Committee OKs developer agreement and city loan for TIF 88; approves county TIF consent for project that crosses city limits

The Rapid City Legal and Finance Committee on March 12 recommended city council approval of a developer agreement and city loan for Tax Increment Financing District (TIF) 88, and separately approved a resolution consenting to Pennington County’s creation of a county tax increment financing district that includes property inside Rapid City.

Finance Department staff presented details on TIF 88 (Country Road West). Mike Dugan, TIF program manager, told the committee the district was originally approved by council in May 2023 and was amended in September to increase project costs by about 33 percent after bids came in higher than earlier estimates. The stated purpose of TIF 88 is to construct about 900 linear feet of Collector Street (Country Road) to support residential development, including single-family and multifamily units.

Dugan said the total project cost, including financing, is currently listed at just above $1,700,000. The city is proposing to fund the TIF with a city loan of a little over $951,000 at a fixed 7 percent interest rate. The loan would be secured by a personal guarantee from the developer, Eastern Slope Land Corp., and an assignment of the TIF 88 tax increment proceeds. Dugan said the TIF is estimated to generate roughly $6,500,000 in increment payments over the district’s 20-year life; the agenda packet lists an estimated city interest income of approximately $786,000 over the life of the loan and an estimated value at project completion of just over $23,000,000.

Committee members voted to recommend approval of the developer agreement (Item 14) and the loan documentation (Item 15). Motions were recorded as passed without recorded opposition and both items will be forwarded to the full city council with the committee’s recommendation.

The committee also considered Resolution No. 2025-023, a city resolution consenting to Pennington County’s creation of a county Tax Increment Financing District (TID) that includes property within Rapid City. Under South Dakota Codified Law (SDCL) 11-9-8, a county may not create a TID that lies wholly or partly within a municipality without the municipality’s consent.

Dugan and Director Ainsley described the county’s proposed district as a multi-phase project; the first phase includes 44 market-rate apartments to be constructed inside Rapid City city limits. County-led elements of the project include a traffic signal at the intersection of Twilight Drive and Concourse Drive; that signal’s right-of-way lies in county jurisdiction. Staff explained that, had the city handled the project, portions of right-of-way and possibly single-family parcels would need annexation into the city, which would transfer maintenance responsibilities for substandard streets and other infrastructure. Director Fisher said staff supported the county-led approach in order to limit immediate annexation and maintenance responsibility while still enabling construction of needed improvements. Fisher told the committee the arrangement represented a collaborative decision between city and county staff.

Evans asked whether annexation would be in the city’s best interest. Fisher replied annexation would bring additional property tax and sales tax value but also city maintenance obligations for newly developed residential streets; she described the intergovernmental arrangement as “a winning decision for the city” because county management of certain improvements reduced immediate maintenance commitments for the city while preserving needed transportation and drainage improvements.

Committee members moved to approve the county-consent resolution; the motion by Councilmember Biederdorff and a second by Councilman Evans carried unanimously.

The packet noted three other city-funded TIFs in various stages: Cannon Heights (closed December), Youth Soccer TIF 87 (closed January), and a pending Homestead Street TIF 83 taken over by the city. Dugan said the proposed TIF 88 would be the fourth city-funded TIF.

All three items (14–16) were forwarded to the full city council with the committee’s recommendation to approve.