In an unprecedented move, a small hospital in South Dakota nestled in the southern Black Hills is spearheading a subdivision project to address a critical housing shortage for its employees. Fall River Health Services, an independent nonprofit medical center in Hot Springs, is committing $2.3 million toward the $3.4 million infrastructure cost of a new development, poised to create 48 new affordable housing units just a short distance from its campus.Like many employers across South Dakota, Fall River Health is grappling with a persistent worker shortage, which has strained its existing staff and escalated costs due to the reliance on expensive traveling medical personnel. As of late May, the hospital reported 19 job vacancies, predominantly in direct patient care, representing a 10% deficit in its 190-strong workforce. Jesse Naze, chief financial officer at Fall River Health, revealed that in recent years, dozens of potential healthcare workers have declined offers because they could not secure affordable or suitable local housing."You can’t stop providing care, so we need workforce to care for our local population," Naze stated in an interview. "It’s not wages or benefits keeping employees away, it’s simply that housing just isn’t available."The hospital’s substantial investment in the Cascade Hills subdivision marks a growing trend among South Dakota employers who are increasingly finding innovative ways to provide housing for their staff. For instance, Wall Drug president Rick Hustead noted in 2025 that his establishment provides mobile homes and other accommodations for over 100 seasonal employees who would otherwise lack housing. Similarly, business operators in Keystone have indicated they offer recreational vehicles as housing for summer workers arriving under the H-2B Visa program.However, Chas Olson, executive director of the South Dakota Housing Development Authority (South Dakota Housing), highlighted the unique nature of Fall River Health’s initiative. He is unaware of any other South Dakota project where an employer has invested directly in permanent housing that promises long-term benefits for both the business and the wider community. The 25-bed private hospital had diligently saved funds for years to enable this significant investment."The hospital is fronting the cash to get this infrastructure put in so we can get this project going," Naze explained. "There’s only so much local workforce, so we need to attract employees, and this should be a big help."South Dakota Housing holds high expectations for the Hot Springs project, having approved a nearly $1.2 million grant in October to support its development. This funding originates from the $200 million Housing Infrastructure Financing Program, enacted by the Legislature in 2023. Olson confirmed that discussions with Hot Springs officials and Fall River Health had been ongoing for several years to formulate a viable, affordable housing plan.(Getty Images)"We knew they were having issues recruiting and keeping workers there because the (existing) housing is old and aging," Olson said. He praised the Cascade Hills project for its robust development plan, the dedication of its construction managers, and strong community backing. "When you combine all those things, it gave us comfort that the housing will get built," he added.The current blueprint for the subdivision envisions a diverse mix of single-family and multi-family buildings, culminating in 48 housing units with varied square footages and price points. Dennis Fischer, a former Hot Springs schools superintendent now serving on local hospital and housing boards, indicated that single-family homes of approximately 1,300 square feet are projected to cost around $350,000, including the lot. Smaller villas, duplexes, and townhomes could be priced as low as $285,000, lot costs included. All these prices fall within the South Dakota Housing Authority’s definition of "affordable" housing."We’re hoping that isn’t out of reach for homeowners," Fischer commented. Project managers are also finalizing details for a special mortgage program for hospital employees who purchase a home, offering a return of up to $54,000 in lot costs if they remain employed for five years.As of late May, the subdivision site remained open pastureland, though Fischer anticipated infrastructure work, including utility installation and road construction, could commence imminently. The 11-acre project, situated on State Highway 71 south of the city, will also incorporate space for a community park. Private developers, yet to be secured, will undertake the construction of the housing units.Fischer noted that the local school district faces similar recruitment challenges to the hospital. "Teachers who couldn’t find housing turned down job offers or left after a couple years because they didn’t feel like they were getting ahead in terms of home ownership," he explained. The collaborative funding approach has significantly accelerated the project’s timeline, as "The hospital didn’t have deep enough pockets to do it on their own." Fischer projected a hopeful timeline of eight to ten years for full development and sale of the housing, though he acknowledged it could extend longer.A 2023 housing study underscored the challenges confronting Hot Springs, many of which are common in small cities statewide. The city experienced a 4.5% population decline from 1990 to 2000, followed by another 10.1% drop from 2000 to 2010, shrinking from 4,129 to 3,395 residents over that two-decade period, according to the U.S. Census. More tellingly, and indicative of the city’s increasing role as a retirement community, 60% of its population was aged 45 or older in 2022, with a loss of 125 individuals aged 14 or under in the preceding decade. Concurrently, from 2010 to 2020, Hot Springs lost 121 households, roughly 7% of its housing stock, despite some models predicting future household growth.The study also identified strengths and weaknesses in the city’s housing landscape. Strengths included its status as a regional economic hub, robust educational and healthcare systems, abundant outdoor recreation, appeal to retirees, and generally affordable housing. Negatives encompassed the aging population, deteriorating housing conditions, prevalence of low-pay jobs, commutable proximity to Rapid City, and inadequate infrastructure. Crucially, the study directly advocated for two components now being addressed by the Cascade Hills subdivision: promoting employer involvement in housing development and increasing the construction of twin-home and townhouse units.Aerial Allison, Hot Springs city administrator, reported strong support for the Cascade Hills project from both the city and its residents, with no significant opposition and a unanimous city council vote. The city approved a $2.3 million tax increment financing (TIF) district to expedite development, with no local tax money expected to be required for the project. This initiative is anticipated to create opportunities for new or existing employers to hire workers and potentially expand."We’ve got some job openings (in city government) and I know they’ve been struggling at the hospital to fill jobs and retain them," Allison said. "But I think all our employers would see a benefit."However, Allison emphasized that the subdivision is merely one component of a broader strategy to enhance housing options in Hot Springs. Quality housing has become increasingly scarce as the city’s reputation as a desirable retirement community has grown, further exacerbated by a significant influx of out-of-state residents who purchased homes during and after the COVID-19 pandemic."Not to blame them for anything, but we’re really excited this project is focused on workforce housing," Allison stated. "We’re trying to get people of working age to come here and bring their family and put their kids in our schools and shop at our local stores."Concurrently, the city has become more proactive in acquiring and rehabilitating or demolishing dilapidated housing, particularly in aging mobile home parks. Part of this plan involves securing suitable housing for residents displaced from these older structures. The city is also connecting homeowners with resources to assist with home improvements or to upgrade their housing status."Our jobs here haven’t really kept up with other rising costs, and especially housing costs, so people may need some help," Allison noted. If the Cascade Hills project proves successful, with homes built and sold efficiently, it could stimulate further housing development, population growth, and economic activity in the city. "It’s a good first step for us, a really big first step," she concluded.