MADC housing development still 'on the table' for eastern Mitchell but funding, building cost hurdles remain
Although the project that sought to bring around 90 homes across the street of Avera Queen of Peace hospital has been sidelined since April 2020, Geri Beck, CEO of the Mitchell Area Development Corporation (MADC) and Chamber of Commerce, says the housing development is still on the table.
The need for more affordable homes in Mitchell persists, and the Mitchell Area Development Corporation’s plan to build a new subdivision on the east side of the city has been sidelined for 18 months now.
But Geri Beck, CEO of the Mitchell Area Development Corporation (MADC) and Chamber of Commerce, says the housing development is still on the table, even if there are some major challenges still standing in the way.
The announcement about the MADC's plan to use 21 acres donated by Avera Queen of Peace to build as many as 90 homes was made in January 2020. Three months later, citing the questions about the pandemic, the project was shelved.
Since then, leadership in the key organizations involved has turned over or left the project, and building costs have made a large-scale development much more difficult. But Beck said she has some confidence in what might lie ahead for the project known as Ridge View on Foster.
“Avera and the city are still with us, and they remain committed to the project,” Beck said.
The housing project has been viewed as key to helping Mitchell's population grow, something that has come into more focus since recently released U.S. Census data showed Mitchell’s population increased by 3% since 2010, while similar-sized cities such as Yankton and Pierre saw a 7% growth in population, bringing the two municipalities closer to Mitchell’s 15,660 population. Huron also saw a 13% increase in growth, bringing the city’s population to 14,263.
“We have the jobs, but we need the homes to accommodate workers,” Mitchell Mayor Bob Everson said. “Bringing more affordable housing will lead to more growth, economically and population. It's been an issue we're working to address. There are two to three jobs for every unemployed person in Mitchell, so the jobs are out there.”
Infrastructure funding, rising building costs pose challenges
Funding the buildout of the infrastructure is the biggest challenge Beck said the project is up against, as of now. While she’s been exploring other options to position the takeoff of the Ridge View on Foster development, Beck said U.S. Sen. Mike Rounds, R-S.D. agreed to earmark $2.4 million in the 2022 Senate Appropriations Bill that would be solely dedicated for the infrastructure and build out of the Ridge View on Foster housing development, if awarded.
Considering the infrastructure costs, which would primarily include installing storm and sanitary sewers, roads, water main and curb and gutter, have been estimated to hover around $4.1 million, the $2.4 million earmarked from the federal government would cover a little over half of that phase of the project, if awarded.
“It made it past the first round of cuts, so that’s a promising sign,” she said of the earmarked money. “We’re going to have to either raise some money, or get some federal or state funding assistance.”
Prior to former MADC leader Mark Vaux resigning in August 2020, he was pursuing the creation of a Tax Increment Financing (TIF) district around the area to help cover the roughly $4.1 million infrastructure costs. After COVID-19 hit, Vaux requested the Mitchell City Council to table the TIF in April 2020 due to concerns that centered around the pandemic impacting construction companies' ability to work within the timeline of the five-year TIF window, which begins as soon as the TIF is approved by council. The TIF has yet to be brought back in front of the council.
With the TIF alone, Beck said project leaders have come to the consensus that it wouldn’t be enough to cover the infrastructure costs. If the TIF is approved, there would be a 20-year period available for the increment to generate revenue from property taxes in the area to pay off the infrastructure improvements.
“We’ve come to the conclusion that even with a TIF, there wouldn’t be enough property tax revenue to handle the debt that we’d have to undertake for the infrastructure for the development,” Beck said.
Although many local construction companies have ramped back up amid the pandemic, a new challenge for the development has emerged: soaring building material prices. For example, lumber prices have risen by 130% since mid-April 2020, according to the National Association of Home Builders as the pandemic continues disrupting supply chains in a myriad of industries.
“It’s tougher to get into affordable housing now with the skyrocketing building costs,” Everson said in June during his reelection campaign. “But we have some good developments in motion like the Lake Ridge development across from the lake and several others in the planning stages.”
Project leader shakeup
When the MADC unveiled the housing development to the Mitchell Planning and Zoning Commission and City Council in February 2020, the leader of a then newly created nonprofit organization -- which aims to help median income level earners afford building a home in communities with a lack of affordable housing -- was playing a major role in the project.
That will no longer be the case, Beck said. Clinton Powell, executive director of Shelter Community Housing Corporation, was offering a myriad of financing packages, such as silent second mortgages, to keep the price range of the homes around $200,000 to $250,000. Powell’s role was lessening prior to Beck taking on her role with the MADC this past summer, replacing Vaux.
To provide homes in the development that are within an affordable price range for median income earners, Beck has been exploring the idea of bringing a housing organization to Mitchell to help drive regional housing assistance, along with partnering with other groups.
“We’ve been actively talking with other housing organizations, and they’ve suggested looking into trying something smaller,” Beck said. “We’re looking at possibly doing a lot or two to start with, and putting up a single-family residential home that has covenants to make sure it is a nice home.”
Despite the funding uncertainty and rising building material prices, Beck and city leaders are remaining optimistic about the Ridge View on Foster development.
“We need to be ready as an organization and community before we can get federal and state money, and we are moving forward with that in the meantime,” she said.