From ‘nuisance properties’ to new homes, expanded partnership to help core neighborhoods

A partnership between the city and the nonprofit Habitat for Humanity of Greater Sioux Falls will expand this year as work continues refurbishing two dilapidated residences.

In 2024, Habitat purchased two houses: one in the Whittier Middle School neighborhood and the other near Cleveland Elementary. Vacant or soon to be vacant, the houses were unsafe and unsightly, said Rocky Welker, the local Habitat chapter’s executive director.

“The neighbors have been ecstatic. Both homes were probably seen as nuisance properties on the block,” he said. “The neighbors are really excited to see someone come in and clean up the outside and are excited to have a new neighbor.”

While it will be several months before these houses are occupied, the city of Sioux Falls plans to expand the partnership this year.

“We want to expand going forward, probably going from two to four houses in the next contract,” said Logan Penfield, housing development manager with the city’s Planning and Development Services Department. “I think we’re going to get it done in 2025. We’ve got environmental reviews pending for a bunch of programs, and that one is going to be one of the next environmental reviews we move.”

Expansion beyond that will depend in part on Habitat of Humanity’s ability to take on additional projects, Penfield said.

The city has multiple partnerships with nonprofits and for-profits working on expanding affordable housing in Sioux Falls, he said. This pilot project, the Troubled Buildings Initiative Agreement, started in mid-2023 when the city found itself with funds returned from a different project, allowing it to try something new, Penfield said.

“Rocky and I had kicked around ideas about what it would take to do affordable housing from existing stock,” he said. “Usually, some significant rehab needs to be done. To make it work since they don’t make a profit, there would need to be grant funding.”

The city had $112,000 available in two grants for the Troubled Buildings Initiative. While city sales tax revenue funded the pilot project, federal funds may be used in the future, Penfield said.

While Habitat for Humanity is best known for building houses with 300 hours of sweat equity from the soon-to-be owners, renovating existing structures is not new. It has been “a long time” since the local chapter tackled rehabilitation projects, Welker said. An increase in large commercial landlords and house-flippers drove up the cost of buying used houses, he said.

“It’s been cost-prohibitive in the past, so we haven’t done it for a long time,” Welker said. “We saw the opportunity to partner with the city of Sioux Falls, and we were just seeing the need for it. Urban sprawl in Sioux Falls is going on, and at times it seems like we forget the core neighborhoods. We need to revitalize them and make them safe. We think rehabilitated homes is one of the first steps to do that.”

Welker describes the pilot project’s first steps as a learning experience. New construction generally is easier than working on rehabilitation projects, and surprises can surface when an existing house is being renovated.

In addition, Welker said, there’s “the human element in the sale and transaction” as well. One of the two houses purchased had been vacated, but squatters had moved in despite the lack of utilities.

“You don’t think of that happening in Sioux Falls, and a lot of times if you drove by, you wouldn’t notice there are homes out there that may have squatters living there with no legal rights,” Welker said. “This gives those homeowners a way to off-load the home while also giving back to the community and making it a better neighborhood for everyone.”

The pilot project house in the Whittier neighborhood has had its exterior renovated, and the interior has been gutted to the studs. The Cleveland neighborhood house has had the interior cleaned out, and demolition work will start early this year.

The city’s code enforcement team keeps track of vacant properties, Penfield said. Two years ago, the City Council voted to increase the cost of registering such properties to make sure that upkeep continues.

“Houses that sit vacant, they go backwards pretty quickly if not closed up correctly or not taken care of properly,” Penfield said. “We want to utilize some of the houses in the core specifically that have been affordable in the past, houses that are smaller or older. A lot of first-time homebuyers try to save those houses before they go backwards.”

Homeowners for the rehabbed properties will be chosen following Habitat for Humanity’s usual procedures, including income guidelines, Welker said. A family of four must have a minimum income of $47,500 and a maximum income of $73,900.

New homes for Habitat for Humanity include four bedrooms and two baths. A formula that includes the children’s gender and age will decide how many bedrooms are needed, Welker said. Four-bedroom apartments are at a premium in the city, he said.

The local chapter will perform a cost-benefit analysis on the two rehabbed houses, but Welker hopes to continue the partnership with the city.

“I think the city needs it,” he said.

The work the city and Habitat do together is valued, Penfield said.

Habitat for Humanity of Greater Sioux Falls is starting its 36th year, and to date has sold 195 houses in Minnehaha, Lincoln and Turner counties. In addition, the lesser-known Affordable Home Repair Program served 97 households in 2023, Welker said.

“Our goal is when you drive down a block and there’s a Habitat home, it doesn’t look any different than the homes on either side of it,” he said. “We help families blend into the neighborhood, and we want our homes to blend in as well.”

A goal of Habitat’s future is to find land where it can partner with other builders to create a mixed-income, mixed-use development on a large scale, Welker said. It will continue to focus on affordable home repair of existing houses as well as rehabilitating homes in core neighborhoods.

Solutions for affordable housing can come from anywhere, Welker said.

“I would just encourage anyone that is curious about the work we’re doing or interested in getting more involved to reach out,” he said. “There are a lot of solutions we could reach to help our community if we just sit down and talk about them.”