Big changes coming to Gold Discovery Days

By Jason Ferguson

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When Gold Discovery Days rolls around the third weekend of July, there are going to be some noticeable changes to the way the event has been conducted in the past.

At the Jan. 22 meeting of the Custer City Council, the Custer Area Chamber of Commerce and its Gold Discovery Days committee sought and received city approval on a bevy of changes that will make Washington Street the focal point of the weekend while also allowing for the open consumption of beer and wine along the street throughout the course of the weekend.

Under the new plan, Washington Street will be closed from 2nd to 8th streets, save for a single lane of traffic between Dacotah Bank and 5th street, which Dacotah Bank has agreed to. Washington Street would be closed starting at 5 p.m. on Thursday, July 18, in order for the carnival, craft fair, bed races and band area to be set up.

There hasn’t been a carnival with rides at Gold Discovery Days in roughly 18 years, but that will change this summer. The carnival will be set up on Washington Street between 6th and 8th streets, with campers/trailers for the carnival employees set up on 7th street. The same area will still be home to the volleyball tournament, basketball tournaments, stick horse races, etc. The arts and crafts fair that has taken place in Way Park will also be moved to Washington Street between 4th and 5th streets.

The annual bed races and car show will call Washington Street home beginning this summer, between 2nd and 4th streets. The bed races will happen on Friday, followed by a dance in the same location, with the car show on Saturday.

The allowing of an open container of beer or wine will begin the Friday of Gold Discovery Days at noon and last until midnight that day, while resuming the next day at 10 a.m. and running until 7 p.m. The open container will be allowed from 5th Street to 2nd Street on Washington Street, and a beer tent will be placed in that area as well. Any of the local establishments who hold a license that allows them to sell wine or beer will be allowed to bid on being the sponsor for the tent. Mayor Corbin Herman said at the meeting that the chamber would make the decision as to which entity ultimately serves the beer and wine at the tent.

The chamber will purchase 16-ounce plastic cups in which the beer and wine will be sold. No hard alcohol or bottles or cans of beer will be allowed. Everyone will be carded and wristbanded to drink in the open container area, regardless of their age. The chamber has indicated it will provide security for the event.

The open container portion of the plan was a source of discussion among the council, with alderwoman Jeannie Fischer wondering aloud how it will “be corralled,” but answering her own question by saying she believes it has been thoroughly thought through by the chamber. She added that if it were to create problems it could be tweaked or eliminated altogether in 2020.

Changes are coming to the Gold Discovery Days parade, as well. Lineup for the parade will be moved to Pageant Hill, and the parade will come straight from the hill onto 9th Street, to Gordon Street, then onto 8th Street before turning onto Mt. Rushmore Road. It will end on 4th Street.

As the weekend winds down, Washington Street could reopen from 2nd to 4th street Saturday 7 p.m., while the rest of the street will remain closed until the vendors and carnival are taken down.

The council also discussed the Custer Community Center at the meeting, and, more specifically, how it can obtain the funds to complete the center that, since the city took ownership of, has been done in a piecemeal fashion.

The council unanimously agreed to have Herman sign a letter of intent to make Dougherty & Company, LLC, out of Sioux Falls its underwriter for bonds the city is considering issuing to complete the project. 

Toby Morris of Dougherty and Company was present at the meeting and gave an overview of the process the city would need to go through to take out what would essentially be a loan to complete the project. Originally, the city believed it would cost $2.5 to $3 million to complete the renovation of the community center, but that price has risen, and could be as high as $4 million.

By state law, towns are allowed to borrow up to 5 percent of its valuation. Custer’s taxable valuation in 2018 was $149.4 million, meaning its legal constitutional debt limit is $7.47 million. The city currently is using $3.3 million of that limit through its various Tax Increment Finance districts that are on the books.

The city has applied for U.S. Department of Agriculture funding for the project, which would count against its debt limit. In that instance, should the project cost, say, $3.5 million, that would put the city right up against its allowable limit, which would in turn limit its borrowing options should an emergency arise with streets, the parks, etc. Current water and sewer projects are not part of constitutional limits, as borrowing for that can be paid for by residents who use the services through a surcharge on city utility bills. The constitution permits the city to issue debt for water or sewer improvements in an amount up to 10 percent of the total assessed value of taxable property. Water or sewer debt that applies against the 10 percent limit does not apply against the 5 percent limit. However, certain requirements, including a public vote, must be met in order for water or sewer debt to apply against the 10 percent limit. Also revenue bonded indebtedness that is secured by a surcharge on utility charges has been determined not to be debt in determining municipal debt capacity and is referred to as surcharge debt. In addition, indebtedness where repayment is subject to the annual appropriation process is not debt that falls under the constitutional debt limit. 

There may be an option for borrowing money that does not go against the city’s constitutional limit. Dakota Resources, an entity located in Renner that describes itself as “a champion for rural communities and a catalyst for economic development.”

Dakota Resources is one of a handful of Community Development Fund Institutions in the nation to be named a partner in the  U..S Department of Agriculture’s Community Facilities Re-lending program, and received a $10 million award for the program in 2016. The funds are designed to help spur economic development opportunities and reduce rural poverty in South Dakota communities under 20,000 by improving essential community facilities. It is through this program, Morris said, the city could possibly secure funding for the community center without adding to its constitutional debt.

Because Dakota Resources does not do construction loans, the city could secure the construction loan through a local lender, and once the construction was complete, Dakota Resources would pay the loan from the lender off and the city would then service the debt to Dakota Resources. One option to do so would be by the city earmarking an annual appropriation in its budget, similar to what it does to pay the $347,000 annual  subsidy to Regional Health for its hospital in the city.

Morris said the city could explore the feasibility of borrowing the money for the project without any obligation, while it was also made clear that Dakota Resources had not committed to lending the money. Under this plan the project would hire a construction manager at risk to spearhead the project, who in turn would work closely with the architect. The construction manager at risk would get an overview of the project and tell the city a guaranteed maximum price for the project, to which the city could decide whether or not to move ahead with the project. If the project were to cost more than the guaranteed maximum price quoted the city would not have to pay for the overage.

Morris suggested the city begin to dig further into the possible cost of the project to see what it is getting, what the cost might be and what the useful life of the building, the former elementary school, may be. The city could then make an educated decision on whether or not to proceed with the project.

“We need to figure it out,” Herman said.

The city could have a construction manager at risk on board for the project as early as March, Morris said.

The council subsequently passed a resolution declaring its intent to reimburse expenditures with proceeds of bonds, which would allow the city to apply for reimbursement for the $400,000 it has already spent on the community center out of any bonds it receives for the project.

In other news from the Jan. 22 meeting, the council:

• Briefly discussed the impending closure of Shopko, expressing optimism that a new business would move into the building after Shopko moves out. The council also discussed the complexity of the issue, as the original developer of the project, Pelstar, LLC, still has the TIF associated with the project, while the building is now owned by another company. The city will still collect property taxes on the TIF, which are paid to the developer. It is likely the value will drop over time if the building is not occupied.

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