The Rapid City Planning Commission on July 10 recommended creation of a Tax Increment Financing (TIF) district for the proposed Sunridge senior affordable housing project but denied the associated project plan after protracted discussion about subsidy size and repayment risk.

Mike Dugan, finance staff, presented the application and said the proposal is for 38 apartment units on the 300 block of North Street targeted to seniors (age 55-plus) and income-qualified households at 60% or below area median income (AMI). Dugan said the unit mix would be 34 one-bedroom units and 4 two-bedroom units and that the developer requests roughly $4.6 million in TIF assistance. Dugan said total project cost is estimated at about $10.6 million and that the TIF request includes about $2.221 million for site improvements plus financing and administrative fees.

Dugan warned staff projections expect a shortfall under the 20-year statutory window for TIF repayment and described a scenario in which a remaining balance could appear near year 18 that the developer would need to refinance into primary debt. He also noted the city's TIF policy and state limits on total taxable valuation captured by active TIFs.

Jason Bull of Blue Line Development, the project's developer, said Blue Line has completed several Rapid City projects and that the company has been awarded tax credits and other funding for Sunridge. Bull told commissioners the project would receive about $4.1 million in equity from Low-Income Housing Tax Credit investors and $700,000 in HOME financing from the state, leaving the TIF as the remaining piece of the capital stack. "It is not our intention to have the taxpayers or the city be on the hook for this loan," Bull said. He added Blue Line would provide a corporate guarantee and projected the TIF would be repaid by year 20, with refinancing by year 18 if necessary.

Staff recommended denial of the project plan because the requested subsidy per unit—about $120,000 per apartment—was notably larger than recent affordable-housing TIF projects in Rapid City (staff cited roughly $50,000–$52,000 per unit for recent projects). Staff also pointed to the site's topographical and development challenges, which increase hard costs and raise the per-unit subsidy when there are relatively few units to spread costs across.

Commissioners asked detailed questions about market demand, rents, how existing nearby tax-exempt entities would be affected, and whether corporate and personal guarantees have precedent. Blue Line said Sagebrush Flats and another completed project are leasing and that the company has a pipeline of applications; Bull said the developer is committed to 40 years of affordability and compliance timelines required by tax-credit financing.

On the first vote the commission approved creation of the Sunridge Senior Affordable Housing TIF district by roll call, 6–2 (Aye: Arguello, Boleman, Vidal, Gallaher, Hieges, Bailey; No: Kwasney, Stuck). Later, when the commission considered the Sunridge project plan, Commissioner Mike Gallagher moved to deny and Commissioner Eric Hieges seconded; the motion to deny the project plan passed.

Staff told the applicant the denial means the developer may work with staff and return with a revised project plan; the district creation will be forwarded to City Council for final consideration.

Key figures presented at the meeting:
- Units: 38 (34 one-bedroom, 4 two-bedroom) for seniors (55+), targeted at 60% AMI.
- TIF request: approximately $4,600,000 (includes about $2,221,000 for site improvements).
- Total project cost: roughly $10,600,000.
- Developer equity from LIHTC investor: approximately $4,100,000; HOME funds: about $700,000 (as presented).
- Staff concern: projected TIF increment receipts were estimated at roughly $3.5 million, leaving a projected shortfall and a possible balance at year 18–20 under conservative assumptions.

Commissioners’ discussion reflected support for affordable housing broadly but skepticism about the size of the subsidy for a relatively small 38-unit project and the long-term risk to the city if refinancing or guarantees were insufficient. Staff and the developer agreed that the project could return with revised financial terms or a different financing structure for further consideration.