SIOUX FALLS, S.D. - The Sioux Falls City Council voted to bring a plan to redevelop a portion of downtown one step closer to reality Tuesday night.
The city and Lloyd Companies are working together to redevelop a 1.75 acre lot at Second Street and Phillips Avenue. It's a site that seems to be the perfect location for redevelopment, but construction is going to come at a serious cost.
Many city officials call this area of town ‘blighted’.
Before construction can begin Lloyd Companies will have to spend an estimated $2.7 million on environmental cleanup and decontamination.
The city council cast their first vote Tuesday night to create a tax increment financing district for the project.
It might not be easy to tell from this view, but environmental contamination has kept this area of downtown Sioux Falls from flourishing.
“Prior to redevelopment of the property they will have to remove asbestos from buildings, and then they will have to demolish some of the buildings, and then they will be doing some cleanup of lead contaminated soil,” DENR environment science manager Kim McIntosh said.
Many years ago, this property housed a gas station and a salvage yard. There is contamination left behind from both of those businesses.
“This property and the and the whole Uptown has been contaminated for many years, and it has been vacant for over ten years, since the mid 2000's, and nothing has happened there,” Councilor Greg Neitzert said.
That’s why the council passed an ordinance to create a TIF for the project.
“A TIF is a tax increment financing. It's a way in which that the developer can get reimbursed for the extraordinary expenses in a project, particularly in this case, it's all of the contamination in the soil,” Neitzert said.
The city has big plans for the development.
“This is a $43.5 million development for a mixed use project, many apartments and there's going to be commercial on the first floor, and it's going to be quite an asset to our city,” Neitzert said.
And the developers say they need the TIF to complete the project.
“Given the risk that you have going in and taking that kind of work on and then the scope of the project…Without this TIF we can’t do what we are trying to do there,” Lloyd Companies Vice President of Real Estate and Investments Jake Quasney said.
The current property tax value for the area is $8,000.
When the project is complete, and the TIF expires, Neitzert says revenue for the city, county and school district would increase to more than $400,000.
The city council will cast their final vote next week to create a TIF for the project.