Sioux Falls Housing Permits up, but is it affordable?

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Something sadly missing from the stats of record building permits;

There’s more than a billion dollars of construction happening in Sioux Falls but where in all that money does affordable or workforce housing fit in?

It doesn’t so far.

“I just looked at the projects and we’re adding over 3,000 (housing) units,” said Jill Madsen, the president of the South Dakota Multi-Housing Association (SDHA). “From what I see I don’t see low income or workforce. I don’t see any tax credit housing and that has been workforce housing.”

It seems the permit values have risen because builders are building more expensive homes;

“There is still a lot of building going on but it’s more expensive houses that are being built,” Ingle said. “The (permit) valuations are going up because we are building more expensive homes.”

I still don’t understand what the end goal is with housing concerning city leadership? If you were to look at it from a distance as an outsider you would think city leaders are trying to push poorer residents out of our community, not just with permanent housing but with rentals also. I have said it is unsustainable in comparison to the workforce we will need.

Sioux Falls Mayor TenHaken taps former Thune and Rounds staffer for Housing Development Manager

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Logan Penfield was tapped 2 months ago according to his profile. He does have educational and professional government experience (unlike some of Paul’s past appointments) but I found it interesting that the circles Mr. Penfield runs in probably contributed to his appointment.

When I think of affordable and accessible housing advocacy, the Republican Party usually doesn’t rank high on that list. (FF 9:40 to hear is introduction);

Top Down approach to affordable housing is a ruse

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Ever since the Reagan administration introduced trickle-down economics governments across our country have experimented with it. It simply doesn’t work. The concept is that if you give tax breaks to the very top it somehow will help the ones below in better jobs and housing. In fact it has done the opposite, expanding the wealth gap.

The cat was let out of the bag during this interview yesterday that the TIF sponsored housing development in SW Brandon was depending on the tired old broken system of trickle-down;

Meanwhile, Karl Fulmer, the executive director of Affordable Housing Solutions in Sioux Falls, told DNN that these TIF-paid city developments are an effective way of addressing affordable housing.

“The benefit of just building more houses in the $250,000 to $400,000 range still provides the unit, and you can see the transition out of more affordable units from those who might make enough to buy homes in that price range”, Fulmer said.

In other words, these new houses in new “accessible housing” developments actually are not for those most struggling to find affordable housing the most. They are far those who bought smaller, older “starter houses” in town that cost less than $250,000 and are ready to move out of them.

The true affordable housing comes in those starter houses. And the more new “accessible” houses funded by city TIFs that are built, the more those older, smaller houses become available to lower income people.

[insert laughter]

If you speak with anyone in the real estate business they will tell you that these homes are usually owned by lower income people, families, retired folks or rental property, they are not the Jeffersons moving on up. And even if what he was saying was true, most of the homes being sold in this development will go to NEW homeowners not people looking for a step up. In fact, I have argued that many of the starter homes in the lower price range (mostly in the core of the city) have more square feet and bigger yards (and basements) than what these new homes will have.

A better approach would be addressing the housing crisis we have with the people who are having the crisis;

Pat Starr, who represents the northeast district, also told Dakota News Now on Monday that city government is continuing to “dig a hole” by continuing to dig literal holes to build homes partly funded in part by Tax Increment Financing (TIFs).

“We need to talk about the real causes of the housing issues in our city rather than trying to put a band-aid and build 65 houses, which is what this program will do.” Starr said.”

“It’s not the program I’m concerned as much about as as I am figuring out who we’re trying to help. And, it seems to me we have a wage issue more than we have a housing issue.”

We must be giving a helping hand to those who are at the bottom first to lift the other boats. The city has decades long programs in place including low interest Community Development loans and grants. We also need to upgrade the existing infrastructure in our core such as streets and lighting. We can do all this using existing money in our 2nd penny and Federal dollars.

The president of Sioux Metro Growth Alliance, which helps people with payment on houses in rural and suburban communities surrounding Sioux Falls, disagrees.

“If you look at wage growth around the country and in the Sioux Falls market in the last three years, it’s been astronomical,” Jesse Fonkert said.

While wages have increased in SF, inflation and housing costs have been beyond astronomical and have wiped away any wage increases.

But Fonkert does agree with Starr’s assessment that continuing these city-funded housing projects is not solving the affordable housing crisis.

“It’s a challenging situation, because if you spend too much money on government programming, you’ll have companies that will just hike their prices up,” Fonkert said.

Notice the Sioux Steel District and Cherapa II projects didn’t announce they were building hundreds of units of affordable housing after receiving a combined TIF payout of $50 million. Developers will always go where the money is, and that is how a FREE market system works. But tax rebates for parking ramps attached to condos isn’t fixing anything it’s just making that wealth gap larger.

Mayor TenHaken pens rare Op Ed

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Imagine my surprise when I found this Op Ed by the Mayor in the Argus today. I can’t remember the last time he wrote an Op Ed in the Argus (or should we say one of his minions). I suspect there has been some push back by VIPs in the community about crime prevention;

Our per-capita violent crime rates have been largely flat for the past decade, and that is true again for 2022.

While this is true when you compare to population growth, the crimes have become more violent and drug related. I’m not putting this entirely on PTH, even though he has had 4 years to do something about it. The past two police chiefs essentially hid in their offices doing little to address the drug related crimes. Chief Thum has decided to tackle it with 1,000 times more transparency than the last couple of guys but he does need the mayor, his boss, to step up.

The Sioux 52 Mentoring Initiative was set up to intentionally begin addressing challenges we were seeing with juvenile crime. 

I commend this program. Mentoring is essential to help keep youth out of trouble. After winning re-election PTH handed the program over to the HelpLine Center. I’m fine with that except when an elected official starts an initiative they need to stick with even after leaving office. It’s one thing to applaud mentoring programs but on the other hand turn them over to a private entity.

Crime largely has to do with economic status. I don’t believe middle class and lower middle class individuals in Sioux Falls ever fully recovered from the 2008 recession in which wages were frozen for several years. While businesses complain they can’t find workers and can’t afford to pay more, the problem is they never kept up to begin with, wages were stagnant for over a decade while the cost of housing has skyrocketed. The math just doesn’t add up.

It’s the tale of two cities. Over the summer I have decided to ride my bike through neighborhoods (logging almost 3,000 miles since last November) and came to the conclusion that 18th street (west to east) is the dividing line. The further South you go the better the residential neighborhoods, the further North, not so much. While there are pockets like extreme NE and NW for the most part the city is divided in economic status, infrastructure upgrades and housing.

When Janet Brekke was on the council she pushed hard for a pilot program to fix up some of these neighborhoods which would have required a heavy lift from the city when it comes to infrastructure. The solution the city offered was slab on grade tract homes between Brandon and Washington HS. Hardly what Brekke was envisioning. If we don’t address building density in our core for affordable housing in this community ASAP I’m afraid crime is only going to get worse.

Fighting crime means fighting for a more sustainable economy in Sioux Falls, FOR EVERYONE! As that line on 18th street gets wider crime is only going to rise.

City of Sioux Falls planning affordable housing development in Southwest Brandon

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Well not quite Brandon, but almost. (FF 1:30)

As I understand it the development is in between Washington HS and the city of Brandon on a current empty lot. They will use a TIF to help pay for the roads and utilities. The most affordable houses will be slab on grade (NO basements, not even unfinished), 1,000 sq ft, single stall garage, $250K.

I think a better approach would be building NO attached garage and putting in unfinished basements with egress windows so the basements could be finished later and a garage.

What is silly about this is that when we have talked about building density in our core and providing more affordable housing this was NOT what people were asking for. But it should be NO surprise since the public had ZERO input and the councilors were met with privately about the plan. This video is the first time anyone from the public has heard about it.

I think doing a pilot program in central Sioux Falls would have been a better way to go. You pick a 8 block area that needs some help. The city could use a TIF to rebuild the roads, sewer, water, sidewalks, curb and gutter and street lighting. Community Development could provide loans to fix up the homes in the affected area and Affordable Housing Solutions could demo and buy up empty lots for new housing in the area. Building slab on grade houses next to Brandon with no apparent public transit service will do little to solve our affordable housing issues in the core of Sioux Falls.