“Prairie Haven Phase II” Development Seeks TIF #24 Approval
- Steve Jurrens
- 8 hours ago
- 3 min read
Northeast Radio SD News – Watertown, SD - The Watertown City Council is preparing to vote on a residential expansion this Monday, June 15, 2026, as it reviews the creation and development agreement for Tax Increment Financing (TIF) District Number 24.
The proposed project, driven by High Five Developments LLC, aims to bring 75 new single-family homes to a 14.13-acre vacant agricultural site, officially expanding the community’s footprint with a subdivision dubbed “Prairie Haven Phase II”.
Addressing the Need for Attainable Workforce Housing
The TIF District is officially classified as an “Affordable Housing” district, a designation supported by a preliminary determination from the South Dakota Department of Revenue. To maintain this status, the initial selling price of each newly constructed home must remain at or below the first-time homebuyer purchase price limit set by the South Dakota Housing Development Authority (SDHDA)—which is currently capped at $410,000.
The developer anticipates the homes will have an average estimated market value of $310,000. According to the project’s economic feasibility study, this price point positions the development squarely within attainable ranges for qualifying households and working families in the Watertown area, addressing a critical need for workforce recruitment and retention. The developer will be required to submit an affidavit or real estate closing statement to the City within 30 days of each home sale to verify strict compliance with these price limits.
The Financial Scope and The “Development Gap”
The total estimated investment for Prairie Haven Phase II, including the construction of all 75 homes, is projected to be between $22 million and $24 million upon full buildout. However, the 14-acre site currently lacks the necessary public infrastructure to support a neighborhood.
The developer estimates that extending streets, water distribution, sanitary sewers, storm sewers, and completing necessary site grading will cost approximately $4,412,618. Across 75 lots, this equates to roughly $58,835 per lot in infrastructure expenses alone.
According to the TIF project plan, current market conditions only support a finished lot value of $20,000 to $30,000, creating a significant “development gap” of up to $38,835 per lot. Without public participation through the TIF, the developer claims the project would not be financially feasible, and the homes would be pushed well above attainable workforce housing thresholds.
To bridge this gap, the City is utilizing a “pay-as-you-go” TIF structure. Under the proposed development agreement, High Five Developments LLC will finance all upfront construction costs using its own capital and private loans. The City will then reimburse the developer for eligible project costs using only the new, incremental property tax revenues generated by the completed homes.
The agreement caps the maximum reimbursement amount at $3,448,918.56 and applies a 0% interest rate to the reimbursement. Furthermore, the City will retain a $5,000 administrative fee from the initial tax increments. City documents explicitly state that the municipality assumes zero financial liability or general obligation debt; if the development fails to generate the anticipated tax revenues, the financial shortfall is borne entirely by the developer.
Project Timeline
If the City Council approves the TIF and development agreement, site preparation and infrastructure work will begin shortly. According to the proposed construction schedule, initial construction is anticipated to begin in 2027, with the first completed homes arriving in 2028.
The developer expects full build-out of the 75-home neighborhood by December 31, 2031. The Watertown Planning Commission has already reviewed the proposal, voting 7-0 on June 4th to recommend approval to the City Council
