Socialism in Housing Advances Amidst Feeble Cries for Free Market and Tax Breaks

Bob Mercer reports that the Legislature is moving forward with big injections of socialism into South Dakota’s housing industry. The eight Republicans and one Democrat on Senate Commerce and Energy passed Senate Bill 53, which pours $150 million of state money and $50 million of federal money into the Governor’s Office of Economic Development “for the purposes of increasing housing supply across South Dakota.” Senate Commerce and Energy also unanimously passed Senate Bill 65, which revises the parameters governing how the South Dakota Housing Development Authority, which reports to GOED, may spend such socialist investments.

Problematically, Senate Commerce and Energy removed the language in statute that requires SDHDA to target its Housing Opportunity Fund assistance to “low- and moderate-income families and individuals,” meaning folks making no more than 115% of the area median income. SB 65 focuses SDHDA on things rather than people, saying housing assistance must be used to develop “affordable housing,” defined as single-family homes that cost no more than SDHDA’s first-time homebuyer purchase price limit and multifamily units with monthly rent no more than 80% of the rent that SDHDA calculates is reasonable for the area median income. SB 65 exempts housing infrastructure loans from those requirements. SB 65 also exempts housing infrastructure assistance from the geographical restriction that says no more than 30% of the Housing Opportunity Fund’s annual disbursements can go to Sioux Falls and Rapid City. SB 65 thus seems to open the door for developers could cash in this socialist assistance to lay the groundwork for ritzier urban development.

Mercer says legislators and the Governor are patting themselves on the back for making this housing socialism happen:

…Senator Lee Schoenbeck, R-Watertown, said he met with Governor Kristi Noem three years ago after her first session ended. They talked about priorities that hadn’t been addressed. He said housing development was down at number six on his list because it seemed like such a reach.

Schoenbeck thanked the legislators, the governor and her staff, and people in the communities that the committee visited last year.

“I would have never expected you to accomplish what you have,” he said. “This is the kind of cooperative, collaborative issue you don’t see that often on this tough of an issue.”

Crabtree thanked the governor and her staff too. He said the help-wanted signs seen statewide reflect the workforce shortage South Dakota faces. “This,” he said about the housing bills, “is part of the solution to a much bigger problem.”

The governor announced in a Facebook Live post Monday that agreement had been reached. The program would offer grants as she proposed and loans as some legislators wanted. “We spent a lot of time listening to legislators on this that’s going to be debated and what that looks like in the future,” she said [Bob Mercer, “Is It ‘Kumbaya’ at S.D. Capitol on Housing?” KELO-TV, 2022.02.08].

Not every legislator is singing Kumbaya for this housing socialism. Representative Scott Odenbach (R-31/Spearfish) has offered House Concurrent Resolution 6002, which claims that “examples from American and world history have taught us repeatedly that increasing government involvement disrupts the natural free market forces that inspire ingenuity to solve problems, and causes market distortions, increased costs, and inefficiencies.” HCR 6002 thus “supports and encourages the free market system, in conjunction with an active reduction in governmental burden, as the most effective solution to meet the need for affordable and sustainable workforce housing in South Dakota.” Representative Odenbach will get to yadda yadda this morning at 7:45 to House State Affairs, which has to plow through that and four other do-nothing resolutions before it gets to real business.

Senator Herman Otten (R-6/Lennox) is trying to put his co-sponsorship of HCR 6002 into practice later this morning. Otten’s Senate Bill 114, which comes before Senate Taxation this morning at 10, would allow homebuyers who meet certain income limits to apply for refunds of the contractors excise tax they pay for the construction of a new affordable home. HCR 6002 specifically cites the excise tax as one of the “governmental burdens” it would like to reduce in its pitch for housing industry anarchy.

Otten and Odenbach talk like good conservative free-marketeers in HCR 6002 and SB 114. But the real test of their ideological commitment will come when SB 53 offers them the chance to funnel $200 million in government money to their wealthy housing developer friends.