So a couple of months ago a developer insider told me that Jeff Scherschligt was looking to do Cherapa II on one of Warren Buffet’s biggest scams on Federal taxpayers in at least a couple of years, the RR Redevelopment project. Mayor Bowlcut & Bucktooth coined it as one of his greatest achievements of his administration. I guess moving Beluga Sturgeon Caviar from it’s original jar to a ziploc bag is considered an ‘achievement’. Who knew?
As we know, it has floundered and the city has been looking to pass off these thrift store 501 Levis onto any takers.
They found a buyer in Jeff.
This should be no surprise as Jeff has been looking to build his Buffalo Palace II for awhile now. He of course got a heckuva deal from the Munson administration with the River Greenway project and now the Golden Arches of Sioux Falls built right in front of his palace thanks to the generosity of rich donors and taxpayers. But with any ‘gift’ the receiver always asks for more.
While the planning department of the city is being quiet about the deal until Tuesday, Detroit Lewis has gotten some rumored details.
The original offer was HALF of the appraisal price.
Mind you, not sure how this land can be appraised anyway? We paid too much for it, and the railroads are still railroading thru the center of the town. But I did a little digging.
Undeveloped land in Downtown Sioux Falls goes for about $15 dollars a square foot. So if you do the math, that would mean Jeff offered about $7 a square foot (and asked for NO TIFs or tax rebates). The rumor is they met half way, so he probably is going to pay about $10 a square foot.
Personally, I could care less, just sell it already. But here is the other ‘Kicker’; Cherapa II is rumored to put in the deal an ‘option’ to buy the rest with a TIF option.
Of course, this is all slobber and gossip from my mouth at this point, and we will hear more details on Tuesday. But if you think for a second the developer is going to take it in the shorts while the taxpayers come out smelling like roses, you are mistaken, unless you think roses in Sioux Falls smell like renderings from a packing plant, then hey, we are doing just fine.
What’s certain is there will be more tricks than treats. These side deals seem to always end up mitigation and litigation. It’s churning of public money via sophisticated misdirection so that lawyers and civil engineering types get paid but it will always be an abandoned railroad yards with heavy trains through traffic.
This sounds like a “Hand-out.” Maybe we could reduce our loss by having Helpline 211 get involved in the deal, too.
If we had a real newspaper, citizens would learn this is a ponzi scheme worked through the Thune Senate office perpetrated on the US taxpayers.
You’re welcome Jeff Schleazy.
What I was told by a commercial realtor is that the city was asking $14.00 per square foot for the land and it appraised at $7.00 per square foot, so Jeff offered the appraisal value ($7.00) per square foot. I’m sure you’re right that they settled somewhere in the middle.
It is land right next to a railroad track and two homeless shelters, so hard to see how that would go for $14.00-$15.00 per square foot.
Either way, glad it sold. Even if it was appraised at $100 a square foot we would never get a return on the money. The worst part about the deal is in the end it didn’t resolve the original problem, train traffic downtown, in fact it has gotten worse. And to add insult to injury, taxpayers ponied up (I believe around $30 million) for an overpass on 26th street, for guess what? TRAINS. While it will help with traffic, I believe this will also increase train traffic downtown. With train transport being so cheap and the trucking industry in turmoil, I think within the next 4 years you will see the train traffic downtown double. Almost $60 million dollars to make our lives more difficult. The politicians that cooked this deal up need help.
Agree. City should get out of the real estate development business. Clearly it hasn’t worked out well to date.
According to the Sioux Falls.Business website, the entire railroad yard development area consists of 10.03 acres.
Now, we bought those acres with federal dollars for $27 million, right? And 10.03 acres of land makes up 436,907 square feet. So we paid – via federal dollars – $61.80 per square foot for the railroad development area, but now we planning to sell this land for $7 to $15 an acre?
Sure, maybe there are neighbors in the area which make the land less desirable, but couldn’t – or shouldn’t – have that argument been made before we bought it from the BNSF?
It appears that this developer will be getting this land for
11.5 cents to 24.6 cents on the dollar. Now, that’s a “Hand-out.” ….. #CorporateWelfare
( – and Woodstock adds; “You just watch, if a tornado ever goes through that area, the city will be all over the place giving out even more “Hand-outs.”)
“for $7 to $ 15 a square foot,” that is….
Now, can a guy place a put or a call on a “TIF option?” Because I think this is a market that needs to be. Just imagine the money that could be had, too. I mean a guy could make so much money from it, that there would be no need for TIFS, well, unless someone was still very greedy …. #OhYah…. #NeverMind
( and Woodstock states: “Yah, I don’t know, but I use to know a call girl who was put out of business and now I don’t have any options.”)
The city massively overpaid for the land. That doesn’t mean the developer who is paying approximately market rate is getting a giant corporate welfare subsidy. They are buying the land for what it’s worth. It’s the railroad company that got corporate welfare by getting $50/square foot for land that’s worth $10-15 per square foot.
But the current opportunity is dependent upon a “giant corporate welfare subsidy.”
Plus, all of the players in this – past or present – are contemporaneous to each other. To suggest that there is some kind distance between the two plausible transactions is very disingenuous.
Some Sioux Falls History
Mr. S. has been dreaming about Cherapa II for years.
He brought it up in numerous public meetings.
When the Zip Feed Mill was torn down and Cherapa I was built, part of the agreement he had with the City was taxpayers would provide $750,000 to remove and replace the old rr bridge as part of the River Greenway Project.
When the actual cost was revealed to be 1m the City Council (under Munson) wanted to back away from this part of the project. That’s when Mr. S. strolled up to the podium at Carnegie Town Hall and threatened the Mayor and the Council that if he didn’t get his bridge, he was going to file a lawsuit against the City.
Consequently, the taxpayers still have a million dollar bridge to nowhere.
Another piece of trivia: Take a look at the east side of Cherapa I. You will see it is entirely blank. This is because the guy with the super ego built it so it could connect with the future Events Center.
Can’t wait to hear what kind of a ‘deal’ he will be looking for at tomorrow’s Council meeting.