Part 1: There’s a market for them

By Jeff Smith


On June 4, The Planning and Zoning Commission decided to hold off on a conditional use permit for a vacation home in Hill City until there is more information provided.

Although 352 Pine Mountain Ave. looks like a two-story rental, the property data sheet shows that it is just a one-bedroom. This confused the commissioners and Dani Schade, development services coordinator in Hill City.

One of the concerns is the amount of traffic that is already on Pine Mountain Avenue. If there is a vacation rental there it could be more dangerous for drivers. The issue is that state and city regulations require a minimum of two parking spaces per dwelling unit. The commissioners don’t want the cars to be parked on Pine Mountain Avenue.

Right now there is one off-street parking space. The commission decided to table the permit application request until they find out how many bedrooms there are. There is also some renovation that is going to happen to the building too so the P&Z Commission would like to know what the changes will be.

Another concern is the amount of vacation homes in the area. Les Gonyer, planning and zoning commission vice chairman, said that he doesn’t want government to control the number of vacation houses but if someone is looking for vacation houses there are a lot of them, but there is not much affordable housing.

It’s not something that is new but they might be taking away from those who work in the community. The goal for the city is to grow the population of Hill City by 120-200 people by year 2025. Additional housing is going to be needed in order to meet that goal.

Chuck Voorhees of Whispering Winds Cottages and Campsites said vacation rentals affect the number of people staying at his larger units. But he also has a wide variety of styles and sizes of cotages on his property.

He is not opposed to vacation rentals and said that “the free market should determine supply and demand for our tourist economy with regard to vacation rentals as a whole.”

According to Voorhees, vacation rentals do compete with local businesses for lodging dollars. 

“More importantly they compete with our local residents for year-round housing options,” Voorhees said.

He stated that there is a housing study that should be completed soon, and it should be used as a resource to open a conversation about the impact vacation rentals are truly having on the community.

“We need to make sure we have facts and statistics about how many we actually have, if it is truly making that large of an impact on housing, or if our issues are more related to geography,” Voorhees said.

He thinks once everyone has the information it can be used to determine planning and zoning in Hill City moving forward.   

Brian Rupert, a local volunteer and member of the Heart of the Hills Economic Development Corporation (EDC), said generally speaking he is not a huge fan of telling people what to do with the property they buy.

“On the other hand the number of vacation homes is impacting those who live here year-round,” Rupert said.

He does think it is a problem that needs to be looked at and if it is tied to the overall shortage of housing within Hill City.

When he and his wife were looking to live in Hill City three years ago they wanted to rent until they figured out that it really wasn’t possible. 

His family ended up living outside of Hill City. He said he would’ve liked to have moved in town.

They ended up closing on a house in a couple of weeks, a process that might have taken a couple of months, and they would have had to rent something in Rapid City.

Rupert said the the EDC has been looking forward to seeing the housing study.

“I think most people have pretty good suspicions of what will come out of that but I think the data will help validate it for those who think it is a problem,” Rupert said.

Rupert is hoping that the study will change some people’s minds.

He said there are two tiers to work on. One is the aspect of affordable housing and then another is the volume of places available.

“I think we’re trying to figure out where the needs are in both of those areas,” Rupert said.

“Where can middle class families that have jobs in the community live?”

They would like to get to the point where they know the number of options that are available.

Rupert said that on there are not very many options for homes under $250,000. Six of the listings are for land now.

A lot of people have told him that a lot of the houses that can be bought are a lot of work.

Vic Alexander, longtime resident of Hill City, has two vacation homes in Hill City.They are both behind the Super 8 motel that he also owns. Lee Ann Jensen of Double Diamond Ranch manages the schedule for the vacation homes.

“She does the management of it. I do the day-to-day maintenance of them,” Alexander said.

He said it’s pretty easy since there is already a crew that is set up to clean with the Super 8.

The vacation homes are furnished. They are continuously being updated and changed.

“You have to keep a vacation home kind of nice,” Alexander said.

“Rentals you are going to have people jumping in and they are going to pay whatever they think it is worth.”

Quality is important with vacation homes. According to Alexander, people are going to just tear up a rental.

One of the key things about Alexander’s vacation homes is that the people that stay there can use the swimming pool at Super 8. Reservations for the vacation home can also be made through the motel.

Alexander said that if he didn’t have vacation homes they would be residential housing.

He does the study on what is most profitable and they are both about the same.

Vacation homes have to be inspected annually by the South Dakota Department of Health. Alexander has plaques that are mounted in the vacation homes.

He said the inspector goes around and checks items like window sizes for egress and the quality of the water.

Ventilation, vermin control, lighting, bedding and linen and cleanliness and storage of utensils are some other items that are inspected.

The owner must obtain a South Dakota Sales Tax License from the South Dakota Department of Revenue.

The city looks at if vacation homes are collecting the sales tax that they need to and if they are certified with the health department. Dani Schade said the city has recently found some vacation rentals that are not registered with the state and thus are not paying sales taxes. They also not being inspected. 

“We have also found that not many people know of the state requirements for having this type of business,” Schade said.

A vacation home establishment is any home, cabin, or similar building that is rented, leased or furnished in its entirety to the public on a daily or a weekly basis for more than 14 days in calendar year. They are also not occupied by an owner or manager during the time of renal. The term does not include a bed and breakfast establishment.

Alexander estimates there are about 50 vacation homes in Hill City and about 50 more just outside of Hill City.

Alexander equates it to 100 motel rooms.

“It’s like two medium-size hotels in Hill City. So it doesn’t bother me,” Alexander said.

Alexander doesn’t see a problem with the vacation homes as long as there is not a problem with parking in town.

One main difference is that they don’t have to collect the occupancy tax that is for the BID Board project.

Alexander said there are different price points for vacation homes and people expect certain things at hotels; it’s different in the vacation homes.

He looks at vacation homes as just another reason people are coming to town. As he owns the gas stations in town, there are items there that people will buy whether they are staying in a hotel or a vacation home.

He said that people that stay a night or two at the vacation home take better care of the house than month-to-month tenants do.

The reason for this is that vacation homes have a credit card on file so they can be charged for any damages.

“Usually they try to keep it the same way as how it was when it got there,” Alexander said.

A new member of the Heart of the Hills EDC confronted Alexander about his vacation homes recently.

“She thought it was unfair that vacation home owners should be kicking their tenants out so that they can rent their houses in the summer as vacation homes,” Alexander said.

Alexander said the buildings were vacation homes before monthly rentals. But Alexander said people are welcome to rent them out in the winter.

The tenants are aware that they have to move in April if they move in during the fall.

Alexander said that it doesn’t matter if the houses are used for one reason or another. He likes to rent them by the week in the summertime and by the month in the wintertime.

“Are we having too many vacation homes in Hill City? What’s too many? That’s like saying we are having too many hotel rooms,” Alexander said.

People on the opposing side might say that if there weren’t as many vacation homes there would be be more housing. Alexander said there is a market for vacation homes and there is a need being filled.

“If people weren’t renting them I would be all for getting rid of them,” Alexander said.

Keystone has a lot of tourists interested in their vacation rentals too. Tammy Gilbertson of Battle Creek Lodge oversees some vacation homes in Keystone and the Hill City area.

She said that the market is growing in the area but it is definitely not as big as in the surrounding areas.

Right now, there are 17 properties that she oversees.

Gilbertson thinks the occupancy of the rentals is around 70 percent.

She said the younger generation is looking more at vacation rentals and the older generations are still looking at hotels when they go on vacation.

“Some of the decline in the hotel rooms has to be attributed to the amount of vacation rentals,” Gilbertson said.

She thinks lodging establishments are seeing more families that are traveling together.

“So multi-generational groups, grandma, grandpa, mom and dad and then the kids are looking at vacation rentals more,” Gilbertson said.

She said that vacation rentals have become really easy as people move out in the summer and then turn their homes into vacation homes.

“I think that should be more regulated,” Gilbertson said.

She doesn’t think that there is a lot more to vacation rentals than what people know.

Those who want to have a vacation rental need to be mindful of what they need to do first. But she stated it is a good business and people can do well in the vacation rental business.