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Was the Downtown Parking Ramp just a ‘SHAM’ from the beginning?

I never did have a good feeling about the project and told several city councilors that the hotel will never be completed, then I hear this;

“The NMTC is a highly competitive economic development program, which incents private investments in the poorest rural and urban communities in America,” Rapoza said in a statement. “To receive NMTC allocation from the Department of Treasury and participate in the program, community development organizations demonstrate a record of financing dynamic projects that improve services such as health care, or create jobs and opportunity in communities where capital is difficult to obtain from conventional lenders.”

Low paying hospitality jobs is hardly a good reason to give such a project tax incentives. This deal was doomed from the beginning and any city official/employee who supported this, worked on this or voted for this should be ashamed and should resign.

UPDATE: Downtown Parking Ramp a bad deal. Yah think?!

We have all heard the story tonight, and Detroit Lewis saw this coming. I predicted early on “There will never be a hotel built at that site.” Trust me, I hate being the ‘I told you so’ guy, but this was obvious from the beginning. I will leave you with my public scolding tonight at the city council meeting.

UPDATE: The city just sent this out;

CLARIFICATION: The City of Sioux Falls has not ruled out private development at this site in the future. At this time, we are focused on the completion of the parking ramp portion of the project.

Today, the City of Sioux Falls provided the Village River Group (VRG) with a notice of termination of their development agreement and ground lease for the Village on the River project.

On December 29, 2017, the City entered into a development agreement for construction of a mixed-use development including a public parking ramp and private hotel with leasable retail space.

The City has invested significant time and resources working with VRG in furtherance of performance of the development agreement.

On April 1, 2019, the City notified VRG that it was in default on the Village on the River project. In accordance with the development agreement, VRG had 30 calendar days to cure multiple defaults. VRG has failed to cure these defaults within the development agreement’s cure period or at any time thereafter.

The project can and will proceed as a stand-alone parking ramp which will alleviate parking challenges within downtown Sioux Falls.

Consistent with protecting taxpayer interests, the City has reserved any and all of its legal remedies available to it under the terms of the development agreement.

In other news, at the Informational meeting, councilor Brekke read her letter to the editor that Cory Myers, News Director of the Argus Leader refused to publish;

May 6, 2019

Letter to the Editor

From: City Councilmember Janet Brekke

I am writing in response to the recent letter to the Editor by Former Councilmember Rex Rolfing and the May 5th Argus Leader Editorial. In my opinion both articles missed the point.

In today’s environment of good versus evil, winners versus losers, or us versus them, frameworks it is plain to see that the Sioux Falls City Council is suffering from the same ultra-polarization that is immobilizing our Federal Government.

The problem that arose with the City Council’s hiring of an Internal Audit Manager has very little to do with the candidate that was ultimately selected. Ultimately the failed discussions and subsequent actions are symptoms of a larger problem.  The larger problem is the City Council’s inability to discuss any divisive problem in a deliberative open minded manner.

Since I joined the City Council last year I have tried to promote and adhere to good government procedures and practice: Decorum, Ethics, Roberts Rules of Order, Open Meetings and Open Records laws. So why does process matter? I believe good process matters because solving complex problems calls for creativity and collaboration, in ways that us versus them, winners versus losers, and good versus evil, do not. In a political context the idea that the good need to simply destroy the evil as we were taught in the movies of our childhood simply does not apply. Affixing blame and demonizing individual councilmembers is counterproductive.

We all have a role to play in our dysfunction. Ron Brownstien, CNN Sr. Political Analyst spoke at the National League of Cities about Congressional polarization on the health care issue. He said both sides claimed they could not talk about the issue because they were too far apart.   Brownstein’s suggestion, “Being far apart on an issue is not a reason to refuse to discuss an issue. Rather being far apart on an issue is the very reason you begin discussions.”  The City Council needs to engage in a deliberative process where we interact and listen to each other. I believe each of us has a valuable perspective to bring to the discussion. We need to work on our ability to collaborate and compromise. If we cannot take the time and effort to work to achieve consensus on hiring an Internal Audit Manager how can we expect to solve the complex problems facing the City. This us versus them mentality serves no one well, least of all the residents of Sioux Falls.

What amazes me is that our soul daily in town had to come after the only councilor (besides Starr) to oppose the parking ramp. The chickens are coming home to roost.

Press Conference on Wednesday to discuss Downtown Parking Ramp

It seems some things will never change at city hall, no matter who is at the helm; Developers Run our city and have the keys to the cookie jar.

The assumption is that in tomorrow’s press conference we will be told everything is hunky-dory with the downtown parking ramp because Lamont has now taken control. While I don’t have an issue with Lamont building a hotel or that Journey is building that hotel and parking ramp, it doesn’t change how we got here and how the plan in itself is a bad one.

First off, the plan. We are only getting a handful of parking spots for the $20 million we are spending, and the 100 year lease is unheard of.

Now, let’s look at the players. Legacy is the developer who concocted this plan, they are forever tied to it. We can throw out all the accolades we want about Journey or Lamont, doesn’t matter. The taxpayers of Sioux Falls shouldn’t be giving one red cent to a poorly planned project with players that are being investigated for safety violations and a wrongful death.

Mayor TenHaken should have TERMINATED this project, paid whatever penalties and when asked why, he should say, “Why don’t you ask Daren Ketchum, Tracy Turbak and Mike Huether.” Mic drop.

It is hardly a secret that the city council was probably told about what would be presented in the press conference tomorrow in the executive session today. I talked to someone who attended the session. They were very clear with me that they couldn’t tell me what happened or what was said under penalty of law, or even what the topic of conversation was, but they did tell me this, “It didn’t go well.”

It is pretty evident to us local government nerds that there are way to many hold overs from the past administration that need to be given their walking papers, and until that happens, we will continue down the same path; Developers hold the key to the city.

Legacy & The Downtown Parking Ramp Issue (GP-Bruce Danielson)

This Legacy Parking ramp / hotel scheme is not like a new thing for most Sioux Falls citizens to comprehend. Many knew this was a scam based on fraud and many people in positions of power decided to look the other way just to get promises fulfilled before they left office. If they took others with in the process, they are collateral damage I guess.

There may be legal liabilities. The six Council members who voted for this project and the previous mayor could be on the hook criminally. They had been told in open City Council testimony (it is recorded and can’t be taken down) there was a connection between the four owners of Legacy and the four owners of Hultgren Construction and the four owners of Boomerang and the parking ramp group. It may not have been on paper, but there was plenty of public testimony to back it up.

Construction manager at risk (CMAR) and guaranteed maximum price (GMP) and RFP and RFQ possible rigging may be examined for years to come. To claim they didn’t know or were unaware, is a poor excuse not holding water. If they did not want to look at the situations because a scheming happy warrior was telling all was OK, then they might be wearing stripes together.

There may have been wire fraud, mail fraud and more involved areas which they are all liable. Look at Daren Ketchum moving over to Legacy after he worked so hard to get this project done before Huether left office. Unspoken quid pro quo is screaming at us, the fix was in. There could still be the asbestos problem and the decision to close down one LLC and give all the assets to another just when the asbestos questions were being raised. Now were talking real criminal conspiracy with real behind bars time to consider.

To now claim this is a Lamont project instead of the cosigners of the guarantees may be just another scam. This will forever be a Legacy project. Does Lamont Co. have signed documents turned over to the City right now saying they are now the sole guarantors?

The threat of lying on bankruptcy filings causing criminal charges made the guarantors come partially clean is little consolation to a dead man’s family or to a city bleeding money on schemes of a past mayoral term.

How can a new mayor who has not fired the “mistake makers” of the past administration now go back to these same individuals (the “mistake makers”) to get a new solution or legal justification everything was done correctly without jeopardizing their pensions and employment?

Mayor TenHaken said it in the piece, “As a citizen, I did not like how the previous administration pushed this project so hard with disregard to transparency.” As citizens, we don’t like it either. Anyone who allows this project to move forward could join the others in unpleasant federal criminal conspiracy ramifications.

Will our new mayor do the right thing and kill this project? Kill this project and wash our city hands of it. Take the $1,000,000 guarantee and use it to pay off the bondholder early repayment penalties and the other city costs. We don’t need this parking lot the way it is being proposed or possibly where it is being proposed. Most of  Sioux Falls know this was a bad deal from the start. We need to let Mayor TenHanken know the project is now in his hands and he should kill it before it gets way out of control. A man died for the sins of greed, what’s next? Is this our Legacy to never forget?

Downtown Parking Ramp Bonds sold in the dark of the night

So I guess the bonds sold last week at 3.5% interest rate. While the rate isn’t bad, I’m curious why there was NO announcement of the sale. Could it be with all the controversy surrounding Legacy and the pending lawsuits they didn’t want to draw anymore attention to it?

Also remember that the 2nd Penny, CIP road fund is being used as collateral. While they ‘claim’ they will never have to dip into this fund to make payments, some would speculate that is not the case, and the specific reason why that fund is being used as collateral. The enterprise fund for parking isn’t very big, and I can’t imagine they will be able to make that big of a mortgage payment and still be able to maintain salaries and maintenance without either dipping into the CIP or raising fess drastically.

We got duped on many levels with the DT Parking Ramp.

Stehly’s 2nd attempt to repeal downtown parking ramp may not happen

Stehly tried to get another councilor to sign onto the repeal, but so far has been unsuccessful;


The city attorney’s office has said that Stehly has the legal right to propose the repeal.

What is frustrating about the Downtown Parking Ramp is the obvious, the developer involved, Legacy is being sued for wrongful death and a whole host of other stuff. Why would the city want to be involved with an entity that is facing such serious charges and fines?

Stehly spoke about it yesterday at the informational, imploring her fellow councilors to repeal the bonds until the legal matters are settled. The only response Stehly got was from councilor Rolfing who offered, “At least the city isn’t be sued.”


And some wonder why such idiotic decisions are made. Just look to the decision makers.

The Downtown Parking Ramp controversy was always about more than just Hultgren

As many critics of the deal pointed out, besides the enormous price-tag and sketchy lease deal, we felt Legacy’s involvement was troublesome. Well so do the families that were affected by the Copper Lounge building collapse;

John J. McMahon, Ethan’s father, and John F. McMahon, his brother, contend in their lawsuits that Hultgren Construction performed its construction and demolition activities “under a trial-by-error mentality.” Besides Hultgren Construction, the lawsuit also names Legacy Developments & Consulting Co., and Rise Structural Associates, the project engineer. Three limited liability companies – Boomerang, CLP and Olympia – that had ownership stakes in the project are also named.

The lawsuits contend that Hultgren Construction and Legacy Developments were closely related entities. Aaron Hultgren, Hultgren Construction’s president, was also the director of development and operations for Legacy.

“By using a captive construction company in Hultgren Construction instead of hiring a reputable, third-party construction contractor, Legacy was able to cut costs and save substantial amounts of money on its development projects,” the lawsuits say.

We have said all along that Legacy and Hultgren were working in tandem on the project. To single out just Aaron Hultgren as the ultimate culprit isn’t right. We had further proof of this when we found out about the illegal asbestos removal.

Why is a majority of the city council and city hall still supporting this project? That is the grand mystery.

The bonds are not set to sell until April. With this recent news I hope the council reconsiders once again if it is a good idea to go into business with this developer on this project or future projects. Taxpayers should not be held hostage by a city government that refuses to take a hard and reasonable look at this situation. It wreaks of corruption.

Sioux Falls City Council MUST repeal Downtown Parking Ramp contract

Councilor Stehly announced yesterday that she is offering a repeal of the DT parking ramp at the January 2, 2018 council meeting.

The council, ALL of them, need to vote for this repeal. It simply is the right thing to do. The council only needs 6 votes to stop a VETO.

The contract should have not been approved to begin with. We already knew about the OSHA fines levied against Mr. Hultgren. We had a dubious 80 year lease, and the 4-6 million in ‘soft costs’ the city’s taxpayers have to pay for. As former councilor Greg Jamison recently said on the Good Ship Lalley Pop show, it’s a great deal for the developer, not so good for the taxpayers. This is a prime piece of DT property, it should come with a prime price that is beneficial to the city. I truly believe we can find another developer with integrity to partner with.

As we have learned over the past week or so, there is now a criminal investigation into Mr. Hultgren, his defunct construction company and Legacy. There was also an environmental fine levied against Hultgren that was never paid because they said they didn’t have the money. The council probably didn’t know this information before the vote but they know now.

So why didn’t the administration tell them? They knew about the landfill fines they also had to have known about the Federal Criminal Investigation that was filed in November. On Wednesday Mayor Huether told Belfrage on his radio show that the city had to turn over videos to the investigators.

Why didn’t the administration tell the council about the fines and investigation?

Why didn’t the developer tell the council about the possible litigation? Seems a little sneaky to me.

What I find ironic is that if Hultgren and Legacy can’t even pay a $20K fine, how do they expect to get $30 million in investors? Also, who would invest with someone who is facing serious criminal charges with possible Federal prison time? You would have to be completely bonkers or incredibly f’ing stupid to invest with these people.

I also find it a little ironic that the council didn’t ask for testimony from the developers at the initial vote of this project. In fact besides Stehly offering amendments, NO councilor discussed the pros or cons of this project that night. This same council will debate for 45 minutes about a church electronic sign, chew out C-Store owners over alcohol stings and pursue limiting malt beverage sales in poor neighborhoods, but doing business with a possible criminal who can’t even pay it’s fines gets passed without any debate or discussion.


The council will now have the chance to take this all back and redeem themselves. I hope ALL eight of them do a lot of soul searching over the holiday season and come to a proper conclusion – Stopping the project – there really isn’t any other options at this point.

UPDATE: Proposed Downtown Parking Ramp; A BAD DEAL for taxpayers

Trust me, I’m still baffled why possibly six city councilors and the mayor support this ramp with so many strikes against it. I am not one least bit surprised though that the development community and their upper crust friends support this, if this passes it will set a precedent paving the way for them to cut the same deals.

The laundry list of issues are obvious; A rock bottom, 80 year lease. Taxpayers covering over $6 million in ‘soft costs’ that should be either shared or paid entirely by the developer. Not enough parking spots (we will only net beween 290-390) for the price we are paying. No clear explanation of rate increases and how the bond will be paid back besides the detrimental idea of using the 2nd Penny as collateral. Not even an inkling of who the hotel franchise might be, the retailers or ‘possible’ private investors – lack of transparency. And lastly, the most egregious, we are possibly signing a contract with the person who is responsible, according to OSHA’s levied fines, for the Copper Lounge collapse making him an obvious legal liability.

But what is even more troublesome is the ‘deal’ we cut for the taxpayers. If we are going into a Private/Public partnership, shouldn’t we be negotiating a good deal for the taxpayers instead of the other way around? Especially after we have spent almost $1 million on engineering, architectural and legal fees, not mention this will be built on OUR land.

This has to be one of the most poorly constructed proposals the city has ever presented in the past decade, and I really mean that. As a councilor, I would be ashamed and embarrassed to vote for such an obvious scam.

If the council thinks they heard a lot of vitriol and rancor from the public before the vote, if they vote for this, I think the second round of frustration will be a lot worse.

Good Luck tonight, you are going to need it.

UPDATE: I just got a tip from someone who works in the hotel/motel industry in SD that the hotel partner will most likely be a ‘select service’ provider (similar to a Homewood Suites). This is NOT considered a FULL SERVICE Hotel. So I asked him if Legacy (and the city) probably knew who that was provider was, and that it was most likely. So I wondered why they have not said who it was yet, and encouraged a city councilor to ask tonight.

So I also asked this person about the lease agreement. They basically said what we have all known for awhile that it was a heckuva a deal and really unheard of (one time payment for 80 years). Like I said, we are getting hosed on this all the way around.

It’s NO misconception we are getting hosed on the Downtown Parking Ramp

God Bless Him! You can’t ever deny that Councilor Neitzert really digs in his heels when it comes to issues facing our city and does his research. He sent out this press release explaining the 12 misconceptions of the parking ramp debate. While I agree with him on some of these, the problem is that Greg gets so lost in the weeds on the finer details he misses the ‘Big Picture’ and doesn’t answer many key questions, mainly “Why are we subsidizing the building of the Hotel?” AND “Why are we signing a contract with Aaron Hultgren before his OSHA fines and legal problems are settled?”

But let’s take a finer look at what Mr. Neitzert came up with;

Misconception #1: The parking ramp cost has increased

Reality: This is the first time we have a specific project with a detailed design with a concrete number we can be confident in.  All previous estimates were just that – estimates based on theoretical assumptions and ballpark figures for planning purposes only, and many only included construction only costs.  Comparing this final project plan to previous conceptual projects is not appropriate.

While that is true, many want to know why some of these ‘ballpark’ figures were off by over 50%? That is either lazy or incompetent government at it’s worst.

Misconception #2: Tax dollars will be used to fund the project

Reality: The parking division, like our water, sewer, and landfill divisions, is an enterprise fund.  This means it gets 100% of its funding from user fees – in the case of the parking division parking meters, leases on ramps and parking lots, and fines.  Likewise, 100% of its expenditures come from user fees.  No general sales tax or property tax dollars can be used to fund the system.  Your property and sales tax dollars will NOT pay for this ramp.

True, the bonds will be paid for by user fees (and the 2nd penny if the enterprise fund runs low). But the real misconception here is that DT employers are going to be able to just float or eat those additional costs for parking for their employees. Those costs will be passed onto their consumers in higher prices for their products and services. All costs get passed on. It’s the left pocket, right pocket argument, is it a tax or a fee? IMO, any time government charges you for a service, that’s a tax.

Misconception #3: Rates for parking meters and leases of parking will have to be increased to pay for this ramp

Reality: Rates were already adjusted two years ago so that the parking enterprise collects enough revenue to fund operations, repair and maintenance, and capital cost to replace or add new parking ramps.

Greg must have missed the email from the council’s legislative and budget analyst showing that rates will be increased over the next 10 years. Maybe he needs to check his email box.

Misconception #4: The parking division cannot afford the debt service on this ramp

Reality: The parking division has no debt currently.  Stress testing scenarios and a detailed financial analysis have been performed on the system.  Even with a loss of major tenant’s downtown, the parking fund can make the debt service payment, maintain a cash reserve, fund operations, and continue repair and maintenance on existing ramps and parking lots.

If the parking division can handle the debt on their own, why are we using the 2nd Penny as collateral?

Misconception #5: The investors in this project are being kept secret

Reality: The public portion of the ramp is being financed with bonds that will be sold on the open market.  The private portion will be financed by investors and banking institutions that the developer must obtain.  When we enter partnerships with private firms, award bids for major road and sewer projects, or enter into contracts with private entities, we know who the winning firm is.  However, we do not know all of the investors, shareholders, or part-owners in those entities.  This is not something we obtain as a matter of course.  The city does not and will not know who the investors are in the private portion.  The city cannot keep something secret that it doesn’t know itself.

I can partially agree with Greg on this one and I understand his argument to an extent. The difference is 1) we are subsidizing this developer by at least $6 million on this project unlike a road project 2) Of the investors listed (4 guarantors) one of them is contesting $200K in fines from OSHA for the Copper Lounge collapse. I guess I’m more concerned about the liability of Mr. Hultgren than I am of the UNKNOWN investors.

Misconception #6: The City is paying for private development

Reality: The development agreement which runs over 100 pages stipulates in very specific detail who is responsible for what.  The city will construct the ramp, and the private entity will construct their private portion.  The developer is paying a portion of the storm drainage work, which both the ramp and private development will benefit from.  The developer is paying for the incremental share of the cost for the foundation which must be larger to support the hotel on top of the parking ramp.  The city is not paying or subsidizing the private development.

While it may be true that the developer is sharing ‘some’ costs, it is a very big stretch to say they are sharing all of the soft costs, because they are not (that has already been admitted by councilor Neitzert). It’s obvious in the price tag of this project and the number of spaces we are getting that we are paying a much bigger share of the ramp than what we should be. He can call it whatever he wants to, but I call that subsidizing the project.

Misconception #7: We are building a ramp for a private developer

Reality: All of the parking spaces will be publicly owned.  The developer will lease spaces like anyone else – at market rate.  The developer does not get any free or reduced price spaces.  The public will be able to lease or use spaces in this ramp, because they are owned by the city.

Not sure if this has ever been a misconception or even a concern. It’s a given. The concern is we are not getting enough (public) spaces for what we are paying.

Misconception #8: We are building a foundation for a private developer

Reality: The developer is paying for their share of the foundation, specifically the increased cost of the foundation to support the hotel on top of the ramp.

Can we see those numbers broken down? While I think they may be kicking in a portion, I don’t think they are truly sharing 50% of those costs. As I mentioned above, the high price tag for this ramp blatantly shows we are subsidizing either the developer or the construction company, and my money is on the developer.

Misconception #9: The developer is paying $1,041 dollars a month to lease our land

Reality: The development agreement is not a month to month lease and the developer is not obtaining exclusive use of the parcel.  It is a lump-sum payment based on current market value and appraisal for the rights to lease the air above the ramp and the portion of our city property in front of the ramp where the private commercial development will sit.  The appraisal takes several factors into account including the fact that the city is still able to use the parcel to its fullest potential for a parking ramp and the increased cost for the developer to build on top of a structure instead of bare ground.  The city will receive 1 million dollars in three portions before, during, and upon completion of the private development.  This lump sum payment takes into account the cost of the increased foundation that must be built to support the hotel and the fair market value of the air rights and partial use of the parcel in front of the parking ramp.

If you do the math, the lease payment does come to $1,041 per month. But that is neither here nor there when you look at the bigger deal. This is the first time the city has gone into a lease agreement like this of a one-time payment for 80 years. Not only is it unusual and poorly negotiated by the city, by allowing this kind of lease to be setup we are setting a precedent for other private businesses that want to lease from the city. I can here it already, “I want the Legacy lease deal.”

Misconception #10: We are only getting 390, 270, or X parking spaces

Reality: The ramp is projected to have 525 spaces.  All of the current spaces on the surface lot we are building on will be replaced with spaces in the ramp.  While the net increase in spaces will be about 390 (525 – 135 current surface parking spaces), the total number of spaces is 525.

So what was the misconception?

Misconception #11: We are not building enough spaces because we are allowing a developer to build on top of our ramp

Reality: We are building enough spaces to satisfy projected demand for the next decade.  Regardless of whether something is built on top of our ramp or not, we would not build any higher than we are building our ramp.  We also cannot go any farther horizontally.  Even if there was no private development, we would not build the ramp any larger or higher.

We are not building enough spaces for the value we are getting. But that has nothing to do with the size of the lot or the height of the ramp, it has to do with this NOT being the right plan. We should be getting 600 Public Parking spots for around $13-15 million. Instead we are getting 2/3rds that for $20 million. Having this partnership with a private developer is actually detrimental to our parking needs downtown. We would be better off and get more value and space building the ramp on our own. The city’s job, especially with an enterprise fund (sewer/water/parking) is to provide a service from a fee/tax. It is not the responsibility of an enterprise fund to subsidize private economic development. One of the reasons a partnership like this has probably never been done before, because it simply isn’t a good deal for the taxpayers.

Misconception #12: We are paying twice the national average for this parking ramp

Reality: The price for this ramp is approximately $26,000 per space using the standard construction cost only number.  The national median cost of a parking ramp per space is $20,000.  The standard median parking ramp for purposes of comparison is a basic bare bones ramp.  Our cost is slightly more because we are adding features and amenities either by code requirement (fire suppression systems) or for user comfort and increased service levels (example: wider drive aisles and parking spaces).  The newspaper article that stated this ramp would cost twice the national median price was based on an apples-oranges comparison of our total project cost (including construction, site prep, financing, debt reserve, architectural, engineering, and other costs) to the national median cost which includes ONLY the construction cost.

When San Franciso and LA can build EARTHQUAKE proof parking ramps for cheaper than we can, you have to question the price tag. As I said above, it isn’t a misconception, it’s pretty obvious with all these extra soft costs, etc., we are subsidizing the building of the hotel AND building them a Cadillac parking ramp. With the mention of the fire suppression system my guess is that the hotel’s portion of the ramp will be enclosed and heated. Still waiting for them to spring this on us, of course, after the contract is approved.

Like I said, many of the councilors, the mayor and his staff are missing the big picture on this project. It’s too damn expensive, it doesn’t provide enough public parking and we are signing the contract with a person who is a major legal liability. Argue about foundations and investors all you want. The simple fact is we are getting HOSED on this deal.