UPDATE: Using Entertainment taxes for private entity setting a bad precedent

I first want to say I support finishing the State Theatre, I have actually helped with some charity fundraisers for the facility through ZombieWalk and SF Roller Dollz. I think it is a worthy cause and I applaud Denny Sanford for giving money to the goal of completion. But I think that is still the direction the theatre should move in, private donations for a private facility.

Using entertainment taxes sets a bad precedent, as I pointed out yesterday, and I will tell you why.

Seven years ago, former city clerk Debra Owen won an open meetings case over how her termination was handled. During the proceedings, City Attorney David Fiddle-Faddle argued his case based on the opinion of a former attorney general. 4 of the 5 attorneys who sat on the Open Meetings Commission contended that an ‘opinion’ of an AG is NOT case law, so it did not apply. When Fiddle continued to argue based on the AG’s opinion, one of the panelists asked David cynically, “You do understand that the opinion of a AG is not the same as case law? Don’t you?” The crowd in attendance let out an audible giggle. The commission determined that you have to base your arguments on tried case law, not opinions.

The City of Sioux Falls is trying to say they can spend the entertainment money on a private entity in the form of promoting the city based on a opinion of the AG in 1984. But there is NO case law. In other words, the city could be sued if they try to set this precedent. Even if I supported giving the State Theatre MORE tax money, which I don’t, it should come out of the CIP not the entertainment tax.

Listen to Allison Weiland talk about the State on Jon Michael’s Forum

In other news, Cameraman Bruce attended a luncheon today talking about open meeting laws, 3 of the panelists were former State Legislator Dave Knudson, Argus reporter Jonathan Ellis and Jon Arneson (Argus attorney). They all contended that the most recent open meeting laws that Knudson helped write, said that if text messaging or emails during a public open meeting are being used, that correspondence can be used in a court case. So council, if you were smart, you would put the phones and email chatting away during the meetings.

Should the Sioux Falls Bike trail be 24/7-365?

At the last Neighborhood Summit the previous mayor held (PTH has not held one yet) Mayoral candidate David Zokaites suggested that the bike trail be 24/7 and not close at 10 PM since it actually a commuter trail for many cyclists and NOT just recreational. The pushback from the city is they may not be able to parole it at night. Even with proper lighting on your bicycle it could still be dangerous to ride at night. I have suggested installing solar lighting in the darker areas to accommodate that. I know that the cycling community is starting to discuss this idea. I fully support making our bike trail 24/7 and many communities across the country have done it.

What do you think?

UPDATE: Can the entertainment tax be used on the State Theatre?

UPDATE: So here is the justification for using the entertainment tax;

Statute enabling the City to use the Entertainment Tax for promotion.

10-52A-2.   Additional municipal non-ad valorem tax authorized–Rate–Purpose. Any municipality may impose an additional municipal non-ad valorem tax at the rate of one percent upon the gross receipts of all leases or rentals of hotel, motel, campsites, or other lodging accommodations within the municipality for periods of less than twenty-eight consecutive days, or sales of alcoholic beverages as defined in § 35-1-1, or establishments where the public is invited to eat, dine, or purchase and carry out prepared food for immediate consumption, or ticket sales or admissions to places of amusement, athletic, and cultural events, or any combination thereof. The tax shall be levied for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities.

Source: SL 2002, ch 68, § 2.

Opinion from Attorney General defining promotion.

 From Opinion of Attorney General Mark V Meierhenry  (235) 1984.

$1.5 million is quite a bit to drop for promotion of a non-profit.

According to the press release about the state theatre, this was stated;

The Mayor has pledged $1.5 million to the Sioux Falls State Theatre Company to finance the exterior and structure of the building, life-safety measures, and accessibility. Paired with the gift from Mr. Sanford for the interior completion of the facility, the State Theatre is expected to reopen in 2020.

Using dollars from the City’s Entertainment Tax Fund, the City’s investment in the State Theatre comes from a pool of dollars restricted for culture and entertainment such as the Washington Pavilion and Denny Sanford PREMIER Center Complex.

But according to the ordinance on the entertainment tax, that can ONLY be used for city owned facilities;

SPECIAL TAX RATES.

   Notwithstanding the rate of tax established in §§ 37.001 and 37.002, from and after March 1, 1992, the rate of tax upon sales of leases or rentals of hotel, motel, campsites or other lodging accommodations within the city for periods of less than 28 consecutive days; sales of alcoholic beverages as defined in SDCL 35-1-1; sales of establishments where the public is invited to eat, dine or purchase and carry out prepared food for immediate consumption; ticket sales or admissions to places of amusement, athletic or cultural events is 3%. Any revenues received from the tax imposed in this section in excess of 2%, but not more than 3%, shall be used only for the purpose of land acquisition, architectural fees, construction costs, zoo maintenance and operational expenses, and payment for an entertainment center and a convention center, including maintenance, staffing and operations of these facilities and the promotion and advertising of the city, its facilities, attractions and activities.
It will be interesting what the city’s legal department will say about using this money for a facility the city doesn’t own. Will the ordinance have to change? Is there some legal case they can fall back on? I wonder if the city council knew they were going to use entertainment tax dollars when this deal was being put together.