Sioux Falls council approves $1 million forgivable loan to help turn 600 Plaza into deep‑affordability housing

The Sioux Falls City Council voted unanimously Aug. 20 to provide a $1,000,000 forgivable loan to Southeastern Behavioral Health (SEBH) to acquire and demolish structures at the 600 Plaza site and prepare it for a Low‑Income Housing Tax Credit (LIHTC) development.

Logan Penfield, planning and development services, told the council the loan would be used for acquisition and demolition and is contingent on SEBH applying for and receiving a 9% LIHTC award through the South Dakota Housing Development Authority within three years. Penfield said the city would consider a second, one‑time $1,800,000 award from HOME‑ARP funds if the LIHTC application succeeds. HOME‑ARP is a federal grant the city applied for in March 2023 and that has specific federal requirements tied to income targeting.

Under the current proposal SEBH would develop 55 units, all targeted at levels at or below fair market rent: 12 units at 30% of area median income (AMI), 23 at 40% of AMI, and the remaining 20 at 50% of AMI or below. SEBH plans to locate administrative offices and on‑site case management — including addiction and mental‑health services — in the building. Penfield said the loan would be forgiven upon completion of an approved LIHTC project within three years; the loan would become due and payable and secured by promissory note and mortgage if no approved project is completed in that period.

Chris Graham, chief executive officer of Southeastern Behavioral Health, told the council the additional funds were needed to pay for demolition and to complete the purchase. She said SEBH lacked the funds to proceed without the $1,000,000. "If this is denied then the whole project would stop," she said, and councilors confirmed that without the loan the acquisition and demolition could not move forward.

Council members who spoke in favor characterized the project as both neighborhood revitalization and an expansion of needed mental‑health housing and wraparound services. Councilor McCorris called the site "a critical project in a critical neighborhood" and said the combination of housing and on‑site case management was central to the project's value.

Motion to approve came from Councilor Bassey and was seconded on the floor; the roll‑call vote was recorded as 8–0 in favor.

The next procedural step for the project is SEBH's LIHTC application with the South Dakota Housing Development Authority. If the LIHTC award is granted and the city later approves the HOME‑ARP grant, the council indicated the loan would be forgiven at project completion per the contract terms. If the LIHTC application is not approved within three years the loan would be repayable under the promissory note and mortgage described in the agreement.