SIOUX FALLS - The corn and soybean fields are falling fast on the edges of South Dakota's largest city.

And it isn't because of the autumn harvest.

With the near-constant rumble of heavy equipment, housing, industrial and education developments are gobbling up the farm fields of Minnehaha and Lincoln counties, as this city of 150,000 expands toward a projected population of 178,000 in 2015 and 221,000 in 2025.

Sioux Falls has an annual growth of more than 3,500 people, roughly the size of Winner. As the city grows, so does an economic base that was once dominated by the John Morrell & Co. meatpacking plant and the nearby Sioux Falls Stockyards and their pervasive connection into once-dominant agricultural businesses in the area.

Those days are history, as are the images of a sleepy little meat-packing community of 70,000 that wraps itself quietly around the winding waterway of the Big Sioux River. That was Sioux Falls 40 years ago, when the stockyards, the John Morrell & Co. packing plant and the South Dakota Penitentiary were the city's main claims to fame.

The Sioux Falls of 2007 is much more than that. And Mayor Dave Munson said there's more on the way.

"We're becoming a much more diversified city," Munson said during a recent tour of Sioux Falls. "We're fortunate to have strong employers in a variety of industries, including health care, education, financial services and retail. I see Sioux Falls becoming more of a regional center for southeast South Dakota and surrounding states."

In much the same way that Sioux Falls is emerging as a regional economic center on South Dakota's eastern border, 350 miles to the west, Rapid City is experiencing a smaller-scale expansion of population and commerce.

Although it can't compete with the frenzy of economic activity and population growth in Sioux Falls, Rapid City is nonetheless reshaping itself as a larger, more diversified version of the soft-spoken tourist town of 43,000 during the late 1960s.

Now at about 68,000, the city is one of the few growth areas in South Dakota outside of the eastern corridor, and an increasingly attractive home to business development. Standing recently on the scraped dirt of the planned Rushmore Crossing development south of Interstate 90, Rapid City Mayor Alan Hanks said the earthwork there is symbolic of the coming boom in Rapid City.

"Rapid City has finally reached a point where the major retailers are really starting to pay attention and come to town," he said. "Sioux Falls was at that point 10 or 15 years ago. We're there now."

It's obvious in the aggressive earth-moving work all around the city's edges. Wal-mart is eyeing the southern fringe for a super-store anchor for a larger overall development, a cluster of commercial development proceeds near Catron Boulevard and Sheridan Road. But the I-90 corridor east of the Rushmore Mall is the epicenter of change, with two major retail developments planned and in the initial constructions stages.

Rushmore Crossing is one. Its 700,000 square-foot of planned retail area will be anchored by a larger Scheels store, a Dillard's store and a Target super store. Across the interstate to the north, Four Square development will cover more than 600,000 square feet and be anchored by a Cabela's store that will call itself a retail destination.

Developing those areas is relatively easy compared to some of the geographic challenges elsewhere in and around the city, Hanks said. Unlike Sioux Falls, which expands more smoothly into the generally flat surroundings, Rapid City must develop as the land forms allow.

"Sioux Falls is little bit flatter, and they don't have the rock issues that we have," Hanks said. "We have to deal with the topography, which makes it very difficult and the cost of development is significantly higher."

The development philosophy in Sioux Falls is to assure that green space and city parks are developed as the city expands, city planning director Mike Cooper said.

"There's no required green space or park-space dedication, although the city's policy is to try to keep a park within half a mile of every residence," Cooper said. "Right now we negotiate with developers on a project-by-project basis."

Rapid City doesn't have a defined distance goal for parks but tries to identify opportunities for green space whenever possible, Hanks said. Topography can be a limiting factor there as well, he said.

On key difference in the development picture between the two cities is the use of tax increment financing (TIF). Rapid City uses them extensively, while they are rarely used in Sioux Falls.

"We have four active TIFs and all are within our downtown boundary," Cooper said. "We believe TIFs should be used as an incentive to promote targeted development - downtown and surrounding neighborhoods - rather than for development in general. That's been our policy since we began using TIFs in 1989."

Hanks said Rapid City relies more on TIFs because it doesn't have the financial resources of Sioux Falls. A higher percentage of the second penny of the city sales tax - which raises more than $40 million a year - in Sioux Falls is available and used for infrastructure and related development, Hanks said.

"We split our second penny, with half going to infrastructure and half for the 2012 fund, which builds a lot of things," he said. "Sioux Falls has more revenue flow to get out in front of development. Rapid City is a little farther behind. We don't have that available cash flow."

Sioux Falls is exploring cost sharing options with developers as another way to keep pace with the projected level of development in the future, Cooper said. Munson said he expects developers to do their fair share financially in development but also represents a city that's willing to invest in its own future growth while maintaining a commitment to existing neighborhoods.

"It is a balancing act between encouraging new development and maintaining existing infrastructure," Munson said. "We invested $40 million in upgrades to the storm-drainage system in many older neighborhoods, eliminating flooding issues that had impacted these areas for years."

While admitting to a degree of envy over the greater financial resources of the bigger city across the state, Hanks doesn't envy Munson the city he leads. Rapid City is reaching a critical mass in size and appeal that will result in dramatic changes in the next 20 years, Hanks said.

"When you consider our main trade area, we're already at 100,000. Within the city limits, we're at just under 68,000 now. And in the next 15 to 20 years, we're like to hit 100,000 in the city," Hanks said. "We've got a great future."

Contact Kevin Woster at 394-8413 or kevin.woster@rapidcityjournal.com