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Housing bill heads to Gov. Noem’s desk after vote-a-rama drama in South Dakota Legislature

As the wide-ranging group of supporters had hoped, $200 million in housing infrastructure dollars is headed out the door, pending signature by a supportive Gov. Kristi Noem.

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Sen. Lee Schoenbeck, the top Republican in the Senate, speaks with Rep. Roger Chase after the successful passage of Senate Bill 41 on Jan. 23, 2023, which Chase sponsored in the House.
Jason Harward / Forum News Service
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PIERRE, S.D. — Gov. Kristi Noem is set to receive her first opportunity for a major signature this legislative session. It didn't come without a fight.

Despite outspoken opposition from the conservative wing of the House Republican caucus, an unexpected delay and a plethora of proposed amendments, Senate Bill 41, the $200 million in grants for helping municipalities develop housing infrastructure, passed the House 54-16 on Jan. 23.

“Our priority in the House is to get this done,” House Majority Leader Will Mortenson, of Pierre, said before the vote. “We’ve made it a priority so far, we've been talking to our caucus about it literally since day one. And so we're gonna get it down to the governor quickly.”

The bill, supported by nearly every interest group in the state related to business or local government, passed the Senate on Jan. 12 and emerged from a House committee earlier this week on Jan. 17, both times with little resistance.

Backers of the bill say the money is needed to supplement private developers in their bid to build adequate housing in the rapidly growing state. Due to the successful two-thirds majority in both chambers, the money will be available for processing municipal applications upon Noem’s signature, which had been a central goal for proponents.

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“Every community you go through in South Dakota, workforce is the number one issue and really, it is a serious challenge,” Senate Majority Leader Casey Crabtree, of Madison, said during a news conference with Republican leadership on Jan. 18. “If we don't get serious about tackling this, our economy is going to shrink. Things are going to change around here.”

The idea for grants and loans dedicated to constructing housing infrastructure such as sewers, streetlights and roads took a total of almost three years; while similar legislation passed last session, it was held up in administrative limbo as the South Dakota Housing Development Authority awaited “clarification” from the Legislature.

Rep. Jon Hansen, an opponent of the bill, framed this wait as proof that the state’s housing market could do without the planned government infusion, as South Dakota had posted one of the nation’s fastest-growing housing markets over that time period.

“Even after that, it's still being claimed that there's a crisis that needs to be addressed,” Hansen said. “Now inflation has led to higher burdens on the housing market. Well, what led to the inflation? Big government spending. And what's the proposed solution here? More big government spending."

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Rep. Jon Hansen, of Dell Rapids, speaks during House debate on Senate Bill 41 on Jan. 23, 2023.
Jason Harward / Forum News Service

Another concern of the opposition was the potential for these dollars to further squeeze supplies of labor and materials that have been significantly increasing construction costs.

“If we release this money, the homes still need to be built, which is a need that our own home builders are already accomplishing,” Rep. Julie Auch, of Yankton, said during debate on Jan. 20. “The homebuilders I visit with are concerned that these $150 million dollars are going to be spent by a few large investors and small hometown home builders will run into supply issues.”

Proponents of the bill point out that 70% of the money is earmarked for smaller municipalities in the state, many of which do not have large contractors that could take in windfalls of state and federal cash.

“It feels like there is a contingent in this body that came in with their mind made up,” Rep. Carl Perry, of Aberdeen, who voted in favor of the measure, told Forum News Service after the vote. “I looked at both sides with an open mind and came to what I felt was the best decision.”

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Amendment-a-palooza seeks to address income requirements, conflict of interest concerns

In trying to address another oppositional concern of the money landing in the hands of a few “well-connected developers,” Rep. John Mills proposed an amendment that would bypass the oversight of the South Dakota Housing Development Authority on these dollars, instead giving the money directly to counties.

The amendment as written gave wide discretion to counties to use these dollars on several types of “capital projects,” including infrastructure, housing infrastructure and incarceration.

The amendment failed 51-18 on Jan. 20, with Rep. Roger Chase, of Huron, a prime sponsor of the housing infrastructure bill as written, criticizing the proposed “cash drop” and underscoring the competence of SDHDA to administer these funds. Other criticisms included a funding mechanism that “punished” smaller counties.

A second amendment on Jan. 20, from Rep. Liz May, of Kyle, would have stripped the emergency clause from the bill, which would delay the dispersion of funds until July 1 rather than making them available upon the governor’s signature. It was on the May amendment that Rep. Tina Mullaley, of Rapid City, invoked legislative rule 5-17, which immediately delays any action on an amendment one legislative day.

When the chamber returned from a weekend break, legislators dived back in where they left off and considered several other amendments. May’s amendment, which she said would “slow off this train wreck,” was voted down on a roll call vote, 51-19.

Another amendment sought to target the money more directly into lower-income “workforce” housing. Proposed by Rep. Greg Jamison, of Sioux Falls, it would have required that the infrastructure built by these dollars be targeted toward “households with earned income that is insufficient to secure quality housing in reasonable proximity to the workplace.”

Rep. Roger Chase, the bill’s prime sponsor — who had become the de facto amendment-buster over the handful of considerations taking place during the two-day vote-a-rama — took issue with the wide breadth of potential interpretations that can come from the word “workforce,” which Jamison had amended into the text several times in order to underline the intertwined issues of workforce and housing.

Finally, an amendment from Rep. Tony Randolph, of Rapid City, would have imposed severe criminal penalties on “current or future” legislators who benefit “directly or indirectly” from the dollars expended under the legislation.

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The amendment failed by voice vote, with Rep. Taylor Rehfeldt, of Sioux Falls, pointing out that the South Dakota State Constitution already requires legislators to avoid conflicts of interest.

MORE BY JASON HARWARD
“We see that when things happen in the coastal areas, a few years later, they start trending toward the Midwest,” said Rep. Ben Krohmer, serving his first term in the House.

Jason Harward is a Report for America corps reporter who writes about state politics in South Dakota. Contact him at 605-301-0496 or jharward@forumcomm.com.

Jason Harward covers South Dakota news for Forum News Service. Email him at jharward@forumcomm.com.
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