Yesterday’s Sioux Falls City Council informational meeting was one for the books. By the time I got to give my public input, the first thing I could say was watching the meeting was ‘painful’.

As we know, the council in it’s current state is extremely dysfunctional, they displayed this dysfunction yesterday when they discussed their travel budget for well over 45 minutes. Besides the fact the staffer who is in charge of this is disorganized and lacks the initiative to put this together properly I found it an exercise in ignorance that never accomplished anything.

They first complained that they had to ‘VOTE’ on what they wanted, in which they really didn’t have to (they normally don’t vote at informational meetings). I reminded them in the past that the council just had a set dollar amount of $19,000 (I misspoke and said million) for the travel budget and when it came time to book the trip they discussed who would go. Not that complicated. But instead they were making decisions on trips that haven’t even been booked.

Councilor Neitzert felt the public was against these ‘junket trips’ because they were waste of taxpayer dollars, but not a $26 million dollar parking ramp with no tenants that we did not need and built in the wrong spot. But let’s split hairs on $19K.

Councilor Soehl felt these meetings were for staff not councilors. Stehly, Brekke and myself told Soehl that these are meetings for policy makers NOT staff, you know, the people who make policy decisions. His ignorance of the legislative process was shocking, to say the least.

They did however approve a facilatator to help with the council’s goal setting (I feel sorry for that person) and the mayor agreed to help pay for a neighborhood summit this Fall (possibly 2 in 2020) which is a great idea. They want to hold it at the new ministry center at the former school for the deaf because they offered the space for FREE.

But what got very interesting was the discussion over the donation to the State Theatre. They want to essentially give them $1.5 million out of the entertainment tax and have strings attached for 10 years. Councilor Starr pointed out that giving money from the entertainment tax would set up a precedent for other non-profits to ask for that money in the future. I agreed with Starr and said that it really should come out of the CIP as a one time gift.

Councilor Neitzert pointed out he struggled with having the option of the city buying the building if they went belly up over the next ten years, saying that the city owns enough entertainment facilities.

What is even more frustrating is that the council and mayor are doing this all based on a decision Denny Sanford made. I asked the council if this is how policy decisions are made, and if so, it was sad. I also told them that while most of the citizens in this community are excited about it being finished and opened, I have never heard anyone say we should be giving them tax dollars.

What is also troubling is that the State Theatre still has to raise another $2.5 million on their own to complete the project, and then there is the operating and maintenance costs. I’m not sure how they will manage that?

The good news though is that the gifting contract is NOT finished yet, and could be tweaked. I would prefer we don’t give the money, but if we do, it should come from the CIP, be a one-time gift with no strings attached, and if it can’t survive on it’s own it can be sold privately. As Greg said, we have enough entertainment facilities that are publicly funded.

I first want to say I support finishing the State Theatre, I have actually helped with some charity fundraisers for the facility through ZombieWalk and SF Roller Dollz. I think it is a worthy cause and I applaud Denny Sanford for giving money to the goal of completion. But I think that is still the direction the theatre should move in, private donations for a private facility.

Using entertainment taxes sets a bad precedent, as I pointed out yesterday, and I will tell you why.

Seven years ago, former city clerk Debra Owen won an open meetings case over how her termination was handled. During the proceedings, City Attorney David Fiddle-Faddle argued his case based on the opinion of a former attorney general. 4 of the 5 attorneys who sat on the Open Meetings Commission contended that an ‘opinion’ of an AG is NOT case law, so it did not apply. When Fiddle continued to argue based on the AG’s opinion, one of the panelists asked David cynically, “You do understand that the opinion of a AG is not the same as case law? Don’t you?” The crowd in attendance let out an audible giggle. The commission determined that you have to base your arguments on tried case law, not opinions.

The City of Sioux Falls is trying to say they can spend the entertainment money on a private entity in the form of promoting the city based on a opinion of the AG in 1984. But there is NO case law. In other words, the city could be sued if they try to set this precedent. Even if I supported giving the State Theatre MORE tax money, which I don’t, it should come out of the CIP not the entertainment tax.

Listen to Allison Weiland talk about the State on Jon Michael’s Forum

In other news, Cameraman Bruce attended a luncheon today talking about open meeting laws, 3 of the panelists were former State Legislator Dave Knudson, Argus reporter Jonathan Ellis and Jon Arneson (Argus attorney). They all contended that the most recent open meeting laws that Knudson helped write, said that if text messaging or emails during a public open meeting are being used, that correspondence can be used in a court case. So council, if you were smart, you would put the phones and email chatting away during the meetings.

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;

SPECIAL TAX RATES.

   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.

I guess my sources gave me the correct numbers, back in March I said this;

I also heard they are looking at $6 million to finish the facility, this is what they are looking for;

3.5 Million from individual private donor
1.5 Million from City (taxpayers)
1 Million from their own Capital campaign

I’m not sure if they will still try to raise the other $1 million on their own, but I was spot on with my numbers;

Sanford will gift $3.5 million while TenHaken, who hinted at potential financial support for the State Theatre in his State of the City Address last month, is committed to setting aside $1.5 million in city dollars for the project.

What great timing by Mayor TenHaken. On Tuesday the MCC votes to raise our taxes, on Wednesday our Mayor decides to give away $1.5 to a non-profit who has struggled to raise ALL the money on their own. Taxpayers to the rescue. Wasn’t it just a couple of weeks ago the mayor asked for citizen’s input on the budget? I’m guessing that the citizenry would say ‘Hell No!’ on this one, but like I said, we really don’t have any input.

I was told back in March that when Paul was negotiating the deal with Sanford, Denny said he wouldn’t give the money unless the city had some skin in the game.

One may question how the State Theater ranks 3 out of 6 votes when public safety only gets one vote from the city council (DOC: Work Session Votes Cast Results.pdf)

It would seem to me that Council Leadership is probably ‘whipping the votes’ behind the scenes for the State Theater and the administration, and like the massive proposed TIFs for downtown development, there seems to be some backdoor wrangling going on to make the appearance that these things are important to the public.

I did my usual polling this past weekend of downtowners about funding the Theater with tax dollars. While there was huge praise for the State and it’s redevelopment, most if not all, said it shouldn’t be funded with tax dollars. The most common response was that they have had plenty of time to raise the money.

I was also told that the Henkin family pulled their donation due to the delay in finishing the project (I haven’t had anyone verify that yet).

I think if the administration and certain councilors try to push forward with any significant funding to the project (the number being thrown around is $1.5 million) there will be some backlash from residents) especially with all the issues we have been having with flooding homes and potholes.

I guess we will see how this drama plays out.