City Councilors have questions about proposed parking ramp

SIOUX FALLS, S.D. (KSFY) - City Councilors Theresa Stehly and Pat Starr are concerned they and taxpayers aren't getting the whole story on a proposed mixed-use parking ramp in downtown Sioux Falls, but the city says that isn't true.

Stehly's main concern is who will be investing in the parking ramp's mixed use facility in a first-of-its-kind partnership between the city and a private developer. She said she's asked for a list of the private investors to ensure transparency for citizens, that no city employees will be profiting off the facility once its built.

"I don't think anyone should be embarrassed to say, 'I'm investing in a partnership with the city,'" Stehly said. "I'm not sure why I'm getting some push back from the city officials when I'm asking for the names of the people that we're partnering up with."

Stehly said the "unique" partnership should be crystal clear, but the city said it won't be releasing the list of investors.

"Who are the investors is a private matter," said Daren Ketcham, Community Development Manager for the City of Sioux Falls. "There are certain legal restrictions that would make it difficult for the city to do business and attract business if you have to have that reporting requirement."

Ketcham cited a city ordinance that would nullify the contract between Sioux Falls and Legacy if any city employees were invested in the project, saying it could cost Legacy millions of dollars, and that there would be ramifications for any city employees involved.

"There will be zero conflicts of interest. They've made a commitment since day one and it was part of the request for qualifications that they can't have any conflicts with city employees," Ketcham said. "They will not accept any city participation."

There is also a partnership between Legacy Development and Aaron Hultgren, whose company, Hultgren construction was fined roughly $100,000 by OSHA on Monday for the downtown building collapse, which killed 24-year-old Ethan McMahon, where the new mixed use parking ramp would be built.

Hultgren is an employee at Legacy and the site of the building collapse, which Hultgren Construction, LLC had been working on at the time of the collapse, had been sold to Legacy by Tim Kant, the owner of the Copper Lounge, in 2015.

When asked whether there was any sort of reconsideration about the partnership between the City and Legacy Development as a result of the building collapse in December 2016, or in the past 24 hours as a result the fines imposed by OSHA, Ketcham only said Hultgren Construction wasn't involved in the project.

"Hultgren Construction is not a part of this project and we're very confident in the ability of our private partner to perform on this project," Ketcham said. "Legacy has a fantastic track record."

Starr's skepticism is more because of a lack of plans. He said the city council has no idea what's actually being planned for the mixed-use space because Legacy hasn't clued them into their plans or ideas for the space. Starr said he's also concerned that more emphasis will be placed on creating a new economic development, rather than parking development.

"What's happening is I think we're starting to dress up this parking ramp so it doesn't look like a parking ramp so that it blends in better with the community," said Starr. "Instead of concentrating on the needs of downtown needing more parking spaces."

Starr said the original plans in 2015 included roughly 550-600 new spaces, and the new plans will only have about 450-500, which includes the already approximately 130 spaces that exist now in a surface lot. Then, about 150 of the spaces in the proposed structure would be for building tenants. Starr said, he doesn't even know if what the council has heard is true, because they haven't been consulted at all on the project.

Ketcham said the plans will be shared with the city council in the coming weeks for their consideration and that the public will have a chance to comment.

"We have so little land left in downtown Sioux Falls to develop, that we have to seize these opportunities to do public/private partnerships and really maximize that value," Ketcham said.

Stehly and Starr both raised concerns over how the ramp would be paid for, and want to ensure that the public isn't paying for an economic development. Both mentioned their concern over use of the "second penny" which is used for capital projects, streets, building projects and more. Stehly said the city has already used it for so many other projects, like the Denny Sanford Premier Center and the new City Administration Building, that taxpayers need to be sure the money isn't coming out of their pockets for this project too.

Ketcham said it would not.

"We're not going to do tax-increment financing," he said. "If you use tax-increment financing, that means we're taking money from non-users to pay for this project. Our goal is to be 100 percent supported by users of the project from day one and that's what we're going to deliver next month."

A final concern both councilors, who voted against the project moving forward in March, was who would pay for what once the city and Legacy are in partnership together. Ketcham said a contract would also be presented to city council that will ask Legacy to be responsible for maintaining its private part of the structure and that the city will be responsible for the ramp only.