PIERRE, S.D. (KELO) — The $200 million of state and federal funds for loans and grants that state senators approved on a 29-2 vote Friday for housing infrastructure in South Dakota has a key technical difference from a similar $200 million appropriation that the Legislature approved last year but was never spent.

The new bill, which the House State Affairs Committee will hear Wednesday, calls for the money to flow into a new South Dakota Housing Infrastructure Fund that would be administered by the South Dakota Housing Development Authority. The money last year was designated for the already existing South Dakota Housing Opportunity Fund that the authority administers.

Governor Kristi Noem signed last year’s bill into law but also issued a letter warning that the money might go unused because the Housing Opportunity Fund (HOF) was by state law already “targeted toward low to moderate-income families and individuals.” That requirement, according to Noem, meant the $200 million could be used by those earning no more than 115 percent of the area median income for a community.

“That uncertainty creates risks for the SDHDA and those seeking loans or grants to consider, and that risk may result in red tape and delays,” the governor wrote. The housing authority chose to never put the $200 million into circulation.

Instead, the governor and legislators cooperated on writing new legislation for this session. It calls for establishing the housing infrastructure fund and says the $200 million can be used for “the installation, replacement, upgrade, or improvement of public infrastructure for the support of a single-family or multi-family housing project.”

It goes on to define public infrastructure as “a right of way, water distribution system, sanitary sewer system, storm sewer system, lift station, street, road, bridge, curb, gutter, sidewalk, traffic signal, or streetlight, which is or will be owned, maintained, or provided by a political subdivision of this state; or excavation, compaction, or acquisition of land for such purposes.”

The new legislation is similar to the 2022 law in how the $200 million would be used: $100 million of state funds would go for loans, while the other $100 million — $50 million of state funds and $50 million of federal ARPA funds — would go for grants. The maximum loan or grant from the program would be capped at one-third of the infrastructure cost.

The difficulty last year resulted from a group of House Republicans who refused to support the Republican governor’s original version, which called for putting the money under control of the state Board of Economic Development, through its local infrastructure improvement program.

Among the Republican legislators opposing the governor’s bill was then-Representative Steven Haugaard of Sioux Falls. Haugaard, a former speaker of the House, challenged Noem in the Republican primary election last June. Republican voters favored Noem 91,661-28,315.

The governor’s legislation needed a two-thirds majority of 47 supporters in the House, and the Republican faction used that requirement to its advantage, forcing the House to strip from the governor’s bill the $150 million of state funding, leaving only the $50 million of federal funds. The Senate wouldn’t accept that scaled-down version. A House-Senate conference committee eventually turned that measure into a prison-funding appropriation.

Meanwhile, a related piece of governor’s legislation was changed into the $200 million appropriation for housing infrastructure. Senator Casey Crabtree, a Madison Republican, offered the amendments. The Senate voted 35-0 for the Crabtree version. Needing 47 votes in the House, it edged through 48-22. This was the bill that Noem signed but she also sent the warning letter that changes were needed.

Crabtree is prime sponsor of this year’s version. “I am excited about the long-standing impact of this bill,” he said at its Senate committee hearing Thursday. 

One of the votes against the bill on the Senate floor Friday came from Senator Tom Pischke, a Dell Rapids Republican. Pischke had been a consistent ‘no’ vote against the legislation last year when he was in the House. On Friday, he said, “We are competing with private enterprise when we put government money into the private sector.”

Last year’s House speaker, Spencer Gosch, a Glenham Republican, had voted against the 2022 housing funding every time. He was feuding with Noem the past two years over whether then-Attorney General Jason Ravnsborg should be impeached, with Noem wanting Ravnsborg removed from office. Meanwhile, this year’s House speaker, Hugh Bartels, a Watertown Republican, voted for the 2022 housing funding every time.

Can this year’s version get through the House intact? The answer comes down to numbers. Because of term limits, retirements and voters’ choices, roughly half of the House Republicans who opposed the measures in 2022 are no longer in the House this year, including both Haugaard and Gosch.