Simplified: Sioux Falls doesn't have enough affordable housing options available for people with low wages, from preschool teachers to grocery store clerks to hospitality workers. Here's how a $6 million trust fund could help bridge the gap.
Why it matters
- The average rent for a two-bedroom apartment in Sioux Falls is $1,030 per month. For that to be considered "affordable" based on federal definitions, a family of four would need to be making more than $41,000 annually – but nearly 20,000 Sioux Falls households live on less than $35,000 annually.
- And while the city has various resources to support housing for folks who fall within 60 to 80% of the area median income (AMI), there's still a gap between what developers need to charge for rent to recoup building costs and what extremely low-income – think 30 to 40% AMI (i.e. $30,000 for a family of four)– can afford to pay.
- That's where a proposed $6 million affordable housing trust fund would come into play. It's a plan to help bridge the funding gap, and it's already got the support of the city's homeless task force and some city councilors, including Councilor Curt Soehl, who said he plans to bring a proposal for the council to start a housing trust fund.
"This is just a continuation of us trying to make a better housing situation in Sioux Falls," Soehl said.
What exactly is an affordable housing trust?
It's a dedicated fund with money that can be used to offset construction costs for developers who add housing units that fit certain criteria for affordability.
- The idea is these projects would also take advantage of other existing funds for affordable housing, like the low-income housing tax credit, to further offset costs.
"We have some really amazing developers in this region who are using low income housing tax credits to buy the rents down to a certain point," said Michelle Erpenbach, director of Sioux Falls Thrive. "But they can't get it below that 40% AMI line."
The goal is to help people get into a secure housing situation so they can find stability and potentially someday own their own home, said Kenley Lamberty, government affairs director for the Realtor Association of the Sioux Empire (RASE).
- RASE received a grant through the National Association of Realtors to support the work Thrive is doing in promoting the Affordable Housing Trust. Their partnership also shows industry buy-in for the proposal, Lamberty said.
"There are over 1,000 Realtor members in the Sioux Empire, and when they saw this proposal ... they really got behind it, and they're hoping to see it through," he said.
Where does the money come from?
Largely, the city.
Sioux Falls Thrive's proposal recommends an initial city investment of $6 million, with long-term funding coming from a variety of self-sustaining sources like tax-increment financing proceeds, proceeds from liquor license sales, proceeds from vacant building fees, etc.
- Private donations would also play a role and would be held at the Sioux Falls Area Community Foundation.
Who will this help?
These are people with very low incomes who are often also supporting others in their household, Erpenbach said.
"It’s a preschool teacher," she added. "It's a mom with three kids ... it's people on disability. It's grandparents raising grandchildren. There's going to be a whole gamut of folks who fall into this."
What happens next?
RASE and the Sioux Falls Thrive Housing Action Team are hosting a public information session 5:30 p.m. Thursday, Aug. 17 in the Belbas Theater at the Washington Pavilion.