Proposal redirects COVID housing stimulus program funds that split Republican lawmakers, Noem administration in 2022 & 2023
PIERRE, S.D. – Millions in unspent COVID-era housing funds will be used to subsidize airport expansions in South Dakota’s two largest metropolitan hubs.
Gov. Larry Rhoden on Friday called for $30 million to support terminal and aviation upgrades in Rapid City and Sioux Falls as the state’s bookending communities undergo terminal overhauls expected to top hundreds of millions of dollars in construction costs.
“Smart economic development involves doing the right thing, at the right place, at the right time,” said Bill Even, commissioner of the Governor’s Office of Economic Development, after the governor unveiled plans for an interest-free loan program that would send $15 million to each city at a morning press conference at Joe Foss Field. “This proposal is a prime example of smart economic development, and it will lead to big wins for South Dakota.”
Rhoden’s proposal calls for the funds to come from unspent housing infrastructure grants and loans set aside by the legislature in 2023, when $200 million was earmarked for government-endorsed housing projects.
Those funds were the subject of legislative gridlock for two years. Then-Gov. Kristi Noem had pushed to use a blend of COVID-driven federal stimulus and freed-up state funds to create a $200 million workforce housing program. After a divided legislature narrowly approved the program in 2022, disbursements were delayed until after the 2023 session due to a drafting error in the legislation. Additional delays were blamed on a slow rollout, which led to leadership changes at both the South Dakota Housing Authority and the Governor’s Office of Economic Development.
More than two years later, $65 million of the original $100 million of the loan portion of the funds remain unspent.
But because those dollars were already marked for a specific purpose, lawmakers would first need to approve diverting them to the state’s Revolving Economic Development and Initiative (REDI) Fund. The loans would need to be repaid to the state by June 30, 2030, under Rhoden’s proposal.
“This investment will make a huge difference – not just for Sioux Falls and Rapid City, but for all South Dakotans,” Rhoden said, noting that tourism is the state’s second-largest economic driver. “We’ve seen huge increases in travelers coming through these airports. With more gates, more flights, and more destinations, we’ll be able to draw more visitors and keep our state Open for Opportunity!”
Since 2019, travelers through Rapid City’s airport have increased by 30 percent, and travelers through Sioux Falls’ airport have increased by 25 percent.
Rhoden’s plan comes as federal spending tightens and state lawmakers have historically been hesitant to back airport projects supported by economic development initiatives in Sioux Falls and Rapid City.
In 2024, the Legislature approved $10 million for airport improvements across eight projects statewide, with Sioux Falls’ share at $2.5 million. Officials say bond sales are available to cover remaining costs, and it’s possible the full $30 million loan may not be needed.
In July, Sioux Falls city councilors and Mayor Paul TenHaken authorized a $5 million, no-interest loan to the Sioux Falls Regional Airport for its long-pursued terminal, runway, and infrastructure overhaul at Joe Foss Field, hoping to entice lawmakers to match the funds after years of unsuccessful funding requests.
Backed by TenHaken’s administration, the initiative coincides with plans for $68.7 million in improvements at South Dakota’s busiest airport. While $30 million could be covered by a bond authorized by the Sioux Falls Airport Authority this summer, funding for the full project remains uncertain. Supporters say billions in local economic activity are at stake. The Dakota Scout reported this summer that the airport authority’s $30 million bond for the initial concourse improvements was finalized this month, and the federal government has pledged $35 million.
Rapid City Airport (RAP) is also planning hundreds of millions worth of construction in the coming years as it undergoes a campus-wide overhaul.
Airport advocates and some of the loudest champions of the expansions on both sides of the Missouri River are lauding the governor’s proposal.
“We are happy Gov. Rhoden sees the value in supporting air service in Sioux Falls,” said Councilor Richard Thomason, who helped usher support for the city of Sioux Falls’ recently adopted airport loan funding initiative. “We look forward to working with the Legislature and Governor’s office to help ensure the airport is set up for future generations.”
Rhoden said the intent is to place all $65 million of the remaining housing dollars into the REDI Fund. It remains unclear how the state plans to spend the $35 million not proposed for the airport projects, though the governor’s office said if reallocated by lawmakers there, it’d support GOED and the REDI Fund eligible projects.