Bedroom communities waking up around Sioux Falls

Doug Hainje remembers when everything in Dell Rapids seemingly was on Main Street.

The community Hainje grew up in is changed. It’s one of the few constants the 61-year-old has noticed about his hometown. Housing goes up each year, except for a few dry periods in the 70s and 80s when the rest of the United States faced economic recessions.

But the last few years have been different. Dell Rapids welcomed a grocery store, then an Ace Hardware, followed by a new Dairy Queen and Shopko Hometown.

“I suppose it’s partially the location to Sioux Falls, and the town has two schools, K-12, we have a public school and a parochial school,” said Hainje, who heads the growing city’s economic development group.

Small communities around Sioux Falls are making big plans for the future as they experience increased interest from families and businesses who want to relocate away from the urban core. Experts credit the trend to the area’s surging economy and population, coupled with the unique appeal of small towns.

Nick Fosheim has noticed the trend across Lincoln and Minnehaha counties. Fosheim heads economic development groups for both counties, acting as an advocate for the smaller pockets around the city as they put out the welcome mat for newcomers.

“It’s pretty clear that there are healthy growing communities out there,” Fosheim said. “Sometimes it happens under the radar because we don’t see it every day.”

Part of the credit goes to Sioux Falls’ success. Population in the four-county area has steadily marched upward along with the city. The metro area’s population crossed the quarter-million threshold in 2015, thanks in part to the thousands of people who moved to houses in the outskirts.

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Rural areas around the city added 5,303 people and 388 rooftops between 2010 and 2015, according to annual surveys conducted by the U.S. Census Bureau.

“We often talk about this regional ecosystem,” Fosheim said. “That concept of the rising tide lifts all boats.”

But growth at the most local level has emphasized the individual personalities of each community, Fosheim said.

While Dell Rapids is benefiting from a recent surge in new businesses coming to town, others are celebrating increases in residential development.

Local leaders in Crooks have experienced high demand for lots of land owned by the town’s housing commission. Baltic issued about one dozen building permits for single-family homes this year, and its Valley View Meadows addition is adding depth to the housing stock with properties selling at or above the $300,000 mark.

“Houses aren’t sitting on the market for a long time,” Baltic Mayor Mike Wendland said. “They’re going in hours versus days.”

Richelle Hofer moved to Garretson about nine years ago, and believes strongly in the uniqueness of her town.

There’s the obvious charms: Scenery and outdoor fun such as kayaking Split Rock Creek. Then, there are less obvious quirks. There’s a cat at City Hall, for instance, which turns out litters of kittens, adopted in turn by local families, Hofer said.

“Garretson is about as close to Mayberry as you can get,” Hofer said. “We all watch out for each other’s kids.”

Hofer co-founded a four-tiered development group called Grow Garretson, which hopes to take advantage of the town’s tourist appeal while bringing in more businesses.

Despite decades of steady growth in Sioux Falls, not every incoming family wants to live downtown. People such as Hofer come to the area with a taste for small-town living, buying a home in one of the city’s many bedroom communities.

Wendland notices a distinct trend in Baltic. Residents are younger, with an average age of 32. Baltic offers quality public schools, and there’s another advantage for young families: Cheaper cost of living, Wendland said.

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“Fifteen minutes, you can be in Sioux Falls,” Wendland said. “And generally speaking, houses are cheaper than Sioux Falls. There are lower taxes.”

Many smaller towns offer the same advantage when it comes to housing. Lower costs. Small town feel. Good schools. The same themes were echoed by local leaders across the region. Existing homes are never on the market for long, and many towns have acreage reserved for new construction.

Crooks officials formed the housing commission in May, selling lots for new houses to meet demand.

“We are incredibly kid and family friendly,” Crooks Mayor Jamison Rounds said. “That’s it.”

Businesses can be trickier for smaller communities to attract, but the influx of new homeowners can inspire confidence in commercial developments.

“The goal is you always want a really diverse economy,” Fosheim said. “We don’t want a lot of our growth just to be in housing. But I think sometimes it starts there right?”

That’s been the case in Worthing, where officials are experiencing a spike in interest in the city’s long-dormant industrial park. The park has two facilities going up, with two more companies interested, said Todd Gannon, president of the Worthing Economic Development Corporation.

“In the last year from both a commercial and residential standpoint, we’ve really seen things really take off,” Gannon said.

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Communities are facing the trend with an economic savvy, Fosheim said.

Growth comes down to more than just an increase in population. In addition to new homes, there needs to be an investment from both community members and business leaders.

“They’re doing their homework,” Fosheim said. “They’re doing things like housing studies and strategic planning.”

As more people move to the area, towns are striking a balance between residential, retail and industrial development. Housing is a great starting point, but like Dell Rapids, towns should build on those successes by making room for other types of revenue streams, Fosheim said.

“Now that they’re seeing this success in housing, they’ve got this momentum, so what other opportunities can they capitalize on now?” Fosheim said.

Sales tax is one such opportunity. It’s an extra source of income towns can spend on infrastructure and other public amenities. Developing it, however, can be difficult. Sales tax has been a “huge challenge” in Crooks, where people head to the city to do their shopping, Mayor Rounds said.

“Frankly, right now, we actually subsidize Sioux Falls,” Rounds said. “God bless Sioux Falls, but we need to keep some of us in our town.”

Shopko and other retailers new to Dell Rapids have been a boon for the city’s sales tax revenue. The town has benefited from slow and steady growth in housing, but leaders have been actively chasing opportunities in commercial development in recent years.

Their work is paying off, City Administrator Justin Weiland said.

“For municipalities, it’s kind of our bread and butter,” Weiland said. “What helps our communities thrive is sales tax.”

That’s why community leaders in Crooks have a vision that goes beyond new homes.

Until recently, the town was landlocked an unable to grow outward, Rounds said. Crooks officials formed the quasi-governmental Housing and Redevelopment Commission, which bought up 25 acres of land with the intention of using it to spur the local economy.

Commission members reserved 12 acres for housing, but the other half will go toward answering the town’s sales tax questions. Rounds described the desired use of the land as “low impact commercial property.”

It’s more than a space for retailers. Rounds sees potential for it to be a new heart of the community – a place where residents can come together and enjoy each other’s presence.

“Where you go for a walk with your girlfriend or your wife,” Rounds said.

Dell Rapids, meanwhile, is just a week away from a landmark moment in its local history. The first tenant of the city’s business park will open its doors. Midwest Fresh Logistics hauls fruits and vegetables across the Midwest and will use the facility as a distribution hub.

Weiland sees it as a next step in Dell Rapids’ development: A way to create jobs.

“We have this kind of self-sustaining economy,” Weiland said. “It’s that extra 5-10 minutes being separated from Sioux Falls that allows us to do that.”