Hot Tea: Community near Sioux Falls becoming the place to be

TEA, S.D. (AP) - Sioux Falls is overflowing.

With dramatic increases in house prices and a lack of available houses in the Sioux Falls market, people are starting to look to surrounding communities.

But for areas like Tea, this surplus in growth has been in the works for years. While Harrisburg has been the state’s fastest-growing city for decades, Tea is right behind it.

Once a small town of just around 800 residents, President of the Tea City Council Casey Voelker has seen his hometown expand to more than 6,500 people, according to a 2020 estimate from the U.S. Census Bureau.

The city’s growth rate is at 8%, said Dan Zulkosky, Tea’s city administrator. For comparison, Sioux Falls’ growth rate in 2020 was 2.7%.

That growth in Tea is partially because of the overflow from Sioux Falls, but also its own planned expansion and accommodation for businesses, the Argus Leader reported.

“We’re planning for controlled growth,” Voelker said. “We want to make sure we’re growing in a way that’s smart for our community and maintains the character of our community.”

The Tea School District is in dire need of expansion and has been since before the pandemic.

Competing businesses are coming to the city. A Fareway was the only grocery store in town, located in the former Sunshine Foods building. Now, a new Hy-Vee Dollar Fresh will be built across the street.

The city can’t seem to hand out building permits fast enough. Between 2019 and 2020 alone, the number of residential building permits increased by 40%. By the end of 2021, the city is planning to have 200 housing lots built and sold, and they’re planning to have 100 commercial lots sold as well, Voelker said.

All this is to say: Tea is growing. Fast.

The City of Sioux Falls is essentially tapped out for its sewer capacity, said Bradyn Neises, a broker with Bender Commercial. So, communities south of Sioux Falls like Tea and Harrisburg are looking to expand north - and that starts with the sewer.

Access to a sewer line is crucial for homes and businesses to succeed, he said.

The city is working on a $10 million sewer line to connect with the Sioux Falls sewer and wastewater treatment plant, making Tea an attractive option for developers. The city expects to finish the project by 2022 or earlier.

“You have to give credit to Tea,” Neises said. “They’re providing services and sewer capacity, they’re continuing to push northeast and annex land. They’re using their advantage of where growth is happening.”

While Harrisburg has been the fastest-growing city in the state for decades, “people are looking at Harrisburg to move to as a bedroom community,” Neises said.

The same can be said for Tea, but it has its own work hub that’s expanding and contributing to the city’s growth: Bakker Landing, a 270-acre industrial and retail hub alongside I-29, stretching from Highway 106 to Sioux Falls’ 85th Street.

Sixteen land sales in 2020 were in Tea, totaling $8.8 million in sales. Seven of those major land sales were in Bakker Landing, about two-thirds of the total major land sales in Tea last year.

Two of the most noteworthy announcements included Silencer Central moving its headquarters to Bakker Landing and the construction of a Casey’s super store, said Joel Ingle, a developer with Harr & Lemme Commercial Real Estate.

Sundowner Investments Group, led by Dan Lemme and being marketed by Harr & Lemme Commercial Real Estate, bought 126 acres of northern Bakker Landing around 2006, anticipating growth around 85th Street in Sioux Falls. In 2017, the company purchased the remaining 144 acres on the southern half of the property, quickly developing it and grading roads to bring in businesses.

The area is as busy as its ever been, and that momentum isn’t slowing down any time soon, Voelker said.

“With each of those developments that fell through, there was someone right behind them ready to make a deal,” Voelker said.

For many businesses that have added a location or moved operations to Bakker Landing, access to Highway 106 and an interchange on I-29 has been the primary selling point, Ingle said.

Just a mile down I-29, there’s access to I-229, and in about five years there’ll be access to the eastern side of Sioux Falls and Brandon once Veteran’s Parkway completes its loop in Tea.

“In our view it’s pretty rare to assemble property for interstate exposure and interchange accessibility in these two area,” Ingle said. “We didn’t make the decision to develop this area based on the Veteran’s Parkway project. But, obviously, that project adds tremendous value to what we have. I know that some of the business owners have considered long-term that they’ll have a highway that’s starting or ended right by their door.”

The City of Tea started construction earlier this month on a $16 million construction project on Highway 106, also called Gateway Boulevard. The project will ease traffic flow, widening the road to four lanes and adding stoplights. The city is also constructing a water tower near the interstate.

“There are all these large capital projects happening and ending in Tea,” Voelker said. “It’s more than coincidence they’re happening at the same time. The area is ripe and ready to go.”

After those two major roadway projects are completed, businesses, restaurants, banking and professional services will pop up to cater to extra traffic spurred by the new roadways and access points - that’ll mean more jobs, more revenue and more people planning to call Tea their home.

Once filled, Ingle anticipates that Bakker Landing will result in nearly 5,000 additional jobs in that area alone.

“The higher traffic counts, the more valuable the property is,” Ingall said. “The reality is that when Veteran’s Parkway is completed, the traffic counts will multiply exponentially to what they are at today. … When you start to get 40,000 to 50,0000 cars a day, you’ll dramatically change the interest of businesses coming to that area.”