SPEARFISH, SD – Following City Council approval Tuesday, construction of workforce housing lots will soon be completed to the end of Aurora Avenue, as well as on Sky Ridge Avenue at Orion Street, in the Sky Ridge development off of Colorado Boulevard near Exit 17.
The Spearfish City Council approved a Property Exchange and Development Agreement with Hills View Homes, a subcontractor of Dream Design International (DDI), the developer of the project, to exchange 10 lots located on Leo Avenue, which have already been transferred to the developer, with 10 lots located on Aurora, Sky Ridge, and Orion avenues, which have not yet been transferred. The transfer came about at the request of Hills View Homes, which desires to be able to build out Aurora Avenue first before moving to additional lots within the development.
City Administrator Bobby Falcon explained under the development agreement with DDI, lots typically are transferred from the City to Spearfish Economic Development Corporation and then sold to the developer. In this case, the 10 lots on Leo Avenue already have gone through that process, as they were part of 14 lots DDI previously purchased and transferred to Hills View Homes.
“For this transfer, there are no funds changing hands; we are exchanging lots to better align with the production needs of the contractor,” City Administrator Falcon said.
The lots have been appraised and have a similar value, and the exchanged lots will be held by the City until they are resold to the developer for later construction.
City Administrator Falcon explained there have been delays experienced in 2024 with production by the developer, and the City has worked with the developer to reach a mutually beneficial arrangement where Hills View Homes would restart the project in the first quarter of 2025, which is now in progress.
“This transfer does not change the development agreement or its amendments,” he said.
Hills View Homes has previously built approximately 10 homes in Sky Ridge as DDI’s subcontractor, and it is the City’s understanding that DDI has a desire to assign its contract with the City to Hills View in the future, City Administrator Falcon explained, describing this is permitted by the current contract with DDI and would require City Council approval.
Construction began in Sky Ridge in September 2020, and since then, 51 homes have been completed, with four currently in progress with foundations constructed. A total of 170 lots have been platted, with an additional eight planned at the east end of Vega Street.
The affordable workforce housing development, planned to be built in phases over five years, uses income brackets from income guidelines from the U.S. Department of Housing and Urban Development (HUD) to give priority to buyers based on the following income qualifications: For Category 1 homes to be at or below the 125 percent of area median income for Lawrence County as determined by family size; for Category 2 homes to be at or below 150 percent of area median income for Lawrence County as determined by family size; lastly, for Category 3 homes to be at or below the 175 percent of median income for Lawrence County or to be in the 22 percent income tax bracket. The square-footage of the home designs vary from 840-1,393 square feet. There will be 22 different home versions based on various elevations and floor plans.
The City is responsible for building the streets and utilities at Sky Ridge, with those costs to be recovered through tax-increment financing (TIF). A TIF district is a public financing system that uses future increases in property tax to reimburse the costs of public improvements built within a designated TIF district boundary. As real estate value increases within that boundary area, higher tax revenues result. That “tax increment” is then used to refund the costs of public improvements created to support the project and is paid back to the source.
