Garages and sheds made up the largest portion of the Mitchell building permits in 2018, with 43 structures built. Residential additions accounted for 38 permits, followed by new residential (20), and commercial additions (17). The city also issued permits for duplexes, roofing and shingling jobs, demolitions and fences.
While numbers were low in 2018, Mitchell Area Development Corporation Executive Director Mark Vaux said he isn't worrying for the long term.
"I don't see anything alarming to me. It looks like a natural ebb and flow of a community of this size," Vaux said. "The community saw several significant projects in 2017, from a business standpoint and for multi-housing projects. ... It's pretty normal to have something like this."
Vaux pointed out that Mitchell had $19 million in new commercial-level facilities in 2017, and $4.5 million in 2018.
"A lot of that can be attributed to just a few projects," Vaux said.
In 2017, Mitchell had 198 building permits, valued at $37,419,723, including seven projects of $1 million or more and 10 projects of $300,000 or more. From a commercial standpoint, those projects included the $7.4 million estimate for the Mitchell Indoor Aquatic Center, $7.15 million for the new Performance Pet facility.
Also on the list in 2017 was a $2.5 million addition for Vantage Point Solutions more than $2.2 million from NorthWestern Energy for its new offices and shop building, a $1.8 million structure for Trail-Eze's manufacturing plan, and a $1 million addition at Menards.
The $7 million-plus estimated value for the Performance Pet facility was the second-to-last permit issued in 2017, helping tip the scales against last year's total as well. Permits are pulled at the start of the building process, meaning they could count for one year but be completed during the next calendar year.
The 20 new residential permits are the fewest since 2014, when 17 were recorded by the city office. Those 20 permits were valued at $4.35 million, while in 2017, there were 35 new residential permits valued at $7.1 million.
Mitchell City Administrator Stephanie Ellwein noted that commercial construction tends to go up and down on a yearly basis, but residential construction is closer to where it was in 2012-14 prior to three strong years of new construction. From 2015 to 2017, Mitchell had 34, 35 and 35 new residential permits respectively in those years.
But she said she wasn't sure why Mitchell experienced such a large drop in 2018.
"I would assume it is largely reflective of demand and the status of the current economy," she wrote in an email to The Daily Republic.
Some builders said the financial situation - with rising interest rates - is having an impact on new residential construction. Jared Boehmer, who works in sales at Ethan Co-op Lumber, said residential construction is being affected partially because of rising rates.
"With residential construction, interest rates are starting to increase," Boehmer said. "We're seeing residential being built but it's from the guys with a little extra cash. You're not seeing those 1,800-square foot homes right now. It's the larger ones, where they've got a little more resources to work with. Interest rates are playing a little with that."
Davison County has also dealt with lower building permit numbers. The county keeps track of building permits from September to August ahead of the next tax year. From Sept. 1, 2017, to Aug. 31, 2018, Davison County had 58 new permits for the 2019 tax year. In 2018, that number was 63, down from 71 in 2017 and 72 in 2016, Planning and Zoning Administrator Jeff Bathke said.
Vaux said the city did a good job of responding to the needs of the community housing study conducted a few years ago, and he said it will continue to be an effort that will need attention to help workforce issues, growing population and bringing in and retaining businesses. He expects housing to be a crucial part of the community vision planning effort that gets underway for Mitchell later this month.
"People are looking for single-family homes," Vaux said. They want to own housing, and not just be renting apartments or houses. We want a good blend and a good mix of affordable homes and that's one of the things we'll have to work at."