Mitchell property owner feels misled, strong-armed over housing development plans

Apr. 9—MITCHELL — When Teresa Hart received a letter in the mail presenting her with two options to pay a fee for a planned housing development, she felt strong-armed and was caught by surprise.

The options are to pay $10,000 up front or $14,000 at a later date if she opts to sell her lot adjacent to the planned South Lake Estates housing development near Lake Mitchell.

The options aren't sitting well with Hart, who believes the road to be built for the development would not benefit her property. The options Hart was presented in a letter would help fund a portion of the infrastructure needed for a nonprofit organization to build homes along North Ohlman Street.

"I won't use this road since it sits next to my second lot that isn't where my house sits. It will not be of any benefit to me at all, so why would I or anyone else in the same scenarios be forced to pay for any of this project?" Hart said.

The nonprofit that presented neighboring property owners with the agreement is Mitchell Area Housing Incorporated (MAHI).

"They should fund their own development and not expect us residents to help fund it," Hart said.

According to the letter, the $10,000 agreement is due within "10 days upon commencement of the construction of infrastructure." Construction is estimated to begin in the fall. For property owners who choose the $14,000 option, they would be expected to pay MAHI the full amount within 10 days of selling or transferring their assessed lot to a third party.

Terry Sabers, president of MAHI, has been working to secure grants to foot the bill for the infrastructure work needed to build the first phase of the development MAHI is putting homes on. While Sabers has managed to secure grants, he said the payments are necessary to fund additional infrastructure work, which include new streets, curbs and gutters.

"When interest rates jumped to 8%, it sent out project costs up. We are now looking at $3 million in infrastructure work. The financing we have secured and the assessments will keep the homes we put in the development more affordable," Sabers said.

Interest rate hikes have also increased the cost of each lot within the MAHI's portion of the South Lake Estates development to $95,000, according to the letter sent to all nearby residents being assessed.

The letter MAHI also stated, "If this project were conducted in the normal development method, that is the cost that could be assessed." Sabers is referring to the process of instituting special assessments.

Sabers understands opposition from property owners such as Hart, but he said the options presented to neighboring lot owners is a fair deal considering the alternative of utilizing special assessments through Mitchell City Council approval. He said the value of each vacant lot next to the south edge of the development, where the first new road would be constructed, will drastically increase.

"A lot that was worth $5,000 would be worth $25,000 to $45,000 with a new road and infrastructure next to it," Sabers said.

However, Hart was concerned whether a nonprofit organization has the authority to authorize a mandated fee for a development like the South Lake Estates project. She felt misled, through discussions with MAHI representatives, that the city was involved with the agreement and payment options.

Hart is aware of city governments using special assessments, but Mitchell Mayor Bob Everson made clear on Monday that the city "has nothing to do" with MAHI's development project. Outside of the South Lake Estates development, the city of Mitchell utilizes special assessments to help pay for sidewalk installations and new roads. Typically, an assessment for a new road is proposed if property owners call on the city to construct a road. When the city uses special assessments for sidewalks, for example, a public hearing is held to allow affected property owners to speak on the matter. The council then determines whether to approve imposing a special assessment.

"In order for the city to assess property owners, the city would have to be the developers. We are not the developer doing any of the work for this project," Everson said.

Nonprofits are not listed as an authority for special assessments, according to the South Dakota Department of Revenue. A guide to special assessments document says, "The governing body of any municipality may establish one or more districts for the construction and maintenance of local improvements." The Mitchell City Council would ultimately need to give final approval for any special assessment through a developers agreement.

The Mitchell City Council has approved the plat for the South Lake Estates housing development, but city officials on Tuesday confirmed MAHI has not yet filled out an application for special assessments for the project.

Sabers, in a phone call Tuesday with the Mitchell Republic, acknowledged the agreement covered in the letter is optional.

MAHI hopes to get 100 percent participation from property owners, but Sabers said it's not a special assessment and, "I can't force them to do this."

"Most of the neighbors feel they're getting a good deal," Sabers said.

Prior to MAHI presenting the new agreement option, each neighboring lot owner was also offered the option to sell their lot to MAHI for $25,000. And several lot owners took the $25,000 offer, according to Sabers.

The South Lake Estates development was first rolled out by Chuck Mauszycki Sr., in 2022. In an effort to keep homes in the development more affordable, Mauszycki formed a partnership with MAHI. Mauszycki donated a portion of the lots in the development along the south edge to MAHI.

When the proposed development was brought in front of the Mitchell City Council roughly two years ago, the majority of the nearby residents were opposed to the proposed zoning changes and an assessment fee.

Sabers said it's a necessary step to bring Mitchell more housing below the $300,000 price range. Sabers, who is running for mayor, is convinced that Mitchell must drastically increase housing availability to spur the type of growth that he said has been lacking for decades.

"If we want to truly grow, we have to build more houses in a price range that we don't have nearly enough of. We can't grow without building more homes, and this is part of the process," Sabers said.

If Sabers is elected as Mitchell's mayor in June, he said he is prepared to step down from his role as president of MAHI if the public perceives it as a conflict.