The Pierre City Commission is considering a new Tax Increment Financing (TIF) District for the development of an apartment complex in northeast Pierre.
This fall, Stencil Group, a Sioux Falls-based developer, presented a plan to build a 100-plus unit apartment complex immediately southwest of City Hall. To make the development financially feasible, Stencil is requesting a TIF. A TIF is an economic development tool that allows a portion of the property tax collected within the district to be used for a limited amount of time to help finance the project.
Pierre’s Planning Commission has reviewed Stencil’s TIF project plan and district boundaries and recommended City Commission approval.
“The TIF plan requests a little more than $1.2 million in deferred taxes,” said Twila Hoffrogge, City Finance Director. “Per the request, the TIF sunsets in 20 years. However, estimates indicate the debt will be retired in about twelve years, allowing the school, the county, and city to benefit from that property tax increase as soon as 2035.”
The payoff is expected to be fulfilled early because Stencil only anticipates using about $762,000 of the eligible $1.2 million TIF tax deferment.
“Stencil plans to use only the TIF dollars it absolutely needs,” said Hoffrogge. “At this point, costs and other funding indicate they won’t need to utilize the full $1.2 million of eligible TIF dollars.”
Pierre Mayor Steve Harding says that the community has been asking for additional housing stock and Stencil is delivering.
“We have a private company that wants to invest in our community and has found space to build,” said Pierre Mayor Steve Harding. “This is an injection our housing stock has needed for more than a decade.”
The worth of the undeveloped land is estimated at $80,609; once the apartment complex is complete, the property value is estimated to increase to $21,300,000.
The City Commission will bring the proposal back to the commission on Dec. 5 for further consideration and action.