UPDATE II: I had a chance to read the contract and a few things stick out. I will first make something very clear, this ‘DEAL’ should have been vetted through the council and it’s staff. The mayor has NO authority on a lease or even selling the building without the consent of the council. Now he could have opposed it and had his staff deny helping with any proposals but that could only drag out for so long. I am still of the opinion that this building could be sold and that the city shouldn’t be investing or hanging onto real estate (unless it contributes to society as a whole like roads, parks and water plants), and we certainly should NOT be leasing for $1 a year a historic building. I still wonder if there is a reason why the city isn’t falling over backwards to sell this property, maybe the answer will come out Tuesday night.
While I certainly support the ZEAL center’s mission and being DTSF is a great idea, it is NOT the responsibility of taxpayers to hold up this stool.
FINDINGS IN THE CONTRACT;
PAGE 3, Section 6, While we are only charging a $1 a year for the building, it seems the city will be leasing the parking from Raven, so we will be losing money on that part of the deal. I also question any contract agreements we may have with Raven since their recent sale has been approved. I would think any agreements we have with Raven before they sold should be renegotiated with the new owners (especially if it has something to do with selling the building.)
PAGE 3, Section 8, ZEAL will have the opportunity to Sub-lease office space while only paying $1 a year in rent (also on PAGE 5 in section 12 they will be able to sell naming rights. A revenue source for ZEAL.)
PAGE 4, Section 10, I question the Mayor’s sole authority of approving or NOT approving alterations. While it is mentioned that rent will be $1 per year there is NO dollar value in the entire contract of what ZEAL will be expected to spend. The number being thrown around is $1 Million to remodel but it just seems to be a handshake deal. I think a commitment of $1 million or more SHOULD be in the contract. What if ZEAL finds out that it will cost a lot more and wants to back out? What are our safeguards?
There is also the glaring conflict of interest the Mayor has because he once sat on the ZEAL board. Oh, nevermind, his COS also used to be an executive for a developer that seems to be getting all the TIFs in town so it all good and ethical.
While I have many more opinions on how this deal was cut I will await the discussion on Tuesday night and the 1st reading.
UPDATE: Item #39 covers the deal at Tuesday’s City Council Meeting;
1st Reading: AN ORDINANCE OF THE CITY OF SIOUX FALLS, SD, AUTHORIZING THE MAYOR TO ENTER INTO A LEASE BETWEEN THE CITY OF SIOUX FALLS AND ZEAL D/B/A STARTUP SIOUX FALLS.
I haven’t done a serious read into the 17 page lease agreement, but there was some interesting things that stuck out to me like the parking agreement and how easy it will be for them to break the lease. Feel free to read the contract and let me know what you think; HERE.
Some ZEAL members have been telling people they are planning to bring a proposal forward at next weeks’ council meeting in which they will abandon their property by SE Tech (rent it to SE) and plan to rent the old Sioux Falls Parks and Rec building by the intersection of 6th & Phillips for $1 a year for 10 years while investing their own money in remodeling the building (Est. $1 million).
In my opinion the city should just sell the building to ZEAL or whoever. Why hang onto the property? Weren’t we told that we had to build a new administration building for new space? Now that we have it why do we need to keep an old building that the SFPD only uses once a week to train dogs (rumor)? Also, I agree ZEAL should be DTSF and this would be a great investment for them.
We just sold a parking lot that was being used for a rock bottom price of a half-million, why not sell this property and put it to good private use?
Just another handout to a group that doesn’t need it. I would suggest the city council amends this before it hits the agenda and put the building up for sale and give the option to ZEAL to put in the first bid.
While generally I am against most private/public partnerships, this one stinks of high heaven. There is NO reason why the taxpayers need to subsidize this. Local government is simple, and instead of putting ourselves in some stupid complicated contract over 10 years, just make it simple and draw up a bill of sale.
The idiocy and general laziness at Carnegie and City Hall is so immense these days I am surprised our city hasn’t imploded from stupid. Of course that would require someone to show up to light the fuse 🙂
The city has a poor record for real estate deals. They bought the railroad yards for to much money then discovered there’s environmental cleanup and it’s to narrow with numerous easement encumbrances for development. There’s the parking garage they built for a hotel that didn’t happen. They built an aquatics center on federal land that must eventually be forfeited to the VA. They built a city offices building that was half empty and lease space nearby would have been a bargain. The Washington Pavilion and theaters are owned but unprofitable. The new Events Center can’t book enough entertainment, is inferior construction, and already needs repairs. The Convention Center sits quiet. The zoo needs an upgrade.
Comes a point in time when going bankrupt one does another preposterous dead end deal to confuse matters. It’s worked for Trump and seems to be what’s happening here.
Might want to pull on your ears to get your head out before you suffocate
Apparently the question marks have been replaced with exclamation marks.
“Trump LOL!” can be take two ways. I laugh at him often, but he is still a serious threat.
Private businesses “partnering” with the Govt? So, we are putting facsim at the local level into plain sight now?
We need to vote out EVERY single “representative” we have because they are not representing the citizens in which they steal taxpayers money from but instead representing who fills their pockets (and has the most blackmail on them) instead.
Govt at ALL levels is a dismal nightmare and completely corrupt.
Erica, you would probably agree we disagree about 50% of the time, but on government corruption you are spot on. As I told someone last night involved directly in this deal, it is government’s job to provide services to the public with the taxes collected, NOT savings accounts and capital investments (unless it is infrastructure, like roads and water pipes). There is absolutely NO reason the city needs to hang onto this pile of rocks and if ZEAL is willing to agree to 1) pay a fair market price for it and 2) invest in rehabilitating it why does the city want to keep it? I will tell you why, this is going to be a talking point for Mayor Poops campaign about supporting local entrepreneurship, etc, etc, etc. But that is a FREE ENTERPRISE, Capitalistic duty, not a duty of government. I just am baffled by the total disregard of separating government from the business sector. If you want to be a businessman Paul, go back to being one and stop f’ing up the government process in this city to profit you and your comrades. There is also a lot of other ‘ethical’ things going on with this deal, separation of powers, and lack of transparency that you would be appalled by, but we will wait until this hits the agenda tomorrow to talk more about that.
This deal with Zeal REEKS of the influence & self-serving agenda goody two-shoes Matt Paulson bought himself by buying dim bulb Premiere Bank stoolie Alex Jensen a seat on the City Council. This proposal needs to go straight in the sh_tter.
i’m waiting for the pth disciples to chime in on what a good deal this is, since in their view the city can do no wrong.
The Zeal Center is supposed to teach the unteachable how to be profitable business types. All this deal is doing is teaching the followers how to suck the teet of government to succeed. I guess this shouldn’t surprise anyone considering PTH only succeeded in his business by sucking several things out of government officials?
From the Argus Leader, 7/2/21:
Raven Industries had something the city of Sioux Falls wanted.
The city of Sioux Falls had something Raven wanted.
It was 2004, the same year the city finished its transformative project of connecting Falls Park to downtown via Phillips Avenue. Near the gateway to that project sat the old Chicago, Milwaukee & St. Paul rail depot. Raven owned it, using it as a training center. The city wanted the building for office space.
The city and Raven struck a deal: In return for the depot, the city traded 192 acres of land on Highway 115 north of town, where the company could test GPS and its fledgling precision agriculture product lines.
“Everybody was a winner,” said Dave Munson, who was mayor of Sioux Falls from 2002-2010.
The sweetest of sweet heart deals that it is going to the pet project of Matt Paulson. Hmmmmmmm…… that is a bit fishy.
The lease is horrible for the City. Who else even got an opportunity to bid on the opportunity to lease???? Was the lease ever listed for public competition? The City could have gotten actual money or possible a better tenant, but there was no open process of selection.
Look at the lease. Usually leases are triple net. There will be no or very little taxes paid because it is a public building. The rent is $1 a year. Zeal is paying for almost no common area maintenance and major exterior improvements. I’m guessing the City is paying the exterior building insurance. Did you catch the part about selling naming rights??? The City building will likely have the name of a sponsor put on a public business connected to our premier park with all profits going to Zeal. Wow, it’s good old robbery of tax payer resources.
If we are fixing what looks like a million dollars+ of free rent to Zeal shouldn’t we be able to see their books. Where is there revenue coming from now? Are they having a revenue short fall? Do they even need free rent?
Certainly a nominee for The Walkway of VUOPM (“Vision” Using Other People’s Money) – the sidewalk pantheon of fame along The Avenue of The Grifters.
The NGOs and non-profits engaged in business and economic development in Sioux Falls are nothing more than mechanisms to launder money, passing funds from government coffers through the “labyrinthine ecosystem” of NGOs and non-profits eventually ending in the pockets of our local grifters (the “private partners”).
Following the millions of dollars which the City passes through this labyrinth is a bit like watching a shell game on a video board at a baseball game.
Watch the money being placed under one of the shells. Follow the bouncing shells. Suddenly the money is not under the shell!
Quite the sleight of hand.
Why not also build them a 6-story parking garage?
There is nothing wrong with “Government” leasing out its public buildings to private organizations such as Churches, Non-Profits Entities, Businesses. There is no where in the constitution that forbids, and if it benefits the community, so be it.
Mikey, is there anything the fool in the corner office does that the tools do not agree with?
Mike, this is not a lease. This is giving the building to Zeal for use their use. No guarantee or intent of public access for tax payers. Zeal controls how the building is used. Not only does zeal control it, Zeal can also lease it for a profit. Zeal will also sell naming rights. I can’t wait for the big Market Sign on City property.
The City will also be paying for all exterior maintenance on a historic build. That can get very expensive. Remember since it is a public building, it does not pay property tax like a normal privately owned building. So Zeal will also pay almost not taxes. Another giant break for Zeal. Basically a 100% TIF for 10 years probably worth $100k or more.
Let me put it in perspective. Papa Woody’s is moving in down the street in their new 4,300 sq feet space for probably $19 a square foot (middle advertised rate for the Cascades) or $81,000 a year rent and probably another $25,000 a year in NNN fees (taxes, CAM, and insurance). I bet they would love to move into the old parks build for $1 per year. PaPa Woodys will also need to pay for their renovations in the space.
Let’s be very clear. This is a million $ give away Zeal, not a lease of A City building. Any business would be tripping over themselves to lease this at that rate.
Just read the lease agreement, this is definatly in the best interests of the residents of Sioux Falls. ZEAL is a company to whom works with the Small Businesses helping them to educate, obtain funding to operate and invest into their businesses in order to increase their profitablity. By signing this lease, even by paying the CITY a $1/year annual rental fee, they are agreeing to pay for all Maintenance, Repairs, Upgrades to the Building, and they may remodel or retrofit the building thus investing their own money into the building, so long as the approvements are aggreeable to the City.
ZEAL is also tasked with paying all Real Property Taxes associated to the property, so in return, the “CITY” itself will be collecting ‘tax revenues’ from the renter.
This is an “Historical Landmark” with beneficial value to the Residents of the City itself, by that logic alone, the “CITY” would want to keep and protect its Ownership in the Building itself for future use as a public building.
You may look at the $1/year rental fee paid to the City as a low ball number, but you also must take into account of all the improvements, maintenance and repair costs, and taxes paid on the property the renter is agreeing to pay.
Upon reviewing their website – the public services that ZEAL will be providing to the residents of the city will be an excellent partnership in relation to City Government in promoting the Local Economy, Providing Legislative Research, Educational Resources, let alone they will help Lobby on our behalf to the Federal and State Government to help create sound economic policies to help the “Small Business Community of Local entrepreneurs, creating jobs, and investing in Sioux Falls itself, helping to find creative ways to help local businesses obtain funding thru SBA Loans, Grants, working with Banks to help invest in those businesses by lending money to them, and more.
The Building is going to be used as a refuge center giving the residents the ability to hold conferences, meetings, work in relation with ZEAL Staff to improve their businesses.
I guess, even with them paying the ‘residents’ $1/per year in rent, the benefits to the residents is that they wll save us tax dollars in maintenance costs, repair costs, clean up costs, let alone, we will end up with a much better building once remodels and improvements are make, let alone, inrease its “Historical Value” to the community itself.
Yes – WE DO NOT want to sell or transfer ownership to anyone regarding this building. I do believe this will be a great partnership between the City and Zeal.
https://www.startupsiouxfalls.com/
I totally support this Agreement – I been asking the Mayor and City Council to things to help the Small Business Community here within the City for a long time now, and here is another example of how great a Mayor, Paul TenHaken really is for this City, and why he will be re-elected to a second term.
– Mike Zitterich
I checked into this, and it is in the contract, they will have to pay the property taxes. But like you said, very little. I hope someone asks Tuesday night what that would be. My guess is around $5k a year or less.
It’s a new year. More crypto city deals. I’ve learned to accept it and realize it can’t be curbed. It’s not their money and easy to appropriate to friends and family. Just watch, it can be entertaining. What’s important to me is to memorize the character villains and vote against them in the future. I’ll also keep family names in mind for when they exercise usual paternalism.
Crypto, def.
INFORMAL
a person having a secret allegiance to a political creed, especially communism.
Mike, there absolutely IS a problem. The city’s money comes from the taxpayers and if the city isnt using the buildings, they can and SHOULD SELL the buildings instead of holding onto a property that essential WE taxpayers are paying for… and that is also contributing to higher rental and purchase costs (along with affordable) of property for businesses to own. The Govt, at ANY level, should NOT be landlords.
I think we should just turn over the city to Silverstar, they seem to have their act together, I just saw a new one on the west side on my way to the dump, they are springing up all over, and are good looking establishments. Maybe tear down all these historical buildings and put in more Silverstar’s? Gun ranges too, Sioux Falls is underserved. Maybe Zeal and Bishop Dudley could team up? Look at that, I’m a damn problem solver!
Seriously Mike! Clearly you understand about half of what you are talking about. I give you credit for trying, but you have more to learn.
The assumption that Zeal needs to a free building for a decade plus is wrong. They do what they do with out it now, why should we step in and subsidize them?? The amenities you think they can offer anywhere in a building they pay for. The City also already offers these co-workig spaces in our existing libraries and community centers. Why should we give them their own private building on the tax payers dime.
You also forget we have other resources that offer the same devices. It’s called the SBA. They have programs and staff to give small business guidance already paid for by your federal taxes. Did you know the SBA and Zeal are right next to each other at 2329 N Career Ave. Why would you want to separate them? My guess is the SBA office could be a future tenant. Zeal negotiates a lease with the Feds (SBA) and collects all the money in a building we let them use for free. If they don’t why would you ever separate them?
Zeal pay little to no property taxes. You are flat out wrong about this. City buildings are not taxed like private buildings. Zeal will almost nothing if anything in property taxes.
In the lease the City pays all of the expensive improvements (exterior, concrete and roof). Zeal pays the interior maintenance, HVAC, interior wear an tear; these are normal things any tenant would expect to pay for. There are several things not mentioned in the lease. Normally this would be CAM (Common Area Mainteance) and paid for by the tenant, who is doing snow removal and where (sidewalks and parking), who is doing landscaping, etc… it appears to the City tax payers while giving Zeal direct access to the Levitt and Falls Park.
The city can hold the property and still lease it at a market rate. Why give it away for free.
If you think Zeal is worth giving a million dollars to, knock yourself out defending Zeal/start up Sioux Falls. But this lease is a million dollar gift. They are not doing the tax payer any favors by paying for improvements that are specifically for their benefit. This is normal in a commercial. What is not normal is getting a building for $1 a year. You would have dozens of business lined up to lease this if it was advertised.
This deal was clearly put together behind closed doors with no open competition. No fairness. No opportunity for other taxpayers. No opportunity for other business. Ironically that has been the trade mark of this administration.
Mike, Don’t you want a free building to run your business from. Maybe you provide a meeting area where you can consult and meet with people while offering repair services. That’s what will be happening, but with business services.
Again the city getting into the business of propping up private business.
The property should be sold or at the very least,open bid process for any business to bid for a contract with the city.
This Strong Mayor government makes us a corrupt city!
You read the lease but got it wrong. The lease says that Zeal is charge of all maintenance and repairs to building, plus they can invest their private money in fixing up and remodeling the building, and yes they are in charge of landscaping, sweeping, mowing, snow removal. They have to carry different forms of insurance let alone the greatest benefit it working with locL businesses and acting as a legislative lobbyist for them and the city itself. Regarding economic policy.
Yes, but there is no minimum dollar amount they must spend. They could spend $5 or $5 million.
Silverstar you’re nothing close to a problem solver. Maybe a drip though.
Why should there be a minimum anything? I think if this partnership works in our best interest, the best will show up in the results of helping small businesses
The Paulson Payoff ! Not nearly as expensive as the bunker but every bit as stupid.
Mike, let’s start with, how many triple net commercial leases have you done? You are very mistaken. This is giveaway to Zeal that will actually cost taxpayers money every year. They have been doing this already for how long being right next to the Small Business Administration office, why do they all the sudden need a million dollar gift from the City? How about we lease it to a paying business instead?
Repair and Maintenance is under Section 11:
Zeal gets interior maintenance to include routine maintenance and repair to the “interior” (wear and tear)(damage by or do to use). Building shall be in good condition (interior). R&M work must be done by reputable contractors and includes: interior walls/partitions, widows, carpeting, mechanical, ventilation, heating, air condition, electrical, and plumbing. These are normal and customary for any paying lease customer to be responsible for when they actually pay a landlord in a NNN lease. AC and heating are the only two items that may actually go bad and cost a significant amount of money to fix. In a real commercial lease, it would be specified who was responsible for the units (AC and Heat) replacement since these are the only really expensive things to fix. The lease doesn’t specifically lay out who would pay to replace them if they could not be repaired. It is the Repair and Maintenance section, not specified as capital improvements. The lease is not written well. Normal commercial leases would be two or three times longer.
The City pays for Foundations, exterior walls, exterior concrete (without limitation), and roof. These are the expensive things that may need repairs, especially in a historic building. In a NNN lease the landlord will often expense these cost back to the tenant also, but is usually limited to a $ per square foot per year to the tenant. Per the lease, the City will not expense any of these costs back to Zeal since it isn’t specified.
All the other ways Zeal gets a massive gift that will cost taxpayer money:
Section 3: The City pays them back for any improvements if the City terminates the agreement early.
Section 4: Free parking for 13 dedicated spaces and 4 more free use spaces. The City is also clearly doing all now removal for the parking lot. Landscape work is not mentioned in the agreement anywhere also, so assume the City will pay for or perform landscape work and maintenance.
Section 12: Zeal can sell naming rights on a City building for their financial gain.
Section 13: Tenant shall pay real property taxes. I searched the county database and didn’t see anything paid for this address. City buildings do not pay property tax to my knowledge. This will be $0 for them.
Section 14: Zeal does a small portion of the snow removal of some sidewalks and the loading dock. Meaning everything else (the vast majority based on the attached exhibits) will be the City’s job to remove snow from even though it is sidewalk next to the building they get for free.
Section 15: Zeal gets to use all existing furniture, fixtures, and art in building for FREE! This means they may not do a major interior renovation or change the layout??? Still, it’s for free. The City will get the furniture back in 10 years when it is trash.
Section 29: City shall maintain building insurance at the City’s cost.
Right across the river is a new office facility that is receiving a TIF which Zeal could lease space from. And next to that building is a project underway which will provide more space for Zeal to rent and it too is receiving a TIF.
How about this, Zeal can lease the top floor of that empty parking ramp our last Strong Mayor got us into. Stick a million into that boondoggle.
This city government is ass backyards. Ideas like this need to pitched at the city council podium and studied with everyone watching.
Wasn’t there a recent petition drive started a few years ago to change the way city government functions? Maybe its time to restart it?
Oh Mikey … Thank You for creating a name to honor me. I appreciate it, it means my words and commentary are important, and in theory, quite popular.
However – did you see my recommended proposal at the C.R.C Hearings year, ‘we’ can revise the charter to slighlty change the composition of the Charter, but I do NOT want to change how our current city government operates. That I made quite clear during the meetings.
I do believe, ‘we’ need a City Council that acts in the best interests of the people, and by that I mean, we need smaller districts, in order to gain a better representative membership on that council.
I proposed a ODD NUMBERED COUNCIL of 9 Members not includign the mayor, but to leave the Mayor on the Council as the Mediator, to Control Decorum, and to Keep the Mayor in Front of the People.
I proposed a slight change to the “Council Composition” as part of Section 6.02 instead of “The Council shall have 5 Council Districts” I propose the rule “The City of Sioux Falls shall be aligned as a ODD NUMBERED COUNCIL of 1 District Per 29,000 Residents with at least 2 At Large Chairs”
This is the only change I would support, as I agree, and my comments show this, that the MAYOR shall be the Predominant At Large Rep of the “Whole People” making up the City of Sioux Falls.
There is no reason to change City Government itself other than to ensure the “PEOPLE” always have a true and fair “Representative” Role on the Council.
The 2 At Large REPS are there to protect the Majority from the Minority, meaning to protect the Vested Owners of the City itself which is bound to Land Ownership and Property OWnership.
“I proposed a ODD NUMBERED COUNCIL of 9 Members not includign the mayor, but to leave the Mayor on the Council as the Mediator, to Control Decorum, and to Keep the Mayor in Front of the People.”
It is interesting you bring up Decorum. The 1st Amendment does not mention this because it is unimportant.
Scott, thanks for alerting the public about this questionable proposal. It has the same feel as that “mixed use bunker ramp” parking ramp proposal. This “Special deal” appeared out of nowhere.
I hope citizens watch the Council meeting tonight at 6:00.
This is surely an interesting topic of discussion. Will definitely be an item to watch at the Council meeting and to see which of the Mayor’s puppets will recluse themselves from any voting on the matter. So nice of this Mayor to help out his business associates….again.
According to their web site, Matt Paulson founded Startup Sioux Falls, which merged with Zeal in 2019. Paulson remains on the Startup BOD. Matt Paulson also served as Alex Jensen’s campaign treasurer or manger when Jensen ran for City Council less than 2 years ago. And, Jensen doesn’t recuse himself from this vote? I’ve been a little out of touch with Council meetings as of late. Apparently ethics really have taken a back seat to personal agendas & buddy deals.
if u want to do it right the city should condemn and raze l’abri and let silverstar build one there
Paulson is/was also listed as a director for Zeal. It would be interesting to know if he receives or will receive any compensation for his position. A million $ break makes it a lot easier to give people big pay checks.
Does anyone happen to know how THIS specific startup was chosen to have a coveted location in Sioux Falls for such a steal of a price? Did other startups or established businesses even know about this building being available for lease? Was there a fair opportunity presented?
The mayor & the city council is completely corrupt and I can’t wait to vote every single one of them out; I would actually prefer the citizens of Sioux Falls demand they resign or that they are recalled.
Also, didn’t Click Rain change to Lemonly?
The Startup Sioux Falls board of directors includes the Co-Founder & Creative Director of Lemonly.
I think CR bought Lemonly and run it as a separate entity.