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Two years in, BID tax helping fund downtown improvements despite some opposition

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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)

After two years of paying a special assessment tax to help beautify their Main Street buildings, property owners are being awarded for improving downtown aesthetics.

As historic buildings in the heart of downtown Mitchell have aged over the years, some leading to more severe eyesores than others, Main Street has been in need of an aesthetic makeover. In an attempt to begin enhancing and revitalizing downtown, Mitchell Main Street and Beyond orchestrated the creation of a special assessment tax two years ago that’s now known as the Business Improvement District (BID) No. 3. Since then, just over 70 properties located within the BID boundaries have been subject to pay a special assessment tax that is being redistributed to those properties with the goal of improving the downtown area.

The first group of property owners to receive the funds generated from the BID were recently awarded with their checks. 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, owner of The Little Red Hen, was awarded $2,700.

“It’s really for exterior building improvements and primarily facades. And that can be siding, windows and signage,” said Dan Beukelman, president of the Mitchell Main Street and Beyond Board. “We did add roofs, even though they are not necessarily visible from the street, it is still a vital building structural component that has to be done. This is a great way for Main Street businesses to show they are investing in downtown and their buildings.”

The funds from the BID tax helped contribute to the Doerr family’s building renovations at The Collective, which was recently revamped. The 316 N. Main St. building used to be the home of The Framer, but the Doerr’s have transformed the property into a modern multi-use space that’s been widely used already.

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The Little Red Hen has also made noticeable improvements to the building with a new-look facade. Although the renovations at Cherrybees are less noticeable, the roof had extensive work done to it, which Beukelman said was recently included as a building improvement under the BID guidelines.

Beukelman has helped oversee the city-appointed BID board -- which is responsible for selecting the participating BID applicants and awarding the funds generated from the tax -- but he is a non-voting member. After the Mitchell City Council and downtown property owners in the district gained enough votes to establish the BID tax in May 2018, former Mayor Jerry Toomey appointed the board members and looked to former Mitchell Main Street and Beyond President Jeff Logan as the leader of the BID board, who is still serving in the role.

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 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. If all of the property owners in the BID are paying their special assessment tax, it should generate roughly $48,000 per year. However, Beukelman said not all have paid.

According to the city's records, in 2019, the first full year the BID was in effect, the tax generated just over $39,443, roughly $9,000 shy from the anticipated $48,000 that was projected in the scenarios that all the property owners were up to date on the payments. For 2020, roughly $16,390 has been generated thus far.

According to Beukelman, applicants who have been up to date on their payments will have an opportunity to apply for the funds needed to make their desired building improvements every six months.

“They have to submit a three-page application explaining the project, along with submitting contractor estimates to show what it will cost. Then they get approved, do the work and then receive the money,” Beukelman said.

While the BID tax narrowly passed in May 2018 with just over 50% of the downtown property owners within the boundaries of the BID voting in favor, some business owners remain opposed to the BID tax.

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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. While Iancu said he understands the purpose of the tax, his patience for seeing downtown improvements has been wearing thin.

After taking a hit from the economic downturn brought on by the pandemic, paired with paying his standard property taxes and the BID tax, Iancu aired out his frustrations with the BID tax during a recent City Council meeting.

“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 meeting. “Yes, I agree to revitalize the downtown area, but not by impoverishing businesses and burdening them with tax, especially at this time of year when tourism has been down by 40 to 60%.”

Considering the steep decline in tourism and foot traffic in downtown, Keke Leiferman, owner of the Back 40, encouraged the council to provide some leeway on the BID tax.

“With COVID-19, I know I have talked to a lot of the restaurants and businesses downtown, and it’s going to be a huge hardship to pay that,” Leiferman said during a recent council meeting.

For the property owners who are opting out of paying their BID taxes, Beukelman said their applications to receive funds won’t be approved until they are caught up on the payments.

Streetscape project

Over the past several years, talks of the city constructing a streetscape have heated up. Beukelman said there are plans to utilize the money that is generated through the BID tax for adding three more blocks of streetscapes to downtown that would closely mimic the existing Sixth Avenue and Main Street streetscape

“The group (BID board) has decided as a whole to set about half of that money aside for eventual streetscape improvements,” Beukelman said.

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While the BID was largely created to incentivize downtown businesses and property owners to invest in building facade improvements and exterior work, the funds are also intended to add park benches, light poles and planters.

At a recent City Council work session in August, the streetscape project was included as one of future capital improvement projects that the city is seeking to complete in the next few years.

Clarification Note: A photo that was previously attached to this article showed Hardcore Inc. located at 320 N Main St. which sits near The Collective at 316 N. Main St. Hardcore Inc. did not receive any Business Improvement District funds, rather The Collective did receive the funds. That photo showing Hardcore Inc. next to The Collective building has been removed.

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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