Informational Meeting

MINUTES Informational Meeting Tuesday, June 15, 2021 at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Members Present: Christine M. Erickson, Alex Jensen, Rick Kiley, Greg Neitzert, Marshall Selberg, Curt Soehl, Pat Starr Council Members Absent: Janet Brekke Council Chair Curt Soehl called the meeting to order at 4 p.m. 2. Councilor Remarks Council Member Pat Starr announced that he is an official member of the Multi- Cultural Center Board of Directors. He added that he attended their annual festival fundraiser and that there is a new executive director. 3. Presentations A. USD Discovery District by Bob Mundt, Sioux Falls Development Foundation President & CEO Presentation: Approximately 20 minutes followed by discussion Mundt began his presentation of a proposed shell space for the District, by stating that they are still in the planning stages for some of this project. He provided a brief history of the Discovery District, which was: established in 2001 as a University Center under the direction of the South Dakota Board of Regents; is currently managed by the University of South Dakota; in partnership with Forward Sioux Falls, the City of Sioux Falls, the South Dakota Board of Regents, and GOED (Governor's Office of Economic Development); and it includes the Community College for Sioux Falls, the USD Discovery District, and the Graduate Education and Applied Research (GEAR) Center. Mundt then reviewed their shared goals to: foster innovation focused economic development to keep South Dakota graduates in Sioux Falls/South Dakota; to strengthen the region's capacity to support, grow and attract innovation based bio-science and high-tech businesses resulting in new, high wage jobs (average salary of $68K) and a new tax base; and utilizing the collaborative resources of regional medical centers, regional education institutions and private sector partnerships to create a top-notch regional bio-sciences center in Sioux Falls. Next, he spoke about the current uses of the three buildings in the District. The USD Biomedical Engineering Program currently utilizes 22,000 square foot of building space in the District. They have had seven new Bio-Tech startups form and they helped to populate the City's Biomedical Industry. Additional space is  needed to lure others to the District. Mundt explained the challenges that they are facing for recruitment in the Bio-Science industry. The challenges include: having very little adaptable space to show interested parties; the need for adaptive space to fit the needs of prospects; proper ventilation systems; FDA Compliant Cleanrooms for Production of Commercial Therapeutics and Medical Devices; and proper lab space. Mundt indicated that there were a number of prospects, but he wasn't allowed to elaborate. Next, he spoke about the proposed 50,000 square foot shell research facility and reviewed the site plans. Mundt said there is still a lot of work to do and they are still putting the numbers together for the project. He said that they are working with developers and they hope to work with the City. Discussion followed regarding: the need for the community to diversify jobs and the economy; that this project has the potential to bring in some great jobs; expressions of support; noting the limitless possibilities of Bio-Science; the if you build it, they will come philosophy; prospects for the District; tough to get businesses on board with no facility to show them; the community college; what students need; comparisons with Foundation Park; how to get the State more involved; and putting a finance team together. B. May 2021 Financial Results by Shawn Pritchett, Director of Finance Presentation: Approximately 10 minutes followed by discussion Pritchett began by speaking about Labor Force & Employment, which is up 8% since November 2020. He said that there are significant labor challenges throughout the community, which the City is noticing through trying to hire part-time employees. Unemployment is at 2.6% for Sioux Falls, 3% for South Dakota, and approximately 5.7% for the country. Pritchett noted that last month we had the lowest insured unemployment rate for the entire country; and we are achieving levels lower than before the pandemic. Inflation is steadily increasing this year and was at 5% for May, which was up from 4.2% from April and 2.6% in March. Pritchett said a lot of the inflation is being driven by the Energy sector. The City continues to have record breaking building values. The Building Permits YTD Building Valuations were at $396M through May, which is $163M above last year. Sioux Falls YTD Residential Permits (Units) indicate 412 single family permits through May, up from 163 last year; and 902 permits for multi-family, which is up 233% from last year. There was some positive news regarding the Sales Tax Collections w/out Audits, which is a 13% growth in over two years. The cumulative 12-month rolling growth rate is 4.8%. Entertainment Tax Collections w/out Audits shows that we were down 50% in May 2020, Pritchett said we saw growth with an increase of 125%. We are up 18.6% compared to May 2019. The return of restaurants is a contributing factor, along with an increase in lodging. Industry Taxable Sales Data shows growth in retail manufacturing, wholesale trade, lodging, and drinking establishments. Pritchett said that we were down 80%, from May 2020, for Lodging Tax Receipts; and for May 2021 we are up 521.2%. Overall, we are up 20% from 2019. He said the expectations are for a strong tourism summer and for it to be a quieter fall, because business travel hasn't returned to its higher levels. The Lodging BID Tax Receipts are lagging from 2019. The General Fund - Revenues YTD shows 42% of the budget has been collected for $83M. The General Fund - Expenditures YTD shows that 33% has been expended, which is in line with the past, according to Pritchett.  Discussion followed regarding: inflation; the Federal Reserves and inflation being transitory; future investments and being kept in the loop; the American Reserves Act funds; housing inflation; and calculating occupancy for housing units. C. Update on the Workforce Housing Needs in SD Interim Study Committee by Jim David, City Council Chief of Legislation and Policy Presentation: Approximately 5 minutes followed by discussion David reported on a recent trip to Pierre to attend the committee meeting. He provided some background on the 19 member committee, which includes: Sen. Jack Kolbeck, Sen. Herman Otten, Rep. Jamie Smith, and Sen. Larry Zikmund, from the Sioux Falls area. The areas of expertise for the committee members include: realtors, homebuilders, bankers, landlords, appropriators, contractors, and more. Among the groups that presented at the meeting, were: the First District Association of Local Governments; the South Dakota Home Builders Association; South Dakota Housing; South Dakota Association of Realtors; Homes for South Dakota Affordable Housing; and the South Dakota Multi Family Association. Themes included the imbalance of supply and demand; and infrastructure. David discussed the State challenges to housing, which include: inadequate housing stock; infrastructure cost to local governments and home builders; limited land availability; unnecessary State and local red tape; limited workforce; and multi- family vacancy rates. The Black Hills have a 1.45% vacancy rate and Sioux Falls has a 6.65% vacancy rate. David also recapped some of the potential solutions. Among the ideas were: a Infrastructure Revolving Loan Fund; to expand Tax Increment Financing (TIF); Sales and Excise Tax Rebates; Neighborhood Rehabilitation Incentive - Discretionary Formula; expand the Governor's House Program; property tax deeds/delinquent property taxes; and a new classification for Multi-Family Property taxes. The next committee meeting will be held on July 14, 2021, in Rapid City. David mentioned the possibility of an East River committee meeting. Discussion followed regarding: appreciation for the report and information presented; the need to have a presence at the meeting; reasons for limited land availability; stimulus money; and the need for all hands on deck. 4. Public Comment There was none. 5. Executive Session A. Consulting with legal counsel or reviewing communications from legal counsel about proposed or pending litigation or contractual matters pursuant to SDCL 1-25- 2(3) The Executive Session was cancelled. 6. Adjournment Council Chair Curt Soehl adjourned the meeting at 5:10 p.m. Denise D. Tucker, MMC, Assistant City Clerk