Nov. 12, 2018

An interchange at 85th Street and Interstate 29 has taken a big step forward.

The Federal Highway Administration last week approved an interchange justification report, or IJR, a requirement before a new interchange can be built.

“It’s very significant,” said Mark Cotter, the city’s director of public works.

“The fact that they have come back and approved it from an engineering and operational system means they see it will work and not cause degradation to their interstate system or the adjacent interchanges. It’s a big step to get through.”

The ramifications of a new interchange are big – so big, that it has drawn a level of cooperation and partnership most call unprecedented in the state’s history.

The state, the cities of Sioux Falls and Tea, Lincoln County and seven area landowners have come together to accelerate the approval process and figure out a funding mechanism. Now, an interchange first envisioned more than a decade ago is closer to reality than ever.

“This is a very large proposed project, and we’ve never had a partnership effort to this extent,” state Transportation Secretary Darin Bergquist said.

“That being said, I think that the partnership has been working very well to this point to keep the project moving forward … which is great because completion of this project will have a significant positive benefit to the area.”

Development potential

While economic development is a significant benefit, an interchange still needs to be justified as a transportation improvement.

In this case, it’s needed to handle the increasing and projected growth in traffic, Cotter said.

“We’ll shorten people’s commutes, reduce delays and more effectively move traffic,” he said.

The project got through the IJR at the speed it did because the area landowners upfronted the money to pay privately for the report to be compiled.

They are committed to investing $4 million to get the project through federal approvals and initial design.

“You have a consolidated group of motivated businesspeople who own a massive piece of ground that’s going to open for commercial development,” said Jake Quasney, vice president of real estate and investments at Lloyd Cos.

“The housing and retail opportunities that will come with that are going to be significant and will really improve that area of Sioux Falls.”

Those involved in the ownership group are:

• 85th Street Crossing LLC – Lloyd Cos.
• Bentwood Place Inc. – Benson family.
• Tallgrass Investments LLC – Hegg Cos.
• Sonler Properties Partnership – Benson and Cutler families.
• Hadrob LLC – Sanford Health.
• Sundowner Investments – Led by Dan Lemme.
• RMB Family LLC and RMB85 LLC – Broin family.

The owners say they see big possibilities for their properties.

“The traffic study said there will be more traffic here than 41st Street, although it will take a number of years,” said Dan Lemme, who leads an investment group that owns 270 acres from 85th to County Road 106 between Sundowner Avenue and Interstate 29.

“I could see a large car dealership, hotels, restaurants, and there are some big boxes around. Bass Pro Shop is something everyone talked about for years, but they acquired Cabela’s, so I’m not sure they would build another store that close.”

The project will mean that the city limits of Tea will touch the city limits of Sioux Falls, making it the first contiguous community to the city.

“They’re pretty excited about that,” Lemme said. “Their hope is this will become the next entrance to Tea.”

Joel Dykstra, CEO of RMB Associates, compares the area around the interchange to Meadows on the River or Empire East.

“It’s not going to be the mall, but as it spreads north, east and west, you could see developments like those in 20 or 30 years,” he said. “Apartments, housing, hotels, and a lot of folks like the ones we’ve seen around Lake Lorraine want to be seen from the interstate, and that would give that visibility.”

According to an agreement last year with the city of Sioux Falls, developers will get credit for their fronted funds once they plat their property in the area.

“If it doesn’t go forward, we lose our money,” Dykstra said.

What’s next

The approved IJR allows the public-private team to move forward with a required environmental assessment.

“We’ll kick it off this week, and I expect it will take 18 to 20 months, and provided it’s approved, you can move into construction,” Cotter said.

Parts of the area were studied previously as part of an overpass study, so those involved in the project said they’re hopeful any findings will be fairly simple to address.

The city also has plans to complete the needed road network around an interchange. Some of those projects have started, and many others are scheduled in the next several years.

At the same time as the environment assessment, the team will start preliminary design. That’s so construction can begin as soon as possible following federal approval – ideally in 2021.

“The private companies continue to front the money for these studies because it makes it go somewhat smoother,” Dykstra said. “We wouldn’t be anywhere near this far along if it wasn’t for the private parties contracting with the engineers and trying to drive the pace.”