-via Black Hills Pioneer
By Heather Murschel
Spearfish convention center expansion board relays risks of $5.3M project to city
SPEARFISH — The proposed $5.3 million convention center expansion entails several “substantial risks” for both the city of Spearfish and the tourism related businesses that would pay additional taxes to fund the project if it was constructed.
After the city council approved a resolution to create its third Business Improvement District (BID) in December 2012, a board consisting of Scott Stampe, Stephanie Adams, Jim Hess, Greg Krier, Clair Donovan, Barry Bibler, and Don Brune were appointed to review the financial feasibility of the project, as well as determine a fair and equitable rate the potential businesses in the district would pay.
After meeting diligently for three months and fielding questions regarding the project, their conclusions on whether to move forward or not were revealed Monday.
“The proposed expansion could be good for the future, but there are substantial risks involved that need to be considered before making a decision,” Scott Stampe said of the board’s conclusions. “There are just so many unknowns at this point.”
First and foremost, he said, the Holiday Inn would need to renovate the building.
“If funded, the expansion should be contingent on the hotel renovation, and until this happens we believe the project should be shelved,” Stampe said. “It’s quite a few decades old, and though regular maintenance has been done and it looks adequate, we’ve learned that the host facility needs to have the appearance of a new facility for the expansion to be successful.”
He said they made the determination after considering the results of a $25,000 feasibility study Hunden Strategic Partners conducted last year, which reviewed several factors, including economic benefits, what people look for when determining a location, and surveying trade organizations to determine the latest trends.
The other risks involved, Stampe explained, include the abundance of regional competition, the lack of parking and that the hotel may not have enough rooms to accommodate larger events.
“We believe these risks should be reevaluated when the renovation occurs,” Stampe said.
Spearfish City Administrator Joe Neeb said the Holiday Inn relayed information that they are open to the idea, but the details have yet to be revealed.
“I agree that it would improve the convention experience, so this is something that should be discussed further,” Neeb said.
When it comes to the 82 tourism and leisure related businesses provided with an option to pay an additional tax to fund the project, Stampe said the majority of them are hesitant because the only businesses to benefit economically are located at Exit 14.
“They believe the impact of a new facility will not go beyond that area and that an equal assessment of businesses community-wide is not fair,” he said. “If funded, it should be a partnership between the city and those businesses located in the area.”
After relaying the risks, he presented an option that rather than financing a project of this magnitude, they should reallocate their resources to spend on marketing Spearfish, drawing in new events and putting effort toward targeting existing ones that are held elsewhere.
When asked if this is what the BID board would like to see happen, Stampe said that is the feeling at this point.
After his presentation, he commended city council members for initiating the board.
“It was a wise move on your part to have these individauls come together to ponder these questions because it will give you some insight into the politics when it comes to the expansion,” Stampe said.
The proposal expansion has been on the city’s radar for more than two years, Williams and Associates, an architectural firm in Spearfish, submitted two different designs and several public meetings were held to garner public input.
In 2011, the city of Spearfish utilized the findings of the Convention Center Taskforce, a committee formed to determine if the expansion would be beneficial to the community as a whole, to determine that the proposed expansion has merit and that the process should continue.
From there, Hunden Strategic Partners were hired and in May 2012 representatives of the firm presented the details of the comprehensive study that consisted of multiple components and projections as to whether there will be a solid return on investment.
After this BID was approved, its boundaries were established and the council determined that taxes generated would be in addition to the revenue created by an existing BID that paid off the convention center in 2010. Today, the $2 general occupancy tax levied upon accommodations for transient guests generates $180,000 and is allocated to Visit Spearfish for marketing.
Neeb explained that the new BID would need to generate an additional $360,000 to fund the expansion, so if all the potential businesses agree to be apart of the BID, their annual assessments could range between $5,000 and $6,000 per year.
If the expansion comes to fruition, the two districts would work together to determine how these funds would support each mission. Neeb said all of the leisure and tourism stakeholders receive benefits from Visit Spearfish’s marketing and attraction efforts and that an expansion of the convention center will generate more room nights sold.