'Game-changing' community donation as partnership forms for affordable housing
Just four months ago, Avera Queen of Peace Regional President and CEO Tom Clark was sitting in on a Mitchell Area Development Corporation board meeting. The discussion centered on affordable housing efforts.
And it wasn’t long after that meeting, Clark let Mitchell Area Development Corporation Executive Director Mark Vaux know Avera Queen of Peace might have some land it could put toward a solution. The 21.7 acres of land to the east of the hospital’s main campus could be the source of a large housing development.
“It just sort of clicked,” Clark said. “I pulled Mark aside after our meeting and asked him, ‘What would you think about this?’ And from there, it’s just started snowballing.”
“Immediately,” said Vaux, recalling his approval.
That discussion set the table for what Vaux called a “game-changing” donation: Avera donating that land to go toward a plan of as many as 94 homes when a two-phase plan is fully developed in partnership with the Mitchell Area Development Corporation.
Clark said the homes will be the keystone to the community’s effort to provide new housing for workforce development and said he believes it fits with Avera’s community-minded vision.
“It allows us to be a good steward of the resources God has blessed us with by leveraging this land for the greater good of our community,” said Clark, addressing a room of about 50 community and Avera officials. “It also allows us to work in partnership with others to achieve something together that none of us would be able to accomplish on our own.”
Initial plans call for eight homes to be completed by the end of 2020, and 55 homes finished by the end of 2024 with the first phase. Vaux said those plans are aggressive but he wants to push toward it, adding he’s already been in conversations with possible builders.
“Right now I would classify it as a goal, it’s the expectation,” Vaux said. “I would stop just short of saying it’s definitely going to happen. We feel very strongly it will happen, but we don’t have all of the documents signed saying we’re going to have eight houses up by the end of this summer.”
The MADC said it will take the lead on the project and develop a request for proposals for developers. The plan is not to sell individual lots, but to work with developers who can build multiple homes within a five-year period.
Clark said the estimated market value for the donated land is about $465,000. A tax increment financing district is expected to be sought to fund the infrastructure improvements, starting later this year. Mitchell Mayor Bob Everson said he expects a TIF to fund about $2 million in infrastructure work in the new development area for streets and city utilities.
“We were having discussions with other organizations in the area about getting affordable housing going in Mitchell but it was piecemeal — a lot here, a lot there — across the city," Everson said. "The nice thing here is that it’s one area that we can parcel out and get the development going. It becomes a neighborhood in itself.”
The target price of the homes is less than $200,000, and the development is intended for people with household incomes of between $50,000 and $70,000. Incomes in that range qualify for multiple grant and loan programs which will keep monthly payments within an approved range for lenders. Vaux said the donation from Avera is what will help keep costs lower for prospective buyers.
“There are a lot of developers in Mitchell and around the region that can successfully build homes in the $200,000 range,” Vaux said. “But when the lots are $30,000 to $50,000 range, it becomes unaffordable to those in the $50,000 to $70,000 salary range. Because of the gift, the land costs are minimal and we’re able to pass that savings on to the homebuyer.”
The donation comes as community leaders have long lamented Mitchell’s struggles with having a shortage of affordable single-family homes and the land is among the largest plots in the city that is available to build multiple homes at once.
The development does not yet have a name, but Vaux said he expects the name to recognize Avera’s contribution. He said he expects that the first of the homes would be constructed along East Eighth Avenue.
“We want to stay within the mission of what their goals and objectives as an organization are about,” Vaux said of Avera.
Clark said that there are some covenants that will be attached to the development, such as no renting of homes in the first five years and to restricting individuals from selling the home in that five-year span and profiting off the equity of Avera’s donation. There will not be a stipulation that some homes go to Avera employees, but Clark said he hopes the development can be used to help with housing hospital and medical staff members.
“We know workforce in Mitchell is a need, we have a very low unemployment rate,” Everson said. “And hopefully this can help bring some relief to that.”
The initial phase of the project includes plans for mixed-use properties near the corner of Eighth Avenue and Foster Street, something Everson said he’s excited about because it would bring additional commercial businesses to another part of Mitchell. The idea might include a business on the ground floor and apartments or condominiums above those businesses. A coffee shop or an attorney’s office were among the ideas mentioned on Thursday.
Other aspects of the neighborhood include bike trails, townhomes, large green spaces and pocket neighborhoods, where homes would be closely concentrated and have an intimate shared common area between them.
The second phase of the project will remain on hold, Clark said, until Avera moves most of its operations to the Grassland campus along Interstate 90, because it needs to keep the employee parking lot. Once that parking lot is no longer needed, additional development will be able to proceed.
Aside from the development and the 2016 opening of the Avera Grassland campus, Clark said Thursday’s announcement was likely the biggest moment he’s been a part of since becoming Avera Queen of Peace’s leader in 2011. Avera officials believe this is the first land donation of its kind in the health care system’s history that has gone toward developing community housing.
“It just was fortuitous timing,” Clark said. “This is a big deal, and I hope people in the community realize what an opportunity this is for the community.”