A planned housing development backed by a first-of-its-kind tax break from Sioux Falls City Hall is on track despite market uncertainty placing challenges on the project developer.
The Sioux Falls City Council in mid-October awarded a $2.1 million tax increment financing package to Nielson Construction in support of a 65-unit residential development. In exchange, the company promised to sell the home at “accessible” pricing that reflects first-time homebuyer levels.
But an email sent days later by the company to dozens of its vendors and subcontractors alerting them of cash flow issues raised questions about whether the project would happen.
“Unfortunately, with that, cash flow is short and there is going to be some delays on being paid for invoicing,” the correspondence read. “We promise that we will pay you for work completed but getting that payment in a timely manner like you are accustomed to won’t be the same.”
I was made aware of this email over a week ago and was also aware that Joe and Jon were digging around on it. While all businesses seem to endure some cash flow issues from time to time, you wonder what kind of financial vetting the city did? If any? Maybe the director of finance is too busy running multiple departments?
Mayor Paul TenHaken’s chief of staff, Erica Beck, said Tuesday that City Hall isn’t concerned that Nielson won’t be able to deliver on the project. The city is not on the hook if it doesn’t happen though, either, she said.
“We have no reason at this time to be concerned with Mr. (Kelly) Nielson’s ability to advance the project in which he was approved for tax increment financing,” she said. “Additionally, it is important to note that this is a developer funded TIF, meaning he is using private financing to fund the project. There is no financial risk to the city.”
Yes there is! If the city is using the TIF to build up infrastructure in the affected development, and the developer bails after the infrastructure is in place and before a house is built, we would be on the hook as taxpayers for it, just like the unfinished Bunker Ramp.
With all the six figure+ staff we have working for the city, you would think we could get at least one of them to do credit checks for these projects.
Besides being tipped off about the email, I was also told that Nielson construction was the ONLY developer willing to do this project. It wasn’t a matter of the city vetting multiple construction companies and multiple ideas and sites (like building density in the core) but a matter of picking the cheapest beer on the lowest shelf.
It would be enlightening to see if any councilors ask the planning department if anyone else bid on this project.
WASHINGTON PAVILION’S DARRIN SMITH CLAIMS THEY NEED $5 MILLION IN RESERVES
The director/president/CEO of the Pavilion told councilors during the contract renewal last night that they needed a $5 Million dollar ‘reserve’ in case they have some struggles. While I would agree they do need a slush fund, most of those reserves should be in an endowment fund that earns money thru it’s investment. It is insane that the city continues to dump millions each year into the Pavilion for maintenance and operating while the Pavilion stuffs private and Federal contributions into a savings account. Councilors defended the reserve. Of course they did.
I do support the increase, which is actually very minimal to even the largest property owners DTSF;
Druley did not specify what Raven’s new assessment would be, although a 377% increase over the assessment’s current cap of $1,700 would come to $8,109.
I’m glad our local paper hasn’t taken away their reporters calculators . . . yet.
I find it shocking that TWO properties (Raven and Sunshine/Norberg Paints-which are in the same building) can have this sort of deferral control over the council. This was vetted by DTSF and after it was explained to me it is easy to understand and why NO OTHER downtown property owners that have valuations over $1 million have come out opposed to this;
Batcheller has said the change would affect 88 buildings in the district and bring in another $160,000 per year, and estimated that Cherapa Place’s expansion and the Sioux Steel district could account for another $115,000.
It’s really not that much money, but that didn’t stop the threats;
And she floated the threat of the company leaving the downtown area as well.
“Raven is accountable to its shareholders and its board, and it’s harder to justify its presence in downtown Sioux Falls as expenses increase relative to the benefit they get,” Druley said.
See yah later!
What was NOT mentioned by the council or Raven’s legal counsel is that Raven is no longer a locally owned business. It is now owned by a very, very, very, wealthy Italian family. I have assumed after the purchase that the new owners will look to consolidate and possibly leave Sioux Falls anyway and there is very little the city can do to stop it. I hope that doesn’t happen, but we have NO guarantees it won’t.
Also not factored into their crocodile tears is that Raven has benefitted from the millions of dollars taxpayers have invested in the River Greenway making more of an attractive workplace downtown. The promotion of DTSF has also benefitted Sunshine Foods, the only FULL SERVICE grocery store in the center of downtown. I have been shopping there for 30 years, and I have seen how the store has improved it’s image in step with DTSF improving it’s overall image.
Funny how the council will keel over when ONE hired gun lawyer makes veiled threats but when dozens of citizens show up to the meetings to oppose rezones, bunker ramps, etc., they ignore the warnings.
The council should have just voted YES last night to the increase and thanked Raven for their concerns. Talk about cutting off your nose to spite your face.
While I applaud the efforts, we can’t ignore the 700 pound turd floating down the river;
Entenman notes that 78 percent of the stream miles of the Big Sioux watershed – which is the size of New Jersey – are impaired, meaning the water quality doesn’t meet certain standards, either through contamination with E. coli or other issues, primarily from runoff – from agricultural practices to city streets and residential yards.
Unless you can get the property owners (mostly ag) along the Big Pioux to actively stop that runoff, you will NEVER be able to clean up that river.
“What is the point in putting multimillion-dollar buildings on the shores of the river if it’s polluted,” Entenman said.
After Noem and the state legislature’s right wing radicals approved open/concealed carry laws there has been a large increase in gun violence in the state’s largest city. I don’t think that is a coincidence;
Court records indicate Billion was shot with one of four stolen guns from the McKennan Park neighborhood. They were all taken from the same truck.
And there are ZERO consequences for the incredibly irresponsible gun owner, but they do have to live with the guilt, poor fella;
It’s something people have to live with and I’d say that’s one of the unintended consequences if you happen to leave your gun in an unlocked garage, car, house whatever it may be and it ends up stolen,” Sioux Falls Police Information Officer Sam Clemens said.
While I don’t think this reckless gun owner should go to jail, I do think they should face a very heavy fine and be banned from ever owning a gun. While the city has had ordinance bans on tobacco and alcohol use in our public parks, fines for not trimming your trees or scooping your sidewalks and bans on texting and driving the state legislature and city council seem to lack the courage to punish irresponsible gun owners when their stolen property is used to murder our citizens.
I am hoping with the influence the Billion family has in our community they would pressure the legislature, the governor and the city council to implement reasonable gun control laws so there is a least some consequences for not securing a deadly weapon.
The Minnehaha Planning Commission is looking to propose a clearer definition – and tighter regulations – for Airbnbs and other short-term vacation rentals in the county. Here’s what an early draft would mean for local rentals.
While I support some regulation, and many neighbors do also, I think some of the recommendations are extremely broad, ignorant and unneeded.
It would also create a separate conditional use permit specific to Airbnb-type rentals. That permit would have its own set of requirements.
I agree there needs to be registration, but it should be a simple filing fee of $50 or so, not $500 per year. I also think the city should piggyback on the proposal and impose quarterly health inspections to insure there are no issues with bed bugs, plumbing, HVAC, etc. just like hotel rooms. There should also be a county and city BID tax applied to such entities. But there are some pie in the sky proposals;
Vacation rentals can’t have more than two guests per bedroom.
There is absolutely NO way of enforcing this. Is the county and perhaps the city going to show up in the middle of the night to every single rental when they have a resident and make sure this rule is being abided by? Hell No! Making rules you won’t or can’t enforce reminds me of the tobacco ban in city parks or texting and driving. When you make a law, and ordinance or rule, you must also have a plan for enforcement, what is that plan?
Minimum parking requirements are one space per guest. (So, if you’ve got an Airbnb that sleeps 12, you need 12 parking spots minimum.)
This one made me bust up laughing. So if a family of 6 rents a place, they have to have 6 parking spots for the two adult parents and 4 children? Or the individual business traveler who takes and UBER to their destination? While I do support some kind of parking requirement, it should only be a minimum two spots per unit. I have used VRBO in the past, and their has only been ONE parking spot provided (that I didn’t use).
There is also NO reason to regulate this private property industry past health inspections and registration since the industry does a pretty good job of regulating BAD clients. You can’t just show up an hour before booking and move in, you have to be vetted by the the service providers and can be denied for any reason.
I have to say the reason I think short-term vacation rentals are so popular is because they are more affordable then hotel stays and my experience has been stellar. It’s like having your own condo on vacation without room service but the comforts of home. Here is a picture of my building patio view at my last VRBO which cost about 75% less then a hotel room miles from the beach.
I wonder if the MCC even did a nationwide study of what other cities and counties do, or if they just listened to some whiny neighbors on Wall Lake?
Short term rentals DO need regulation, but it should be applied in baby steps, and it should have a plan for enforcement.
Item 6, Sub-Item 22; Entertainment Facilities, Washington Pavilion Building Improvements – Balustrade and Cornice Remodel; To award a bid, McGill Restoration, Inc., $5.9 Million, There is available budget to award this bid out of the Washington Pavilion CIP budget. (this is code for ‘entertainment tax’ the slush fund the Pavilion and city have been using to make repairs to the city owned facility. I have argued for a long time that they could just remove the bad balustrades and plug the holes for a lot less, even though the contractors say otherwise. No one would know any different if they were removed permanently. This should have been done 20 years ago when the problem came up, but now we are looking for a $6 million dollar fix while the Pavilion’s management sits on over $5 million in a savings account. The image below is a photoshop rendition of what the Pavilion would look like without the balustrades. While the city decries tax cuts in their legislative priorities, they seem to have plenty of money for glamor and appearance projects.
Items 20-86 (there are several VL lottery requests in the wake of the recent cap. I implore the council to pull each license and vote on them individually).
Item #96, 2nd Reading: AN ORDINANCE OF THE CITY OF SIOUX FALLS, SD, AMENDING THE CODE OF ORDINANCES OF THE CITY BY AMENDING CHAPTER 37: TAXATION. Sponsor, Mayor, Background & Objective: The proposed changes are a result of the work done by Downtown Sioux Falls, Inc. on the Main Street Sioux Falls Business Improvement District Growth Plan. The Plan proposes additional and enhanced services to best position downtown for growth and to address common issues. Additional funding would be generated by these proposed amendments to achieve the additional and enhanced services. (After this was explained to me, I support the amendments even, but you have to wonder why the mayor is sponsoring a tax increase? The council should have been the ones to bring this forward, but maybe they need 3-4 more full-time employees to assist them with their very difficult job of creating policy. I still think a better approach would be for the parking department to be in charge of the maintenance DTSF since they do collect a majority of parking fees in the downtown area and let DTSF concentrate on marketing, programming and business services with fees collected. DTSF shouldn’t have to beg for tax code changes to water plants and sweep the sidewalks, the city has plenty of money to take care of the maintenance and beautification of downtown).
Item #98, 1st Reading: AN ORDINANCE OF THE CITY OF SIOUX FALLS, SD, AMENDING THE REVISED ORDINANCES OF THE CITY BY ESTABLISHING AN ACTIVE TRANSPORTATION BOARD. Sponsor: Mayor Background & Objective: The purpose of the Sioux Falls Active Transportation Board (ATB) is to advise the city council, city departments, and city boards regarding bicycle, pedestrian, and other active transportation and accessible pedestrian transportation modes. (While this is a great idea, this should have been initiated by the city council, like the homeless task force. The council will ultimately have to vote on any changes and they should be actively involved in shaping these policies moving forward. Just another fancy task force the mayor and his staff have cooked up to make it look like they are doing something. I heard in the first meeting they will spend the first 45 minutes rearranging chairs in the conference room. As an all season bicyclist and active street rider since the early 90’s in Sioux Falls, I would love to sit on this board and give my perspective of what I have seen. I would apply, but most likely my application would end up where my other city board’s applications have ended up 🙂
Item #99, A RESOLUTION APPROVING THE MINNESOTA AVENUE CORRIDOR PHASE I LAND USE REPORT. Sponsor: Mayor, Background & Objective: That the City of Sioux Falls adopts the Minnesota Avenue Phase I Land Use Report to provide policies and guidance for future rezoning proposals, conditional use requests, redevelopment grant funding, and other redevelopment proposals. (I have been watching this construction play out, and from what I have been hearing from residents and business owners in the affected area is that while the city has been having listening/learning sessions they ultimately are doing what they want to with little to no regard from private recommendations. Minnesota Avenue should have started this process 30 years ago. I remember De Knudson and Dr. Staggers recommending changes to this corridor with no avail. I guess better late then never.
Item #100, A RESOLUTION AUTHORIZING THE MAYOR TO ENTER INTO AN AGREEMENT BETWEEN THE CITY OF SIOUX FALLS AND WASHINGTON PAVILION MANAGEMENT, INC. FOR THE MANAGEMENT OF THE WASHINGTON PAVILION OF ARTS AND SCIENCE, ORPHEUM THEATER, AND THE MUNICIPAL BAND. Background & Objective: Resolution to approve entering into a five-year management agreement with Washington Pavilion Management, Inc. to manage the Washington Pavilion of Arts and Science, Orpheum Theater, and the Sioux Falls Municipal Band. Agreement covers the years 2023-2027. Details of the new proposed Agreement were presented at the City Council’s Informational Meeting on November 22. (While there was a presentation on the renewal, the Pavilion talked very little about their financial status. Do they really need an operating subsidy from the city when we dump millions into the place each year in maintenance? I think with $5 million in savings – growing a whopping $2 million last year – it is time the Pavilion put on their big kid pants and operated on their own coin considering NOTHING is FREE to use in the building except the toilet and water fountain. It certainly hasn’t become the place for ‘everyone’ but is has been costing ‘everyone’ in Sioux Falls a pretty penny.)
• Legislative Priorities. Their priorities seem to be PRO-TAX for citizens while advocating for a tax break for themselves;
4. We support efforts to eliminate double taxation on public projects through the state use and contractor’s excise taxes.
I would agree that making citizens pay excise taxes on public projects is silly, BUT it is the contractors who build the projects that pay the tax. If this tax is eliminated, would the contractor pass those savings onto the city?
5. We oppose any legislation that would reduce or repeal any municipal or county tax.
This of course may apply to the food tax. I think it is incredibly short-sighted to support a food tax cut statewide but not municipal. I think if we eliminate the food tax in Pierre, it needs to apply to cities also. I have also argued for a long time, the city is overtaxing us. If you have over $70 million in your reserves (a savings account) you have to ask yourself if the city is collecting too much in taxes. I don’t care how large the city’s budget is, there is NO justification of having that much in reserves.
7. We support tax increment financing (TIF), an economic development tool that has led to millions of dollars in increased property value, benefitting both the state as a whole and the local entities sponsoring the districts, while at the same time maintaining the integrity of the process.
Integrity of the process? Benefits? As I have stated over the years, there has been NO comprehensive independent study of what those benefits are and the process. I recently received a tip that one of the more recent TIFs the city council issued was based on NO financial review of the recipient, or at least not a comprehensive one. Did we learn anything from the bunker ramp fiasco? Maybe Neitzert is right, maybe we need to do an investigation to see just how bad city government screwed the pooch on that one.
Speaking of process integrity, I was made aware last week that a current city director is being asked now to run two separate departments that have very little to do with each other. While he is an educated, qualified director for the one department he currently runs he has zero qualifications for running the other department. While we could surmise why PTH makes such idiotic decisions (he has NO leadership skills) you have to wonder why this director would agree to such a thing, even with a significant pay increase? I guess when he quits in frustration or gets fired the administration will just chalk it up as par for the coarse. I think Amazon management has a lower turnover rate.
Item 5A, Petition:CU-017246-2022: Conditional Use Permit to allow for a Full Service Restaurant within 250′ of a sensitive land use. Operations will include On-Sale Alcohol with supplemental video lottery located at 7601 S. LOUISE AVE.
What I find interesting about this item is how some entities will come to the planning commission asking for conditional use permits without even having a business name. If you review the documents you will see this is basically a 3 tiered casino that has a pizza oven.
He envisions a restaurant centered around brick-oven pizza and with pasta dishes, salads and other family-friendly menu items.
Nothing says family friendly like 30 video lottery machines and a pepperoni pizza. “Where’s dad?” Asks Johnny. “He’s hopefully winning this month’s rent in the other room.” Mom replies.
• Reimbursing council staff for local travel (this basically would fall in line with the administration’s staff).
• Updating attending meetings remotely (City Clerk Greco did suggest this be updated, he didn’t say it was being abused, but you got the feeling it has become complicated. IMO it was being abused after Covid and it needs to become more strict).
• They discussed limitations on public comment (Clerk Greco referenced that meetings needed to wrap up at a certain time and that may be why public input is limited. Hogwash. Any meeting that may go over an allotted time slot can be recessed to the next day to allow for more information. One of the main reasons regular city council meetings were held at 7 PM instead of 6 PM was to allow more time for presentations at the informational, while also allowing a dinner recess for the council. Now everything is slammed in. The real change would be moving the meetings back to 7 PM with 5 minutes of public input at the beginning).
• Council Chair Soehl said being chair has left him out of touch with the other councilors (I found the statement completely odd considering the main role of the two council chairs is to inform the rest of the council of what the administration is up to. A council chair that is NOT communicating with the rest of the council is a serious issue and the procedures should be put in writing).
• Councilor Merkouris suggested not having an audit manager and maybe replacing them with an operations assistant or an executive assistant to the council. (Not needed. The audit committee should just hand down the audit directives to the current two auditors and management review can be done by the chair of that committee. The city council already has 3 clerks, an operations manager, a legislative manager and 2 auditors, they have plenty of staff. I have even suggested in the past they we eliminate our legislative manager (not sure what the guy does) and our head city clerk and have the duty shared by the two assistant clerks. I believe the current city council staff does a decent job, and I have never felt they are overwhelmed. The issues with the council, communication and transparency with citizens sits with the elected councilors NOT council staff. If the council wants to make communications better, the council has to put forth the initiative NOT the council staff).
• Neitzert brings up the question of who’s responsibility it is to inform the rest of the council about disciplinary action by the vice-chair when it comes to HR issues and council staff. (I find the timing of the question interesting considering the recent departure of the audit manager, was she under some disciplinary action at the time of her departure)?
• Neitzert also adds that the informational meetings are being rushed.
l3wis 
