UPDATE: Can the entertainment tax be used on the State Theatre?

UPDATE: So here is the justification for using the entertainment tax;

Statute enabling the City to use the Entertainment Tax for promotion.

10-52A-2.   Additional municipal non-ad valorem tax authorized–Rate–Purpose. Any municipality may impose an additional municipal non-ad valorem tax at the rate of one percent upon the gross receipts of all leases or rentals of hotel, motel, campsites, or other lodging accommodations within the municipality for periods of less than twenty-eight consecutive days, or sales of alcoholic beverages as defined in § 35-1-1, or establishments where the public is invited to eat, dine, or purchase and carry out prepared food for immediate consumption, or ticket sales or admissions to places of amusement, athletic, and cultural events, or any combination thereof. The tax shall be levied for the purpose of land acquisition, architectural fees, construction costs, payments for civic center, auditorium, or athletic facility buildings, including the maintenance, staffing, and operations of such facilities and the promotion and advertising of the city, its facilities, attractions, and activities.

Source: SL 2002, ch 68, § 2.

Opinion from Attorney General defining promotion.

 From Opinion of Attorney General Mark V Meierhenry  (235) 1984.

$1.5 million is quite a bit to drop for promotion of a non-profit.

According to the press release about the state theatre, this was stated;

The Mayor has pledged $1.5 million to the Sioux Falls State Theatre Company to finance the exterior and structure of the building, life-safety measures, and accessibility. Paired with the gift from Mr. Sanford for the interior completion of the facility, the State Theatre is expected to reopen in 2020.

Using dollars from the City’s Entertainment Tax Fund, the City’s investment in the State Theatre comes from a pool of dollars restricted for culture and entertainment such as the Washington Pavilion and Denny Sanford PREMIER Center Complex.

But according to the ordinance on the entertainment tax, that can ONLY be used for city owned facilities;


   Notwithstanding the rate of tax established in §§ 37.001 and 37.002, from and after March 1, 1992, the rate of tax upon sales of leases or rentals of hotel, motel, campsites or other lodging accommodations within the city for periods of less than 28 consecutive days; sales of alcoholic beverages as defined in SDCL 35-1-1; sales of establishments where the public is invited to eat, dine or purchase and carry out prepared food for immediate consumption; ticket sales or admissions to places of amusement, athletic or cultural events is 3%. Any revenues received from the tax imposed in this section in excess of 2%, but not more than 3%, shall be used only for the purpose of land acquisition, architectural fees, construction costs, zoo maintenance and operational expenses, and payment for an entertainment center and a convention center, including maintenance, staffing and operations of these facilities and the promotion and advertising of the city, its facilities, attractions and activities.
It will be interesting what the city’s legal department will say about using this money for a facility the city doesn’t own. Will the ordinance have to change? Is there some legal case they can fall back on? I wonder if the city council knew they were going to use entertainment tax dollars when this deal was being put together.


#1 Scott Linder on 06.26.19 at 5:22 pm

Was this discussed at all at any city council meeting?

Sounds like T. Denny was calling the shots on this deal.

#2 Timbuktu on 06.26.19 at 5:54 pm

Where is all this money coming from? Do the citizens get any say in this gift to a private entity? One more legacy gift that the taxpayer gets shafted with but no say in the process

#3 l3wis on 06.26.19 at 6:59 pm

The councilors (at least 6 of them) were told about the plan a couple of months ago. What they were NOT aware of was that the money was coming from the entertainment tax fund.

If you watched the press conference, you will see that Denny pretty much admits he is giving this money because he was tired of driving by the place for the past 30 years and wondering when it would get finished. I’ve been meaning to remodel my bathrooms in my house for the past 10 years, wonder if the city will pony up the money for me since I haven’t gotten around to it yet?

#4 D@ily Spin on 06.26.19 at 9:00 pm

This could have bought body and cruiser cameras for police. There’s a serious problem when entertainment is more important than public safety and police actions defense.
I suggest a campaign of private cell phone videos. When you see a police action, take a video and later sell it to attorneys for hundreds of dollars. It shouldn’t take long to realize cop cams are cheaper and better favor police in court.

#5 "'Extremely' Stable Genius" on 06.26.19 at 10:23 pm

They still need an other $2.5 million? What? First, we got the facade. Now, we are getting movies for the first floor. This is the first time I have seen a community approach a restoration project like a working class family, who incrementally repair, replace, and restore the old home they bought.

Too bad that Sears is no longer open in town, however, because they probably could have helped us with a major project payment plan to buy some paint and carpet….. I bet when they finally get it all restored, including the second and third floors, that the first movie they will show will be called: “High-Speed Trains”

(“When we get our tax refund, we’re going to get some new carpet for Sissy’s room….”)

(“Grandpa, did they really have electronic marquees like that or comfort chairs like the ones here at the State Theater, when you were a kid?”….#RevisionistRestoration…)

#6 King Archie Bunker Ramp on 06.26.19 at 10:41 pm

The State Theater restoration project is no longer period correct. Instead, it has become a restomode, which will someday be shown at SEMA.

(“Check-out the interior…..I really love the seats.”)

(“The VELOCITY Channel: TV with a racy movie”)

#7 Historic ?? Digital Sign on 06.27.19 at 9:34 am

They lost me the day I drove through DT and saw the digital sign….what does this have to do with a historic theater!?

Is using 1.5m of entertainment tax dollars Tenhaken’s way around having to get the City Council’s approval?

#8 anonymous on 06.27.19 at 1:02 pm

The Mayor shows up in a suit and tie for a meeting with T Denny Sanford, but for a formal meeting with taxpayers in the people’s town hall he refuses to wear a tie and insists on wearing his sneakers!!

It’s obvious where his priorities lie……

#9 The Anti-Trump on 06.27.19 at 2:08 pm

He wore the tie and dress shoes so Denny wouldn’t accidentally ask Paul to get him a cup of coffee.

#10 All fleet farmed out on 06.27.19 at 9:48 pm

Hey, I got an idea. Maybe it’s time for an other quitclaim deed…..#ItsWorkedInThePast…#SavedByTheBell

#11 anominous on 06.28.19 at 9:21 am

ticket only $12+.

#12 Doug LUND on 06.28.19 at 12:02 pm

Perhaps the first movie shown should be “Money Pit” with Tom Hanks and Shelly Long. All one needs to see how this should have been done is Google Fargo Theater History. It’s the State’s twin..built at the same time..restored for a fraction of the cost twenty years ago and appears to be paying its own way.

#13 l3wis on 06.28.19 at 1:35 pm

Part of the problem was that last director was ‘asked to leave’ because the only money he was raising for the place was for his salary, and secondly I heard the back wall was/is about to collapse (that is probably the structural issues PTH was talking about). But you are right, if they would have finished this 20 years it would have cost a lot less. I also wonder how Arc of Dreams was able to scrape 1.6 million together but the State hasn’t been able to get support? So now Denny and the taxpayers have to bail this out.

I also take issue with setting a precedent solely based on an AG’s opinion in 1984, that fixing a building is the same as promoting a city owned facility. There is NO case law saying we can spend entertainment taxes on something like this, just an opinion. Will that stand up in court?

#14 "'Extremely' Stable Genius" on 06.28.19 at 11:01 pm

I’ve said it before and I’ll say it again. I believe there are many who do not want the State Theater finished, because it would be in competition with the Pavilion and the Orpheum, which financially struggle to survive. What they want is what they already have, which is a restored and complementary facade for Phillips Avenue development.

If you look at the overall deal set forth this week, they still need $2.5 million more to complete this project; which means the restoration fund raising goes beyond the short term ability to watch movies on the first floor in the next year and well into it’s fourth decade of fundraising and restoration.

Some day Crazy Horse will be done, but my guess is that you still won’t beable to watch a movie about that completion from the third floor of the State Theater.

What I find odd, too, is if the City has $1.5 million available and Sanford has $3.5 million in change ready, willing, and able, why couldn’t they together find the additional $2.5 million?

In my opinion, all of this is just kicking the can down the road, while giving the image of completion by throwing some money around and Sanford’s involvement.

Fore (Fore?), we have all seen this type of press conference before. Do you remember, when the last mayor held a press conference with the owner of the dilapidated former Howard Johnson’s Motel, where they promise quick demolition and a new hotel soon? Well, it took a lot longer than they promised, didn’t it? And the eventual hotel we got was not what was promised.

So this whole thing is just fluff, in my opinion, to get us to forget about the bunker ramp and show the current administration as a “Winning.”

Oh, and by the way, the last movie I saw at the State Theater was “Footloose” back 1984. And if you Speed forward today, I think some things are still “loose” at the State and six degrees from the truth.

#15 scott on 06.29.19 at 5:50 pm

do the weiland’s own this place? how come one of them is always put in charge of running it?

#16 anominous on 06.29.19 at 10:47 pm

i seen War Games and Rambo in there. & i seen Gandhi down at the Hollywood.