Watertown’s Strategic Blueprint: Housing, High-Tech, and the Battle for Affordability
- Steve Jurrens
- Feb 16
- 4 min read
Northeast Radio SD News - Watertown, SD - In a wide-ranging interview following the recent Watertown Housing Summit, Chris Clifton, Executive Director of the Watertown Development Company (WDC), laid out a bold vision for the city’s economic future.
From leveraging federal “debt stacks” for rural housing to navigating the controversy surrounding multi-billion-dollar data centers, Clifton’s message was clear: Watertown must grow aggressively to remain sustainable, but it must do so with a surgical focus on cost and community accountability.
The discussion, held LIVE from Watertown on Northeast Radio SD, underscored a pivotal moment for the region as it faces a “grow or die” ultimatum from local leadership.
The Housing “Silo” Problem
The summit, which drew more than 200 registered stakeholders, including local builders, state officials, and USDA representatives, was designed to break down the “federal silos” that often stifle development.
Clifton noted that many developers are unaware of the creative ways they can populate their “debt stacks.” By “piggybacking” state programs on federal USDA resources—which have evolved over 30 years to support more than animal husbandry—developers can secure financing for essential infrastructure that would otherwise sink a project.
“Unless we are in Rapid City or Sioux Falls, we’re all rural,” Clifton said. “The USDA realizes that financing for housing is critical for families who want to stay on the farm and manage the family legacy. Their applications here are spot on.”
The goal is to encourage incremental development. While large-scale subdivisions are rare in the region, Clifton is pushing for more duplexes, triplexes, and “quads.” Each unit, he argues, represents a “bunt or a single” that eventually adds up to a winning score for the city’s housing stock.
The TIF Debate: Transparency as a Shield
One of the more technical—and contentious—tools discussed was Tax Increment Financing (TIF). Often criticized as a “giveaway” to developers, Clifton reframed TIF as an essential tool for public benefit, particularly in a state like South Dakota, where few other economic tools exist.
Clifton emphasized that a TIF is not a “check” written to a company. Instead, it uses future tax revenues from a new development to fund current public infrastructure, such as water, sewer, and roads.
To combat public skepticism, Clifton proposed a new standard for Watertown: Annual Performance Audits.
· The “Clawback” Provision: If a developer fails to meet the investment or job creation goals outlined in their agreement, the city can “claw back” the value of the incentive.
· Transparency: Every TIF project should be measured and published annually to show exactly how it is performing.
“I’m not in the ‘oops, it didn’t really work’ business,” Clifton stated bluntly. “If you don’t produce the results, we get half our money back. It’s a simple contract.”
Data Centers: National Defense and Utility Impacts
Addressing the recent buzz surrounding a potential data center in Toronto, SD, and its implications for the dual-county area, Clifton sought to dispel myths about energy and water usage.
Contrary to popular belief that AI is the sole driver, Clifton attributed the surge in data center demand to national defense and secure data storage. He argued that Northeast South Dakota is a “natural fit” for these facilities due to the convergence of natural gas and electricity infrastructure.
Addressing environmental concerns, Clifton noted that modern data centers use closed-loop liquid cooling systems—similar to a car radiator—which prevents the massive water waste associated with older technology. Furthermore, he argued that large industrial energy consumers, such as data centers, can lower utility rates for residential users by providing a steady, guaranteed revenue stream that funds next-generation grid upgrades.
The “Yoda” Doctrine: Growth at 3%
The overarching challenge for Watertown is a mandate from the Mayor to double the city’s growth rate to 3% annually.
Clifton drew a line in the sand regarding the city’s future, invoking a cinematic comparison:
“It’s kind of like Yoda: do or do not, there is no try. We either grow or we die. If we don’t have sales tax growth in this environment, you only have one other option: property tax growth. To keep taxes low, we must have growth.”
The strategy for achieving this involves a two-pronged approach:
1. Attracting Talent: Working with local institutions like Lake Area Technical College (LATC) to retain “the best and brightest” who might otherwise move to metros like Dallas or New York.
2. Density and Size: Challenging the “American Dream” of 2,500-square-foot homes. Clifton argued that “smaller is going to be what gets us to affordability,” suggesting that Watertown needs to return to more efficient, manageable housing designs to lower the $250-per-square-foot build costs.
What’s Next?
Following the success of the Housing Summit, the WDC plans to host a “Mini-Summit” this fall to dive deeper into solution strategies. Clifton encouraged all residents and business owners to fill out the housing questionnaire available on the Watertown Development Company website.
“Watertown can be whatever it wants to be when it grows up,” Clifton concluded. “But we have to have those critical conversations about density, infrastructure, and cost now.”
Primary Organizations
· Watertown Development Company (WDC): wdcsd.com
· Watertown Area United Way: watertownunitedway.org
· Prairie Lakes Healthcare Foundation: prairielakes.com/foundation
Key Partners and Programs
· Lake Area Technical College (LATC): lakeareatech.edu
· Boys and Girls Club of Watertown: bgcofwatertown.com
· Salvation Army (Watertown): centralusa.salvationarmy.org/watertown
· Dolly Parton Imagination Library (Codington County): imaginationlibrary.com
· USDA Rural Development (South Dakota): rd.usda.gov/sd
