MITCHELL — A 22-lot housing development could be coming to the north side of Lake Mitchell in the near future.
Corsica-based Groeneweg Construction is seeking to build a housing development on roughly 8 acres on the corner of Fiala Road. To help fund the proposed project, the developer, Paul Groeneweg, is seeking a Tax Increment Financing District.
Mitchell attorney Don Petersen, representing Groeneweg Construction for the TIF portion of the project, broke down details of the development during Monday’s city Planning and Zoning Commission meeting. According to Petersen, the TIF, if approved, would fund the roughly $562,000 infrastructure needed for the development, including street installments, drainage systems and curb and gutters.
“The project would consist of one phase. There are four existing lots within the development that have existing single-family homes built on them,” Petersen said during Monday’s meeting. “They would meet the affordable housing requirements.”
The guidelines of the TIF stipulate the initial selling prices of all the homes in the proposed development cannot exceed $300,000. According to the South Dakota Housing Development Authority, a $300,000 home is the maximum price tag for it to be considered an affordable house in Davison County.
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“It’s houses that are at or below the first-time home buyers limit, which is currently $300,000,” City Administrator Stephanie Ellwein said during Monday’s meeting.
Pending approval of the TIF, Petersen said Groeneweg Construction is eyeing homes to start being constructed as early as this year. Petersen says the anticipated completion date for the development is 2026.
Groeneweg Construction is owned and operated by Paul Groeneweg, who has recently built a handful of homes in Mitchell and is familiar with building near lake homes. In recent years, Groeneweg Construction has put up residential homes along the lake, with some being constructed in existing developments such as The Island on the west side of Lake Mitchell.
Groeneweg did not speak about the development during Monday’s meeting, which centered around the TIF application.
According to Petersen, Groeneweg would be placing a covenant for the development that requires new homes built in the development be owner occupied for at least two years after the initial sale is completed.
Another caveat to the development Groeneweg is requesting entails allowing him to rent the homes built in the development if they are not sold within three months of completion.
“If a completed single-family home has not been sold within three months of the completion, the developer reserves the right to rent such a property as a single-family dwelling with the rental amounts to be added below the calculated rent for the state of South Dakota’s 80% area median income,” Petersen said.
Providing Groeneweg the ability to rent the homes that may not sell within three months of completion would allow Groeneweg to generate income to pay for the expenses of building out the development, Petersen noted. Petersen said the rental amounts of the new homes in the development would also be required to stay within the affordable housing guidelines
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The increase in property taxes within the TIF boundaries is referred to as the “tax increment,” which the city would then pass on to the developer until the maximum $627,889 increment has been realized. There would be a 20-year period available for the development to generate the $627,889 from property taxes within the housing development. Petersen anticipated the $627,889 increment could be reached by 2035.
If the development is approved, once it’s finished, Petersen claimed it could add roughly $5.5 million to Mitchell’s tax base.
“This area right now is being taxed at a nominal amount, and as these houses develop it’s only going to create more tax increment and taxes for the city and county,” Petersen said.
Groeneweg’s proposed development would join a handful of ongoing housing developments in Mitchell, with several taking place around Lake Mitchell and areas along the south and east edges of the city.
The housing project was met with support from Commission Chairman Jay Larson, who pointed to the estimates on the lack of affordable housing options in Mitchell as a major reason he approves of the plan.
“I think you’re going to see more houses going quickly. Or at least that’s my hope,” Larson said.
