DEADWOOD — The Deadwood City Commission June 21 approved a Memorandum of Understanding with TRD, LLC for the Preacher Smith Property, also known as “The Ridge” development in regard to a proposed annual appropriation Tax Increment Financing (TIF) of $10.5 million.
The estimated project amount of acquiring, developing, financing, and preparing the property for sale or lease is more than $13.9 million, with an estimated $10.5 million of those TIF-eligible costs.
TRD, LLC is the development company on the project, owned by Randy Horner of Bismarck, N.D., and Larry Cottier of Deadwood.
The Preacher Smith tract is platted as 679.49 acres. The budget submitted for TIF jurisdiction indicates three phases: phase 1, phase 1a, and phase 1b. The land is proposed to be developed into residential, multi-family and retail/commercial.
As indicated in the MOU, the city will require an ongoing administration fee of 10% of the total increment received on a yearly basis. The total amount projected for the administration fee will not exceed, $1,050,000.
A TIF is used as an economic development tool and can be explained like this: It is a public financing system that uses future increases in property tax to reimburse the costs of public improvements built within a designated TIF boundary. The value of all the properties inside the district is assessed or calculated and the total amount of property tax generated by all those properties is noted — the base amount of property tax revenues. All property revenue above this base amount, for the life of the TIF, is captured by the TIF to refund the costs of the public improvements or project. This amount — the amount over the base — is called the “tax increment.” Over time, property values are presumed to increase in part due to infrastructure improvements brought about by the TIF project itself. When the TIF is retired, the total taxation values revert to the original taxing entities.
Deadwood-Lead Economic Development Director Kevin Wagner addressed the commission, saying the MOU is the next step in the process for The Ridge subdivision.
“I feel you’ve done due diligence. You definitely listened when we had our first conversations. I appreciate the 10%. That is critical for the city to be able to think about engaging something of this cost. I’m hoping that everything moves forward. I’m hoping that you already have contractors lined up because they’re not available. I feel that this is going to be an amazing addition to our town.”
Commissioner Gary Todd said he wished to comment.
“You know how concerned I am about TIFs,” he said. “I truly feel that we’re over-TIFfed,” Todd said. “Toby’s (TIF Consultant Toby Morris of Dougherty and Company) recommendation, this should be it. I mean, we’re there. We’re TIFfed out. Whether or not we even approve this one. I’m a little bit concerned about, if we make this commitment, are we going to follow Toby’s recommendation and put a moratorium on our TIFs, so that future projects that are out there, we know there’s several of them, that are going to be coming and asking for TIFs. This TIF is going to be part of our future. As far as I’m concerned, I love the project … but I think if we do this one, we need to say, ‘that’s it.’ We can’t do any more.”
Mayor David Ruth, Jr. suggested first addressing the TIF then following up with direction for staff to prepare documentation to adopt as a resolution.
Martinisko said she agreed.
“The dollar amount is painful, but the fact that for once, the city is going to be getting at least their administrative costs out of this each year, as we go, granted, it won’t be a whole lot to begin with, but at least we’re getting a fee for us,” she said. “We’re not just sitting here for 20 years, waiting for it to go away.”
Todd said on this particular TIF, the city is going to incur some costs.
“So, the 10% will certainly help, so I can appreciate that, but I just have been asking the question, ‘What’s in the future for the future generations?’” he said.
Commissioner Charlie Struble thanked the developers for investing in the community.
Ruth asked staff to start preparing documentation for the commission to address the city’s TIF status.
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