City council will discuss proposal at Monday's meeting Will a Sioux Falls real estate developing company purchase The Bluffs from the city of Vermillion? by David Lias Will a Sioux Falls real estate developing company purchase The Bluffs from the city of Vermillion?
It's too soon to say, but the Vermillion City Council is scheduled to discuss this issue at its meeting Monday night.
City officials and representatives of Dunham Company, Sioux Falls' largest real estate developer, have held two meetings in recent weeks to discuss the possibility of Vermillion selling its housing development project to the firm.
From those meetings, an offer has emerged from Dunham.
Vermillion City Manager Jeff Pederson said Tuesday that the city council will talk about whether to make a counter proposal to the Sioux Falls company at its March 15 meeting.
In late February, the Dunham proposal was still being reviewed by the city.
"We're trying to determine if the Dunham proposal is enough to generate the amount of taxes needed to retire the bonds," Pederson said then. "Another consideration would be the price that Dunham would pay for the lots."
Not accepted or declined
"We have been exploring the feasibility of whether the offer is sufficient to retire the bonds (used to construct The Bluffs)," Pederson said. "The proposal was not sufficient in terms of the bottom line to create a broad enough revenue stream."
The city manager added that no representative of Dunham Company will be at Monday's meeting. Pederson said he has supplied Dunham officials with the necessary suggested changes that would make their offer more acceptable to the city, however.
And as of this week, no door has been closed on further discussions with Dunham.
Pederson said a key part of Dunham's proposal was the amount of homes he planned to build, and how quickly he planned to construct them.
"We had a second meeting and shared our analysis at this point," he said. "No one has neither accepted or declined the proposal, and the city council may make a counter proposal."
Approximately two weeks ago, Pederson confirmed that a meeting had taken place between city officials and Dunham Company on Feb. 1.
"We are having discussions with Dunham Company concerning the possible sale of residential properties at The Bluffs," Pederson said then. "Key issues that need to be explored would be the amount of tax base created by Dunham Company by the construction of homes."
It is vital that any sale concerning The Bluffs contains adequate revenues through a tax base or by other means. The Bluffs, with its beautiful new 18 hole golf course and scores of lots for new residential construction, was made possible by a Tax Increment Financing (TIF) district in April 1994.
That allowed the city to issue $4.1 million in bonds, payable over a 15 year period from 1998 to 2013, to construct the new golf course and housing development.
"Taxes projected from the sale of homes were set up to be the number one source of retirement of the bonds," Pederson said.
The height of living
Vermillion uses the phrase "the height of living" to describe the new multilevel golf course and residential development. Approximately 120 new housing lots are being incorporated into development.
Residential sites have already been prepared in The Bluffs' Augusta Development. "It has sites developed there, and would have 35 sites available," Pederson said.
He added that there are plans to open a second residential addition east of the new clubhouse. It would feature 40 lots. And a third residential development is planned for below the bluff that may contain 12 to 15 lots depending on how its platted, Pederson said.
The lots are fully improved, with all utility services installed prior to the concrete surfacing of the streets.
The residential development has been zoned to protect the integrity of the neighborhood, and deed convenants are intended to maximize the value of each lot's location within The Bluffs.
Don Dunham, president of Dunham Company, told the Plain Talk March 3 that he had met with Vermillion officials, but he declined to offer any specific information because further discussions were pending.
"We have an interest in the project," he said. "We are still in some very preliminary discussions."
A well-known name
Dunham is well-known in South Dakota, especially in the Sioux Falls area. Dunham Homes has been serving the needs of the Sioux Falls housing market since 1975, constructing well over 1,000 homes.
Dunham Homes, known for its well-planned developments, has become a major player in the new construction housing market.
It's safe to say that Dunham is a busy man. His company is presently developing Country Club Estates, a new construction development consisting of 365 homesites and 16 acres set aside for apartment and commercial development at the Elk Point Golf Course.
Dunham Company is also involved in housing development at Dakota Dunes, the golf course in North Sioux City, and Fox Run, Yankton's golf course.
"There are indications that the Dunham development concept involves the construction of spec homes," Pederson said. "He is choosing to build homes ahead of demand."
Should the city come to proper terms with a developer that follows such a concept, it could bring benefits to the Vermillion, Pederson said.
"The earlier the homes are constructed, the longer the taxes are drawn," he said. And the sooner that The Bluffs generates additional real estate taxes, the sooner it is insured that the TIF district debt will be appropriately retired.
Pederson said the lot sales at The Bluffs have not met origincal projections, but investments in lots have far exceeded projections.
He added that the payment of the debt of The Bluffs is multi-faceted, using revenue generated by the golf course, from lot sales, and from home construction.
"We are still within the range of feasibility, but we are getting to a point where we need to reassess our marketing strategy," he said.
By the time the TIF district expires, the community will enjoy an additional $12 million to $15 million in property valuations, Pederson said. The Bluffs project, he said, binds housing and recreational development, and creates economic development.
"It's brought a lot of out of town people in to use the golf course," he said, "and they drop some money into local businesses when they visit here."