GOED reports steady economic growth, unveils Infrastructure First site study, childcare grants and asks for $74,000 for new Sioux Falls 'one‑stop' lease

Joe Fiala, commissioner of the Governor's Office of Economic Development (GOED), presented highlights of the state's economic performance, GOED project activity, and several program initiatives — including the Infrastructure First site study, childcare planning and implementation grants, broadband investment updates and a proposed lease increase tied to a Sioux Falls one‑stop facility.

Fiala said South Dakota added roughly 6,300 net new residents last year (0.7% growth) and that gross state product reached about $75 billion. He said real average income is above the national average and that the state's labor force rose by about 19,000 people over five years. Housing permits exceeded 6,000 units in the prior year with an estimated $1.4 billion valuation.

Why it matters: GOED's activities support site development, business attraction and program delivery for small towns and industries; broadband and childcare programs in particular affect workforce participation and business feasibility across rural communities.

Key initiatives presented:

- Infrastructure First: GOED used an Economic Development Administration planning grant to assess statewide infrastructure needs (water/wastewater, natural gas, railroads, roads, electric and broadband) and identify candidate sites for development. An ISG‑prepared study identified 19 high‑impact sites (exceeding the original goal of 16) with site‑specific build‑out and acquisition cost estimates. ISG also created five‑year capital improvement plans for 16 small communities (pop. <5,000).

- Childcare grants: In partnership with the Department of Social Services, GOED administered two childcare grant phases: planning and implementation. GOED awarded roughly $1.1 million to 28 communities for planning and $3.8 million to 13 communities for implementation. Agency estimates provided during testimony projected that implementation projects would retain about 596 childcare slots and create roughly 2,461 new slots when complete.

- Broadband: GOED said the state Connect South Dakota program has committed funds leading to about $301 million in broadband investment, and that approximately 32,000 locations should be connected under that program when projects finish (expected around 2027). GOED is also preparing to accept applications for the federal BEAD (Broadband Equity, Access, and Deployment) allocation to South Dakota (about $207 million) and is coordinating with NTIA on the federal process.

- Business development: GOED reported 49 project wins in the prior year expected to generate roughly $900 million in capital investment and create or retain about 1,100 full‑time jobs; GOED also noted support for agriculture and manufacturing expansions and a growing dairy sector (agency cited about 215,000 dairy cows statewide).

Lease ask: Fiala described a proposed rent increase tied to moving GOED's Sioux Falls office into a new one‑stop building. He said the new lease will cost roughly $74,000 more per year above the agency's current rent (current lease about $80,000 per year, total ~ $154,000 after the move). GOED said 14 staff will relocate to the one‑stop office; the office move is planned for May and GOED is working with Bureau of Administration to backfill its existing lease if needed.

Federal grant pause: lawmakers asked about a recent executive order pausing some federal grants; Fiala said GOED is monitoring impacts — the primary concern is the BEAD broadband process and the HUD CDBG program, and GOED has been in contact with federal agencies to determine effects and next steps.

Ending: Fiala offered to supply the committee with additional fiscal details on the state's Future Fund balance, project obligations, and outstanding commitments; he said the office would coordinate with the Department of Labor and Regulation for exact revenue/fee flows that finance the Future Fund. The presentation was informational; no votes were taken.

Discussion points: state economic indicators, the Infrastructure First study and site inventory, childcare grant outcomes and slot projections, progress on broadband (Connect South Dakota and BEAD), GOED loan and bond activity, and a proposed $74,000 lease funding (Governor recommended level) for the Sioux Falls one‑stop move.

Directions: GOED to provide the committee with requested detail on the Future Fund cash balance, commitments and outstanding obligations, and to coordinate with NTIA and HUD on the effect of any federal pause.