Yankton commission approves $3.3 million sales-tax rebate cap for mall redevelopment

The Yankton City Commission voted 8–1 to raise the cap on an existing, performance-based sales-tax rebate for the Yankton Mall from $1,700,000 to $3,300,000 over the same 10-year term, keeping the rebate at the city’s 2% portion of eligible sales tax.

City Manager Amy Leon explained to the commission that South Dakota state law lets municipalities offer sales-tax rebates to encourage retail development and that the city’s portion of sales tax from eligible retailers would be rebated only after the tax is generated and verified. “The sales tax rebate is a tool that the South Dakota codified law makes available for cities to utilize,” Leon said during staff remarks.

The rebate increase was requested by mall owner Matt Evans and his representatives to cover additional build-out and tenant improvements needed to recruit national retailers. Community economic development director Dave Mingo told the commission the mall is currently about 71% leased and that the new anchor tenants under development — including Hobby Lobby, Marshalls and 5 Below — are expected to open by the holiday season. Staff recommended approval, noting the proposal is performance based and that eligibility of individual retailers would be determined under the contract terms.

How the rebate works

Under the contract structure described by staff, each eligible retailer would continue to remit sales tax to the South Dakota Department of Revenue as usual. The Department of Revenue reconciles and remits the city’s share, and the city would then rebate its share, dollar for dollar, back to the mall owner (via the economic-development intermediary named in the agreement) only for sales that meet the contract’s eligibility criteria. Leon and Mingo emphasized that state and other portions of sales tax are unaffected.

Owner and lender controls

Evans’s representatives said any rebate proceeds would be sent directly to his lender as required by his loan agreements. Broker Ryan Tisdall told the commission that rebate payments “immediately go to First Dakota National Bank” under Evans’s loan documents. Representatives also said the owner is the sole investor in Evans Enterprises and that leases include co-tenancy protections common with national retailers.

Public comment and commission debate

More than a dozen members of the public spoke during the hearing, several in favor and several opposed. Supporters said the project would reduce retail “leakage” to larger regional centers, bring jobs and visitors, and raise future property and sales-tax revenue. Opponents urged the commission to avoid setting a precedent of repeated increases to the same rebate and questioned whether private financing or investors should shoulder more of the cost.

Evans addressed the commission before the vote, saying he wanted to complete the redevelopment and asking commissioners to “put your faith in me and I will get this done for you.”

Vote and immediate effect

Commissioner Brunick voted no; commissioners Sarta, Hanoff, Minor, Mosher, Villanueva, Weber, Benson and Mayor Schromm voted yes. With the vote the commission directed the city attorney to prepare the contract documents and authorized the city manager to sign them following any final edits required by the commission’s direction.

What the agreement does not do

Staff and the contract language the commission discussed exclude certain existing nearby businesses from eligibility and specify that eligibility will be determined store by store under the agreement. Dave Mingo and City Manager Leon said the agreement would not function as a direct loan: the rebate pays only for sales actually generated at eligible stores. The existing tax-increment-district repayment that covers earlier facade improvements remains a separate obligation and is not changed by this action.

Next steps

City staff will finalize contract language following the commission’s direction, and the city attorney will prepare required documents for execution. The rebate is limited to the city’s portion of eligible sales tax, will be processed only after documentation and verification, and will run up to 10 years or until the $3,300,000 cap is reached, whichever comes first.

Ending

Commissioners framed the approval as a calculated, performance-based step to complete a long-running mall redevelopment effort; staff and mall representatives said construction and tenant build-outs are already under way and that tax revenues will return to the city after the cap is reached.