Groundbreaking held for Hot Springs workforce housing project

Photo by Brett Nachtigall/Fall River County Herald

Participants in last week’s groundbreaking on Hot Springs city property along Canton Avenue included, from left, Brian Spitzer (Southern Hills Future Foundation), Hot Springs Mayor George Kotti, Dean Hedrick (Hult Homes), Andrea Powers (Southern Hills Economic Development Corporation) and Hot Springs City Council President Bob Nelson.


By Brett Nachtigall


HOT SPRINGS – Last Thursday, June 27, was a “big day for Hot Springs,” according to Mayor George Kotti, as he and several others took part in a ceremonial groundbreaking event at the site of the city’s former water fill station along Canton Avenue and 21st and 22nd Streets.

The groundbreaking served as another step towards the city’s goal of creating more workforce housing in the community to keep up with the current and future demand created by some of the area’s larger employers. Currently planned to be placed on the site are a pair of Governor’s Houses – one three-bedroom home and one two-bedroom home – being secured by Hult Homes, which has offices in Rapid City and Casper, Wyo.

“The city of Hot Springs is not getting into the housing development business,” Mayor Kotti stated in a press release sent out prior to the event. “We are essentially priming the pump to stimulate future private development by showing that we do have a demonstrated need for homes in the workforce housing price range. This program is essential for future growth by assuring we have adequate housing for those coming to work at our State Veteran’s Home, the VA’s Hot Springs campus, our school or other businesses in our community.”

According to city officials, the effort to create more housing began with the commissioning of Community Partners Research, Inc. to complete a Housing Study for the City of Hot Springs. That study was completed in December 2016 and it projected a need for multiple types of housing, including some in the range of $140,000 to $190,000 that young workers and their families who were beginning their careers could afford.

Mayor Kotti noted, “The City Council of Hot Springs stepped in and passed a plan that would utilize excess city properties to meet the need for more affordable workforce homes.”

One of those properties was the “old water fill station” lots along Canton Avenue, where the groundbreaking last week took place. The city tore down an existing dilapidated storage garage and the Southern Hills Economic Development Corporation (SHEDCO) applied for a grant to complete an environmental assessment of the property which determined the lots were safe for home construction.  The city prepared a Request for Proposal (RFP) that stipulated the property be developed into affordable workforce housing.

Hult Homes was the successful bidder and has developed a suitable plan to place up to five “Governor’s Houses” purchased from the South Dakota Housing Development Authority (SDHDA) on the Canton Avenue lots.

Originally, Hult Homes had proposed placing two Governor’s Houses and then also a duplex, but according to Dean Hedrick with Hult Homes, who attended and took part in the groundbreaking, the plan for where the duplex was to be placed will be determined at a later time and is dependent on home buyer needs based on demand.

City Hall said the homes will be sold to individual home buyers at a price that falls within the affordable workforce housing criteria that fits the Hot Springs demographic specifically. The city of Hot Springs will provide water and sewer to the property line and upon the sale of each home; the city will receive $5,000 from Hult Homes according to the provisions of the RFP.

According to the SDHDA website, both nonprofit and for-profit builders may purchase Governor’s Houses to develop and resell to qualified buyers. Developers may earn a profit of no more than 10 percent of the total project cost.

In 1996, the Governor’s House program was created as a way to provide reasonably sized, affordable homes to income-qualified individuals and families. 

The Program puts prison inmates to work which teaches them valuable skills, the SDHDA website states. The simplified home design, in conjunction with the Governor’s Inmate Training Program, keeps the cost of these homes affordable. This benefits many inmates by teaching them important skills to better prepare them for life outside of prison.

Qualifications to purchase a Governor’s House include a household income that does not exceed $52,710 for couples or individuals and $60,240 for families of three or more. The house must also be used as the homebuyer’s only residence.

Prior to pressing his foot down on the golden shovel to signify the official start of the construction phase of the project, Mayor Kotti thanked the many groups which helped pave the way for the day, including Southern Hills Economic Development Corporation (SHEDCO), the Hot Springs Area Chamber of Commerce and his city council members and city staff.

Mayor Kotti also pointed out that local developer Don Olstad had already broken ground on an adjoining lot that faces west towards the Wesleyan Church. There, Olstad said after the groundbreaking ceremony, that he has started the construction of a pair of one-level duplexes designed for elderly housing. The project, he said, will have an indirect beneficial to the town’s workforce housing needs as it will make it possible for older residents to sell their larger homes for a growing family, and then move into these lower cost, lower maintenance homes.

Olstad had acquired the adjoining lots along Canton Avenue through a landswap with the City of Hot Springs earlier this year, which in turn, gave the city some property Olstad owned adjoining the city-owned armory building near Butler Park.

Hedrick, a Hot Springs native, also spoke prior to the groundbreaking and said the need for workforce housing is not just a Hot Springs problem, but also a national problem.

Hedrick said he feels Hot Springs has solved the problem by creating partnerships with multiple agencies and development companies, and added that the South Dakota Governor’s Office of Economic Development (GOED) was watching what was being done very closely. He said the success in Hot Springs could serve as a model for other communities in the state as they too struggle with the need for more affordable housing to sustain a growing workforce.

He said Hult Homes’ goal is to have the two Governor’s Houses in place within 12 months.

Despite already beginning work on his housing project, Olstad said his goal is to have the foundations put in by winter, but a completion date is yet to be determined.

Fall River County Herald Star

EDGEMONT OFFICE: 410 2nd Avenue   Edgemont, SD 57735-0660 | 605.662.7201
HOT SPRINGS OFFICE: 334 S. Chicago St.  Hot Springs, SD 57747 | 605.745.3930
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