The Pennington County Commission agreed Tuesday to help local entrepreneurs and the city of Box Elder finance an estimated $137.43 million development project that will be anchored by an event center.
During a meeting at the county’s Administration Building, the commission voted 4-0, with one abstention, to assist the project by creating a tax increment financing district.
Up to $11.5 million in new and higher property taxes generated within the boundaries of the TIF district will be captured to help pay off infrastructure improvements that are needed to facilitate the event center's construction and to develop an associated hotel and business park.
Several backers of the proposal testified that it will help Box Elder and the Rapid City area capitalize on economic activity expected to be generated by the impending addition of B-21 bombers to Ellsworth Air Force Base.
“This is a no-brainer for me,” said Commission Chairwoman Deb Hadcock, “because it’s going to help the base and help us.”
Commissioner Lloyd LaCroix abstained from the discussion and vote after saying his employer, M.G. Oil, has property adjacent to the TIF boundaries. He abstained to avoid the appearance of a conflict related to any potentially enhanced property value that might accrue to his employer as a result of the TIF district, he said.
The project is a partnership involving the city of Box Elder and B-1 Development Inc. The corporation’s shareholders are members of the Bradsky family and of Liv Hospitality, with experience in the development, restoration or operation of Black Hills projects, including Cadillac Jack’s Gaming Resort, the Hotel Alex Johnson and the WaTiki Indoor Waterpark Resort.
WaTiki is near the intersection of Elk Vale Road and Interstate 90 in Box Elder. The proposed event center location is to the east of the WaTiki complex.
The TIF boundaries would encompass not only the proposed event center but also a large area of undeveloped land to the north and east across I-90, which comprises much of the 157-acre Seger Business Park. TIF-funded roads, water and sewer lines and drainage improvements are expected to help the developers sell lots in the business park, which will generate new and higher property taxes to pay off the infrastructure.
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The developers and Box Elder city officials asked Pennington County to create the TIF district because Box Elder is unable to do it. State law says cities cannot have more than 10 percent of their total property-taxable value in TIF districts, and Box Elder is already at or near that limit. Additionally, the city has limited capacity to take on extra debt because of numerous existing projects, including wells, street improvements and sewer upgrades.
The city of Box Elder will own the proposed event center, which is envisioned as a 56,000-square-foot facility with the capacity to host “everything from sports tournaments to formal banquets,” according to a written TIF plan submitted to the county commission. The event center’s main component will be a 21,600-square-foot area of flat floor space.
Nobody from the city of Rapid City testified at Tuesday’s Pennington County Commission meeting, but Craig Baltzer, executive director of Rapid City’s Rushmore Plaza Civic Center, said in a phone interview that he does not consider the Box Elder event center to be potential competition. The Box Elder center and the Civic Center’s Rushmore Hall might compete for a few events, Baltzer said, but the facilities could otherwise complement each other and help bring more events to the area.
“We’re having to turn events away because our weekends are so often full,” Baltzer said.
A breakdown of total estimated project costs in the TIF plan includes about $7.32 million for infrastructure in the business park, $2.01 million for infrastructure to support the event center, $13.33 million for a new Courtyard by Marriott hotel near the event center, $16 million for the event center, $72.4 million for commercial and industrial buildings in the business park, and $25 million for other commercial development.
The $11.5 million in TIF money would be applied to the infrastructure for the business park and event center, plus engineering fees and contingency costs.
The maximum duration of the TIF district is 20 years. Tobin Morris, of Dougherty & Company, which drafted the TIF plan, said the developers rather than the county will be liable if the project fails to generate enough property-tax revenue to pay off the infrastructure improvements.
“That responsibility is between them and the bank,” Morris said.