Simplified: The City Council decided to wait an extra couple weeks before voting on a proposal to increase what downtown businesses pay into a "Business Improvement District" assessment – essentially an extra tax on top of property taxes specific to downtown – after business owners expressed concerns.
Why it matters
- Right now – following the rules set in 1989 – assessments are capped. That means that no matter what a building is valued at, an owner won't pay more than $1,500 per year to the BID.
- That money goes to fund the work of Downtown Sioux Falls, Inc. The organization's hope is to bring in additional revenue to do put more money toward downtown maintenance, marketing, safety, events and more.
- But doing away with the caps has some downtown businesses – including Raven Industries, Sunshine Foods and Norberg Paints – raising concerns that they'll be paying big money for services that don't benefit them.
"As you’re taxing this ... everybody needs to see benefit from that," Norberg Paints Owner Stuart Norberg told councilors. "Make sure that the benefit isn’t just Christmas lights on Main Street and Phillips (Avenue)."
What's the change being proposed?
It's worth noting we're just talking here about the BID assessment. This is separate from property taxes.
The new plan for the BID assessment is to continue the existing assessment rate for buildings valued at less than $1 million. (Essentially, they won't pay more than $1,500 per year – the existing cap).
- Then, valuation over that first $1 million, will be assessed at a rate of $0.50 per $1,000 of taxable valuation.
So, say a property is valued at $3 million.
- That first million is assessed using the existing formula (I'll spare you the math and tell you it'd be $1,500).
- Then the remaining $2 million in valuation would tack on another $1,000. ($0.50 for every $1,000. $2 million is essentially 2,000 thousands. It gets wonky, but taxes always are.)
- So the property owner would need to pay an annual BID assessment of $2,500.
The changes will also apply to land, not just buildings – though existing caps on land assessment are lower.
What are the big concerns?
Those who brought concerns to councilors largely said they support the work of DTSF, Inc., but they're not excited about paying into services they say they're not benefiting from.
Raven Industries, in particular, wants to see an amendment to the proposed ordinance that takes into account the different types of downtown businesses, said Delia Druley, legal representation for the company.
- A place like Raven doesn't see the same benefit from more foot traffic as a retailer or restaurant, Druley said, adding that it'd be "harder to justify" Raven's presence in downtown if these expenses keep going up.
What happens next?
The City Council is giving DTSF, Inc., the BID board and downtown business owners (namely Raven) a couple of weeks to meet up and find a potential solution.
The proposed tax increase will then be back in front of City Council later this month.
- At least one councilor, Councilor Curt Soehl, said already that he likely won't support any amendments.
"It's not a lot of money that we're talking about," Soehl said.