Committee approves reclassification of TIF 92; school levies to be made whole locally

The Legal and Finance Committee on Feb. 12 approved a resolution to amend the project plan for Tax Increment District (TID) 92, changing the district classification from "affordable housing" to "local." The change alters how incremental tax revenue will be calculated and how school district levies will be made whole.

The amendment affects property generally described as east of Elkvale Road, north of Homestead Street and west of Enon Drive. Director Ben Fisher, community development, said the amendment is needed because the mix and pricing of planned residences has changed and the TIF now includes infrastructure costs outside the original development footprint, including completing a portion of Reservoir Road.

TIF planner Mike Dugan described the approved development program: the project includes a developer-controlled parcel intended for 56 single-family homes (smaller units priced around $220,000), 72 single-family homes priced around $385,000 for first-time homebuyers, and an adjacent area where about 55 homes will be priced at roughly $500,000. Dugan said that because a portion of the area will include market-rate homes above the $385,000 threshold, the district no longer meets the statutory definition for an "affordable housing" TIF and therefore must be reclassified as "local." He said total eligible project costs remain essentially unchanged at about $7.8 million and the amortization is still expected to conclude around 2039.

Dugan explained the fiscal effect on school levies: under state practice, schools must be "made whole" for lost increment when a TIF captures property tax revenue. For this TID the make‑whole obligation will be handled locally rather than at the statewide level. Dugan provided example rate estimates: for 2024, roughly $0.81 per $100,000 of owner-occupied value (and about $1.52 per $100,000 for commercial/industrial); a projected 2031 example was about $3.25 per $100,000 of owner-occupied value. He also noted the local classification affects county residents who fall inside the Rapid City School District boundary, including parts of Meade County.

Council members asked for clarifications about boundaries and which residents would be affected. Dugan and staff confirmed the TIF boundary stretches into county territory and affects property owners inside the Rapid City School District regardless of municipal limits. After questions, the committee approved the resolution on a motion by Councilmember Biberdorf, seconded by Pat Roseland; the motion carried.

The amendment does not change the project's eligible costs or the planned infrastructure work but alters which taxing entities receive incremental revenue and how make‑whole payments to schools will be handled.

The full project plan amendment will move forward for the next steps required under state law and local ordinance.