Posted on 07-15-2014

The West Central School Board, sensing little room to maneuver legally, approved a revenue-sharing plan Monday night as a key first step for a west-side neighborhood to join the Sioux Falls School District. Cherry Lake Reserve, an upscale housing development near 12th Street and Ellis Road, still would need another "yes" vote from the West Central board before transferring from West Central to the Sioux Falls district. That second vote would come after West Central hosts a public hearing on the land transfer, possibly in August, said Steve Dick, the board president.

 

"It puts us on record that we're supportive of working out an agreement with Sioux Falls," Dick said. The Sioux Falls School Board also supported the proposal at its meeting Monday night.

 

Cherry Lake is a neighborhood in Sioux Falls but also inside the eastern tip of the West Central district. It is one of several housing areas around the edge of Sioux Falls, inside the city limit but outside the Sioux Falls school system. It is five miles from downtown and eight miles from Hartford. Land owner Jim Soukup and developer Van Buskirk Cos. want to move land into the Sioux Falls district, a move the Sioux Falls board approved April 28 but still needs OK from West Central.

 

The revenue sharing proposal surfaced as a compromise. Under the plan, West Central will receive decreasing amounts of tax revenue from the residential property moving to Sioux Falls for 20 years if the transfer becomes final. The payments would be 100 percent of capital outlay revenue from the land starting in 2016, then drop 10 percent every two years until zeroing out in 2035. Dick estimated that the payments would start at $300,000, then drop incrementally to $30,000. The total would be $1.65 million over 20 years, he estimated. He said the development has a $100 million potential, so West Central would be receiving a small fraction of the tax revenue. But that may be the best possible result under the circumstances, he said

 

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If the board refused the transfer, and the matter ended up in court, West Central would risk losing it all, he said. "They look at all the issues, where people go to church, where they shop, where they socialize, proximity to school. We don't win on those issues," Dick said. The West Central board discussed the matter for 45 minutes in closed session with its attorney, Miles Schumacher, from Lynn Jackson Shultz LeBrun of Sioux Falls. Board members then voted 4-0 to support the revenue sharing agreement. It also voted 4-0 on a second measure under which Soukup agrees not to try to transfer additional land adjacent to the Cherry Lake houses from West Central to Sioux Falls. That agreement would be in place until the year 2030, Dick said.

 

Supporting both tallies were board members Dennis Husman, Bryan Skinner, Craig Habben and Gordon Haldeman. Habben and Haldeman were sworn in earlier in the evening as the board had its first meeting of the new fiscal year. Dick, as president, did not vote but said afterward he supported both measures. Schumacher said the agreement with Soukup not to attempt to transfer additional land would bind a future landowner if Soukup were to sell the property.

 

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The revenue sharing concerns only residential property in the development. Any commercial property, by law, stays in the original district, Dick said.

The land in question will far exceed the value of property that can be transferred from one district to another under a state law that took effect July 1. But the Soukup proposal was filed in April under previous rules and was not subject to the limit, Dick said.

Sioux Falls agrees

 

The Sioux Falls School Board unanimously approved a memorandum of understanding Monday that would transfer residential property in the Cherry Lake Reserve near the Tea-Ellis Road and 12th Street from the West Central School District to the Sioux Falls School District. Beginning with taxes payable in 2016, the agreement stipulates that the Sioux Falls district will send 100 percent of the capital outlay taxes received on the transferred property back to the West Central district. That rate will decline by 10 percent every two years until 2035, when the final 10 percent is sent to West Central. The transfer is contingent upon residents of neither district referring or rejecting the transfer.

 

Board member Kate Parker was on vacation and not present to vote. The effective starting date of the transfer will be July 1, 2015.

 

— Steve Young, Argus Leader