Sioux Falls could receive $30M from state's workforce housing program

SIOUX FALLS — The city could net $30 million to encourage the building of more affordable homes, a key element to attracting workers to the area, as part of a grant and loan that is working its way through the Legislature.

The package includes $200 million for workforce housing statewide. Lawmakers approved spending the money last year but it was held up when the South Dakota Housing Development Authority raised concerns about how it would work.

So the Legislature is taking another swing at it with hopes of getting the money to communities starting this spring.

The $30 million isn’t going to solve the affordable housing crunch in Sioux Falls, said Logan Penfield, housing development manager for the city.

But it will help.

“I’d rather have it than not,” Penfield said Tuesday, Jan. 17, following a presentation to the city council on the 2026 Housing Action Plan. “Thirty million dollars is still 30 million dollars and it’s more money than we have to spend from city funds on housing or federal funds.”

Penfield told the council that his department hasn’t put together a detailed plan on how the money will be spent. That will start when the final package, with details and regulations, is approved.

However, the city always has the goal to find ways to leverage grants and loans to the greatest extent possible.

In the case of state workforce money, half of the $200 million is grants and the other half will be used for a low-interest revolving loan fund. The money can be used to put in the infrastructure - roads, water, sewer - in order to help lower the cost of a housing project.

There are private developers and nonprofit organizations in the city who are good at finding ways to maximize the effect of the money, Pinfield said.

The city currently gets about $2 million a year through several federal housing programs. That money is used in a variety of ways including helping low-income families make needed upgrades to a home, rental assistance and subsidizing twin home construction.

“The goal would be to try to find a way to partner, and say the city provides X, whether it’s grants or loans for the project, and then there are grants available through the state. How does that affect the pricing at the back end? If it’s multi-family housing, did it buy down the cost of the units? Or did this lower the cost of single-family homes?” Pinfield said in an interview with Sioux Falls Live.

The legislation includes an emergency clause, which makes it effective immediately after the governor signs it. That clause requires a two-thirds majority vote in both chambers of the legislature.

The Senate approved the measure 29-2. The House is scheduled to consider it Friday, Jan. 20.

The city’s share of the $200 million would aid in the overall mission of the Accesible Housing Advisory Board, Jeff Nelson, chair of that board, told the council during the update on Tuesday.

“We can put every penny to work, meaning people can stay in their houses, they can upgrade their houses and they can be worth more money,” he said. “That’s what we are tasked with.”