This story has been significantly updated with information from the Legislature’s Appropriations Committee meeting on Wednesday afternoon. See UPDATE*.

PIERRE, S.D. (KELO) — Its interim director hopes to know by week’s end when the South Dakota Housing Development Authority board can have a quorum of members available to hold a public hearing on proposed rules for a new $200 million program to help assist in financing infrastructure for workforce housing.

Chas Olson told KELOLAND News on Wednesday afternoon that the Governor’s Office of Economic Development has given consent to the authority’s board holding a public hearing. Olson said the authority’s seven board members are being contacted about possible dates. State law requires a quorum of members present for a rules hearing.

A related state law says notice of a rules hearing must be published at least 20 days before the public hearing in at least three newspapers of general circulation in different parts of South Dakota. The notice must provide information about where and when the hearing will be held; how amendments, data, opinions, and arguments may be presented; the deadline to submit written comments; and how the public may obtain copies of the proposed rule.

Based on those requirements, the earliest date for the public hearing would be during the last week of May.

“I don’t want to speculate so I’ll reserve any further details until the date, time and place have been confirmed with our board,” Olson told KELOLAND News.

The Legislature’s Rules Review Committee is scheduled to meet June 13, July 18, August 8, September 12, and November 7. If the committee lets the housing-infrastructure rules go through, the rules then go to the South Dakota Secretary of State. The rules would take effect 20 days after the secretary of state receives them.

UPDATE*: Olson told the Legislature’s Appropriations Committee later Wednesday afternoon, “The hope for that (rules hearing) is it will be scheduled for May 31.” He said the goal is to present the rules to the Legislature’s review committee on June 13.

Tim Engel, the legal counsel for the Governor’s Office of Economic Development, said there was “a misunderstanding on Housing’s part” regarding what was submitted to GOED on February 24. “We got the rules on March 15,” Engel said. There were a set of rules and an allocation plan, but Engel said, the 2023 legislation required that “the guts of the program” be in the rules. “We said, we don’t think this was done correctly,” Engel said.

“We need to go forward, but I think we need to learn from what happened,” said Republican Sen. Jean Hunhoff, the Appropriations chair.

Olson told Hunhoff that SDHDA eventually determined all of the components including the allocation plan should be part of the proposed rules. That combined approach was done Tuesday by the authority’s board when it decided to proceed to a public hearing.

Republican Sen. Jack Kolbeck said he and others were frustrated by the long delay that has transpired. He asked why legislators weren’t informed this year that the rules-making process had to be followed. Engel, GOED’s lawyer, said the housing authority had to follow the law.

Hunhoff said neither Olson nor Engel were involved in the original process a year ago, when the Legislature approved $200 million. But Governor Kristi Noem advised the housing board against spending it because of questions she had about it. The Legislature then passed another measure this year, modifying the 2022 law.

Hunhoff, who also chairs the Rules Review Committee, said the proposed rules could go into effect July 2 under Olson’s potential timeline. “That would be our objective,” Olson said. He said organizations that applied last year would need to re-apply.

Olson explained the goal is to provide incentives for new development by non-profits such as local economic-development organizations, local governments and tribal governments. He said for-profits could work with non-profits on projects under the proposed rules.

The proposed rules also include a look-back period that allows ARPA money to be used for projects that began after March 3, 2021, and allows state funds to be used for projects that began after the new bill was signed into law February 1, 2023.

The 2023 legislation appropriates $150 million of state general funds and $50 million of federal ARPA funds that came to South Dakota as part of the COVID-19 relief aid. The legislation says the $150 million of state funds should be distributed through $100 million of loans and $50 million of grants. The $50 million of ARPA funds and $50 million of state funds shall be distributed in grants, with no more than one-third of a project’s total infrastructure costs to be covered by the grant. The same holds true for the $100 million of loan funds.

Under the new law, communities of 50,000 population or larger can’t receive both an ARPA-funded grant and a loan from the program for the same project. Those 50,000 population or larger communities are to receive 30 percent of the $100 million loan portion, with 70% reserved for other areas of South Dakota.