A city committee will consider creating a new tax-increment district for Presidents Plaza to replace a larger district that was established nearly five years ago for the downtown revitalization project.
Presidents Plaza LLC is making the request to the city’s Tax Increment Financing Committee, which is the first stop in the review process for new and revised TIF districts.
“The goal is to return back to the city some money and reduce the TIF area by quite a bit,” said Hani Shafai, president of Dream Design International and partner in Presidents Plaza LLC. “We believe it’s the best thing for the community and the best thing for public perception as far as the project goes.”
Under the request, the new TIF would be only a quarter of the size of the original, releasing a number of unrelated properties from the district. That would return about $166,000 in annual property tax revenue to city and county coffers.
By redrawing the district, developers also give up their right to about $500,000 in tax increment funds that have already been collected by the existing district. That district would be dissolved upon the approval of the new TIF.
The dollar amount being sought from the TIF would not change from what was originally approved by the Rapid City Council.
Mayor Sam Kooiker said Friday the change is a good deal for the city and the developer.
“It is an immediate infusion of dollars back into the tax coffers,” Kooiker said. “It’s more of a win for the taxpayers – they’re getting a TIF that’s smaller in geographic area and they’re getting back the accumulated tax dollars.”
The creation of a new TIF would also free the developers from the rapidly approaching deadline to use the current district. State law says no expenditure may be provided for more than five years after a TIF district is created.
In the case of the current TIF, that would give developers until May 7 to get all of the improvements being financed by the TIF under contract for construction, according to the city attorney’s office.
“There has been a concern on when the five-year time frame begins,” Kooiker said. “By dissolving the TIF and reconstituting it, it takes away that issue.”
Shafai said the approval of the new TIF would not change their construction schedule, either. The goal is still to meet the current deadline and have the parking garage under contract by May 4.
“It just removes any doubts in case someone says no you should have constructed this within five years,” Shafai said. “We want to eliminate any doubts, and we don’t want to open ourselves up to any potential questioning.”
Under the current district, the city has approved $11.7 million in tax-increment financing to assist in the construction of the project’s public improvements -- the seven-story parking ramp, environmental remediation and power line burial.
As proposed, Presidents Plaza would include a mix of retail, office and residential space, along with a 100-room hotel, conference center, restaurant and at least 500 public and leased parking spaces.
The current TIF boundary covers nearly 24 acres of downtown property along the Fifth Street corridor, including Tuscany Square, Hardee’s and the Knights of Columbus building.
The new TIF would be just shy of six acres, capturing primarily the one block bounded by St. Joseph, Kansas City, Fifth and Sixth streets, according to city documents.
Two properties on Sixth Street – the old city hall building and Roger Frye's Paint & Supply – would be exempted from the TIF. The building that is temporarily housing the Pennington County Equalization Office on the other side of Kansas City Street would stay in the district.
Presidents Plaza is planned for the site of the city-owned parking lot on St. Joseph Street between Fifth and Sixth streets.
The seven-member TIF Committee that will consider the request Monday is made up of city council members, planning commission members and representatives of Rapid City Area Schools, Pennington County Commission and Rapid City Economic Development Partnership.
The committee’s chairman, Ward 1 Alderman Gary Brown, said from what he can tell, the return of tax dollars to the city is a “nice gesture” from the developers.
“I’m looking forward to hearing their explanation on Monday,” Brown said.
If approved by the TIF Committee, the request would next go before the Planning Commission, city planner Karen Bulman said. That would likely happen at the May 10 meeting.
The Rapid City Council would also have to sign off on the new district before it could officially be established.
Contact Emilie Rusch at 394-8453 or email@example.com.