Sioux Falls councilors defer downtown tax hike amid concerns from Raven, other businesses

A major presence in downtown Sioux Falls is hinting that it could look at moving elsewhere as city leaders weigh hiking taxes in the area.

The Sioux Falls City Council deferred a vote on a tax hike for properties in the city's downtown area after several businesses raised concerns Tuesday night, Raven Industries chief among them.

The proposal, unanimously deferred to the council's Dec. 20 meeting, was originally shown to the public in September.

In that presentation, Downtown Sioux Falls President Joe Batcheller told councilors the tax assessment formula for the Main Street Business Improvement District hadn't been updated in three decades, making it difficult to implement improvements to the area.

More:DTSF president: Downtown improvements being held back by decades-old tax rate

To hammer that point home, he noted while Sioux Falls' downtown was larger than that of Rapid City or Fargo, it was bringing in a little more than $200,000 annually, less than the special assessment totals for either of those cities.

With more funds coming in, Batcheller has said Downtown Sioux Falls could recruit more retail businesses, improve maintenance in the area and put more support toward local events.

But representatives from several businesses in the district, including Norberg Paints and Sunshine Foods, said at the meeting they didn't feel like they saw the current benefits of the district.

Other concerns came from Raven Industries, as relayed by Delia Druley, an attorney representing the company who said they did not oppose the removal of the tax cap, but had "some concerns about the precedent it could potentially set," noting it would be a 377% increase in their current assessment.

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.

Druley said Raven "greatly appreciates" what the district had done for downtown Sioux Falls, but said the company was concerned about whether they'd be paying a "fair and equitable assessment that recognizes their distinct character in downtown Sioux Falls" and that the district's goals "provide limited benefit to Raven."

She told the council she'd like more time to work with the district on the proposal, specifically saying she'd like to see it include assessment zoning maps.

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.

While Councilor Curt Soehl said he supported the deferral, he said he would be against any sort of changes to the proposal that would lower what Raven would pay.

"Raven has been an integral part of downtown, their people have served on numerous boards, they've done great things for us in Sioux Falls, and I wouldn't expect them ... to back away from any commitment that the rest of downtown is going to take on."

Soehl added "unless somebody enlightens me, I won't support any amendments to lower it. It's not a lot of money that we're talking about."

Change could lead to Sioux Falls' 'best days'

With the changes in the special assessment, Batcheller said, "I believe our best days could be ahead of us," tying the proposal to the ongoing 2035 Downtown Plan.

More:Public sees latest on downtown Sioux Falls' plan for 2035

The current formula places a $1,500 cap on building value and $200 cap on land value. So whether a building is valued at $1 million or $10 million, owners can't be charged more than $1,700 under the current formula.

The formula would retain the ratio of $1.50 per $1,000 for the first $1 million of a building's value, along with the ratio of $1 per $1,000 for the first $200,000 of the land's value.

But a new tier of the tax would be added, set at $0.50 per every $1,000 of a building's value over $1 million, and $0.50 per every $1,000 of the land's value past $200,000.

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.

This article originally appeared on Sioux Falls Argus Leader: Sioux Falls City Council pushes back downtown tax proposal