SIOUX FALLS, S.D. (KELO) — After more than a year’s delay, the planned project for the former Sioux Steel property in downtown Sioux Falls should be moving ahead.
The Sioux Falls City Council on Tuesday dissolved a tax increment finance (TIF) district it had approved in February of 2020. The council then approved TIF District No. 24 for $21.5 million for a planned $200.5 million project on the site.
On July 15, 2020, the developer, Lloyd Companies, announced the ground-breaking for the planned project was delayed by the pandemic.
The new district is similar to the original 2020 district. Lloyd Companies will receive up to $21.5 million in reimbursed, or deferred, new taxes on the property, Dustin Powers, a city planner, said at Tuesday’s council meeting. The developer will be required to use any TIF money for the development of a 900-stall parking structure with public parking available on the property, Powers said.
The developer will continue to pay the existing annual property taxes because the TIF involves any new property taxes created. Tax money collected from the increased valuation, called the increment, will go into a TIF fund. When the project is completed and the TIF is paid, the TIF district is dissolved. All of the new taxes created are then paid by the developer.
The planned project includes a 216-room hotel with a 66,000-square foot convention center, Powers said. It will also have a nine-story office tower. The convention center and office tower will both have ground level retail space. The parking structure will have a housing complex wrapped around it.
The property generates about $57,000 in annual property taxes, Powers said. It will generate about $1.6 million in annual property taxes when the Lloyd Companies project is completed.
“If we kept it the way it was today it would take 27 years to get to that $1.6 million dollars,” council member Alex Jensen said. “That will be annual tax revenue going to our schools, going to our municipality, going to our county.”
Jensen called it a “once in a lifetime project.”
The city requires that a TIF District meet certain criteria. Powers said the criteria are that 25% of the property needs to be blight or at least 50% of the project will stimulate the state’s economy. The project will significantly enhance the property values so it meets the criteria, Powers said.
Although the council had approved TIF District No. 22 for the plan back in February 2020, no money was distributed since construction did not start, Powers said.
The key piece of the proposed project for this new TIF District is the 900-stall parking structure, Powers said. All non-leased space will be available to the public and spaces will be free on nights and weekends.
A parking structure will support downtown development, said Joe Batcheller, the president of Downtown Sioux Falls.
“When we can create structured parking we eliminate the need to pave nine acres of downtown,” Batcheller said. “Can you imagine nine acres of surface parking downtown?”
The project is an appropriate use for a TIF District, Batcheller said.
Lloyd Companies announced the original project in November of 2019. Sioux Steel announced in March of 2018 it would be moving from downtown Sioux Falls. It would move the plant’s operation to its plant in Lennox.