Corn Palace: Vital to economy, or just Mitchell's identity?

It demands attention with its colorful domes and spires, its intricate corn murals and the thousands of lights that illuminate it after sunset.

"Without the Corn Palace, we wouldn't be the community we are today," said the city-owned facility's director, Mark Schilling.

As Schilling and other city officials look to the future, discussions continue on all aspects of the effort to improve and expand Mitchell's iconic 91-year-old building in the hopes of revitalizing it and the historic downtown area. But with millions of the city's dollars at stake, questions have arisen as to whether the Corn Palace is as important to the city's economy as it is to the city's identity.

"The mistake we keep on making is we think it is economically critical to Mitchell," said Innovative Systems CEO and founder Roger Musick. He was also one of the leading critics of a proposed property tax increase to build an arena along Mitchell's state Highway 37 bypass in 2007, when voters rejected the idea.

Musick has gathered lots of data to support his point about the Corn Palace's weaker-than-perceived impact on Mitchell's economy.

For example, between June 2011 and November 2011 -- the tourism and pheasant hunting seasons -- taxable sales in Mitchell for lodging and food increased beyond what was normal for the rest of the year, which Musick attributes mostly to visitors. He estimated that visitor spending pushed taxable sales in Mitchell approximately $7.3 million higher during the visitor season, based on reports he gathered from the state Department of Revenue and Regulation. That $7.3 million accounted for only 1.4 percent of Mitchell's total taxable sales for all of 2011.

According to Musick, that's an indicator of the relatively small impact of the visitor industry and the Corn Palace on Mitchell's economy.

Musick argues the Corn Palace already meets Mitchell's needs as a civic auditorium, and residents should not be asked to fund expensive improvements that would only benefit tourists.

"The idea that a retired person at home should pay property taxes so the Corn Palace can have a better museum for tourists, I kind of have a problem with that," he said.

While Musick recognizes the Corn Palace's importance to Mitchell's identity, he said economic decisions should be based on facts, not perceptions.

"I have no problem doing things with the Corn Palace. It's a matter of how they should be funded and what things are important."

A $35 million Corn Palace expansion plan introduced in January provided city officials with an array of possible improvements, including a "Corn Tower" observation deck, additional seating, additional green space around the facility, and the conversion of the adjacent City Hall into space for new exhibits. While many of the ideas were well received by the public, the cost was not.

"Everybody agreed that the $35 million price tag was way too high," said Mitchell City Council President Jeff Smith.

A slimmed-down proposal, estimated to cost between $10 million and $12 million, will be discussed at an upcoming special meeting June 11, Smith said.

While many studies have focused on physical improvements to the Corn Palace over the years, apparently no study has been conducted to determine what economic impact the potential improvements to the Corn Palace might have. Smith said that is a possibility in the future.

The city of Mitchell has approximately $1.7 million in cash that could be used for a project such as improving the Corn Palace, and more than $70 million in bonding capacity, according to numbers presented to the City Council by Finance Officer Marilyn Wilson on April 9.

Another possible funding source could be found if a number of Mitchell's businesses agree to be part of a business improvement district. Businesses located in the BID would pay a voluntary tax to fund improvements in an attempt to increase commerce in the area. Smith is open to the creation of a BID to fund improvements at the Corn Palace, but said a majority of the businesses in a proposed district would have to agree before one could be created.

Musick said it would be a "huge mistake" for the city to fund Corn Palace improvements without the help of affected businesses.

"If the people that are going to benefit won't support it, why would the taxpayers want to support it?" he asked.

While the Corn Palace's role as a city auditorium warrants the use of some public funds, Musick said, the tourist industry in Mitchell should be responsible for funding future tourism enhancements at the facility.

Bryan Hisel, executive director of both the Mitchell Area Development Corp. and the Mitchell Area Chamber of Commerce, claims even enhancements meant for tourists "add a certain pride and quality of life for residents."

"What community wouldn't want 250,000 to 300,000 people coming to their downtown? That is what happens in Mitchell," Hisel said. "If they find interesting things to do, they will stay a little longer. That's what we're seizing at."

Due to the presence of a tourism industry in Mitchell, Hisel said, millions of dollars have been privately invested in building up the retail and restaurant industry to the benefit of the entire community.

"It adds a certain vitality to our economy that is the envy of a lot of other cities," Hisel said.

In 2011, Mitchell had the highest amount of taxable sales per capita among South Dakota's largest cities, at about $34,429 per person. Hisel attributes a significant portion of that spending to visitors. Rapid City was the next highest among the state's largest cities at $33,935 per person.

Looking beyond the largest cities, Wall, with a population of 766 as of the 2010 census and more than $90 million in taxable sales in 2011, had about $117,697 spent per person in the city last year. Wall is home to Wall Drug and is located on I-90.

"We look like a tourist town," Hisel said. "If you just look at the data, you can't tell if Mitchell is in the Black Hills or not."

To continue attracting tourists, Hisel said Mitchell should continue to invest in projects like the Corn Palace renovation.

"We really have more potential if we offer them more," he said.

Spending last year in Davison County on lodging, transportation, shopping, food and entertainment -- the categories from which "visitor spending" is estimated -- represented about 4.6 percent of total sales in the county, according to a state Department of Tourism report. Visitor spending in Davison County totaled about $104 million in 2011, the report says. The figure did not differentiate between out-of-state tourists and local visitors.

Tourism was the third-largest private industry in the state in 2011, representing about $3.7 billion in expenditures and generating approximately $271 million in state and local government revenue, the report says.

But while the visitor industry has grown across the state, with expenditures increasing 2.7 percent in 2011, the number of visitors at the Corn Palace has been in decline. According to Schilling's records, attendance at the Corn Palace declined from 336,480 visitors in 2010 to 294,106 in 2011, a 13 percent drop.

Schilling is hopeful a renovated Corn Palace would encourage more tourists passing by on Interstate 90 to stop more often and stay longer, thereby bringing more dollars into the community.

"Even if it's a stop for an hour, we can entice visitors to stop off the interstate rather than drive by," he said.

While Musick agrees bringing tourists to Mitchell does inject some money into the economy, he claims I-90 is just as responsible as the Corn Palace, if not more responsible, for bringing visitors to Mitchell.

"Mitchell residents view the economic impact of the Corn Palace much higher than it actually is," he said.

He compared the decreased relevance of the tourism industry in Mitchell to the past importance of the meatpacking industry in Sioux Falls. As health care and finance became the dominant industries in Sioux Falls over the past 50 years, he said, the city transformed its image to match the change.

"We've never really done that in Mitchell, and I think we should," Musick said. "Not that we should deny having the Corn Palace, but it's just not a huge part of our economy."

According to statistics gathered by Musick, about 19 percent of Mitchell's workforce is employed in construction and manufacturing, and another 12 percent is employed in the financial and information industries. Both segments of the workforce have an average annual salary of more than $37,000.

He compared those statistics with others that show the 13 percent of Mitchell's workforce employed in leisure and hospitality services have an average annual salary of slightly more than $11,000.

The Corn Palace itself has eight full-time employees and hires a total of about 50 part-time employees throughout the year, according to Schilling.

Musick said more attention should be paid to creating quality jobs in the city.

"Our biggest challenge in the next decade is getting more people to move to Mitchell," he said, adding that the existence of the Corn Palace is not a reason people move to the city.

"No one is going to move to Mitchell for that kind of job," Musick said.

Hisel said the tourist industry provides jobs for Mitchell's young high school and college students, and older residents not ready for full retirement.

"We don't want to pretend the Corn Palace drives the Mitchell economy itself," Hisel said. "It's additive."

Mitchell Main Street and Beyond Executive Director Molly Goldsmith announced earlier this month her organization is accepting proposals from design firms relating to a project to renovate the "landscape and streetscape" of Mitchell's Historic Commercial District. She said Mitchell Main Street and Beyond's project and the effort to renovate the Corn Palace, while technically separate, "pair together well."

"I'm hoping that people are beginning to realize our downtown needs to be appreciated," she said, and added each project has the goal of improving Mitchell's economy and its sense of community pride.

Hisel said making the experience at the Corn Palace great for everyone, while at the same time building local pride in the area, could become the most important part of the entire project.

"Sometimes the intangibles are more important than the actual dollars," he said.