Update - October 15, 2020.  After review of related reports the offer to purchase this property was withdrawn by the City.  No further action is planned at this time. 

Update - October 5, 2020.  Property evaluations are complete and the reports are listed here:  Environmental Assessment Ph. 1    Appraisal    Structural Report
The City Council is currently reviewing the information contained in these reports.  

Update - August 24, 2020.  The purchase agreement has been signed by the seller.  The City has hired three firms to assist with property evaluations:  Klein Appraisal will prepare an appraisal report, Albertson Engineering will be conducting a structural analysis, and American Engineering & Testing will perform a Phase I environmental study as well as an asbestos inspection.  Results from these evaluations will be available within 2 to 3 weeks.  The final sale will not be complete until results from these evaluations are approved by the City Council.

The City of Sturgis is currently considering the purchase of a building located at 1219 Main (known as Mr. Al's).  If purchased, this building will be used as a convention and events center. 

The project's goal is to redevelop a large property in our downtown that is used year-round for vehicular storage into a vibrant economic catalyst for the downtown core and the community. The project would leverage revenue generated during the City of Sturgis Motorcycle Rally to generate a new catalyst for the downtown core. With the closure of the Boulder Canyon Event Center, hotels and restaurants have lost a significant resource for weddings, meetings, and banquets. These events drove a significant catering business as well as a significant number of non-Rally hotel room nights. The former event center was a beautiful facility but often lacked adequate space for larger meetings and wedding parties. The closure has led to an increase in demand at the Community Center and Armory hindering the youth sports and recreational programs in our community. 

The Sturgis Hotel BID and the Downtown BID have both advocated for the City to address this need by finding another location that could fit a variety of events year-round. The City has been in discussions with the owners of Mr. Al's building in Downtown Sturgis to fulfill this need. The roughly 11,250 sq. ft. building is large enough to fit two large bathrooms (including areas dedicated to serving downtown visitors and guests), a storage area for the Music on Main and other event needs, a warming kitchen, and up to 9,000 square feet of event space. This space is larger than either the Armory or Community Center and can allow for up to 600 guests (if sprinklers are installed) or 300 (if sprinklers are added later). 

The goal would be to lease this space for weddings, meetings, events, and gatherings at a more affordable price than similar facilities available in Rapid City and Spearfish. Event spaces are often owned or financed by municipalities. These types of facilities usually operate on very slim margins, making it very challenging for the private sector to make an adequate return on their investment. Municipalities are often willing to invest in event facilities as they encourage new visitors to spend time in the community which assists local businesses. 

The proposed event center would be an anchor for new visitors to Downtown restaurants and new guests in Sturgis hotels. In this instance, the Rally vending revenues would be used to leverage a year-round facility that would assist in enlivening downtown Sturgis throughout the year. This is a similar strategy the City has used in the past with Harley­ Davidson Rally Point and the Community Center, where the City is able to leverage financial resources from the Rally to make a year-round positive impact in our Downtown.

The proposed purchase agreement includes a refundable $10,000 escrow deposit. The City will pay for a commercial appraisal, an environmental review, and a building inspection of the property. These studies would reveal any additional risks that the City would need to consider before closing on the property.

Budget Impact:

This is a long-term investment in the future of Downtown. The City's 210 Comprehensive Plan and the Downtown Strategy Committee all envisioned enhanced activities and events in the Downtown area. This would allow existing events to increase their impact in Sturgis (holding banquets for the Camaro Rally and other events in Sturgis). It would also allow the community to increase our number of bids for new events. The Chamber has been able to get some events (the 2021 SD Local Foods Conference), but efforts have been challenged due to a lack of a meeting facility. The Rally would enable the largest portion of the costs for the project to be covered. As such, it would allow the facility to be leased at highly affordable rates. This in turn would increase hotel nights and restaurant meals in local establishments. Over time, this will provide a substantial increase in General Fund revenue and most importantly an increase in the Tourism (BBB) Fund. 
 
The Downtown Foundation and the Hotel BID have identified this as a significant need in our community that needs to be addressed in order for the economy to continue to grow.

FINANCING 

The total purchase price ($1,270,000) and renovation budget ($365,000) would be financed. The revenue sources would include a loan through the City's Economic Development Loan Fund (25%) and Commercial Banks (75%). The total annual payments for the first ten years are anticipated to be covered entirely through the Rally rental revenue and a few leased events. After ten years, the Rally revenue is anticipated to generate $45,000 above the costs of the remaining financing. The staffing required for setup and booking would be provided through the Community Center staff. There would likely be occasional overtime due to setup and cleanup, however, these occasional costs would be covered through the additional lease revenue from the events. 

The proposed purchase agreement includes a refundable $10,000 escrow deposit. The City would pay for a commercial appraisal, an environmental review, and a building inspection of the property. These studies would reveal any additional risks that the City would need to consider before closing. 

Renovation Estimates 
 

MOVING FORWARD

During the July 20 City Council meeting, the Council voted to move forward with the intent to purchase this building contingent on the results of the building inspections and appraisal.  Updates to this project will be posted as they become available.