Spearfish City Council Study Session – April 1, 2026

The Spearfish City Council held a study session on Wednesday, April 1, 2026, beginning at 4:15 p.m. in the City Council Chambers at City Hall. Mayor Senden presided, and all council members were present: Hafner, Hourigan, Jacobs, Klarenbeek, Myers, and Rath. The session was primarily a review of the upcoming April 6, 2026, regular council agenda, followed by two presentations: a proposed Tax Increment Financing district for an affordable housing project and the Spearfish Trails Coalition Trails Hub Project. No formal action was taken on either discussion item. The only votes were approval of the agenda and adjournment. An executive session listed on the agenda was noted as not needed and was not held.

Agenda Approval and Review of April 6, 2026, Council Agenda

• Council unanimously approved the study session agenda on a motion by Jacobs, seconded by Hourigan.
• Staff reviewed each item on the draft April 6, 2026, council agenda. Highlights included a recognition at the High Plains Western Heritage Center, a request from the Black Hills State University Foundation regarding rubble site fees for demolition of three homes, approval of a termination agreement with Platinum Investments related to the McLaughlin sawmill development, a Monument Health 340B infusion services agreement, water service outside city limits at 150% of in-city rates for Valley Estates, donation of Clyde Ice aviation memorabilia, a South Dakota Community Foundation grant administration agreement with a $500 annual fee plus $7,500 administration cost, event licenses, Board of Adjustment minutes, the Spearfish Trails Coalition project location, phase two of the Spearfish Creek preservation plan, and multiple public works and airport contracts.
• Public Works staff reported that several recent bids came in under engineer estimates and budget, including the Sawmill Avenue project with bids opened earlier that day at a little over $750,000. In response to a question, staff attributed the lower bids to increased contractor competition and the drying up of ARPA funding.

Public Comments & Testimony

• During the agenda review, Doug Markworth asked what would happen to the McLaughlin property after Platinum Investments backed out and encouraged council to vote yes on TIF #9. He stated he had no financial interest in the TIF passing, but argued that it would be unfair to deny a private landowner's TIF while the city owns land and can use TIF districts itself.
• During the formal public comment period, opened at 5:16 p.m. and closed at 5:27 p.m., John Williams of 1320 North Canyon Street described the ongoing failure of the downtown chip seal project. He said dust and gravel were accumulating daily on his two businesses' outdoor seating areas, requiring constant sweeping and wiping, and that he has had to apologize to customers. He asked for clarity on the city's plan and urged a permanent fix and proactive cleanup.
• Nathan Hoogshagen of 2194 Bridgestone Street asked the council and public works directly for an update on the chip seal project, saying many community members wanted to know what was happening.
• Jeremy Smith of 287 Evans Lane spoke about the recent Board of Adjustments meeting, questioning whether a variance was the appropriate or legal tool for the project considered there. He said the decision felt rushed and asked council members to take their duty to follow city ordinances seriously, suggesting ordinance changes could be used when existing rules do not fit a desired outcome.
• Doug Markworth returned during public comment and said the chip seal project had united the community in frustration. He noted that two direct questions had been asked about the plan and no answers were given that evening, and asked whether the city would address the issue.

Discussion Item: TIF #9 – Stone Ridge Commons Affordable Housing

• Community Development Director Wysocki presented an overview of Tax Increment Financing, explaining that TIFs use the increased property tax increment from a developed site to pay eligible project costs for up to 20 years, while the base property tax continues to go to taxing agencies. He noted TIFs can be used for affordable housing and require a finding that the project meets state statutory requirements.
• The proposal from Lloyd Companies is for Stone Ridge Commons, which would be TIF #9. The project is located near Exit 14 between Paramount and Platinum Drive. Total estimated eligible expenses are about $7.3 million, with the applicant seeking about $3.2 million in TIF assistance.
• Wysocki stated the applicant agreed to restrict rents for 10 years, based on 80% of area median income, exceeding the state minimum of five years. He clarified there are no income restrictions on tenants because the project is not using federal or HUD funds. A two-bedroom unit would be capped at $1,840 per month based on a 2025 state median income of $102,000.
• Eligible costs include land at about $1.6 million and public street work at just under $1.9 million. The TIF district boundary includes the right-of-way connecting Paramount and Platinum Drive.
• The Planning Commission voted 4-2-1 to recommend approval, finding that the TIF meets statutory requirements and aligns with the city's comprehensive plan, TIF guidelines, and economic development strategy.
• Jeremy Smith expressed concerns during the discussion. He said the TIF does not appear to meet the intent of the law, does not address blight, raises boundary questions, and may mainly provide a road needed for commercial development rather than affordable housing. He also said the TIF appears to shift responsibility for private project profitability to the city and encouraged council to ask Lloyd Companies for more financial details before the April 6 decision.
• Lloyd Companies representatives were available online but no substantive questions were directed to them.

Discussion Item: Spearfish Trails Coalition Trails Hub Project

• Recreation Facility Superintendent McDonald presented the proposed Trails Hub. The Spearfish Trails Coalition is seeking city approval to construct a trail hub structure on city-owned property directly south of the existing city-owned parking lot at the southeastern corner of Canyon Street and Winterville Drive.
• STC is working with local contractor Jared Cappy of Pangea Designs on concept and design. Approval of the location is being requested first, with final design to come back for council approval before construction. An amendment to the construction agreement and a dedication agreement would be drafted so the city would take over ownership and maintenance.
• The location is adjacent to the rec path and existing and future single-track trails. STC has contracted with Rock Solid Trail Builders to construct new bike trails on city-owned property south of the Spearfish City Campground, about a quarter mile north of the proposed hub. That project was approved in 2025, rescheduled to 2026, and is tentatively planned to begin in May 2026.
• The 2026 Leadership Spearfish group has expressed interest in organizing a fundraising campaign for the project, with additional costs supplemented by STC and possible grants.
• On March 26, 2026, the Park, Recreation and Forestry Board unanimously recommended council approval of the location, and staff supported that recommendation.
• Emily Brown, President of the Spearfish Trails Coalition, said the project is the result of collaboration among many organizations. She said the goal is to create infrastructure that promotes connection and community and feels uniquely Spearfish. She noted the design is not yet complete and will be presented in coming weeks.

Departmental Discussion

• Public Works Director McMahon responded to chip seal comments, explaining that the city does not yet have a full plan. He said staff are still in negotiations with the contractor and are working with DOT experts to ensure any repair does not lead to a second failure. He stated that public and council feedback is being considered within the constraints of the contract, and the contractor is targeting June 2026 for repairs.
• McMahon also announced that the city has decided not to pursue the 3-lane conversion of Main Street downtown at this time, based on feedback from council and the public. He and Wysocki will present at the next study session on implementation and timelines for Safety Action Plan recommendations.
• Wysocki reminded council that the Planning Commission will meet Tuesday, April 7, 2026, and will consider adoption of engineering design standards and introduction of another affordable housing TIF petition near Peaceful Pines. He also clarified the city's due process for variances, noting the city code does not provide for administrative variances.
• Parks and Recreation Superintendent McDonald reminded everyone that the Community Easter Egg Hunt will take place Saturday, April 4, 2026, at 10:00 a.m. at City Park, rain or shine.
• City Attorney Knox said a revised Art in Public Places ordinance will come before council in the coming weeks, and a purchase agreement with Hills View Homes for an additional 16 lots at Sky Ridge Subdivision will be on the April 20, 2026, agenda.
• Finance Officer DeNeui said the Town Hall scheduled for April 13, 2026, will be rescheduled. The draft 2025 financial statements will be brought to council for approval on April 20, 2026, ahead of the May deadline. The 2025 financial audit will begin in May.
• Mayor Senden acknowledged that public frustration over the chip seal project is high, but said responses are limited because of ongoing legal negotiations.

Key Outcomes

• The study session agenda was approved unanimously; no executive session was held.
• No action was taken on TIF #9. It remained scheduled for the April 6, 2026, council meeting for possible action, with staff noting it could be delayed if council wanted more information.
• No action was taken on the Trails Hub location. The item is scheduled for the April 6, 2026, council agenda, with final design and agreements to return later.
• Staff will bring chip seal repair options to council after negotiations are complete and will present Safety Action Plan implementation steps at the next study session.
• The meeting adjourned at 5:36 p.m. on a motion by Hourigan, seconded by Myers.