Financial impact of closed mill difficult to quantify

Nearly three years after the sawmill in Hill City closed, the financial impact to the region is difficult, at best, to quantify. According to Kendra Baucom  at the South Dakota Department of Revenue the agency does not do economic impact studies and is unable to determine the impact the sawmill closure had on Pennington County. Since the mill was located outside of Hill City limits, the city of Hill City, too, has no means to quantify what the closure means to the area. 

City administrator Brett McMacken says that Neiman was “a great supporter of our community in free lumber donations or lumber at a reduced cost.  Over the years, they also gave several monetary donations to the various non-profit groups in town.”

He also spoke to the number of jobs that were lost and the impact those jobs had on area families. 

“Some took positions up in Spearfish and have commuted between here and there,” he said. “Other families did move completely out of the city. Some displaced employees filled other open positions around town and remain here.”

Surprisingly, the Hill City School District (HCSD) did not suffer much loss with the mill closure. In fact with the closure of the mill the district became the city’s largest employer in the area. 

According to HCSD superintendent Blake Gardner enrollment in the district has remained steady since the closure.

“In the spring of 2021, our enrollment was 490 and now it is actually 498,” Gardner said. 

Gardner attributes the lack of decline to the influx of people to the Black Hills and the reputation of the district as a whole. 

“While the data shows that most of the population increase was a non-child rearing demographic, there were some new citizens that had school-aged children,”  Gardner said. He added, “we lost a handful of students whose families moved when the mill closed, but other students came to our district via open enrollment.  We have been the number one school in South Dakota three of the past five years and I believe that families strive to enroll their kids here. Hill City truly is a great place to live and raise a family if you can find a place to live.”

Gardner notes that the sawmill was an “institutionalized piece” of the Hill City community and that the “Neimans are very community-minded and still provide resources for the school as requested and have remained good partners.”

Gardner does say that “the closure of the sawmill has not changed the percentage of property taxes paid to the school district, which is a similar formula for every county in South Dakota (around 50 percent goes toward funding the school district).”

 However it is interesting to note that the mill property that sits on Hwy. 385 has lost about half of its property tax value since closing its doors. That is despite the fact the property taxes are based solely on land and building values, not on the profitability of a business or commercial enterprise. 

According to Trevor Abernathie at the Pennington County Department of Equalization the department looks at the value of the land and the structures on it and is not capturing the value of the business at all. 

The department started lowering the value of the land while the  mill was still operating because the business itself was starting to take down buildings. 

Most of the mill’s value, Abernathie said, is in the equipment, like the saws, the debarking equipment and things of that nature.

 Those items are considered personal property and are not taxed by the Department of Equalization. The county does, however, tax the pole barns or buildings used to house the equipment. Those buildings go down in value with deterioration or if no one is taking care of  them. Abernathie  cites the old  Shopko building in Rapid City as an example of a property that had its value decreased  due to a  burst pipe which caused serious damage to the building, lowering the property’s value.

Pennington County property tax records show that the sawmill property located at 23848 Hwy. 385 was assessed  $2,237,700 in 2020. That is the full assessed value. The taxes on that property were $37,525. 

Currently the full assessed value for that property is $1,335,500. That property has a tax bill for 2023 of $18,723.90.

What the future usage of that property is still remains to be seen. No comment from Neiman Enterprises was available by press time.