South Dakota Housing requests $715,000 increase as lawmakers press on infrastructure loans and governor's house pace

Chaz Olson, executive director of the South Dakota Housing Development Authority, told the Joint Committee on Appropriations that the agency is requesting a $715,000 net increase to its FY26 appropriation and outlined program activity and COVID-relief wind‑downs.

Olson said the authority administers single‑family mortgage lending, multifamily production programs and several federal and state housing funds, and he asked lawmakers to consider budget adjustments to cover contractual inflation, salary adjustments and other costs. "South Dakota Housing was created in 1973 as a public or an independent public instrumentality for the purpose of issuing bonds and notes, to develop finance and develop affordable housing opportunities," Olson said during his presentation.

Why it matters: the authority manages both financing and program delivery for multiple housing streams — loan products, HUD and IRS programs, state housing infrastructure funds and pandemic relief dollars. Lawmakers pressed Olson on how quickly infrastructure grants and loans are being spent, what protections exist if projects fail to proceed, and how the governor's house program is performing.

Olson described the FY26 request as a $715,000 increase composed primarily of $200,000 in contractual/service increases (insurance, rent and audit), $300,000 proposed for salary adjustments, $60,000 for marketing, roughly $160,000 for higher benefits costs and about $55,000 for governor's house materials. The authority has 76 FTEs (about 50 in Pierre and 20 in Springfield), and Olson said five positions were currently vacant but turnover is generally low.

On the state housing infrastructure financing program — the $200 million package passed by the Legislature in recent years — Olson said all grant funding has been allocated. He told Representative May that loan funds remain: "We have $55,400,000 left in loan funds for communities of 50,000 or less, and we have $28,600,000 left for Sioux Falls and Rapid City in loan funds." He described the usual reimbursement process, conditional commitments and loan/grant agreements, adding that some projects may be repaid via TIF assignments, lot sales, or rental income and that loan terms can mature in 10 years with amortizations up to 25 years. He said the authority had seven completed projects and three projects that returned funds because the planned development did not proceed.

Lawmakers asked about safeguards against fraud and cost inflation. Olson said applications for infrastructure funds require engineer‑signed affidavits attesting that project costs are in line with market conditions, submission of bids, lien waivers and itemized invoices before reimbursements are made. "We collect invoices, lien waivers, everything like that prior to dispersing any funding," he said.

On production of contract‑built homes, Olson reviewed the governor's house and DakotaPlex programs (built largely with offender labor at the state facility). He said lead time for governor's house units has fallen from 30–36 months to about 18 months and reported that in calendar year 2024 the program delivered 78 governor's houses and 36 DakotaPlex units (114 total for the year). Current program counts included roughly 136 homes ordered and unstarted, 55 homes under construction at the prison site, and eight finished homes awaiting foundations.

Olson provided program performance figures for fiscal year 2024: his homeownership department lent roughly $497,000,000 in mortgage financing to 1,531 first‑time buyers and 715 repeat buyers; the CHIP home repair program issued about $2,100,000 to 90 borrowers; rental housing management oversees about 392 properties (over 12,200 units) and disburses around $27,600,000 annually in rental subsidy through project‑based contracts; and the housing infrastructure financing awards total about $122,400,000 to 74 projects across 38 communities, supporting an estimated $416,000,000 in total infrastructure project costs. Olson said those infrastructure projects are expected to support an estimated 7,190 single‑family lots and roughly 5,127 multifamily rental units.

Olson also summarized pandemic relief program status: the CRF program disbursed $2,900,000 (helped 624 households), Emergency Rental Assistance I disbursed $13,000,000 (helped 2,529 households), ERA‑2 had dispersed $51,600,000 and Olson said it expires in September, and the Homeowner Assistance Fund had disbursed about $1,500,000 to date (helped 210 households and expires Dec. 30, 2026).

Lawmakers pressed for more detail on individual infrastructure projects. Representative May asked for specifics on a Pierre downtown redevelopment award; Olson said he would provide a project‑level spreadsheet for the committee that lists the 74 projects, funding dispersed, and where each stood in the due‑diligence or construction pipeline.

Ending: Olson said program staff would follow up with requested spreadsheets and additional project documentation. Several lawmakers requested more granular information about loan agreements, repayment schedules and project‑level status reports; Olson agreed to provide that documentation to the committee.

Discussion points: program safeguards and documentation practices; infrastructure loan repayment mechanics; requests for project‑level status spreadsheets and details on the Pierre downtown award.

Directions: staff to provide committee a spreadsheet summarizing the 74 housing infrastructure projects (award amounts, reimbursements made, projects completed, projects that returned funds) and specific details on the Pierre downtown award.

Decisions: informational; no formal votes were taken during the presentation.