Can the City of Sioux Falls use its federal Community Development Block Grant funds from Public Law 93-383 to establish a direct loan or grant program for private property rehabilitation, or do state municipal-finance laws block that use?

Plain-English summary

Public Law 93-383, the Housing and Community Development Act of 1974, gave cities federal block grant money for community development, including housing rehabilitation. Sioux Falls wanted to set up a program that would loan or grant those funds directly to private property owners to rehabilitate their homes and rental properties.

Mr. Kean asked AG Janklow a narrow state-law question: did South Dakota municipal-finance law allow Sioux Falls to do this, or did some state-law constraint block the city from running a private-property rehab loan program with the block grant funds?

Janklow's answer was short. Two state statutes were relevant.

SDCL 9-22-1 requires all money belonging to a municipality, from whatever source, to be paid into the municipal treasury, with the governing body designating by annual appropriation ordinance which fund the money goes to. So the block grant funds, once received by Sioux Falls, would go into the municipal treasury and be earmarked through appropriation.

SDCL 9-21-9.1, Janklow wrote, "certainly implies" that the municipality has authority to accept federal grant money such as the Public Law 93-383 funds.

Beyond those two points, Janklow said the use of the funds was "either covered by federal law or left open to the discretion of the appropriate municipal authorities." He did not opine on what the city could or could not spend the money on. The opinion is brief because the only question he had to resolve was the state-law authority question, and the answer was yes: the federal money flows through the municipal treasury under SDCL 9-22-1, and SDCL 9-21-9.1 supplies the authority to accept it.

Currency note

This opinion was issued in 1976. Subsequent statutory amendments, court decisions, or later AG opinions may have changed the analysis. Treat this page as historical context, not current legal advice. Verify current law before relying on any specific rule, deadline, or remedy mentioned here. SDCL 9-21-9.1 and 9-22-1 may have been amended since this opinion, and the federal block grant rules have changed over the decades. Modern questions about municipal use of block grant funds for private property programs should be verified against current HUD regulations and current South Dakota municipal-finance law.

What the opinion meant at the time

For Sioux Falls, the opinion cleared the way to establish a CDBG-funded private-property rehab program. The city did not need a special state-law authorization beyond its general municipal authority and the general grant-acceptance provisions.

For other South Dakota cities receiving federal block grant funds, the same reasoning applied: they could accept and appropriate the money through the ordinary municipal treasury process, and the design of any rehab loan or grant program was a matter of federal law or municipal discretion.

For property owners who would receive CDBG loans or grants, the opinion was a quiet step toward the program structure that would actually deliver the federal aid. Without state-law clearance, the city would have had to find another vehicle for the rehab program.

For state legislators, the opinion was a signal that the general grant-acceptance authority in SDCL 9-21-9.1 was robust enough to accept evolving federal programs without requiring specific authorizing legislation each time.

Common questions

Q: Did Sioux Falls need special state legislation to run a block-grant rehab program?
A: No. Janklow concluded the city already had the authority it needed. SDCL 9-21-9.1 "certainly implies" the authority to accept federal grant money, and SDCL 9-22-1 provides the treasury-and-appropriation mechanism for spending it. No separate authorizing act was required.

Q: Did the AG decide what the city could spend the block grant money on?
A: No. Janklow said that question was "either covered by federal law or left open to the discretion of the appropriate municipal authorities." He resolved only the state-law authority question and did not opine on the federal rules governing eligible uses.

Q: What is Public Law 93-383?
A: It is the Housing and Community Development Act of 1974, the federal law that gave cities block grant money for community development, including housing rehabilitation. It is the federal funding source the city wanted to use; the opinion addressed only whether state law let the city accept and spend it.

Background and statutory framework

The Housing and Community Development Act of 1974 (Public Law 93-383) gave cities federal block grant money for community development, including housing rehabilitation. Sioux Falls received these funds and wanted to channel them to private property owners through a loan or grant program.

The state-law question Janklow addressed was a straightforward authority question. South Dakota's municipal corporations had the structural authority to receive federal money (SDCL 9-21-9.1) and to spend it through the annual appropriation process (SDCL 9-22-1). Together those two statutes were the municipal version of "we can accept this and we can spend it."

The substantive program-design questions were not state-law questions. As Janklow put it, the use of the funds was "either covered by federal law or left open to the discretion of the appropriate municipal authorities." His brief opinion reflects that division: once he confirmed the state-law authority, he did not opine on the federal rules governing how the money could be used.

Citations and references

Statutes:

• SDCL 9-22-1 (municipal funds paid into municipal treasury; appropriation by ordinance)
• SDCL 9-21-9.1 (municipal authority to accept federal grants)

Federal law:

• Public Law 93-383 (Housing and Community Development Act of 1974)

Source

• Landing page: https://atg.sd.gov/OurOffice/OfficialOpinions/opinionhtml.aspx?id=1475

Original opinion text

Use of Public Law 93-383 Funds

Dear Mr. Kean:

You have asked for an official opinion as to whether or not the City of Sioux Falls can legally establish a direct loan or grant program for private property development using the federal block grant rehabilitation loan money of Public Law 93-383.

SDCL 9-22-1 provides that all money belonging to the municipality from whatever source shall be paid into the municipal treasury and the governing body by the annual appropriation ordinance shall designate to what fund or funds such money shall be applied. SDCL 9-21-9.1 certainly implies that the municipality has the authority to accept federal grant monies such as those provided under Public Law 93-383.

With respect to how these funds are to be used, the matter is either covered by federal law or left open to the discretion of the appropriate municipal authorities.

Respectfully submitted,

WILLIAM J. JANKLOW

ATTORNEY GENERAL

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