The Rapid City Council’s Legal and Finance Committee received a fascinating report from North Carolina consultant Heather Worthington last week that notes how much more valuable concentrated downtown development can be for a city’s tax base than strip malls and big box stores:
“Another really interesting part of your model was this mall, which sits on 61 acres,” Worthington said. “The mall itself, the buildings, take up about 19 acres. The overall value of this parcel is $.2 million per acre. So, significantly less than any of your other commercial uses and with the mall about the same as your Walmarts.”
For example, Rapid City’s Walmart locations bring in $.6 million per acre yearly. Compare that to a single prominent downtown Rapid City business.
“When we compare that big box with, again, Prairies Edge [sic] and your really productive downtown model, here you’re seeing again higher property tax per acre, the Prairies Edge [sic] has higher sales tax per acre, but the big box is sitting on a much larger parcel of land,” Worthington said. “It’s kind of interesting when you think about how productive that Main Street use is compared to your big box.”
Worthington adds that’s also reflected in valuations, especially in the downtown district.
“Most of these are buildings that have been in Rapid City for over 75 years. Some of them closer to the time period you were founded,” Worthington said. “These are very valuable buildings for you. The Haines Building at $7.2 million per acre. The Rushmore [Hotel] – a little newer project – at $7.6. I’m guessing that’s from the 1970s. If you look at this peak parcel, and that’s again the Hotel Alex Johnson, you can see that’s a whopping $35.4 million per acre” [CJ Keene, “Report Finds Downtown Rapid City Businesses Punch Above Valuation Weight,” SDPB Radio, 2025.12.12].
Same goes for tax increment finance districts—more density means more TIF ROI:
The study also looked at some of the tax increment financing districts in town that are performing well and not so well financially.
The study said the Main Streets Program TIF saw a net positive of $33,000 with the Red Rock Meadows TIF seeing a net negative of $13,000.
“Generally speaking, those lower-density single family uses for TIF are going to generate much less value for the city in terms of those TIF dollars,” said Worthington. “And higher density more compact development is going to generate more lasting value and also more revenue for the city long-term” [Bryan Savic, “Financial Study Examines Rapid City’s Current Growth and Land Use Patterns,” KOTA-TV, 2025.12.10].
Rapid City votes next month on tax increment financing for the proposed Libertyland theme park, which will sprawl over 300 acres. If Rapid City can afford to hand out any more tax subsidies, perhaps they should focus on supporting more improvements in the urban core rather yet another outskirts project that will deliver lower revenue per acre.