SDHDA Modifies Proposed Rules for $200M Housing Grant/Loan Program

Chas Olson, interim director of the South Dakota Housing Development Authority, told his board members yesterday that he’s moving the rulemaking necessary to implement the Legislatively approved but gubernatorially delayed $200-million housing infrastructure program as quickly as possible:

The South Dakota Housing Development Authority is moving forward with proposed rules for spreading the $200 million the Legislature wants spent on affordable housing infrastructure.

The authority’s governing board on Tuesday gave initial approval to the package and set the date for a public hearing.

…“Everybody understands the urgency of this,” Olson told board members [Bob Mercer, “Housing Board Proceeds to $200 Million Rules Hearing,” KELO-TV, 2023.05.02].

In an April 28 memo to the HDA, Olson summarized changes to the proposed rules:

• Only non-profit entities may apply for the grants and loans.
• Projects applying for the $150M of state funds in the program qualify if they began construction after February 1, the date Senate Bill 41 took effect.
• Projects applying for the $50M of federal ARPA funds qualify if they incurred costs as early as March 3, 2021.
• SDHDA will take applications any time rather than the original plan to restrict applications to two cycles per year.
• Grant applicants must provide an analysis of how their projects will reduce home prices and rent.
• The SDHDA exec may approve up to a 5% boost in any applicant’s funding to cover inflation and overruns. Any larger increase will require Board approval.
• SDHDA is extending the allowable mortgage terms from 15-year amortization with a 5-year balloon to 25-year amortization with a 10-year balloon.
• The maximum interest rate is rising from 5% to the IRS’s federal rate (which, if I’m reading the IRS’s May update correctly, is no less than 9%).
• The amount of any award that the SDHDA can withhold until completion of the project is going down to 10% from one third.