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City releases details of Cabela's agreement: $2 million and visitor center land
Tax-increment financing district will help reimburse taxpayers
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FarkRAPID CITY -- The incentive package offered to bring outdoor outfitter Cabela's to Rapid City includes $2 million in economic development funds and the 30 acres of land where the Black Hills Visitor Information Center now sits.
In return, the city would be the location for an 80,000-square-foot "destination retail store" that Cabela's is known for: hunting, fishing, camping, hiking and boating gear as well as clothing, gifts and furnishings with elaborate animal displays, aquariums and other sights.
Cabela's would also spend as much as $500,000 to provide 5,000 square feet of space inside the store for a new Visitor Information Center. According to the agreement, the city will lease the visitor-center space inside the new store for $1 per year for 30 years.
The city released details about the agreement Thursday to give the public an opportunity to review them before the city council considers them during the June 18 city council meeting.
The documents are linked online to the council's agenda here under the June 18 city council meeting's agenda at the third item under Executive Session to Discuss Contractual Matters.
The city agrees to give Cabela's $2 million from the economic development Opportunity Capture fund, which was created using sales-tax money from the 2012 program, to help build the store. Payments would be made over three years: $500,000 by the end of this year, $500,000 by the end of 2008 and $1 million by the end of 2009.
The city intends to recapture that money by creating a tax increment financing district for the project. Proceeds from the TIF will ultimately go to the Rapid City Economic Development Foundation and replenish the Opportunity Capture fund.
Before it can go to Cabela's, the city must first transfer the 30 acres of visitor-center land to the foundation; then, the foundation will transfer the land to Cabela's after the TIF district is formed.
If Cabela's closes the store within 10 years, it would be required to repay the $2 million entirely and would have to pay a prorated amount if it closed in 11 to 15 years. The city would also get the visitor-center land back, or the amount that the land was sold for, if Cabela's closes during that time period.
In addition, for 30 years, Cabela's would not be allowed to relocate the store within 150 miles of Rapid City but could relocate within the city.
According to past news reports, the centerpiece of the store will be a mountain replica with running waterfalls and streams, a trout pond and trophy animals in recreations of their habitat. The store will also have a gun library and an indoor archery range.
The store will be part of a 700,000-square-foot open-air retail center north of Interstate 90 on 70 acres at the southeast corner of Dyess Avenue and East Mall Drive. Dyess Avenue runs north and south halfway between Exit 60 and 61. East Mall Drive is parallel to the interstate. Foursquare Properties, based in Carlsbad, Calif., is developing the project on land it is buying from GLM Land Corp., a company owned by Bill Gikling and his partners.
Alderman Tom Johnson said there may be minor details to work through, but overall, he is satisfied with the agreement and believes Cabela's provides a tremendous growth opportunity for the community.
Johnson said the Four Square development, which is not only Cabela's but includes other retail stores, will produce $3.7 million to $3.9 million annually in sales-tax revenue to the city. The state would get about double that amount in sales-tax revenue.
"That is a substantial development," he said.
Johnson said the creation of a TIF district turns the $2 million subsidy into an investment that will be recaptured, not merely an incentive program.
"In addition, we are gaining all these additional sales taxes as a result. It's a win-win," Johnson said. "Eventually, it really will be a payback. And this will be a TIF that really pays the community back, so growth will pay for growth."
Though some people may be critical about the incentive package, Johnson said he looks at the question in a different way: "What does it cost if Rapid City does not get Cabela's?"
Johnson said the city would lose between $3.7 million to $3.9 million in annual sales-tax revenue, and als, Rapid City's status as the retail hub of western South Dakota could be threatened if Cabela's went to another community in the area.
"They're a huge magnet. Do we want to let Cabela's go? Do we want to let another community establish a base of retail destination other than Rapid City? I think the answer is no to all those questions," he said.
Alderman Bill Okrepkie agreed it would be a mistake if Rapid City lost the retailer by rejecting the agreement.
"I'm going to do everything in my power to make it happen," he said. "I would not want to go to my constituents and say I voted against Cabela's coming to Rapid City. What's important to me is the benefit it's going to provide the people of Rapid City. People like to go to Cabela's; they like to go to these places. That's a benefit to the people who live here."
But Alderman Sam Kooiker is concerned that the city is providing too much of an incentive.
If you add up what the city would be contributing, Kooiker said, the investment by city taxpayers will be greater than Cabela's capital investment.
"We need more information on that, but I believe there's a key difference between giving away a few cows or a herd of cows and giving away the farm," Kooiker said. "I very much want to see them come in. But I'm concerned about the proposal."
Kooiker said Cabela's was originally looking at the Black Hills Visitor Information Center's land to build its store. Now, they're building on a different piece of land two-thirds of a mile away, but they still want the visitor-center property as an incentive so they can develop it.
"I believe Cabela's needs to come and make a very solid case as to why the city's investment should exceed their own investment," he said. "To my knowledge, we've never structured a deal like this for any other business coming to town."
Contact Scott Aust at 394-8415 or scott.aust@rapidcityjournal.com
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