The Events Center and our schools

By opting for expediency and near-term savings benefits, we will be doing the city of Sioux Falls grave near- and long-term economic disservice (and in the process compounding a past failure of placement with the Convention Center) if we fail to build the proposed new Events Center in the heart of Sioux Falls. In its recent decision that Councilor Jim Entenman’s ownership of property near the Arena posed no conflict of interest in the matter, the Board of Ethics unanimously concluded that land values would not rise with a new events center at the Arena site.

AECOM reached similar conclusions in its economic and development impact analysis of the two sites - even in the near-term, projecting $51.1 million in new near-term investment attracted by a downtown location versus $6.7 million at the Arena site (“Sioux Falls Events Center Economic and Development Impact Analysis,” p. 8). The AECOM report also concludes that

“Currently, there is an estimated $500 million in planned or proposed downtown projects. Based on discussions with local developers, the proposed Events Center would likely provide the needed impetus to kick start many of these projects. Locating the Events Center at the Downtown site could create a level of potential spin‐off development not likely achievable at the Arena/Convention Center site.” (p. 37 – emphasis mine)

That’s FIVE TIMES the estimated cost of building the Events Center injected directly into the Sioux Falls economy in property development alone.

The property tax implications go far beyond mere municipal receipts; our city has the opportunity to reap benefits in terms of our greatest asset: our children and the quality of their education. The AECOM report continues on page 8:

“[W]e estimate $30,000 in new city property tax revenues from spin‐off development at the Arena/Convention Center site in 2016, and $228,000 from the Downtown site. This does not include other tax impacts that would be captured by other public bodies, such as the local school district, the county, and the state.” ‐AECOM “Sioux Falls Events Center Economic and Development Impact Analysis,” p. 8 [emphasis mine]

In 2010, the allotments from each SD property tax dollar were split five ways: 27.35% for counties, 1.51% for townships, 1.89% for special assessments, 13.4% for municipalities, and 55.85% for schools. (SD Dept of Revenue 2010 Annual Report, p. 19) From AECOM’s projected municipal revenues, we can extrapolate the Sioux Falls School District’s property tax share. Considering only new near-term investment numbers ($51.1 million downtown / $6.7 million Arena site), $950,000 – almost a million dollars – will be generated annually for Sioux Falls schools from a downtown events center versus $125,000 from an Arena placement.

The difference grows even more stark when we consider the $500 million in already-proposed development that a downtown Events Center would kickstart. The city of Sioux Falls loses an additional $2.2 million in property tax revenues every year those developments languish, but an even greater impact is had on Sioux Falls schools. The mayor and AECOM are right when they say that building the events center downtown will “only” speed up development in the downtown area, but we need to be clear what “only” really means: Every year that downtown development is delayed, Sioux Falls schools are missing out on an estimated $10.2 million of additional funding.