Rapid City Officials Hope To Fund New Arena With Unique Fund

Apr 12, 2018

Credit Visit Rapid City

On June 5, Rapid City voters decide whether to build a new arena at the Rapid City Civic Center complex.
 
The $130 million for the new arena would come from a unique funding source, in fact, it’s the same fund created to build the civic center in 1975.
 
However, just like in 2015, the last time voters turned down a new arena, not everyone is convinced on the project.

City leaders must at least repurpose the Barnett Arena and make the 40-year-old building comply with current accessibility requirements.

However, Rapid City Mayor Steve Allender says a new arena would make the city more competitive for a few of those dozen sold out Garth Brooks shows in Sioux Falls and Billings, Montana.
 
The $130 million is a steep price tag for many, but the mayor says they’ll pay for the arena without raising taxes. They’ll finance it with what’s called The Vision Fund.
 
“The Vision Fund originated in 1972, three months before the Rapid City flood," Allender says. “Taxpayers voted to impose a half cent sales tax on themselves for the purpose of building a civic center complex. Another 1 percent sales tax, visitors tax, what’s affectionately referred to as the Bed, Booze and Board tax.”
 
Then came the water that delayed construction of the civic center until 1975. Two years later, the project was completed and Elvis Presley was whisked into the Barnett Arena for it’s inaugural show.
 
“That original half cent sales tax had a sunset clause,” Allender says. “So, that half cent reverted.”
 
Allender says the city managed to pay down its debts 20 years later, and the half cent sales tax went away.
 
In 1992, city leaders resurrected the half cent sales tax for a 20 year plan they called Vision 2012.
 
“That was drafted for important community projects, including infrastructure and whatever else the citizen committee would deem as a priority," Allender says.
 
That list, over a 20 year period, is exhaustive
 
Today, that half cent sales tax remains and is simply called the Vision Fund.
 
“In 1972, when the tax was first imposed, it brought in about $400,000 annually,” Allender says. “Today, it brings in $11.8 million.”
 
Allender says that number has grown by 2 percent over several years.
 
Under the new arena plan, the city hopes to use half of the annual vision fund collections, roughly $6 million, for the sale of over $110 million in municipal bonds over thirty years.
 
The arena plan voters said no to in 2015, was more expensive and would have used 100 percent of vision fund collections. Allender speculates that’s part of why people rejected the project.
 
“It was not very safe, because if we would have had another great recession we would not have been able to make that debt payment,” Allender says.
 
Using just half of the annual collections from the Vision Fund for a new arena, that leaves approximately $5.8 million for funding other community projects.
 
“You can buy a lot for that 5.8 million dollars," Allender says.
 
But some residents say the left over money won’t leave much for community projects going forward.
 
Tonchi Weaver is with South Dakota Citizens For Liberty. That group successfully referred a council decision to raise city water rates over the next five years. They did the same for the council’s vote to build a new arena
 
Weaver says people feel very strongly about the arena decision.

“The most common comment we heard during this time is ‘the city is not listening to us,’” Weaver says. “’We have spoken before.’ While we were gathering signatures to refer the water rates resolution, we really heard, more than anything, ‘I hope you do the same thing when it comes to the civic center, because we already voted on that and we said no.’”

Weaver, and the group Citizens For Liberty, are handing out a cost analysis for a new arena that’s at odds with the city’s numbers, alleging the project will cost at least $50 million more, with a higher interest rate.
 
Weaver won’t say who crunched their numbers. She says the person hopes to remain anonymous because they do significant business with the city.
 
“Our goal is to get as much accurate and honest information to the public as possible,” Weaver says. “I think that’s the only way you can make a good and informed decision when you go to the polls.”

Citizens For Liberty is hosting a public open forum on May 1, with Mayor Allender to discuss a new arena.
Weaver says she’s leaning towards updating and renovating the Barnett Arena, but hasn’t made a final decision.

If voters turn down the proposal for a new 12,000 to 13,000 seat arena, the city will still spend anywhere from $25 million to $26 million renovating the Barnett Arena to bring it up to compliance with the Americans With Disabilities Act. Mayor Allender says that will result in less seating and be a major expense.
 
He says a new arena is an investment on the next 40 years of Rapid City.