Changes in the housing market have resulted in a flurry of new development in Rapid City with multiple large apartment complexes currently under construction. Many of these new developments are on the edge of town, which leads to urban sprawl, contributes to congestion, and adds to the City’s tax burden. Current zoning requirements, land costs, and incentive structures have created an environment that pushes renters out toward the edge of town and results in a shortage of medium density housing options, often referred to as the “missing middle.”
Missing middle housing refers to a range of housing types that are between single-family homes and large-scale multi-unit buildings. These types of housing, such as duplexes, triplexes, fourplexes, townhouses, and small apartment buildings, can provide more diverse and affordable housing options for a variety of income levels and household types.
By pushing medium and high-density development into the undeveloped areas away from local businesses, schools, and services, we limit the types of housing options that are feasible. This type of development also adds maintenance costs to the city budget by requiring the installation of all new water lines, sewer lines, and roads. This cost is then passed on to taxpayers in the form of property tax increases.
Infill development, which helps to provide missing middle housing, utilizes existing infrastructure, thereby limiting costs to taxpayers and providing housing options that are naturally more affordable.
In order to encourage infill development and accommodate more missing middle housing we need to address some of our local incentives and land use regulations. Although there is no silver bullet to addressing the current housing shortage, there are a few policy changes that we can make locally:
Parking Requirements-Current parking requirements are a major barrier for infill housing development. A significant reduction in parking requirements would reduce the cost of housing construction, make more housing projects feasible, and improve livability and walkability in neighborhoods. A reduction in parking requirements wouldn’t prevent new parking being added, it would only allow for new construction to take place in areas where parking requirements would have limited housing options.
Tax Increment Financing-Tax Increment Financing (TIF) is a powerful tool and one of the few options we have for encouraging new development. Rapid City’s application of TIF is a little different from how it is used in other communities in the state. Tax increment financing commits future property tax revenue to the repayment of a loan. That loan is then used to help fund improvements and create land suitable for new construction. Although adding infrastructure allows for additional housing development and is part of the solution, this infrastructure also comes with a cost to the city and taxpayers.
Small changes in the local TIF policy can help to make the tool more applicable for infill development and reduce the long-term cost of infrastructure to the city and taxpayers.
Land Use Regulations-Land use regulations, such as minimum lot sizes, frontage requirements, and setback requirements increase the amount of land and infrastructure needed per housing unit. This drives up the cost of new construction and requires the city to take on additional infrastructure and long-term costs. Many of the historic and older neighborhoods around town wouldn’t meet the current requirements and couldn’t be built today. Small changes to land use requirements can help to maintain the character we are familiar with, reduce development costs, and help to accommodate new housing on lots that previously weren’t practical.
Even without changes to current Tax Increment Financing policies or parking requirements, minor changes to lot size and setback requirements in residential neighborhoods can help to accommodate additional housing units without the cost of infrastructure development and maintenance. However, when used in conjunction with small changes to our local TIF policy, these minor adjustments to zoning regulations can provide powerful tools to address the problem of missing middle housing in our community.