This old house: Historic home is a bellwether of Sanford Health's plans for neighborhood

Wallace L. Dow died in 1911, but the buildings he designed remain as Sioux Falls icons.

Now, one of Dow’s mostly forgotten works is a bellwether for Sanford Health’s main campus in central Sioux Falls and the neighborhood writ large.

The story-and-a-half Craftsman-style home at 628 W. 20th St. was designed by Dow and built in 1898, among the first in the open fields on the plateau looking down on the Big Sioux River valley. In the following decades, more and more modest homes were built, creating a central neighborhood of working-class families.

Sanford might tear it down, continuing a slow trend of razing old homes the health system owns among the 32 square city blocks from its sprawling campus from Grange Avenue east to Minnesota Avenue.

In all, Sanford and its three affiliated business entities control more than 70 percent of the land in the area, a residual of the once-grand dreams of former CEO Kelby Krabbenhoft, who envisioned a broad entry to the campus, leading patients from Minnesota Avenue to the heart of the health system.

That vision stalled when Krabbenhoft was forced out in 2020 in the midst of a controversy over masking and precautions during the pandemic.

“Sanford Health has no immediate plans for future development in this area,” Andy Munce, interim president and CEO of the Sioux Falls medical center, said in a statement provided to Sioux Falls Live. “But we are always looking for opportunities to expand access and services for our patients and the community. Our focus remains being a good neighbor, improving the quality of life for residents, and delivering world-class health care for the communities we serve.”

It’s not clear what that means for the 185 residential parcels and the aging homes that sit on most of them.

Neither Sanford nor the City of Sioux Falls would agree to detailed interviews regarding the Dow house or the long-term future of the neighborhood.

City records indicate the hospital system has been issued nine permits to raze buildings within the 32 square blocks since late 2023. One of those permits was for the garage that used to sit behind the Dow house but was not considered historic.

Sanford appears at a crossroads in its plans at a time when the city is grappling with ever-tightening access to affordable housing. City officials and renters in the neighborhood say Sanford, through its property manager, has been responsive to needs and has done a good job keeping up the occupied properties.

Only two of the empty Sanford-owned properties are considered "vacant" by the city. That’s a technical designation, however, applied when an unoccupied home or apartment building has reported code violations. In those cases, the property owner pays a fine of $1,000 that increases each year the building is on the list, according to Kevin Smith, assistant director of Planning and Development Services.

In a statement provided to Sioux Falls Live, Smith said no permit or registration is required for an unoccupied building without any reported problems.

“When code violations arise, Sanford has and continues to work with the city to correct them and is communicative with our team,” Smith’s statement read.

It’s unknown how many of the houses owned by Sanford or affiliated business entities are empty.

A short informal walking tour by Sioux Falls Live on Friday identified at least eight.

Residents and contractors in the area said some of the houses have been empty for years. There are broken windows, boarded up doors and holes in roofs with missing or curling shingles. While many of the occupied homes appear in good condition, others have peeling paint and yards cluttered with refuse.

It all raises concerns among advocates for maintaining healthy urban neighborhoods, who fear either a slide in the quality of the housing or the eventual clearing out of the area with no long-term goal.

“Doing absolutely nothing is not a viable option because you are going to end up with brownfield,” said Rich Jensen, a Sioux Falls consultant who works with property owners to navigate historic designations and preservation.

There are no winners from a scenario where houses are slowly razed, Jensen said in an interview with Sioux Falls Live.

“Eventually, you're going to end up with a bunch of land that you would sell, for possibly less, inflation adjusted, than what you bought the houses for,” he said. “So you end up basically taking a hit in the press, you take a hit in the wallet and everybody ends up coming out a loser. The hospital does, people who are looking for homes lose inventory, people who are looking to rent lose inventory. And somebody is left with a redevelopment project that is probably going to be taxpayer subsidized.”

Dow’s legacy is well documented.

Born in 1844 in New Hampshire, the young Dow picked up the carpentry trade before joining his uncle’s architecture firm. In 1880, he and his brother landed in Pierre and bounced around South Dakota before moving to Sioux Falls in 1884.

Early on, he won the contract to design a new South Dakota State Penitentiary, the first in a long list of buildings we know today.

That includes the original Minnehaha County Courthouse, which is now the Old Courthouse Museum.

The Rock Island Depot – now the Great Outdoor Store – and the Illinois Central Railroad passenger terminal, which today is the headquarters of the Sioux Falls Area Community Foundation nestled next to the Cherapa building.

All Saints School, the South Dakota School for the Deaf and the Willey & Williams Building on North Main are among Dow’s many and storied achievements.

The home he designed for himself and his family at 702 S. First Ave. still stands.

The house on 20th Street is less known. In fact, it’s extremely rare for a single house outside a historic neighborhood such as McKennan or Cathedral to receive the designation.

It’s not clear whether R.A.C. Rentals – a business entity connected to Sanford – knew that it was on the National Register of Historic Places when it bought the house in 2010.

But it had been since 2000, according to the National Parks Service, which maintains the registry.

At the time, it was owned by John and Kimberly Pederson. It sold three times before R.A.C. Rentals purchased it for $158,500.

The 2025 valuation by Minneheha County was $262,500.

Sanford’s application to remove that designation is tentatively scheduled for the Board of Historic Preservation’s next meeting on April 9. A more detailed report and agenda should be made public on Tuesday.

The once-obscure board has been cast into public view in recent years after a high-profile legal clash led to the 2018 demolition of a new home built next to McKennan Park and the recent removal of several historic homes that had fallen into disrepair near 18th Street and Minnesota Avenue.

In those cases, however, the houses were in a historic neighborhood.

Sanford's application to the local board is just the first step in what could be a long process likely ending up before the Sioux Falls City Council for a final decision.

Delisting the property is a tricky question, said Jensen, the historic preservation consultant.

Not every old property can or should be saved, he said. The board will consider whether there is irreparable damage to the exterior or interior.

But in general that’s a high bar.

That’s because historic preservation and rehabilitation is based on the idea that we are stewards for the next generations of the community, he said.

“Even though there’s one house on the National Register, we don't build like this anymore,” he said. “When we lose this residential fabric, we lose something that we can't replace, we can’t recreate. What makes a community what it is, is not just the people living in it right now, it’s the things that were built and made and planted by everybody who came before, and that’s worth protecting.”

Sanford Health doesn’t technically own all the properties.

Most of them are held by three limited liability companies – R.A.C. Rentals, National Student Housing and DG Development – which were created between 2005 and 2008. In all three cases the address listed on city parcel records is a Sanford office building on Benson Road.

The Sanford USD Medical Center also owns several properties. It’s an important distinction in that the LLCs aren't nonprofit corporations like the hospital or the health system, so they continue to pay property taxes on the houses and land.

Krabbenhoft started speaking publicly about his vision for a research park with a dome in 2007, the year T. Denny Sanford pledged $400 million to Sioux Valley Hospital. That was the beginning of a massive shift for the local hospital into one of the largest health care systems in the country under the new moniker of Sanford.

It was about the same time the land buying began in earnest.

There are about 275 parcels in the 32 blocks bordered by Grange and Minnesota avenues, between 18th and 26th streets.

Sanford now controls 185 of them, according to an analysis of city records by Sioux Falls Live.

Narrowing that down, the health system controls all but 11 of the 136 parcels between 19th and 21st streets, making it possible to raze entire blocks.

That prospect bothers Jordan Deffenbaugh, an advocate for walkable neighborhoods and sustainable growth.

Deffenbaugh is active in the Whittier neighborhood east of downtown Sioux Falls. But he’s also spent time studying the area around 18th Street and Minnesota Avenue.

“It’s upsetting. It just seems like we talk about the housing crisis until we are blue in the face, and here is this obvious thing, we’re talking about 180 properties that are completely disconnected from the owner-occupied mix,” said Deffenbaugh, a former City Council candidate with aspirations to run again. “It feels icky, it feels shady, to be quite honest. I know they are probably not trying to be shady.”

Supply and demand suggest that removing houses, particularly potentially affordable ones, puts price pressure on what remains, he said.

“We are treating the housing crisis like it’s calculus when really it’s just maybe algebra at best,” he said. “This is an obvious example of hey, why don’t we take an intentional approach to maximizing housing stock and emphasizing places that matter like the core neighborhoods. It seems like a no-brainer to me.”

Martin Benning and his wife have lived in a Sanford-owned house on Summit Avenue for about five years.

Benning, who builds firetruck cabs for a local manufacturer, said he’s happy with the house. The rent is fair and the management company is quick to respond when he has a problem, like when the water heater started leaking.

“I've been doing a lot of the work myself, because you can't have people coming over to fix every little nit and pic,” he said. “But I do carpentry and electrical and all that. I don't mind doing a little here, a little there.”

Across the street, one house has been empty since the elderly couple moved out a few years ago and the one next door was torn down.

Further down the block another house has been empty for a couple years. The tenants there were hosting parties and causing trouble, but they moved out, Benning said. The house is still empty, and the broken front window has a large hole in it.

Other than that, it’s a quiet neighborhood without any problems, Benning said.

“I figure Sanford's planning on getting rid of all these houses after a while, build a big old parking lot,” he said. “As long as they give me enough time in between to find a different place, for me to decide, when they do it. Other than that, I'm happy where I'm at.”

Sanford has increased its investment in the neighborhood and has been making improvements, according to interim CEO Munce’s statement. That includes renovating some houses, adding retaining walls and fences, general repair and providing security services.

“Sanford Health is dedicated to being a good neighbor in the community. Sanford Health has donated and renovated multiple properties while also razing houses that have become unsustainable,” Munce’s statement reads. “When Sanford-owned rental homes are unoccupied or vacant, we work closely with the City of Sioux Falls to ensure those properties follow the city’s building criteria.”

Zoom in on the map below and click on individual parcels for details.

It’s unclear, however, if the non-profit health system wants to stay in the rental business. That likely hinges on whether a fresh version of Krabbenhoft’s idea emerges, or something different altogether.

At some measure, the current leaders of Sanford are strapped with a dilemma not of their making. Health care in general has been a difficult business coming out of the pandemic. Sanford merged with a Wisconsin-based system to further grow its Midwest footprint following a second failed attempt to acquire Fairview in the Twin Cities.

On-campus construction has continued with a nine-story, $161 million orthopedic surgery facility and smaller projects. That’s in addition to clinics expanding into the city’s suburban ring.

There appears to be no immediate transformation for the 32 square blocks to the east of campus.

Deffenbaugh and Jensen both see a path to maintaining the housing stock and perhaps selling them to bring back owner-occupied homes.

There are big, long-term implications but it’s not impossible, or that complicated, if Sanford changes perspective a bit, said Deffenbaugh.

“It wouldn’t take me long to strategize about, hey, how about we make this about public health. It's housing to make sure people can live in a walkable area and emphasize this place for health and wellness,” he said.

Jensen shares that big-picture perspective.

“One of the core assumptions that we have is that people will be good neighbors if they are given the chance to be good neighbors. People will take care of what they own because they own it,” he said. “We assume that other people, that our neighbors, are going to take care of what’s theirs the same way as they expect us to take care of what’s ours. That is, I believe, a perfectly reasonable expectation. You can’t look at what’s going on here and say that those expectations are being met.”

The immediate question is less philosophical: What to do with a 19th century house with a historical designation.

Sanford said it’s still considering the options ahead of the April 9 meeting with the Board of Historic Preservation.

“This could include asking for the historical designation to be removed, donating the house or removing it from the neighborhood,” Munce said in the statement.

Moving it is a potential solution.

The National Park Service generally frowns on removing structures from their original position, which is something Jensen doesn’t always agree with.

“If Sanford has construction plans that they want to carry out on this stretch, moving preserves historic types of homes. Moving, from my perspective, is a fine solution. It's not as good as leaving it in place but it is something that I consider to be very worthwhile,” he said. “Historic preservation the way it’s done in Sioux Falls works, and if we have an opportunity to come back in and preserve this fabric, let’s do it.”