TenHaken touts city’s successes, warns of budget implications in State of the City address

Sioux Falls saw improvements to public safety, is experiencing a road construction boom and is making strides toward helping those in need of housing.

But uncertainty in federal funding and changes to property tax revenue at the state level are causing city government to  consider what adjustments to services might be needed, Mayor Paul TenHaken said in his State of the City address Monday.

TenHaken delivered the annual speech from the Canopy by Hilton hotel at The Steel District in downtown Sioux Falls, including honoring developer Craig Lloyd, who died in January.

Gesturing to the development more than a decade in the making on land that was owned by the Rysdon family for more than a century, TenHaken noted transformational ideas take time.

“They take bold leadership. They take big ideas,” he said.

Under Lloyd’s leadership, among many signature developments, Lloyd Cos. developed 8,000 housing units, TenHaken said.

“Craig was the driving force behind the growth and development of quality housing throughout this region,” he said.

“Craig shaped the landscape of this community, not just housing but the leader who he was shaped this community.”

This year, the city’s ability to fund accessible housing could be impacted by changes in federal funding, TenHaken added.

In 2024, $8.5 million was invested into the community to produce, preserve or rehabilitate housing for 2,086 income-qualified people. This year, $4 million is set aside for programs.

“There’s a lot of uncertainty,” TenHaken said. “We rely heavily on federal funds to do affordable housing initiatives. We’re watching this very, very closely to make sure we can still deliver quality affordable housing to our community.”

TenHaken underscored the city’s stabilizing crime rate, showing a five-year low in property and violent crime per capita.

“In 2024, our community was the safest it’s been since pre-COVID, since 2019,” TenHaken said. “Incredible work by Sioux Falls PD to keep our community safe.”

So far, 78 public safety new hires have been trained at the new Public Safety Campus, not counting the many within the city and surrounding region who have used it to improve their skills.

“That project has seen tremendous success, and that campus has been an absolute boon since it was opened a year and a half ago,” TenHaken said.

“We are continually growing and enhancing our public safety teams to address our growing community.”

As the community adds 5,000 to 6,000 people annually, addressing the needs of vulnerable populations continues to be a focus point for the city, TenHaken said.

The city’s contract with South Dakota Urban Indian Health for street outreach services resulted in 212 individuals being assisted and 20 people being housed last year.

“Those 20, that may not sound like a big number, but these are some of our hardest to house people in our community,” be said. “They’re harder to house because of their barriers.”

Many have been through the justice system or aren’t ready to take the step into housing, he said, adding that the partnership with South Dakota Urban Indian Health “has been a good relationship for us in the city, and we look forward to continuing it in the year ahead.”

The Link triage center also has seen 3,676 unique individuals since opening in 2021 at its downtown location – about 70 percent who identified as homeless. Six months ago, Southeastern Behavioral Health moved into the building to supplement health resources.

“On average, each person is seen about 3.5 times here,” TenHaken said. “It’s not glamorous work. It’s very hard work. But when we talk about homelessness, a lot of times addiction is one of the root causes of that homelessness.”

He pointed to the ease of access to alcohol as detrimental to those struggling with addiction.

For instance, there are locations in Sioux Falls where it costs $10.99 to purchase 60 ounces of vodka, TenHaken said.

“This is a tough one,” he said. “It’s readily accessible. We spend millions of dollars at The Link to treat addiction, and for less than $11, you can go get 60 ounces of vodka. It’s hard. We have headwinds constantly on these issues. Readily accessible, cheap liquor is not helping our community.”

It’s why you’ll see a campaign coming soon to discourage supporting panhandling, he said.

“Handing out cash doesn’t help. It’s not helping. It’s enabling some of these challenges. It doesn’t mean we don’t have compassion, but it does mean we can’t enable some of this behavior. We have support services. We can’t hand out cash.”

Infrastructure improvements

TenHaken also previewed a major year for road construction, with $180 million planned, including two major interchanges at Interstate 229 and Cliff Avenue and at Interstate 29 and 85th Street, along with the next 2 miles of South Veterans Parkway and reconstruction of the intersection at Arrowhead and Veterans parkways.

“2025 is going to be a year of transformational roadwork in our community, and 2026 will be too because of the size of these projects,” TenHaken said. “These are foundational investments, huge investments, and it’s hard to remember a time when we have had this many big projects happening at once.”

City infrastructure also is seeing a $215 million upgrade at the water reclamation plant, which will wrap up a three-year expansion this fall and expand capacity from 21 million gallons per day to 30 million.

“You may say, is that a lot? I didn’t know either when I started this job. That’s a lot of wastewater,” TenHaken said. “This is important because our region is growing. It’s important for the region because Tea, Brandon, the city of Sioux Falls all send their wastewater to this plant. This truly is a regional wastewater plant.”

From an economic development and growth standpoint, “this is a huge investment for our community,” he continued, adding that prospective employers often ask first about the city’s wastewater capacity.

Like other projects, the water reclamation plant involved debt. TenHaken noted that the city’s debt per capita is comparatively low compared with many other communities.

“Sioux Falls is a very, very fiscally healthy city, a very smart-managed city, a city that is in a very strong fiscal position,” he said. “We can have a strong economy and a great quality of life while still being smart with how we grow. … Do you know what the opposite of growth is? It’s stagnancy, or it’s dying.”

The city is taking on additional debt to fund a new outdoor aquatic center at Kuehn Park and a new indoor recreation center with an indoor pool at Frank Olson Park.

Taxes are not increased for such borrowing, he said. The bonds are repaid using existing revenue sources.

TenHaken cautioned that there will be an impact from a recently passed property tax bill in the South Dakota Legislature that will limit the countywide assessed value of owner-occupied residential property to 3 percent annual growth for five years.

TenHaken estimates that the city of Sioux Falls will lose $25 million in operating revenue because of it over the next decade. That’s the trade-off, he said.

“This is a significant impact to our city budget,” he said. “We’re having to look closely at the level of services that we are offering, that we can offer, that we have offered in the past and that we will offer in the future. The reality is we will be making some changes … that residents will feel.”

The goal is to minimize those impacts while looking at ways to be more efficient or entrepreneurial, he added.

A budget will be presented in late July for next year.

Looking ahead

At the same time, TenHaken called for continued work on a plan to replace the Sioux Falls Convention Center. The goal is to generate new revenue sources by bringing additional visitors to town, he said.

TenHaken estimated that the city lost $2.9 million in revenue last year at the Convention Center because of its inability to host certain events.

“We lost almost 140 events in one year, totaling thousands of people who would have supported our small businesses, retailers and restaurants because we have a convention center that was built in 1996 when we were 115,000 people, and we’re 220,000 people and we have the same convention center. It’s time for us to think big, cast a bold vision. Where do we need to go as a community? How do we capture more revenue from those convention-goers?”

It takes leadership and “big dreaming” to move ideas like that forward, he adding, noting that the vision of the Rysdon family to develop the industrial property that became The Steel District.

“That’s what we have to keep doing as a community. Keep dreaming big,” TenHaken said. “This community has never, ever failed in figuring out how to get stuff done.”

Moving the convention center will result in more space for indoor recreation for the community inside the current facility, he added, pointing to some recent indications of demands.

The new Westside Recreation Center has sold more than 5,400 day passes since the beginning of the year in addition to memberships and families taking advantage of a reduced rate.

“It’s been a great smashing success so far,” TenHaken said.

TenHaken also acknowledged the record amount of private dollars that have supplemented city projects since he took office in 2018, totaling $68 million, including the expansive Jacobson Plaza that is scheduled to open its Lodge event and food venue in late April and its playground, spray pool and dog park in July.

Other donations have helped create the new lion and meerkat exhibit at the Great Plains Zoo, recreation trail additions, Barb Iverson Skate Plaza and an expanded McKennan Park wading pool.

“It’s an absolutely incredible number,” TenHaken said. “We should never, ever, ever take that for granted. That just does not happen by accident. It takes partners.”

With one year remaining in his term as mayor, TenHaken also called on others to consider stepping into leadership. He was 39 when elected in 2018, he reminded the audience.

He’s seeing “less and less people with that desire to run and to serve in office,” he said. “I know that ebbs and flows. But I do feel that sometimes we take Sioux Falls for granted — that this just happens.”

The community needs to move beyond listening to the loudest voices, “and we have to make sure the smart and pragmatic and level-headed leaders are also in the room,” he said.

“It’s hard,” he said of serving in office. “But it’s very rewarding. We need good people, pragmatic people, smart people who have no agenda other than to make Sioux Falls a better community. … The state of our city depends on the leaders in the next generation to step up and serve.”

Leaders of the past helped create “the Sioux Falls that we all love today, the Sioux Falls that you brag about. … It didn’t happen by accident,” he continued. “It’s up to us to stand on the shoulders of giants like that to keep it moving forward.”