Unlocking Economic Growth: The Importance of TIF District #22 for Affordable Housing Development in Watertown, SD
- Steve Jurrens
- Feb 20
- 2 min read
Northeast Radio SD News - Watertown, SD - In a lengthy Session marked by debate over property assessments and the city’s economic future, the Planning Commission recommended approval for TIF District #22, the Dakota Commons Reserve.
The $17.5M project proposed by Dakota Commons Reserve, LLC, features eight apartment buildings totaling 110 units. Like its predecessor on the agenda, this district is classified as Affordable Housing, holding rents at or below 80% AMI.
The “But-For” Test
The heart of the discussion centered on the “but-for” requirement: the statutory necessity that a project would not happen without the TIF. Tobin Morris argued that current high interest rates and construction costs make TIF an essential tool.
“You pretty much have to have a TIF to do any apartment building right now,” developer Dustin Hendrickson added during the hearing.
The Performance Gap
Commission Chair Liam Culhane raised concerns about the performance of previous TIF districts. “One of my personal concerns has been that I’ve overseen eight or nine or ten TIFs and some of them are underperforming, which is concerning to me,” Culhane stated.
City Manager Alan Stager addressed this by pointing out the discrepancy between project costs and county assessments. Stager noted that while the developer might spend $16 million, the Codington County Director of Equalization might conservatively estimate the assessed value at only $4 million.
“This amount will never pay more than $953,564,” Morris noted, explaining that the risk of underperformance falls entirely on the developer, not the city.
County Collaboration
The discussion prompted an unusual public comment from Troy VanDusen, Chairman of the Codington County Commission. “I sat in the back of the room here this afternoon, and I listened to your discussion on the TIFs,” VanDusen said. “I want you to know that I will be taking that back to the county... We want to move this forward.”
The commission eventually passed Resolution 2026-08 unanimously.
