Brookings Marketplace decision in voters' hands on Tuesday

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BROOKINGS — Plans of developing the land near Interstate 29 now known as the Brookings Marketplace have come and gone over the years with no tangible results — but the newest plan, dangling the prospect of a new major grocery store in the form of an Aldi, hopes to make years of dreaming into a much more substantial reality. 

Voters will have the final say in the matter, with polls open Tuesday from 7 a.m. to 7 p.m., in a referendum on the City Council’s decision to sell the front 10 acres of Marketplace land to Minneapolis-based developer Ryan Companies. The firm is negotiating with Aldi, and has contacts with other businesses, to build on the four sites it plans to initially develop. The land in question is just east of Sixth Street’s interchange with Interstate 29, on the north side of the street.

The 10-acre deal reached in November is an amended version of the initial agreement with Ryan in February 2023 that involved 18.53 acres of the 26-acre Marketplace land. The new deal has raised concerns among some Brookings residents, particularly developers.

The issue was sent to a special election via a petition process, an unusual step in Brookings, with one side making a fairly fringe ideological argument while the City Council and others argue they’re simply — and finally — trying to get a project done that began nearly 20 years ago.

Poll hours, locations

• Voters can cast their ballots on Tuesday from 7 a.m. to 7 p.m. Vote centers are at the Brookings Activity Center, 320 Fifth Ave.; Bethel Baptist Church, 714 17th Ave. S.; and Holy Life Tabernacle Church, 241 Mustang Pass.

• Early voting continues through today from 8 a.m. to 5 p.m. at the Brookings City & Government Center, 520 Third St.

• A “yes” vote will allow the sale of 10 acres of city-owned land to Ryan Companies for subsequent development. A “no” vote will prevent that sale from occurring.

“People should want their government to make the best decision both in terms of fiscal responsibility and growth for the community,” Jacob Mills, vice president of development at Mills Development, said in response to questions from the Brookings Register.

He believes the 10 acres of land the city is selling is worth more than $609,840, especially due to those acres being next to Sixth Street.

“Selling the best, most valuable 10 acres of frontage land, for the average value price of $1.40 (per square foot) is not fiscally responsible,” Mills added, pointing out that, in 2001, those acres were appraised at $2.29 per square foot when the land was still owned by the South Dakota Department of Transportation.

The land has been appraised at numerous different numbers throughout the years and for numerous different parcels — not surprising considering the 2008 financial crisis occurred in the years before when the city first acquired the land and this attempt to sell.

Mills also contended that, beyond the initial purchase price of acquiring 26 acres of Brookings Marketplace land, the city also incurred other, related, costs over the years. These include when it sold other land at a loss to the DOT on 34th Avenue north of the U.S. Highway 14 Bypass, where the state agency subsequently built a new facility, and contract costs related to previous, failed development efforts.

City Councilor Nick Wendell, in a counterpoint, said the city isn’t on the losing end of anything. 

“The city won’t be losing money through the sale of the initial 10 acres of the Marketplace development. Not only is the city selling the land at the original purchase price per square foot, we’re also securing a development partner who will be investing millions in storm water mitigation and infrastructure (water, sewer, streets) installation,” he said. “In addition to proceeds from the sale and the city not taking on the initial risk of making the land developable, just the addition of a third grocery store is forecasted to generate more than $150,000 in additional sales tax revenue every year. The city will be reimbursed all costs incurred through the land sale, generated sales tax, and incentives.”

Times have also changed since 2001. The state DOT no longer occupies the site, its maintenance building and fueling tanks having been removed and “soil corrections” conducted, per a story in the Dec. 7, 2013, edition of the Register. The city has owned those 26 acres since late November 2013, having purchased the land from the DOT for $1.6 million, or $1.41 per square foot. There’s no longer a frontage road paralleling Sixth Street following that road’s closing when Whiskey Creek grill opened. Another change? An appraisal in 2022 valued the land at $1.37 million, or $1.20 per square foot.

One thing, though, remains the same, and that’s the lack of infrastructure within the Brookings Marketplace. Documents from the city indicate it will cost Ryan roughly $10.3 million on those front 10 acres alone — $20.50 per square foot by the time you add in the land purchase price — to build infrastructure to support the four pad-ready sites the developer is planning. A tax increment financing district would help with those costs, if it were to be approved at some later point in time.

Government role 

The referendum has also brought up the question of what role government should, or shouldn’t play, when it comes to economic development, land prices and so on. 

“The goal of government in development should be to support development happening anywhere in Brookings, not on a specific location that they own,” Mills said. “Picking an individual site, competing against other property and artificially selling land below market value are damaging to the free market.”

But, of course, the city already owns this land, and has had it slated for possible development for more than 20 years. The city also has a vested interest in securing businesses that will stop so-called leakage — a longstanding geographical problem in Brookings whereby shoppers take their dollars, and subsequent sales tax, down Interstate 29 to shop in Sioux Falls.

It’s also important to note, the city of Brookings owns this land already. A no vote will only kill this deal and this development, not force the city to auction off the land.

Wendell added his thoughts as well.

“I don’t believe land prices will be disrupted through the sale of this property. Appraisers and developers have consistently identified the unique nature of this raw land,” he said. “It was purchased at $1.41 per square foot in 2013. It was appraised at $1.20 per square foot in 2022. It is being sold at $1.40 per square foot in 2024, within an acceptable range relative to its appraised value and purchase price.” 

Importance

Mills and Wendell said the referendum is important and that, whatever its outcome, the residents of Brookings will benefit from it.

“This decision also involves millions of dollars of land value and transfer of significant public assets, so I would say it is important for a higher level of scrutiny and transparency,” Mills said. “The referendum has produced a lot of discussion and information on this subject and the council has been explaining their decision more, but only because of the referendum. This type of civic engagement is good, regardless of the outcome of the vote.” 

Wendell said, “I can assure Brookings residents that the City Council was thoughtful in our decision to amend our original agreement with Ryan Companies, especially after having previously worked with a regional and local developer team. 

“The amended agreement maintains the same sale price per square foot as the original agreement, affirms that Ryan Companies will be taking on the risk and multi-million dollar initial investment in infrastructure costs to make the property developable, and increases the likelihood we’ll be able to attract new national retailers — including an Aldi grocery store — to Brookings.”

Support for the land sale extends beyond the City Council as well, with backing coming the Brookings Economic Development Corp. Its focus is on increased tax revenues, which would help Brookings pay for a variety of things, including better streets, policing and parks and rec initiatives. 

“The city of Brookings relies heavily on sales tax receipts to fund services that create a high quality of life that we all enjoy,” BEDC CEO Tim Reed noted at a City Council study session on Jan. 16. “Workforce recruitment is critical considering Brookings’ low unemployment rate and projected growth of industries and businesses.”

He concluded, “Retail choice and quality of life are important when attracting new residents to help solve our workforce issues.”

If the referendum on the 10 acres passes, Patrick Daly of Ryan Companies said the goal is to have buildings open and in operation for business 12 to 18 months following commencement of construction later this year. 

— Contact Mondell Keck at mkeck@brookingsregister.com.