Spearfish City Council approves increasing SERF loan to finish office space in Atlas building

News ReleaseMay 3, 2022Local
courtesy photoSpearfish City Council approves increasing SERF loan to finish office space in Atlas building

SPEARFISH, SD – The Spearfish City Council Monday approved increasing a previously approved $1.4 million Spearfish Economic Revolving Fund (SERF) loan to $2 million to allow the remaining office space in the Atlas building in the Spearfish Industrial Park to be finished and leasable to the State of South Dakota.

City Administrator Steve McFarland explained that the Spearfish Economic Development Corporation (SEDC) is working with the State to occupy the remaining, vacant 17,550 square-feet of the Atlas building as professional office space to house 50 professional jobs with solid pay and benefits, representing both current jobs retained in Spearfish, as well as relocations.

The estimated cost to finish the interior of the building and construct professional office space is approximately $2.4 million. SEDC would apply approximately $400,000 toward the construction, and the City Council in 2021 approved a $1.4 million SERF loan at a 2-percent interest rate and 20-year term for SEDC to utilize for the remainder of the project. The revised loan, for a maximum of $2 million, would be converted from a 20- to 30-year term at a 2 percent initial interest rate. An escalating interest rate or the ability to renegotiate the interest rate amount was discussed, and the loan will have one of those provisions.

In addition to completely filling the Atlas building (which is currently 50-percent occupied), attracting a long-term tenant, retaining/adding jobs to the community, and putting SERF dollars back into the local economy, the additional lease funds would significantly decrease, if not eliminate, the City funding SEDC currently receives, City Administrator McFarland said, describing the monthly loan payments of approximately $7,400 would replenish the balance in the SERF fund quickly.

Kory Menken, SEDC executive director, explained SEDC is responsible for funding the tenant finishes and is working closely with the State in the design, and he pointed out that the loan is to SEDC, not the State. The Atlas building is owned by the City so the tenant finishes that SEDC will be using the SERF loan to fund will become the property of the City upon completion. Menken explained the State is willing to sign a 20-year lease for the office space, with an option to renew.

The City Council approved the request, with Councilor Marty Clark abstaining.

Construction on the remaining vacant portion of the Atlas building, located at 120 Industrial Drive, would not begin until a lease has been signed with the prospective tenant.