SPEARFISH, S.D. – A proposed $9.3 million apartment complex planned for this fast-growing city in western South Dakota will be the first to use part of a federal affordable housing fund approved by Congress in 2024.
The proposed 32-unit Peak View II apartments on 3.5 acres off Paramount Drive in eastern Spearfish should begin accepting tenants in summer 2027.
The project will rely in part on a low-interest loan made from a $30 million pool of money allocated by Congress for affordable housing projects across the greater Black Hills region.
"We could build market-rate apartments where rents are higher, and that would be more profitable for us. But we wanted to be part of the solution, to find a win-win that helps the community and was still good for us."
– John Buxton, co-owner of Buxton Enterprises and the developer of the project
The South Dakota Ellsworth Development Authority was provided access to the funding through an earmark pushed by U.S. Sens. John Thune and Mike Rounds as part of a $468 billion congressional spending package passed by Congress in March 2024. The money was allocated in advance of the $2 billion expansion of the Ellsworth Air Force Base in Box Elder, which will be home to the new B-21 Raider bomber fleet.
The funding was allocated to the South Dakota Ellsworth Development Authority, and it is partnering with the Black Hills Area Community Foundation to approve and administer low-interest loans for affordable housing projects across the region. The community foundation approved a $750,000 loan to aid in funding the Peak View II project.
"We look forward to this being an asset to the Spearfish community for decades to come," Greg Litton, director of strategic housing at the foundation, said June 5 at a groundbreaking ceremony for the apartment complex.
Subsidized rents will aid low-wage earners
Depending on their income – which can range from 30% to 60% of the federal area median income level of $96,100 – subsidized tenants in Peak View II will pay $600 to $1,300 a month for rent and utilities, said John Buxton, co-owner of Buxton Enterprises and the developer of the project.
Buxton said the subsidized rents are well below current market rate rents in Spearfish. Federal law requires the project to maintain rents at an affordable level for the next 40 years, Buxton said.
Lloyd Companies of Sioux Falls will be the builder of the Peak View II project.
Get South Dakota news and information in a free email on weekdays. Cancel any time.
Spearfish has shown rapid growth in recent years, from a population of 10,494 in 2010 to 14,154 in 2025, a 34.8% increase over that 15 years, according to the U.S. Census Bureau.
The number of households has not kept pace with that population growth, according to the U.S. Census Bureau, rising from 4,644 in 2010 to 5,932 in 2024, a 28% jump.
Housing a major need in fast-growing Spearfish
A 2016 housing study conducted by the city noted that much more rental housing is needed and included a recommendation that the city find a way to generate 230 new apartments to meet the need at that time.
As with most South Dakota cities, Spearfish faces an acute need for more affordable housing. Average rents in June ranged from $1,200 to $1,650 per month, according to Apartments.com. To afford an apartment at the top end of that range, a tenant would need to make gross wages of $66,000 a year to not be considered "rent burdened."
Meanwhile, 15.2% of the population of Spearfish lives beneath the national poverty level, according to the Census. In 2025, the U.S. poverty threshold was $32,150 in annual income for a family of four.
Jeremy Hoven, president of the Black Hills Community Bank branch in Spearfish, said finding an affordable apartment or home in Spearfish is difficult right now.
"We really need housing like this – affordable workforce housing," said Hoven, who serves on the Spearfish Housing Trust Advisory Board. "The overall affordability of housing is the big issue."
Hoven said Spearfish has relatively high housing costs, so market rate apartments might be out of reach for some residents. "It's nothing against other nearby towns like Belle Fourche, where I grew up. But if you want to live in Spearfish, you have to pay a premium, so to speak."
Bart Pfankuch
Hoven said the increasing costs of housing construction make it hard for developers to build affordable units without some form of subsidization and collaboration among funders.
"We need some help," he said. "With high land costs, building costs, engineering costs and soft costs, it's pretty hard to make a project work without some type of subsidy."
A variety of funding sources in play
The Peak View II project falls into that category.
The proposed project's $9.3 million price tag will be funded through a variety of sources, said Buxton, co-owner of Buxton Enterprises, which built Peak View and is the developer on Peak View II as well.
Buxton received nearly $9 million in gross grant and loan funding from three programs run by the South Dakota Housing Development Authority. That includes $7.4 million in gross federal tax credits, $1 million from the HOME Program and $600,000 from the Housing Trust Fund.
The proposed Peak View II complex will be almost identical to the 32-unit Peak View apartments that opened in 2024 in the 2500 block of Paramount Drive in eastern Spearfish. Peak View II will be located next door and feature one-bedroom and two-bedroom apartments, Buxton said. Two units in each complex will rent at market rates with the other 60 available at subsidized affordable rates.
Buxton, who lives in Spearfish, told News Watch that Buxton Enterprises is focusing on affordable housing as a way to support opportunities for anyone who wants to call Spearfish their home.
"We could build market-rate apartments where rents are higher, and that would be more profitable for us," he said. "But we wanted to be part of the solution, to find a win-win that helps the community and was still good for us."
In addition to being the first project using the federal earmark money, the Peak View II project is also a continuation of the larger Strategic Housing Initiative being conducted over the past decade.
Bart Pfankuch
The initiative is a partnership among local and regional philanthropic groups that has shown success in expanding access to affordable housing for low-income individuals and families in the Black Hills region.
As of this spring, the initiative that began roughly a decade ago has resulted in development or retention of 645 apartments totaling more than 1,230 bedrooms for people who have difficulty obtaining and affording quality housing in the area.
South Dakota News Watch is an independent nonprofit. Read, donate and subscribe for free at sdnewswatch.org. Contact content director Bart Pfankuch: 605-937-9398/bart.pfankuch@sdnewswatch.org.
