Downtown rail yard property sale, TIF district gain approval from Sioux Falls City Council

A plan to redevelop about 4 acres of former downtown rail yard land into apartments, retail and office space earned approval Tuesday from the Sioux Falls City Council.

The council voted 8-0 to sell the land east of 8th & Railroad Center to Iowa-based Christensen Development, which plans at least a $95 million development there.

The concept calls for three multistory buildings plus a parking ramp and reflects the city’s downtown master plan vision, business development coordinator Dustin Powers said.

“We believe this project continues to leverage our property to meet the desired outcomes of the railroad redevelopment plan and complements the developments that have already been built in the area.”

The land will be sold for $1.66 million, the same cost per square foot that the Cherapa Place development paid for other parcels of rail yard property. Because the property was purchased with federal dollars, the money received for the land sale will be put toward a federal highway project.

The Sioux Falls City Council voted 7-1 to establish a tax increment financing district around the property.

“Based on the improvements there’s an estimated $750,000 in increased property taxes that would be a result of the development,” Powers said.

That increment is what will be used to pay for $8 million in qualifying costs including the parking ramp and site development. The developer will upfront the funds and be reimbursed through the TIF as property tax is collected.

“The taxes created by this project are what pay for the eligible project cost in the district,” Powers said. “We believe the project will substantially support the economic welfare of the city and state.”

All improvements must be made by the end of 2031, and more than 230 public parking stalls will be available with the project.

Christensen’s plan for the land includes a 60,000-square-foot retail and office building with retail on the first floor and four floors of Class A office.

The other two buildings will be apartments — roughly 300 units between them — with a rooftop indoor-outdoor lounge for development tenants. Both apartment buildings will have fitness centers and grilling areas.

Rents are being set to range from about $900 to $1,450 per month for studio through two-bedroom floor plans, intended as “workforce housing.”

There also will be an on-site dog park, bike and dog wash stations and bike storage, as well as potentially raised planter beds for gardening.

The first building is planned to start construction later this year and be done by the end of 2027. Construction of the apartments is estimated to take 14 months once it starts.

The development offers “very real, very tangible public improvements,” said Brandon Hanson, CEO of Downtown Sioux Falls Inc.

“The project itself does include affordable housing, something our entire community continues to need, particularly in the downtown area.”

Eventually the property taxes on the site “will increase significantly,” he added, in addition to sales tax generated by the additional activity in the area.

The downtown area has a track record that “properties that once generated minimal tax revenue are now producing exponentially more,” Hanson said.

In approving the plan, council member Curt Soehl said “the missed opportunities” to not develop the area “are huge” since the rail yard relocation was approved in the early 2000s.

“We can’t go another 20 years,” he said. “The city is not out any money. Taxpayers don’t lose any money … I’m really bullish on this project … it’s something we really need to move forward.”

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