Cabela’s full impact lies ahead, locals say

By Heidi Bell Gease, Journal staff | Thursday, August 07, 2008

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It's not just about Cabela's.

When people speculate about how the new outfitting store could affect Rapid City, what many are really talking about is how far the economic development ball will roll after Cabela's kicks it into play today at 4 p.m.

"I think that the spin-off from Cabela's will be tremendous," Pat Tlustos, a local developer and president of Rapid City's Economic Development Partnership, said. "You're already seeing a number of different businesses looking at potential relocations out there. ... I think you're going to see a lot of growth in that area of town."

Cabela's 29th store opens today at Interstate 90 Exit 61. The store itself employs about 150 people and will certainly generate additional sales and property tax revenues that will benefit the community. But many say the real impact will come in the months and years to come.

"They basically are the catalyst for additional development, and we're already starting to see that," Rapid City Mayor Alan Hanks said. "We were certainly hopeful that we were going to see a big bump in sales tax, but with the additional amount of development that we're seeing, ... I think our projections were on the low side."

Sam's Club has announced plans to open a new, larger store next to Cabela's within the next two years. Both Cabela's and Sam's are part of Gateway at Rapid City, a shopping complex being developed by Foursquare Properties. And several new hotels and restaurants have already gone up at Exit 61.

Meanwhile, just up the road, Rushmore Crossing retail center is taking shape at Exit 60, and McKie Ford and Toyota of the Black Hills are reportedly planning new car lots on the north side of Exit 60.

There's still a lot of commercial property for sale near Exit 61, Tlustos said, including about 50 acres he is helping develop northeast of Cabela's. Possibly because of that, the Cabela's project has not had a big impact on area land values yet.

But Tlustos does not think it will be long before that stretch of the I-90 corridor fills with new businesses.

"I think people are looking for the major intersections right now, and they're placing their bets on those intersections," he said. "Then, you'll start to see some of the rest of it filling in. ... That's the classic way things develop."

Cabela's also has prompted local officials to extend East Mall Drive to the west. By Christmas, Hanks said, shoppers will be able to drive from Haines Avenue past Lowe's, behind the Rushmore Mall, and all the way out to Cabela's without getting on the interstate.

That's important for traffic flow, Hanks said, but also for the infrastructure -- water, sewer, electricity -- the road brings.

"Now, we basically have the extension not only on the north side but also on the south side," past Rushmore Crossing, Hanks said. "We literally have a huge retail corridor along the interstate."

There was some opposition to the Cabela's project when city officials approved an incentive package that included $2 million in economic development funds and the transfer of 30 acres to Cabela's (see related story). Last September, Rapid City voters approved the land transfer by a margin of about 60 percent to 40 percent.

Mitchell used a $5 million sales tax revenue bond to help land its Cabela's store. Since it opened in 2000, what was once a grassy field south of I-90 has become home to at least four hotels, seven restaurants and other businesses, all eager to take advantage of Cabela's customer traffic and the infrastructure that came with the store's construction.

Bryan Hisel, executive director of the Mitchell Area Development Corporation, said the city added more than 600,000 square feet of retail space after Cabela's opened. Taxable property valuations grew by $100 million. In turn, taxable sales went from $300 million to $400 million between 2000 and 2005.

That impact won't be as dramatic in Rapid City. According to the South Dakota Department of Revenue, Rapid City reported $2.144 billion in taxable sales in fiscal year 2008.

For Mitchell, Cabela's did something even more important. It changed the image of the city of 15,000 from that of a sleepy town defined by a corn-covered civic auditorium to one of a growing, progressive community.

"The image of your town is what people see from the interstate," Hisel said. "What people see is what they think your town is."

Image is less crucial for Rapid City. Thanks to the neighboring Black Hills, the community already has a unique image. Although Cabela's has made smaller towns like Mitchell and Sidney, Neb., a destination for visitors, there already are lots of reasons -- including Mount Rushmore, Crazy Horse, and existing shopping -- to visit Rapid City.

"I think Rapid City has always been perceived as being a vacation destination," Hanks agreed. "This just adds one more attraction."

Local retailers are working to make sure downtown Rapid City is also a visitor destination.

John Brewer, president of Destination Rapid City, believes customers drawn in by businesses along the interstate may well end up downtown.

"They expect to find entertainment, shopping, dining they don't find on the I-90 corridor," he said. "They expect to find it in a pedestrian-friendly downtown environment."

Destination Rapid City is working with a consultant on plans to revitalize downtown. Promoters say the statues of presidents, Art Alley and weekly summer street festivals are already making downtown a more interesting place for visitors and locals.

Competition is nothing new for downtown businesses. They've been dealing with it since the Rushmore Mall opened in 1978, pulling such large retailers as J.C. Penney and Sears out of the city center.

Brewer believes Cabela's will only enhance downtown business. "It makes the pie bigger," he said.

That's not to say some small businesses aren't braced for Cabela's arrival.

Mike Cummings, owner of The Rooster, a bait and tackle shop on West Main Street, said last spring that he was worried about competing with the giant outfitter. "They can sell products for what we can't even buy them for," he said.

But other business owners, including Hans Stephenson of Dakota Angler & Outfitter, said they would rely on regular customers and good customer service to keep their doors open.

Jim Hawk is one of those customers. He loves Cabela's and welcomes them to town. He expects to do some shopping there. But he and other local fly fishermen feel a loyalty to Dakota Angler that Cabela's can't compete with.

"We've spent a lot of years trying to keep a good fly shop in Rapid City," Hawk, who is past president of the Black Hills Fly Fishers, said. "We appreciate the fact that (Hans) is in town, and he has very specialized, personalized service. ... We're still going to support him with major purchases."

From his vantage point eight years down the road, Hisel believes Cabela's brought nothing but good things to Mitchell.

"It has delivered everything that we expected it to, and a little bit more," he said. "There are very few development deals that work out that way."

Contact Heidi Bell Gease at 394-8419 or heidi.bell@rapidcityjournal.com