Three years in, downtown BID tax sees steady drop in money collections

“Last year the direction not to be very aggressive on that was due to COVID-19. We really haven’t come out of that approach yet,” City Attorney Justin Johnson said in regards to the protocol to handle property owners who haven't been paying their BID taxes.

The Little Red Hen, located at 314 N Main Street, in downtown Mitchell was one of three businesses awarded as a result of the BID tax. (Matt Gade / Republic)

While some downtown property owners have been subject to pay a special assessment tax for the past three years to beautify Main Street, there’s been a steady decrease in payments.

According to Finance Officer Michelle Bathke, a total of $24,579 has been collected this year from the special assessment tax that’s known as the Business Improvement District (BID) No. 3, marking a $12,453 decrease from the 2019-2020 collections. The BID tax was created three years ago by Mitchell Main Street and Beyond to help property owners in the downtown Mitchell area fund aesthetic improvements to their buildings.

Although some property owners have been steadily paying their portion of the BID tax, a handful of others haven’t. However, the city has yet to drum up an enforcement protocol for property owners who are in the BID tax boundaries, which City Attorney Justin Johnson said is mainly due to the pandemic.

“Last year the direction not to be very aggressive on that was due to COVID-19,” Johnson said during the Sept. 7 Mitchell City Council meeting. “We really haven’t come out of that approach yet.”

If every owner of the roughly 70 downtown properties in the BID boundaries successfully paid -- which mainly entails Main Street, stretching from The Depot to the Little Caesars area -- it would generate roughly $48,000 per year.


But several property owners have voiced their frustrations with the tax, some of whom cited the economic slowdown brought on by the pandemic over the past year and a half. In 2018-2019, the first full year the BID tax went into effect, there was a total of $41,386 collected. The following year in 2019-2020, just over $37,000 was collected, marking a slight decrease from the previous year.

According to the BID guidelines, every downtown property located within the boundary of the BID is subject to an annual special assessment tax based on the assessed valuation of the property. Broken down further, the BID tax calls for property owners who own commercial buildings located within the boundaries to pay a special assessment tax of $5 per $1,000 of the assessed valuation.

For example, if a property in the BID boundaries has an assessed valuation of $75,000, the respective property owner would pay $375 per year for the special assessment tax.

While the BID tax narrowly passed in May 2018 with just over 50% of the downtown property owners within the boundaries voting in favor, some business owners are opposed to the BID tax and have spoken out against it in recent years.

Otinel Iancu is one downtown business owner who is pushing back on the BID tax, mainly due to the financial burden he said it’s caused him while trying to keep his religious-themed store afloat. For Iancu’s business, Valtiroty Shiloh's Tabernacle, the BID tax came out to a total of $1,124.98 for 2020.

“How do we revitalize this area if we add a burden that is already high? For example, I’m paying almost $5,000 in taxes already. Now you want to add $1,400,” Iancu said to the council during the Sept. 8, 2020 council meeting.

According to the city’s records of the BID, some of the largest annual tax amounts in the BID boundaries range from $1,400 to $2,800, while some are as low as $120 to $300. The recently approved 2021 assessment shows the Navin Apartment Complex on the corner of First Avenue and Main Street is looking at a $2,743 assessment tax, while the Midtown Plaza building on Main Street sits at $2,883, which are among some of the highest amounts in the BID boundaries.

Process of awarding funds from BID tax

For some of the property owners who have successfully paid their annual BID tax, the money collected has been redistributed to them, helping several property owners make noticeable improvements to the exterior of their Main Street buildings, including façade work and roof repairs.


City Administrator Stephanie Ellwein said the BID Board, which is made up of local business leaders and residents who are appointed by the council, has made three rounds of awarding downtown properties since the tax began in 2018.

“Out of the $100,570 collected, they have awarded about $52,000,” Ellwein said. “They submit their costs, and the BID Board decides how much of the expenses they are going to cover. I’ve seen some of the applications, and some of them are not the full cost being covered by that grant.”

Among them are Richard and Betty Anderson, owners of Cherrybees Floral and Gifts, who were awarded the most money with $9,250. Matt and Micaela Doerr, owner of The Collective, were also awarded $7,000, while Cathy Weber, former owner of The Little Red Hen building that was recently sold and is now Q Jewelry, was awarded $2,700. Charlie’s Shoe Repair is another recent property awarded funds from the tax, which has been used to give the front of the building a new makeover.

Dan Beukelman, president of the Mitchell Main Street and Beyond Board, said some of the money collected from the BID tax is being allocated to fund the city’s streetscape project that’s set to bring green space, planters and curb and gutter improvements.

While Beukelman is not on the BID Board, he’s been serving as a liaison to oversee the grant awarding process. During the recent council meeting, Beukelman broke down the process the BID board follows in deciding which property owners who submitted plans to receive some grant funds are awarded.

“We’ve reserved some money for those goals in the streetscape project like bike racks or benches and planters and whatever comes with the streetscape project,” Beukelman said. “The information we’ve portrayed to people is that you can apply as often as you want, but that doesn’t mean you’ll win every time, or ever win.”

Since the tax went into effect, Beukelman said “nearly everyone who has applied has been awarded some funds.”

“They’ve been trying to take a careful, measured approach based on who applies and how much they ask, but also how many dollars are available,” Beukelman said.


Downtown property owners in the Business Improvement District (BID) tax will be entering their fourth year of paying into the special assessment tax. (Matt Gade / Republic)

Sam Fosness joined the Mitchell Republic in May 2018. He was raised in Mitchell, S.D., and graduated from Mitchell High School. He continued his education at the University of South Dakota in Vermillion, where he graduated in 2020 with a bachelor’s degree in journalism and a minor in English. During his time in college, Fosness worked as a news and sports reporter for The Volante newspaper.
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