Housing officials point to a workaround for tribes to apply for an upcoming state infrastructure grant and loan program.

That comes after concerns were raised in public comments about whether housing projects in reservations qualify for the money.

The Housing Infrastructure Fund is designed to spur housing development across the state. Seventy percent of a $200 million dollar pool of money is earmarked for communities other than Rapid City and Sioux Falls.

The only requirement is the developed infrastructure be transferred to a political subdivision that derives its power from the state.

Tribal governments are independent sovereign entities.

State law requires the infrastructure be owned, maintained or provided by a political subdivision of the state.

Chas Olson is the director of South Dakota Housing. He said cities and counties located within reservations can apply.

“Potentially, a tribe or tribal entity could partner with a city or county or some form of government that qualifies as a political subdivision to apply for the funding, get the infrastructure built and then convey that ownership over to the tribe or tribal entity,” Olson said. “Technically, that would be provided by a political subdivision.”

Olson said a legislative fix is needed to allow tribal governments to directly apply for the housing and infrastructure money.

The Housing Infrastructure Fund has had a brief turbulent past. Lawmakers passed the funding during the 2022 session. The money remained unspent following concerns about authority. Lawmakers passed a program again in 2023. Since then, the Housing director resigned, and several lawmakers grew concerned about the pace of the program roll out.

Three quarters of the money comes from the state general fund. Another $50 million comes from federal pandemic relief money.

Rules governing the infrastructure fund must be approved by a legislative committee, which meets on June 13. If approved, the rules will go into effect in 20 days. Housing development officials expect to start taking applications after that.