New apartment complex will be city's biggest

By Dan Daly, Journal staff | Saturday, August 18, 2007

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RAPID CITY – It has been a long road for Belgarde Enterprises and its 278-unit Stoney Creek Highlands Apartment Homes.

Construction on the project off Catron Boulevard near Sheridan Lake Road was to begin in 2005. But that summer, the Pentagon threatened to close Ellsworth Air Force Base. Belgarde stopped the project in its tracks. Air Force personnel are a key part of Rapid City’s rental housing market.

Today, the base is safe -- at least for now -- and work on Stoney Creek Highlands has begun in earnest. Dirt work, curb-and-gutter work and framing of some of the garages are well under way. The partners in Belgarde say they hope to open the first building to tenants in late December or January.

Belgarde chief financial officer Harry Yaffe said planning for the project began back in 2003. Partner Leon Martin, who runs the company’s Rapid City office, identified the site for the apartment complex in 2003. By 2004, the company had signed a purchase agreement with landowner Jeffrey Bendt.

And in May 2005, the Pentagon announced plans to close Ellsworth. For a rental-housing firm, that kind of news is devastating, Yaffe said.

“In a sense, that was our sub-prime mortgage meltdown,” he said, referring to the current mortgage market turmoil.

By the fall of 2005, the base was removed from the Base Closure and Realignment list. Since then, Yaffe said, Rapid City has seen a development and job-creation renaissance. And Belgarde is back in the apartment building business.

The $24 million, hilltop complex will consist of 16 apartment buildings on 27.5 acres, with separate garages, a two-story clubhouse, a fitness center, a spa, a one-mile walking path and a coin-operated laundry. Rents will range from $759 for a one-bedroom, 709-square-foot apartment to $1,189 for a three-bedroom, 1,310-square-foot apartment.

With 278 units, Stoney Creek will be the largest apartment complex in Rapid City, maybe even in South Dakota, Martin said.

Belgarde, based in St. Louis Park, Minn., owns and manages 14 residential properties with about 4,300 units in five states. Its Rapid City properties are the 265-unit La Crosse Estates, the 248-unit Hainesway Apartments and the 255-unit Harmony Heights Premier Apartment Homes on the west shoulder of Cowboy Hill.

Martin believes there is room in the Rapid City rental market for Stoney Creek. He said Belgarde’s existing properties are nearly full.

“But you can’t judge by (the vacancy rate) today; you’ve got to look at least two years down the road,” he said. “We expect to see Rapid City to continue to grow.”

Martin’s research indicates that the Rapid City market can absorb about 140 new apartments annually without creating a glut of rental housing.

Another Catron Boulevard apartment project, this one west of Fifth Street, is filling up fast as well, said manager Maureen Stevens. Eagle Ridge Apartments, a 96-unit complex, opened in December.

“We’ve had no trouble filling up. I have maybe five units left to rent,” Stevens said.

Eagle Ridge is an affordable-housing apartment project, she said. Residents must meet income guidelines, and many receive subsidies from the Pennington County Housing Authority.

Rent at Eagle Ridge ranges from $502 to $675 for the two- and three-bedroom apartments. The apartments are big, ranging from 1,000 to 1,350 square feet.

According to building permit records from the city of Rapid City, construction of apartment buildings is beginning to climb out of its 2005, BRAC-induced 2005 slump.

In 2005, just 48 apartment units -- in buildings with five or more homes -- received building permits. In 2006, apartment construction climbed to 214 units. This year alone, permits for 302 apartment units have been issued -- Stoney Creek accounting for the lion’s share of them.

At Harmony Heights, Air Force personnel account for about 17 percent of the residents. Retirees account for about 11 percent. The rest is a cross-section of incomes and occupations.

Young people used to live in apartments until they could afford to buy a house. But Martin said apartment living has become more of a lifestyle choice than an economic necessity. People whose jobs require frequent moves or those who don’t want the hassle of home ownership are moving into apartments.

Martin said he has had his eye on the site overlooking Catron Boulevard for years. The location was his first choice for Harmony Heights, built in 2003. Instead, Harmony Heights was built off Deadwood Avenue.

Stoney Creek’s hillside site, he said, allows views overlooking West Rapid City on nearly every floor of nearly every building.

Contact Dan Daly at 394-8421 or dan.daly@rapidcityjournal.com