HOT SPRINGS, S.D. – In what could be a first-of-its-kind project in South Dakota, the small hospital in this southern Black Hills town is investing in a subdivision project to provide housing for its employees.

Fall River Health Services, an independent nonprofit medical center in Hot Springs, is paying $2.3 million of the overall $3.4 million cost of infrastructure for a subdivision that could create 48 new affordable housing units a few hundred yards from the hospital campus..

Like many South Dakota employers, Fall River Health is enduring a long-range worker shortage that has put pressure on its existing staff and driven up costs due to hiring of expensive traveling, short-term medical employees.

As of May 29, the hospital had 19 job openings, most of them in direct patient care, a shortage of 10% of its needed workforce of 190. The hospital in recent years has lost about 70 prospective workers because they couldn’t find affordable or suitable local housing, said Jesse Naze, chief financial officer at Fall River Health.

“You can’t stop providing care, so we need workforce to care for our local population,” Naze said. “It’s not wages or benefits keeping employees away, it’s simply that housing just isn’t available.”

Naze said he isn’t aware of any South Dakota project in which an employer invested so much money on permanent housing that will benefit the business as well as the community at large for years to come.

The private hospital with 25 beds saved money for years to be able to invest in the proposed housing project in which some homeowners could see a financial benefit if they take jobs at the hospital and stay for at least five years.

“The hospital is fronting the cash to get this infrastructure put in so we can get this project going,” Naze said. “There’s only so much local workforce, so we need to attract employees, and this should be a big help.”

The South Dakota Housing Authority (South Dakota Housing) has high hopes for the Hot Springs project and in October approved a nearly $1.2 million grant to support the project. The money came from the $200 million Housing Infrastructure Financing Program approved by the Legislature in 2023.

Chas Olson, executive director of South Dakota Housing, said the authority had been in discussion with officials from Hot Springs and Fall River Health for several years to generate a plan for an affordable housing project.

“We knew they were having issues recruiting and keeping workers there because the (existing) housing is old and aging,” Olson said.

The current plan for the subdivision, located on the city’s south side east of Highway 71,  is to build a mix of single-family and multi-family buildings that will create 48 total housing units with a wide range of square footages and prices, said Dennis Fischer, a former Hot Springs schools superintendent who now serves on the local hospital and housing boards.

Single-family homes of about 1,300 square feet should cost about $350,000, including the lot. Smaller villas, duplexes and townhomes could come in as low as $285,000, including lot costs, he said.

Project managers are working out details of a special mortgage for hospital employees who buy a home in which lot costs of up to $54,000 could be returned if they remain employed for five years, Fischer said.

So far, the city of Hot Springs and its residents have been big supporters of the Cascade Hills project, said Aerial Allison, city administrator.

With no significant resident opposition and a unanimous city council vote, the city approved a $2.3 million tax increment financing (TIF) district to expedite development, she said.

Quality housing has been increasingly hard to come by as the city’s reputation as a pleasant retirement community has grown. Adding to the demand is a large number of out-of-state people who moved to Hot Springs and bought homes during and since the COVID-19 pandemic.

“Not to blame them for anything, but we’re really excited this project is focused on workforce housing,” Allison said. “We’re trying to get people of working age to come here and bring their family and put their kids in our schools and shop at our local stores.”South Dakota News Watch is an independent nonprofit. Read, donate and subscribe for free at sdnewswatch.org. Contact content director Bart Pfankuch: 605-937-9398/bart.pfankuch@sdnewswatch.org.