A look at the city’s proposed 5-year capital plan: Heavy on roads, steady on new spending

Revenue — especially sales tax — isn’t growing as fast in Sioux Falls as in recent years, and it’s reflected in the city’s latest five-year capital improvement program.

The CIP was provided Friday to the Sioux Falls City Council. It represents part of the full budget, which Mayor Paul TenHaken will deliver July 25. The five-year plan totals $1.1 billion, with $253.4 million in spending slated for 2025.

The plan is heavy on street funding, which accounts for almost $500 million in the five-year plan, an increase of 9 percent compared with the last five-year plan. But it also reflects the debt necessary to build multiple swimming pools, as well as cash to buy the land on the east side of downtown that has been identified as a potential convention center.

“It’s the first year we’ve shrunk the size of the sales tax fund,” director of finance Shawn Pritchett said. “It’s a reset, and we do what families do: You reprioritize and look at what you can accomplish and make sure what you’re doing is maximizing investment for the community.”

The graphic below breaks down spending categories in the 2025-29 capital program:

Total capital spending of $1.1 billion is comparable to the current five-year plan. The difference comes in how much sales tax the city is expecting to receive.

“We didn’t hit projections, so we had to reset based on 3 percent growth last year,” Pritchett said.

So far, the city is trending at 3 percent growth in sales tax this year, though “we’re optimistic we can recapture some of that as the year goes on,” he said.

Looking ahead, the city is projecting 4 percent annual sales tax growth for 2024-26 and 5 percent annually in 2027-29. That doesn’t include a potential loss of tax revenue from consumables, scheduled for a public vote in November.

“We can’t contemplate putting that in there because it hasn’t passed and is hypothetical at this point, but you’re talking about probably a 9 percent drop,” Pritchett said.

Highways, streets drive spending

The South Dakota Department of Transportation plans to invest almost $810 million in and around Sioux Falls from 2024 through 2027, almost 60 percent of that within Sioux Falls city limits. Projects include the South Veterans Parkway corridor and multiple interstate interchange projects, including 85th Street.

The city of Sioux Falls is funding adjacent road work necessary for the completion of the interstate projects, which dominates its capital plan for the next several years.

“We’re collaborating with the DOT on a level that we just never have before, and most of that is because they’re making such a substantial investment here,” director of public works Mark Cotter said.

South Veterans Parkway is working toward wrapping up its first 2 miles, from Cliff to Western avenues, and from there, work will move either east or west depending on the pace of land acquisition.

“We’re going to be as flexible and adaptable as we can to deliver the next phase of Veterans Parkway,” Cotter said.

“One of the most visible changes people will see at … is the new roundabout at 95th and Western because Harrisburg has an elementary and middle school there and … that was the right design selection to make sure people have good progression from the corridor to and through the roundabout.”

Despite a reduction in sales tax, routine maintenance of city streets, including overlay work, concrete rehabilitation and slurry seal will stay at the level residents are used to, Cotter said.

“In some of those cases, we’ve seen inflation happen, and we lose purchasing power, but things are starting to stabilize with asphalt and concrete,” he said, adding that the city drove all Sioux Falls streets last fall to assess their condition and will use the data in prioritizing improvements.

Larger reconstruction projects on roads such as Minnesota and Phillips avenues likely won’t be scheduled until some of the interchange work is done, he said.

“We’re only going to be in this lumpy part of our capital plan for a few years until we get through these key interchange builds and Veterans Parkway,” he said.

Parks, public safety projects

The proposed five-year program plans for several improvement related to public safety.

The construction of the 13th fire station, which will be in northeast Sioux Falls, is slated for 2026. Construction of a police report-to-work station in east Sioux Falls is planned for 2028, and an investment of $25.4 million in vehicles and other safety equipment for the two public safety departments is reflected in the plan.

Major investments for the Parks and Recreation Department largely are seen in indoor recreation, including estimated $6 million annual repayments over 20 years for a bond scheduled for a City Council vote later this year. That would construct an indoor recreation facility with a pool at Frank Olson Park and a replacement outdoor aquatic center at Kuehn Park and purchase Sanford Wellness Center on the west side of the city.

It’s a reflection of what the community has said it wants to see from the Parks Department — “the need for indoor rec space and replacing aging pools,” director of parks and recreation Don Kearney said. “That’s what ultimately resulted in the projects we’re bringing forward.”

The Parks Department also is continuing to look at options for a south-side pool and has programmed a master plan for its proposed site near the Harrisburg Freshman Academy near 85th Street and Cliff Avenue in 2027.

“We’re trying to time it with development that’s going to happen and infrastructure going in at that time,” he said.

Otherwise, the department’s sales tax-funded budget calls for improvements to neighborhood parks and regional parks, an investment in a school/parks site on the west side near McGovern Middle School and the future Marcella LeBeau Elementary and continued improvements and development of the recreation trail.

Future segments include the Cherry Creek Trail from Family Park north to Madison Street and continuation of the east-side trail corridor from Arrowhead Parkway to the Mary Jo Wegner Arboretum. The hope is to find donor support to extend the trail at Lien Park on North Cliff Avenue along the river to Bahnson Avenue, Kearney said.

“And then, we have a bunch of different segments when it comes to reconstruction, and most of the time, that’s just replacing what’s already there — removing and replacing with new trail,” he said.

Land purchase

The comprehensive CIP includes not only sales tax-funded projects like city streets and parks but also improvements related to utilities paid for by user fees and projects for facilities funded by the entertainment tax.

The entertainment tax would contribute $8.1 million in 2025 to buy 8 acres east of downtown Sioux Falls in the area identified by the city as the future Riverline District.

An update will be shared on the planning process next month, including results of a feasibility study with assessments of the current arena and convention center, Pritchett said.

“As stewards of public funding, we thoughtfully and strategically prioritize investments based on the funding available, the plans of our partners and opportunities that present themselves,” TenHaken said in a statement. “We hope city councilors recognize the positive momentum in our community and the incredible possibilities we have in front of us in Sioux Falls.”