The decision whether to remodel Barnett Arena or build a new facility to replace it may, once again, ultimately lie in the hands of Rapid City voters.
Mayor Steve Allender has repeatedly said that he hopes to avoid a public referendum. “The goal should be for it not to go to the ballot,” Allender said after a civic center board meeting on March 28.
But in an interview last week, the mayor hinted that might not be possible.
“All of our logical thinking right now tells us that we’re not going to spend $130 million of taxpayer money without it going to petition,” he said.
The build new or renovate debate was revisited at a June 28 special city council meeting, where Allender laid out details of the two options and how much each would cost.
The cost of the remodel option was estimated between $26 million and $28 million while the new arena option was tabbed at $182 million. Both figures include the cost of construction and interest on bond payments.
Acknowledging the issue as contentious but the message from the 2015 referendum as clear — 60 percent of the 12,903 voters opposed the expansion plan — Allender said this was not a case of the city simply repackaging the old plan and calling it new. The difference, he noted, was that this time inaction and outright rejection of a plan was no longer an option.
“There are two options on the table. Both of them cost tens of millions of dollars,” Allender said at the meeting. “It’s no easier for me to decide to spend $25 million dollars than it is to spend $100 million.”
The bulk of Allender’s presentation, though, focused less on the options than on explaining why inaction was no longer possible.
ADA and attendance
In March 2015 — the same month that Rapid City voters rejected the $180 million expansion plan in a citywide referendum — then Mayor Sam Kooiker signed an agreement with the U.S. Department of Justice to bring the entire Rushmore Plaza Civic Center into compliance with the Americans with Disabilities Act.
The agreement stipulated that the city had 30 months to complete this work. September will mark the end of that 30-month period.
While the impending deadline has brought immediacy to the decision-making process, other more long-standing issues within Barnett Arena have also complicated the matter.
Since 2009, civic center attendance has dropped about 25 percent. That trend is no surprise, given that the number of event days in Barnett Arena has steadily declined by more than 33 percent since 2000.
Though civic center staff have worked to offset the lack of large events by booking more small events — the number of events has risen 39 percent and the number of event days has risen 55 percent since 2001 — it’s the top-tier events in the arena that generate the real economic impact, Allender said.
Citing a study by convention and tourism advocacy group Destination Marketing Association International, Allender noted that out-of-town event attendees spend an average of $239 per adult per day.
With more than 630,000 people within a 200-mile radius of Rapid City, the potential was obvious.
And while recent shows like the Miranda Lambert and Eric Church concerts in 2015 drew people from 35 and 33 states, the 40-year-old Barnett Arena’s limitations make attracting and hosting larger events nearly impossible. Some of the issues include ceiling height, ceiling load, floor size, ingress and egress, heating, ventilation and air conditioning capabilities and the lack of a large loading dock.
Add the outdated sound, lighting and visual technology, and the need appears even more pronounced.
“We’re looking at basic improvements, and as far as what we can project for economic impact, I think anyone’s opinion is as good as anyone else’s, but we know that the entertainment industry is growing,” Allender told the Journal. “There’s no chance we’re going to stop seeing entertainment made available to people who have suitable facilities.”
Funding the civic center
The civic center receives about one-third of its funding from the city’s bed, booze and board tax — aka the BBB tax — a 1 percent tax levied on lodging, alcohol, dining, and entertainment ticket sales within Rapid City.
The money collected from the BBB tax is distributed to the civic center and Visit Rapid City, the city’s tourism promotion agency. According to city ordinance, the civic center receives 75 percent of BBB funds and Visit Rapid City receives the remaining 25 percent.
In 2016, that 75 percent chunk represented about $3.1 million.
In turn, that $3.1 million represented about 34 percent of the civic center’s funding for the year. The remaining 66 percent, about $6.1 million, was generated by civic center activities, including concession sales and rentals of the center’s rooms and equipment.
Civic Center Executive Director Craig Baltzer said one of the problems in the 2015 referendum cycle was that citizens thought the civic center received its funding from the city’s general fund, meaning any money spent on the center would be money not spent on other city needs such as infrastructure.
“We were chasing that tail even though it wasn’t true,” Baltzer said, noting that the building’s operating costs as well as all building and equipment maintenance were paid for with the funds. Baltzer said one of the reasons he was interested in the executive director position was based on the way the center is funded.
“The funding mechanism here is brilliant,” he said. “The funding mechanism that helps me operate is something I contribute to.”
By increasing attendance, more visitor money is spent in city restaurants, hotels and on other goods, contributing to the BBB tax fund as well as the city’s Vision Fund, created in the 1970s when Rapid Citians approved a half-cent sales tax to fund the construction of the civic center.
Baltzer said booking larger and more popular shows attracts more out-of-state visitors who typically spend several days in town.
“We need to be in that bigger game,” he said.
Remodel vs. building new
According to Allender, in the period leading up to the last vote in 2015, more than $700,000 was spent on studies and design proposals. “That’s a tremendous expenditure for nothing to be done,” Allender said.
To avoid repeating that mistake, no designs have been commissioned thus far. The plan, Allender said, is to find where the public stands on the issue before moving forward with the details.
In 2015, the remodel option was estimated to cost $70 million. This time, it’s between $26 million and $28 million, with the total cost dependent on the length of the loan.
“I did not study the previous presentations,” Allender said when asked about the difference in cost estimates between the old and new plans. “I took the task force’s work, and we came up with this proposal.”
The remodel costs are broken into three categories: ADA, life safety and functional enhancements.
Overall, ADA work would cost $8.1 million, life safety improvements $8.1 million, and functional enhancements $7.7 million.
The big ticket items include HVAC, electrical and fire safety upgrades ($4.8 million), building ADA accessible seating ($2.6 million), sound and visual improvements ($2.4 million), and designs and testing ($2.2 million). A contingency cost across the three categories totals about $3.6 million, and about $1 million is added on for inflation.
The projections were made in the fall of 2016.
Baltzer addressed some of the line items after making clear that he was not involved in the estimations or the formation of the mayor’s presentation.
“The building is just so outdated on (HVAC). That’s an area where we’ve had problems before,” he said. “That became a big, huge life safety adjustment.”
Noting the sound system needs an upgrade, Baltzer said it makes sense to do sound and visual work when the wiring is already exposed for HVAC work.
Since many of the larger touring shows bring their own sound and visual equipment to hang from the roof, Baltzer said a structural engineering study may be necessary to understand how much more weight, if any, the roof could hold if improvements were made.
“We’re butt up against the limits already. You have to take into account snow loads, too,” he said.
In the June 28 presentation, Allender noted that if the remodel option were chosen and ADA accessible seating were constructed, the Barnett Arena’s current 10,000-person seating capacity would likely be reduced by up to a few hundred seats.
A new arena could hold up to 13,000 people, with a 10,000-person capacity for a 180-degree end stage setup. General price estimates for the new arena are between $100 million and $130 million, and were provided by Kansas City-based Crawford Architects and Sink Combs Dethlefs Architects, two national design companies specializing in arena designs.
Crawford Architects also produced the conceptual designs for the 2015 proposal, according to Journal archives.
The estimated cost of $182 million was based on the city borrowing $101 million over 30 years and paying $6 million per year. The 2015 proposal was estimated to cost the city between $340 million and $420 million including principal and interest, Allender said.
To pay for either option, the city’s Vision Fund would be used. The Vision Fund currently brings in about $13 million a year. By using half of the fund, $6.5 million, the city could pay for the construction of a new arena in 30 years.
To pay for the remodeling effort, the city would pay either about $5.3 million per year for five years or $2.8 million for 10 years. The five-year option would cost $26.5 million while the 10-year option would cost $28.3 million.
In the 2015 proposal, the new arena would have been funded using all of the Vision Fund money for the next 30 years.
Allender said that the city has been accumulating a lump sum in the city’s undesignated cash reserves fund for a possible down payment, dependent upon the city council approving such a use.
With no concepts or designs currently under consideration, Baltzer was unsure how the anticipated construction would affect civic center business.
“There is actually a multitude of options to look on at that,” he said.
Where the new arena would be built, whether the Barnett would be demolished, repurposed, incorporated into the new arena, or left alone while a stand-alone new arena was built, were just some of the questions he had. If the decision were to simply remodel the Barnett Arena, Baltzer wondered about the timing of that work.
“The least amount of effect to it possible is something that I’m curious about,” he said, adding that a March to December construction schedule would be ideal.
“There are a lot of people that are really tuned into the economic impact that would be really distraught if we didn’t have the Black Hills Stock Show for a year. Even if you miss a year, that’s a lot to Rapid City.”
In preparation, Baltzer said his office had been in conversations with architects, the Central States Fairgrounds and Sutton Rodeo about working around construction.
“There might be a way to handle that even if you were going to incorporate a new venue into the old,” Baltzer said, noting that the Lakota Nation Invitational and state high school sports tournaments were other events he hoped would not be forced to relocate.
But if voters decide against building a new arena, those events may be forced to find another venue in the future, Baltzer said.
LNI organizers have rented additional basketball space outside the civic center in recent years, and held events like rodeo competitions at the fairgrounds. Balzter said they have expressed a desire for more space to keep as many of the events in one location as possible.
State wrestling and basketball tournament organizers have also expressed concern about the lack of space. Then, there’s the ever-growing Black Hills Stock Show, an event where Baltzer said “every closet space is being used.”
“Those three things are events that are continually growing,” he said.
Parking and transportation to and from the center was also not addressed in the mayor's presentation to the city council, something Alderwoman Darla Drew took note of afterward.
“Have there been any economic studies on what would happen if we did move the location outside of town?” Drew asked Allender at the conclusion of the presentation. “It certainly would help parking and eliminate some of the parking concerns that people had during the first plan.”
Labeling Rapid City as “an area that does resist walking,” Drew said she supported building a new arena but would need to see a transportation plan in place before giving her full support.
“That’s what I’m going to hear from people. They don’t want to walk from Alex Johnson,” she said. “I think right now when we’re looking at this, that’s going to be part of the hard sell.”
Though additional public presentations have not yet been scheduled, Allender said dates and locations will be announced soon and will likely continue through the summer.
“If we’re doing public presentations and two people are showing up in August, then we’ll adjust accordingly,” Allender said when asked how long he anticipated presenting.
He had previously said he would stop presenting when he felt satisfied that citizens fully understood the two options. Then, he hoped to conduct a city-funded poll to gauge which option people preferred.
“The plan at this moment is to pay for the survey with public money so we have public results. That’s the plan,” he said.
But, if the decision is put to a public referendum, the city’s hands could be tied. If City Attorney Joel Landeen declares the decision to be a ballot question, the city would be prohibited from spending public funds on a poll.
South Dakota state law 12-27-20 prohibits “the expenditure of public funds for the … petitioning of a ballot question on the ballot.”
A privately funded poll could still be completed, but the results would likely not be made public.
“When is the moment when we say 'OK, we’re making it a ballot issue?'" Allender said, noting that the timing of declaring it a ballot issue would determine how the poll would move forward.
To get the issue to a referendum, state law requires that 5 percent of the city's registered voters need to sign a petition.