Community-Driven Housing Development Takes Shape in Watertown’s Harmony Hill

Steve Jurrens
Apr 6
3 min read

Northeast Radio SD News – Watertown, SD - The Watertown City Council on Monday night unanimously approved the creation of Tax Increment Financing (TIF) District #23. The new district is set to pave the way for a residential development in the Harmony Hill Addition, focusing on “workforce housing” that targets a price point often overlooked by modern developers.

The project is a collaborative effort between SCI Development and the Sisters of the Mother of God Monastery, whose sprawling campus is transforming into an intergenerational community hub.

The primary goal of TIF #23 is to facilitate the construction of up to 40 new single-family homes. During the public hearing, developer Seth Fryer of SCI Development detailed the vision for a neighborhood that prioritizes accessibility and affordability without sacrificing quality.

“The houses range anywhere from 736 square feet all the way up to 1,400 square feet,” Fryer told the Council. He emphasized that the project was specifically designed to meet a mandate from the Sisters to keep homeownership within reach for local workers. “We were tasked by the Sisters to keep those houses at $300,000 and less... Most of them will actually hit fairly well under $300,000.”

Fryer noted that some of the smallest models are projected to hit the market at approximately $160,000, with larger mid-range options—such as a 1,089-square-foot model currently being piloted in nearby Hayti—listed at roughly $274,000.

A Legacy of Stewardship

The Sisters of Mother of God Monastery, who have long called the hilltop home, viewed the development as a natural extension of their vocational mission. Joy Nelson, a local real estate expert and board member for Harmony Hill, spoke passionately about the project’s necessity.

“These are the people that are calling me that I cannot accommodate,” Nelson said. “I have nowhere to put them other than a rental. This is their opportunity to be able to have homeownership, and we worked really hard to get those numbers down to where they would be affordable for families.”

Michael Klatt, a strategic advisor to the Monastery, added that the development aligns with broader community goals identified in recent housing studies. “It hits a number of goals that the community’s identified,” Klatt noted. “It will be a blessing for the community in terms of tax revenues that will continue to be enhanced.”

Fiscal Safeguards for the City

Council members expressed strong support for the project, particularly praising the “textbook” structure of the TIF, which limits the city’s financial exposure. Tax Increment Financing allows the developer to be reimbursed for public infrastructure costs—such as water, sewer, and streets—using the new property tax revenue generated by the development itself.

Councilman Kyle Peters highlighted two critical features of this specific TIF:

1. No Debt Guarantee: Unlike some financing models, the City of Watertown is not guaranteeing the developer’s debt. If the project fails to meet revenue projections, the risk remains solely with the developer.

2. Infrastructure Only: The funds are strictly designated for public infrastructure, not “vertical” construction of the homes.

“This is exactly how they should be written,” Peters said. “This is a good thing for the community and a drive to down the costs that Councilman Heuer is talking about. This is the tool that’s needed to make sure those costs stay low.”

Building a Community

The Harmony Hill Addition is part of a larger 480-acre master-planned campus that already includes the Village at Harmony Hill senior living facility. Future phases are expected to include student housing for Lake Area Technical College and specialized housing for veterans.