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Belle Fourche Tackles Housing Market Failure with Governor’s Houses

The Belle Fourche Development Corporation recently won one of the state's fourteen workforce development grants with an affordable-housing plan that mirrors one proposed on the Madville Times seven years ago. The Belle Fourche housing plan also reveals a fundamental market failure in providing housing for workers.

The state is giving Belle Fourche $175,200 to help buy three lots, build three basements, plunk down three three-bed two-bath Governor's Houses, and hook them up to utilities. The total cost for each property will be $143,884. The city will also draft high school students taking vo-tech classes to build two more new houses during the next school year.

BFDC's application says that big new companies since 2013 have stimulated the Belle Fourche economy with $20 million in capital investment and 160 new jobs. However, those new workers can't find decent affordable housing in Belle Fourche and are having to commute from Rapid City and elsewhere. BFDC includes in its application a July 2014 letter from Permian Tank plant manager Robert Sieve saying that affordable local housing is "an important factor in our employee satisfaction and retention."

I agree with plant manager Sieve: a two-hour commute increases the chances that workers will keep their eyes open for work closer to home and stick the company with more frequent turnover costs. The Belle Fourche Development Corporation is serving the interests of labor, management, and the community as a whole in promoting affordable, quality housing.

But I see in Belle Fourche's plan the same market failure that I've seen in housing development in Madison. Back in 2008, the Madison City Commission granted developer Randy Schafer a tax increment financing district to subsidize construction of working-class housing that Schaefer told me would not get built without government help. In his last great economic development project, Richard Benda convinced the Lake County Commission that market demand wasn't enough to build workforce housing and secured tax increment financing for 28 townhouses in Madison. Tax increment financing will build another 14 housing units on the east side of town.

The assumption in Madison, Belle Fourche, and (as evidenced by the grant award) Pierre is apparently that the market is broken. Housing is a basic need; the market fails to build and maintain enough decent, affordable housing; therefore, government must act with tax subsidies and labor provided by prisoners and public school students.

I agree that government properly acts to redress market failures. But what part of the market is failing? Is supply failing to respond to obvious demand? I have a hard time believing that South Dakota contractors are willing to turn down an opportunity to make money building houses. It seems more likely the market failure lies on the demand side: workers would like houses, but their new employers in Belle Fourche, Madison, and elsewhere in South Dakota aren't paying the wages that will convince the bank to sign the mortgage.

Workers need houses. Belle Fourche is taking reasonable action to help workers get houses. But I worry that Belle Fourche's action and the state money supporting it, like other state programs, subsidizes employers who are shorting their employees the full paychecks they deserve.


  1. Loren 2015.01.19

    OK, I understand gov't providing funds for housing IF it is a gov't enterprise in a rural/remote area with limited housing, i.e. military post, park rangers, etc, but for private enterprise??Some of these businesses move to these remote areas because it has "cheap labor and land". OK, did they not understand that employees would probably NOT want to live in a tent? What happened to the free enterprise Republicans, the "we don't want gov't involvement" folks?

  2. caheidelberger Post author | 2015.01.19

    Loren, that's exactly what I'm wondering: why is South Dakota surrendering so blithely to a market failure and propping things up with socialism? Why isn't the market solving this problem?

  3. happy camper 2015.01.19

    I smell pork.

  4. leslie 2015.01.19

    you didn't build it.

  5. happy camper 2015.01.19

    28 of 58 properties on Realtor dot com are below 143k. About half. You can look at the pics and get an idea. Starting out in life who expects a new house? The governors houses are also quite small. Connected people like the goodies.

  6. larry kurtz 2015.01.19

    I confess to liking Belle: her intersecting US212, the CanAm highway and RCPE will ensure longevity. There is a solid inventory of historic properties crying to be restored and readapted by some nice white couple from Omaha or Kansas City.

    That there isn't a Democrat for about eight miles to the south and none to the north and since Butte County is home to the nation's geographical center it's the perfect location to build the radioactive waste repository that Governor Daugaard wants.

  7. Bill Dithmer 2015.01.19

    Wouldnt a better plan be to not just build housing, but to help those same people build cheaper, keep insurance down, and feel comfortable for their liftime?

    I've been in a couple of the governors houses, small, made cheap to sell cheap, and stick built, yuck.

    I tried to get the tribe to do this but they evidently dont need lowcost housing anymore.

    If your building with yesterdays technology, dont expect to be able to afford the energy it will take to heat and cool that home in the future. Steel buildings, either straight or arched is where to start. Keep everything above grade, in floor radiant heat, nothing but spray foam, and utilizing LED and induction technology to keep energy cost down.

    Buy the same lots, dont do any basements, instead put a loft in. A 30x60 building with a 30x40 loft would give you 3000sf of good usable space. Make energy efficiency a part of the way the town promotes itself.

    Now take one of those "educating vans" from Sioux Falls, put one shotscrete machine, two spray foam machines, one closed cell and one open, and the men who can teach others how to do it, and point that sucker west.

    Bolting steel buildings together doesnt take much smarts, only a strong back, but anybody that wants one of these homes should be required to take a two week workshop to qualify. If they want to help the cost would go down some, but the workshop would still be a must do.

    Let the buyers have some control over their house plans, within reason, and give them a choice of finishes. Cement counter tops all around, and solar assisted hot water. Induction cooktops, and nothing but LEDs in every damn socket. Give them a 10 year homowners TIF, and write it so the cost comes out of the sale price if they dont stay for at least ten years.

    You should be able to keep the building cost at the currently projected level through numbers. Look at it this way. Very low upkeep, both inside and out. It would take less then two months from start to finish, and. You get a home that cost less to heat and cool. Three bed, two bath, is real doable for that kind of money.

    If someone wants to start a spray foam or shotscrete business make them low interest loans with the condition that they need to put x number of hours a year on these type of projects and hire at least one employee or risk loosing that interest rate, and equipment.

    The price of using fossil fuel will go up shortly, these buildings meet both the present and future needs of their owners, environmentally, and economically. Or you could build with sticks and hope the wind dont blow. Good luck with that.

    The Blindman

  8. leslie 2015.01.19

    nice start BD. kudos on heated floor. best comfort i have ever experienced. do you need big machinery to erect beams? How do they hold up as residences, 30 years ect?

  9. happy camper 2015.01.19

    I owned one: Very well built. The contractors hired for remodeling agreed. With delivery they are 40k or 45k minus lot and foundation/basement. How did they get to 143??? There's no trim around windows and cheap light fixtures. Big deal.

  10. Bill Dithmer 2015.01.19

    Leslie, no heavy equipment. Your building with ribbed steel, no beams. The already strong steel only gets stronger when you spray foam every inch. A truck would help you set the precut pieces to high to reach from the ground and its just lay and bolt from then on.

    If the landscaping is done right, and utilities are put in right the first time, the home should last at least seventy years. The new steel is a lot better then what they used years ago. I have seen quancets that are 70 years old that are only marked because they had fertilizer stored in them.

    The spray foam takes care of any inside leaks, and the new metal keeps the outside looking new without the fire risk of a stick built home. This type of building is also easier to expand, and remodel down the road, both inside and out.

    We are building like this only on a little bigger scale. Our dome is cement and about 2000 sf, infloor radiant floor heat. Carson House, will be 8,000 sf, same way. We have put up 53kws of solar and at this time we are producing 2/3rds more power then we are using. The solar will also heat our pool using geothermal technology. The only gas we will be using is for the kitchens in both buildings and one fireplace in the big building. The three suites will all have induction cooktops. If you want to see pictures go to my fb page, William Dithmer. If you go back six months there are bunches.

    The Blindman

  11. Joseph.Voigt 2015.01.19

    I agree with what you are saying, at the same time communities can do this cheaper than people, plus its easier. A person doesn't want to go through the hassle of a contractor, and government house application, they just want to sign the papers and move it. Its a good idea, as long as they don't flood the community with them. Every community should do this to some of their empty lots. Buy 3-6, put up prison houses and sell them to those that qualify economically.

  12. grudznick 2015.01.19

    Mr. Dithmer, when people drive through most Indian Country villages they see what appear to be Governor's houses. Small. Uniform. Falling apart. Painted in 4 different pastels so people coming home late can tell which is theirs. Heck, they are not uniform, they are cookie cutter. I say we need somebody to put up some spec homes in Bridger and set a new course.

  13. caheidelberger Post author | 2015.01.20

    Bill, I like your take on the potential to use the Governor's House program to showcase and evangelize the best in modern building techniques for energy efficiency rather than just building a house as cheaply as possible.

    But I'm still trying to figure out why the market doesn't solve this problem. Is it really just low wages? If this program is pork, as Happy suggests, do the contractors involved make more money on the basements and other costs than they would if they were just selling a new house of comparable size built purely by free market?

  14. Bill Dithmer 2015.01.20

    Cory, contractors make their money in hrs spent on a project. Where a stick built home would take six months from purchase to use, these could be done in two. Of course the contractor isnt going to like a technology that cuts into his time and money. Plus the more time he spends on a projrct, the more his services will be in demand because he will continue to fall behind on his building projects.

    120 days at eight hrs a day equals 960 hrs for a company to complete a home that is using the new method would take 320 hrs, 40 working days.

    Fewer mistakes useing precut steel, just bolt it together. The outside could even be done by a highschool crew, its that easy. Steel studs and shotscreet for inside walls =fire proof and does wunders for sound.

    Never ever need a new roof or siding. No termites, and with solid floors nothing to hold those little surprises like germs and bugs. For those with allergies, this is as close as your going to get without spending big bucks to fix a stick built home.

    The building market will never fix itself if they can continue to build so they will have to come back to make repairs every couple of years.

    Here are some pictures tp peak your imagination.

    The Blindman

  15. happy camper 2015.01.20

    Lots in the city start at $12,000. The numbers don't make sense.

    Governors houses are not "cheap." Decent cabinets and very well insulated and structurally solid. The house I had was added on to at delivery, put on a ranch walk out basement so it had 4 bedrooms, 2,500 sq ft. Very nice house. Sold for 165k.

  16. Bill Dithmer 2015.01.20

    Happy, but the governors houses are made of wood. According to the average cost to maintain a stick built home over ten years averages $1 per sf each year, some years more and some less.

    For that 2500 sf home you had the cost over ten years would be in the neiborhood of $25000, whereas the steel home would have less then $500, over the same ten years. It doesnt mater what you do to wood eventually it is going to rot, not steel. And while the stick built homes that are the governors houses have good insulation, unless they sprayfoam it, there will be air leaks.

    Wood is an excellent building tool. It can be bent beat on and pried to where it has to go. Why do all that when the holes are predrilled useing steel?

    The Blindman

  17. Lynn 2015.01.25

    Bill I'm all for saving money and being as self sufficient as I can but my neighbors would not be too happy if I put up one of these steel buildings as a home there. It would be against the local Covenants and my resale would not be very good since it would require a very specialized buyer for it.

    Your set up in Missouri is awesome but when I saw the list price it looked like a bargain but it may also reflected the need for a special buyer for it also. I'm totally sold on it and the efficiency and protection it offers but many people are still looking to build their McMansion dream home.

  18. Lynn 2015.01.25

    The SD Governors Houses are more conventional, well built and are very energy efficient, made handicap accessible designed to keep living costs low for the short and long term. Nothing fancy but very practical.

  19. Bill Dithmer 2015.01.25

    Lynn, what we are building in Mo is completely different from the houses I'm talking about for Belle. This place will be totally green and you couldnt do that there.

    Its funny, you are still thinking about looks and covenants. The looks part is easy. They dont have to look like a quancet. But I do understand that it will be hard to get people to change their way of thinking, especially when they are still starting fires with flint.

    Yes the governors houses are effecient, but their effecintcy is just about what any home built for that price would be. I'm talking about super efficiency here. A reduction of 50% or more in utility cost with these building technics for roughly the same cost of construction. While the neighbors are busy painting and fixing, the young couple in one of these homes will have more money and time, to use for other things.

    What we see as being effecient now, will be seen as wasteful in the not to distant future. The buildings I propose arent theory, they already exist with numbers to prove their worth.

    The Blindman

  20. Lynn 2015.01.25

    Bill do you have a link? I'm always curious about options and what is out there.

    " While the neighbors are busy painting and fixing, the young couple in one of these homes will have more money and time, to use for other things."

    I'm all for that! I'd rather keep my overhead and environmental impact low so I can focus on other things in life.

  21. Bill Dithmer 2015.01.25

    For starteres Lynn go back to

    Click on each picture and then click on their web site. Most will show you how they built, and some will give you comparisons.

    Now, if you were going to build a retirement community, you should look here.

    Click on each model and it will show you different floorplans. All of these cement cabins can be shipped by truck.

    "The Monolithic Cabin can be used as a rental unit, eco-housing or granny flat, disaster shelter, workshop, office or studio, game room, vacation dome, exercise room, temporary housing for work crews or home builders, guest house or storage. They can be designed as single living units or combined with others. The list goes on."

    They are already being used, here is one such place.

    I hope I helped, it took me years to get the information I have. When we priced one of these 24x12 foot cabins, completed, all you needed was furniture, and infrastructure, the cost with shipping was right at $60,000. That was four months ago.

    We are living in a 2000sf cement dome now. The new building will be connected to the dome. It is 100x80, straight sided steel building. Sprayfoam insulation, geothermal heat and air driven by solar panels. Our geothermal system will also heat our pool and hot tub. We are tied to the grid but produce 2/3rds more electricity now then what we are using. That comes back in credits from the electric company. If anyone is interested, send me some email and I will tell you how to look at exactly what our system is doing at the moment. You can also see how much total electricity the system has made, and the carbin offset. Send that mail here and when I can get to it I will get back to you.

    The Blindman

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