Black Hills Business

RAPID CITY’S

HEART&SOUL Remembering

Ray Hillenbrand ISSUE YEAR | 1

• Buffalo

• Belle Fourche • Spearfish • Sturgis Upton • Newcastle• •

• Lead-Deadwood

• Rapid City • Hill City

• Custer

• Wall

• Philip

• Hot Springs

Service Area Population 428,830

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FROM THE GM

Recognizing the

‘NEXT BIG THING’

T

here is momentum building in the Black Hills. We can feel it.

That momentum is a new way of conducting business that focuses not on transactions, but on partnerships.

That momentum sees technology not as a necessary evil, but as a tool to strengthen our region.

That momentum will harness the power a new Air Force bomber brings to our state.

That momentum understands that future business leaders are getting an education here — but to succeed, we need those young people to stay here.

That momentum knows the Black Hills region is an outdoors jewel that should be celebrated, not kept hidden away.

That momentum is forward-looking without forgetting our West River values.

At Black Hills Business, we have bought in to this momentum, and we aim to tell the stories of the work it’s doing. Let us be the voice for this new way of conducting business in the Black Hills.

Each month, we will bring you stories of innovation, education and culture.

We will highlight what is happening at Ellsworth Air Force Base and tell you why its future is tied with ours. When new business ideas come to the Black Hills, we will be there to tell you about them. You’ll learn not only about our leaders, but also our up-and-comers. Our future is bright, and with Black Hills Business, we are ready to spread that message across the country.

In Gov. Kristi Noem’s first State of the State address, she referenced the lateGov. Bill Janklow’s ability to bring bank headquarters to our state and challenged South Dakota to find the “next big thing,” to move our economy forward.

At Black Hills Business, we have a feeling the “next big thing” is already here.

It’s in the ambitions of students at South Dakota School of Mines, Black Hills State University and Western Dakota Tech.

It’s being discussed at events like Morning Fill Up, 1 Million Cups and BHSU’s Geek

VOLUME 1, ISSUE 1

Staff Publisher Matt Tranquill

General Manager Chris Huber

V.P. of Advertising and Marketing Brad Casto

Ad Director Lon Massingale

Circulation Director Josh Hart

Speak. The “next big thing” is likely in beta testing at Ascent Innovation or being constructed right now in Spearfish.

The actions we take as a community right now will determine what our community looks like in 20 years.

If we turn away from this momentum and continue our standard operating procedure, we will still continue to grow, but we won’t reach our full potential.

We won’t create new and exciting jobs.

We won’t see wages rise to the level they could. We won’t see investments into worthy projects. In short, we won’t be a community on the cusp of something even greater.

Join us in becoming a part of this new way of business in the Black Hills. Join us in harnessing the power of this new momentum and making sure we don’t miss out on our state’s “next big thing.”

Chris Huber, General Manager of Black Hills Business

Black Hills Business is published monthly by the Rapid City Journal and Lee Enterprises.

New issues are inserted into the Rapid City last Sunday of every month and are available at locations across the Black Hills. Offices are located at 507 Main Street, Rapid City SD 57701.

The magazine is free of charge but back issues quantities are limited and subject to availability.

The opinions of the columnists in Black Hills Business are their own.

Online www.blackhillsbusiness.net Follow us on Facebook and Twitter

Tips on future stories?

Contact: chris.huber@lee.net

Interested in advertising?

Contact: Brad.Casto@rapidcityjournal.com

Want copies at your business?

Contact: Josh.Hart@rapidcityjournal.com

JULY 2019 | 3

TABLE OF CONTENTS COVER STORY PAGE 24

Remembering Ray Hillenbrand’s lessons for business and philanthropy The heart and soul of the Rapid City community – a column by Ray Hillenbrand

EDUCATION | PAGE 6 Mines President hopes for ‘entrepreneurial ecosystem’ Mines grad engineers Full Send, a downhill ski business

PROFILES | PAGE 12, 42, 46 Seven questions with David Emery of Black Hills Corp.

Growing business by nature in Spearfish Rick Kahler on Amazon’s taxes 4 | BLACK HILLS BUSINESS

VOLUME 1 ISSUE 1 REAL ESTATE & CONSTRUCTION | PAGE 16 Construction projects coming soon Know the numbers with Jared McEntaffer A look inside BHFCU’s new downtown branch Real estate and building data

INNOVATION | PAGE 30 Phase Technologies celebrates 20 years Property meld makes maintenance a breeze Elevate Rapid City’s interim CEO talks future growth

CULTURE | PAGE 36 A culinary journey with Skogen Kitchen in Custer Shannon Schad’s favorite Black Hills spot

ELLSWORTH | PAGE 40 SDEDA’s Scott Landguth’s vision for our B-21 future

JULY 2019 | 5

EDUCATION

Mines helping to create an

‘ENTREPRENEURIAL ECOSYSTEM’ JIM RANKIN

President, South Dakota School of Mines & Technology

C

ongratulations to the Rapid City Journal on its launch of Black Hills Business magazine! This publication is a great opportunity to showcase the accelerating economic development activities in Rapid City and the Black Hills by featuring the area’s existing companies, new start-up companies, new entrepreneurial efforts, a n d “ n ew- to - t h e - re g i o n ” companies.

When I was interviewing for the South Dakota School of Mines & Technology’s presidency in 2017, I was very excited to learn that the Rapid City area shared my interest in economic development. It is very difficult for a university to impact the area’s economy on its own; it is important that the area have the interest and a mindset to grow

6 | BLACK HILLS BUSINESS

the economy – what I call an “entrepreneurial ecosystem”.

I have been very impressed by the developments that have occurred in the 17 months that I have been back in Rapid City, a few of which include: the rebranding of the Ascent Innovation Center that is located on the School of Mines campus; the city-defined Innovation District between 5th Street and campus; the design and development of the new Ascent Innovation Campus that will be located at Main Street and East Boulevard; Elevate Rapid City – the merger of the Rapid City Chamber of Commerce and the Rapid City Economic Development Partnership; t h e a n n o u n ce m e n t t h a t Ellsworth AFB will be the home of the B-21 Raider and its training mission, and the positive impact that will made by Northrup Grumman, the subcontractors,

and the airmen who will move to the area to support the B-21.

The School of Mines plans to be integral in the area’s economic development. While I served as the Chief Research and Economic Development Officer at the University of Arkansas, a major part of the university’s mission was to help the state’s economy by creating more high-tech, high-paying jobs through the commercialization of the intellectual property (IP) generated from our university research. The university was very successful in promoting entrepreneurship by our faculty, staff, and students, which led to numerous start-up companies. In addition to helping the economy, the start-up companies provided jobs for our university graduates who wanted to stay in the state.

I see the School of Mines having the same role: to help the South Dakota economy and to create jobs for our graduates – we

know that many of them would prefer to stay in the state after graduation. To give them that option, we need to create more technology-based jobs that can utilize their academic training and skills. The School of Mines offers several strong entrepreneurship programs for our students who may want to start their own companies, typically technology companies. Often, the technology focus for these start-up companies will be based on IP that comes from university research at the School of Mines as well as other universities. That is why the university’s strategic plan lists research and innovation as one of its focus areas – research and innovation are at the beginning of the commercialization pipeline.

I am looking forward to partnering the university with local and regional entities to lead Rapid City, the Black Hills, and all of South Dakota into an exciting future.

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South Dakota School of Mines & Technology engineering graduate Douglas Bachand started this own ski making business.

EDUCATION

PHOTOS BY CHRIS HUBER

Engineered for

FRESH POWDER Mines grad uses degree to start ski business

BRENT ZELL

Black Hills Business correspondent

D Bachand makes custom skis ranging in prices from $800 to $1,000.

COURTESY PHOTO

8 | BLACK HILLS BUSINESS

ouglas Bachand has been in search of the ideal skis, ones that would give him the best of all worlds and be able to tackle anything a snowy scene could present to him.

When he wasn’t finding what he wanted in skis, he decided to make his own – and a business was born. Bachand, a 2018 graduate of South Dakota School of Mines & Technology, started Full Send Ski Company and is the state’s only ski company.

Bachand’s love of skiing — and from where his company evolved — began when he was younger and became what he described as more like an addiction.

While growing up in Pierre, Bachand said, his father Paul began taking him skiing starting in grade school and continuing on and off through high school. After graduating from T.F. Riggs High School in 2013, Bachand came to the Black Hills to attend Mines, where the skiing continued. He skied about

Bachand uses a press in his shop outside of Nemo while working on Full Send skis.

Bachand — who graduated from Mines in May 2018 — started designing skis in the fall of 2016 with his father.

40 times his first year at the college, and that annual number grew from there.

“Once I got out here, I couldn’t wait to ski,” he said.

His love of the sport came from the sense of adventure it brings, and that a skier can be challenged without competing against someone. Its gain through Bachand was Playstation’s loss. Bachand said he saved up money to buy a PS4 console, but everytime he got around several hundreds of dollars built up, he saw a sale on skis.

“I haven’t bought the PS4 yet, obviously,” he said. “I just kept buying more and more skis.”

What Bachand struggled with, however, was finding the right kind of ski for himself.

Some skis focused on stability; some were good stiff, charging skis; some were fun and playful.

But he was looking for something that caught the middle ground and could be versatile.

“There’s a lot of great skis out there,” he said. “None of them hit the mark perfectly for what I wanted them to do.”

Bachand also began re-evaluating his course of study at Mines. He was in mechanical engineering for his first 3½ years at the college, but began realizing it wasn’t for him.

He switched to industrial engineering, which put him more in tune with what he was looking for and opened up opportunities for him. He started studying aspects such as manufacturing technique, and that flowed together with his desire to make a new kind of ski.

According to the company’s website, fullsendskico.com, Bachand — who graduated from Mines in May 2018 — and his father started designing skis in the fall of 2016.

Douglas and his father are partners in Full Send.

There are two styles of skis available on the website: the Eviscerator 106 and the Eviscerator 95. The numbers in each name refer to that ski’s width in millimeters underfoot.

The description of each ski is broken down into three categories: Not Tech Jargon, which

describes the advantages of the ski; Tech Jargon with specific measurements; and Materials.

The Eviscerator 106 is described on the website as being able to handle any type of condition, while the Eviscerator 95 is more for tight-turning. Costs range from $800 to $1,000.

Each kind of ski can have carbon fiber added to increase the charging ability while reducing the playfulness, the website says.

The skis’ material includes laminated bamboo cores for the backbones, with a wrapping of 22 ounces in fiberglass.

Bachand said the skis are manufactured in the garage of his parents’ cabin near Nemo. The skis were made as the orders come in this year.

The company’s website also features shirts,

koozies and hats with the Full Send logo on them.

Bachand said he is happy with how things are going so far with the company, and said the people who got skis from a low-end production run conducted this year have not reported any issues. He has just completed testing on a 113 model, and plans to build up some inventory during this summer.

The name of the company reflects the attitude that Bachand, who had no experience with woodworking or composite layout prior to starting the company, has brought into his endeavor. Full send refers to a tongue-in-cheek reference to skier trying something outside of their comfort zone.

“That’s kind of me building skis,” he said.

Bachand uses a CNC Multicutter to cut bamboo cores for this skis.

JULY 2019 | 9

ready to Grow.

Behind every business and bold move were those who believed it was possible to do more. We’re proud to support and energize our community’s dreams.

Visit blackhillsenergy.com/growing to learn more.

VBS July 24th-July 27th This July, your child is invited to take a journey to the mysterious town of Cricket Creek, where they will learn about the Bible, God’s Kingdom, God’s love for all people, and God’s love for social justice.

This VBS program is free to all children ages 4 through 10.

Nursery care is available for children under 4.

Youth age 11 and up are invited to be guides and help the younger children.

Dinner served each evening at 5 p.m.

The Program will run until 7:30 p.m. Snacks will also be served!

Faith Lutheran Church 17 Indiana Street (605) 342-9234

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Please Contact Open Heart UMC or Faith Lutheran to register

PROFILE

7DAVID EMERY questions with

CHRIS HUBER

Black Hills Business

D

natural gas utility with 1.27 million customers in 823 communities across eight states. Black Hills Corp. now has $7 billion in assets and a $4 billion market capitalization.

The company expanded from 900 employees in 2003 to 2,900 employees now.

Emery also oversaw the construction of the new $70 million corporate headquarters — called Horizon Point — on Rapid City’s south side.

Under the Emery’s helm, Black Hills Corp. made it a point to give back to Rapid City and the Black Hills. In the past six years alone, Black Hills Corp. and its employees have donated $2.8 million to organizations in our community.

When he isn’t working, Emery loves spending time in the outdoors with his wife Deanna and sons, Brandon and Ryan.

Emery now shares his experience growing up in the Black Hills and eventually running one of the region’s economic cornerstones.

avid Emery stepped down as CEO of Black Hills Corporation in December after leading the largest publicly traded company in the Black Hills for 15 years.

Emery, 56, joined the company in 1989 as a petroleum engineer and served for more than 29 years at the utility company based in Rapid City.

He will continue to serve as chairman of the board of directors until May 1, 2020.

The Custer native is third-generation employee of Black Hills Corp. and his time leading the company was marked by massive growth. Black Hills Corp. has grown nearly 20 times its original size and added more than 300 corporate jobs in Rapid City, under Emery’s leadership. Those high-paying jobs have pumped millions of dollars into the local economy.

Q: You spent a lot of time at your During his tenure, Black Hills Corp. grew grandparents in North Rapid City while from a diversified energy company with growing up. How did that time shape you 61,000 electric customers to an electric and as a person?

12 | BLACK HILLS BUSINESS

My paternal grandparents in North Rapid City had a tiny house and lived very frugally.

They often had visitors and family members from the reservations staying with them, which made the house pretty crowded and busy. During the summer there was often a tipi and or cabin tent in the yard for people to stay in.

The story is similar on my mother’s side of the family. She is from Lead, and her Dad worked at the old South Mill for the Homestake mine. Both of my parents grew up with very little, but their parents instilled in them strong values and a strong work ethic. I was fortunate to spend quite a bit of time with all of my grandparents growing up, and they certainly instilled in me those same values, as did my parents.

Q: You are a member of the Cheyenne River Sioux Tribe. What advice do you have for young Native Americans looking to advance their careers in our state?

I think the most important advice I’d give anyone related to a career, and it certainly applies for young Native Americans, is to find something you are passionate about, and go

after it. It might be difficult and challenging, but in the end, if you enjoy and are passionate about what you do, life is so much more rewarding. Don’t settle for something less just because it is easier.

Q: Since you took over as CEO in 2004, Black Hills Corp. has undergone massive growth as a company. What challenges come with amount of growth, and how can leaders help overcome those challenges?

There are lots of challenges that come with growing a business rapidly: scaling up systems and processes, financing challenges, facilities decisions, hiring and staffing issues, and the like. One of the most important things we focused on at Black Hills to help with those challenges, was to maintain a smaller company culture as best as possible, even with more than 2,900 employees.

As one example, we have senior officers visit every location annually to speak with David Emery was CEO during the construction of the new Black Hills Corp. headquarters in south Rapid City. employees regarding business strategy and key goals. I often hear from employees who came to Black Hills from other firms say they EMERY’S TENURE AT worked somewhere else for years and never BLACK HILLS CORP. saw a company officer.

We did something similar related to the CEO succession process. Linn Evans (my Jan. 2004 Dec. 2018 successor as CEO) and I conducted a total ASSETS $2 billion $7 billion of 76 employee meetings in seven states to 61,000 1.27 million discuss the leadership change, the condiUTILITY CUSTOMERS tion of the company and the future strategy.

We received a lot of positive feedback from $1 billion $4 billion MARKET employees about the meetings.

CAPITALIZATION

Q: How did you define success during your time as CEO, both at your job and in your personal life?

When your company is listed on the New York Stock Exchange you get daily feedback on how the market views your success. I think over time that market feedback has become increasingly more short-sighted, which is not necessarily a good thing.

Black Hills has been serving utility customers since 1883. The only way you can continue to survive and thrive in the utility industry for the long haul is to take a long-term strategic view. Although there are always pressing issues, big picture strategic decisions should be made with a long horizon, which in this industry is 30-40 years or more.

I’ve always taken that view of success for the company, although it has been much easier said than done especially when the stock market is often driven by daily numbers. It is, however, the best way to ensure long-term success for the company, its shareholders, employees, and the communities it serves.

My job required extensive hours and lots of travel. From a personal standpoint, two things were my priorities when I wasn’t working – my family and giving back to the community. I was away from home for lots of holidays, birthdays, and other events.

Whenever possible, I put a very high priority on attending my sons’ events/activities and making time for them. When they were young, I tried hard to leave the office in time to eat dinner as a family and spend time

EMPLOYEES

900

2,900

with them in the evening. After they went to bed, I typically worked from home. My wife Deanna and I also made family trips a priority.

We would often do outdoor activities with the boys such as camping, skiing, canoeing, fishing, etc. We would also take trips together to places like Florida, Hawaii, Europe, the Bahamas and other places.

My parents were always very active in civic and non-profit activities (my Dad was a state legislator for 12 years and my Mom was also very active in the state and community).

I have always been involved in at least a few organizations that have missions that are of interest to me in which I felt I could make a difference.

sacrificed over the years due to my busy work schedule. Ideally, I can do a lot of them with Deanna and the boys. I love to downhill and cross county ski, snow shoe, hike, backpack, camp, fly fish, mountain bike and rock climb.

My wife and I also like to travel, and we will take some trips occasionally, but in the near term, staying home here in the Black Hills sounds pretty nice!

I will continue to be involved in several Q: What do you hope your legacy is at government and non-profit organizations post retirement, and may also consider Black Hills Corporation?

I’m not big on the concept of a legacy, serving on one corporate board. but as a third generation employee of the Q: Are you hopeful for the future of company, my hope is that the growth accom- Rapid City and why? plished by the employee team over the past 15 Rapid City and the entire Black Hills region years has set the company up well for many is an awesome place to live, do business and decades of future success as an investor- raise a family. More and more people are realowned company based right here in Rapid izing just how special the area is. There is a lot City. of exciting, yet well-managed, growth occurQ: You will continue to serve as chair- ring in Rapid City, which bodes extremely man of the board of directors at Black well for the future. Ellsworth Air Force Base Hills Corporation for roughly another year. being selected as the first home for the new What are your plans after that?

B-21 bomber is truly exciting. Passionate city I plan to spend a lot of time outside doing leadership will continue to keep Rapid City on many of the activities that I enjoy, but were course for a very bright future.

JULY 2019 | 13

Proudly brought to you by the Fraternal Order of Police and Horsley Agency of Farmer’s Insurance

14 | BLACK HILLS BUSINESS

Proudly brought to you by Rapid Skillz 360 and Rushmore Construction Company

REAL ESTATE

COMING SOON

A roundup of construction activity in the Black Hills

Framing is up for the Sturgis Brewing Co., owned by Knuckle Brewing Co. and the Knuckle Saloon at 600 Anna St. in Sturgis.

RCS Construction is the contractor and TSP Architects designed the 17,500-square-foot building.

Construction continues at The Barn at Aspen Acres north of Spearfish. The building will be a wedding and event venue that features stunning views of Crow Peak. Ainsworth-Benning Construction is the contractor.

Site work continues at the future home of Fleet Farm. The 202,000-square-foot complex is just east of the Hilton Garden Inn between Interstate 90 and East Mall Drive in eastern Rapid City.

The general contractor is Fulcrum Construction.

Crew work on the 174-room Marriott hotel east of Elk Vale Road in Box Elder. The hotel will be managed by Liv Hospitality and the project is being built by Consolidated Construction Co.

16 | BLACK HILLS BUSINESS

DATA

KNOW THE NUMBERS WITH ECONOMIST JARED MCENTAFFER Vital statistics from the Black Hills region JARED MCENTAFFER

Black Hills Knowledge Network

H

ello readers. Welcome to the first edition of the “Know the Numbers” column. This column will be your source for timely analysis of economic issues affecting Rapid City and the Black Hills region.

Alongside this column you’ll also find indicators of economic and social health. In this first column I’ll introduce the numbers and what they can mean.

First, we have the employment indicators. The labor force includes the employed and unemployed workers in the Rapid City metro area (Pennington and Meade Counties). The unemployment rate is simply the number of unemployed workers divided by the total labor force. The numbers are strong. Employment is up 1,427 jobs since April 2018, and the unemployment rate has fallen to 3.0%. Watch for employment to continue growing as we enter the tourism season.

Speaking of tourism, one thing to look at is the number

18 | BLACK HILLS BUSINESS

of people coming through the region by counting the number of travelers arriving at and departing from the Rapid City Regional Airport. Arrivals and departures can also indicate the strength of the business climate. Once again, the numbers look good with travel up 10.7% compared to last year.

Next we have data on municipal taxable sales and tax collections for Rapid City. Taxable Sales is an excellent real-time indicator of economic activity. Look for both indicators to rise during the summer months and around the holidays. As a rule of thumb, Taxes Due needs grow by more than 2.0% so that city revenues keeps pace with inflation.

Building permits and home sales are important leading indicators that can hint at where the economy is going. When building permits and home sales are up, it can signal confidence and future growth. When they slow down, it can indicate a future downturn.

Building permits and home sales also fluctuate with the seasons though, so a slow down in winter

VITAL STATISTICS

APRIL 2018

CHANGE

Labor Force

70,636

APRIL 2019

69,422

1214

Employed

68,531

67,104

1427

Unemployed

2,105

2,318

-213

Unemployment rate

3.0%

3.3%

-0.3%

Arrivals

21,414

19,338

10.7%

Departures

22,213

20,159

10.2%

Taxable sales

$268,222,642

$259,637,616

3.3%

Taxes due

$5,047,015

$4,861,538

3.8%

Births

172

159

8.2%

Deaths

106

72

47.2%

Marriages

48

54

-11.1%

Divorces

35

33

6.1%

is to be expected.

Last up are the Vital Statistics which track births, deaths, marriages, and divorces. Vital statistics are broad and general indicators of overall economic and social health. They reflect l o n g - te r m p o p u l a t i o n a n d economic trends but also have

strong seasonal patterns. Look for births and marriages to rise in the summer while divorces and deaths will rise in the winter.

Jared McEntaffer, Ph.D. is the Project Director and Regional Economist for the Black Hills Knowledge Network.

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A HELPING HAND IN OUR COMMUNITY’S GROWTH JULY 2019 | 19

REAL ESTATE

Light streams into the lobby of Black Hills Federal Credit Union’s new 15,000 square-foot downtown branch.

PHOTOS BY CHRIS HUBER

NEW DIGS B

Inside Black Hills Federal Credit Union’s new downtown branch

Black Hills Federal Credit Union opened the new downtown Rapid City branch across from their old location on Main Street.

20 | BLACK HILLS BUSINESS

lack Hills Federal Credit Union opened their new downtown branch in March and the 15,000 square-foot building features high-tech upgrades, a cozy lobby and historic photos of downtown Rapid City. The new Downtown Member Service Center is located on the corner of Main and 2nd Streets in Rapid City — directly across from the old location.

Walking into the new building, light streams in from the large windows that surround the office’s two floors. A huge collage of historic Rapid City photos greets customers behind the front desk.

In the lobby, a fireplace allows visitors to sit and wait in comfort with a warm cup of coffee.

Beautiful South Dakota landscape photographs cover the walls in the office and modern teller areas.

Outside, the drive through is equipped with new Interactive Teller Machines (ITMs). These touch screen machines connect the user with BHFCU employees at the corporate office and replace long-used pneumatic tube system. From the ITM customers can withdrawn or deposit cash, set up or make loan payments and much more. The ITMs are open longer hours than the physical locations and can be used as an ATM 24 hours a day.

The building is open 9 a.m. to 5 p.m. Monday through Friday, and 9 a.m. to noon on Saturday.

The modern teller area features stunning South Dakota landscapes.

A historic photo collage greets customers as they walk in.

A cozy fireplace warms visitors in the lobby area.

Come to the Center of the Nation for free family fun!

Visit the Tri-State Museum and Visitor Center in historic Belle Fourche and enjoy our beautiful Center of the Nation monument, historic Johnny Spaulding Cabin and Tri-State Museum.

Kids will enjoy our activity tables, discovery boxes, dress-up trunk and microscope station. Buy a souvenir at the gift shop, admire the original “Belle of the Ball” termesphere and enjoy a picnic lunch on our deck overlooking the Avenue of Flags!

We’re FREE and open 7 days a week!

Monday-Saturday 9 to 5 Sunday 1-4 605-723-1200 www.thetrisestatemuseum.com Visit us on Facebook!

415 Fifth Avenue, Belle Fourche JULY 2019 | 21

NORTHWEST Pipe Fittings

BUILT ON SERVICE

Mel Scheib and Company opened their doors on December 31, 1952 as a pipe, valve and fitting distributor located at West Boulevard and Rapid Street with three employees.

In 1959 the company moved to 808 Philadelphia Street followed by changing its name to Northwest Pipe Fittings in June of 1961.

Over the years Northwest Pipe has grown from serving customers in the five-state p g and a region surrounding its single Rapid City location, to 13 locations servingg plumbing industrial contractors and customers throughout the Dakotas, MN, NE, WY, and MT. Northwest Pipe provides the products that take water through a complete cycle of pumping it out of the ground, distributing it for use through pipes, faucets and fixtures and then putting it back into the ground with turf irrigation. “If it touches water, odds are Northwest Pipe carries it.”

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REAL ESTATE

PHOTOS BY CHRIS HUBER

The new Love, Inc. of the Black Hills facility at 414 E. Omaha Street was the highest building permit for May in Rapid City.

The remodel of the RC Freight House building at 306 Seventh Street was the second highest building permit for Rapid City in May.

Rapid City building permits total $9.5 million in May Love, Inc. remodel highest issued at $990K

R

apid City issued 293 building permits in May with a total valuation of $9,528,009. The valuation total is the lowest total for the month of May since 2010.

For 2019, the City has issued 1,099 building permits with a combined valuation for the year of $84,992,763, the lowest total for the first five months of the year since 2014.

!

W NE

“We’ve been riding a great wave for the past eight years both in terms of permits issued and for valuation,” said City Community Development Director Ken Young said in a press release from the city.

“The community has been steadily growing, and building activity has been steady with trends moving consistently upward in many

respects in recent years. As a city, you can expect fluctuations either way to occur over several months.

All things considered, we remain very optimistic for the future.”

Top permits issued in May include: Love, Inc. of the Black Hills for alterations at its 414 E. Omaha Street facility ($990,000); RC Freight House LLC for GSA

space at 306 Seventh Street ( $ 7 2 2 , 5 0 0 ) ; G ra c e M i c h a e l Properties LLC for Street Image at 1514 Lando Lane ($717,000); Discovery Circle LLC for new fuel tanks at the Common Cents store, 1821 N. Elk Vale Road ($500,000); and 11 Main LLC for office remodeling at the 11 Main Street facility ($401,955).

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JULY 2019 | 23

COVER STORY

Ray Hillenbrand in his office overlooking Main Street Square in downtown Rapid City.

CHRIS HUBER

‘HELPING PEOPLE, HELPS THE BUSINESS’ Ray Hillenbrand’s last lessons on business, philanthropy and community CHRIS HUBER

Black Hills Business G.M.’s note: Ray Hillenbrand sat down for a wide-ranging interview with Black Hills Business before his death in May. Ray discussed his philosophy on business, philanthropy and giving Rapid City a heart and soul.

W

hen Ray Hillenbrand looked out his second-story window in downtown Rapid City, he couldn’t help but smile.

Ray’s office above Prairie Edge had a series of east-facing windows with a perfect view of Main Street Square — a project for which he was a driving force.

“It’s my favorite thing,” he said in May,

24 | BLACK HILLS BUSINESS

grinning ear to ear while sitting behind his desk in a walnut chair. A large painting of a bison loomed above him.

“To look out that window, see the fountain going and see those little kids just screaming and yelling; it’s just terrific,” Ray said.

Ever modest, Ray was quick to say he was just part of a team “trying to do the right thing for Rapid City” when Main Street Square was built in 2011 and an economic renaissance was sparked in downtown Rapid City.

Now the area is a thriving retail center, with shopping, food and entertainment. Main Street Square acts as a hub, supporting the spokes of downtown businesses and allowing them to grow and connect.

It was hard not to like Ray. He was bashful

about receiving praise and didn’t seek recognition. He always used his position in the community to make the lives of others better — never wanting a thing in return.

Instead, he worked quietly behind the scenes and enjoyed the little things that came from his projects. Like seeing Main Street Square filled with ice skaters on a winter evening after having a meal downtown. It’s a scene Ray described as “something from Norman Rockwell.”

Ray said he had the foresight to build a good team for the square project, with people like Paul Bradsky, Michelle Lintz, Pete Lien, Dan Senftner, Dan Tribby and others. After that, it was a matter of giving the group the room to work and run with ideas. That’s a

lesson he learned while leading a successful family business for many years in Indiana.

Even at age 84, Ray said his work wasn’t finished.

He liked to say Main Street Square helped fix the heart of Rapid City. After that, he set his sights on another ambitious project — the OneHeart campus, and healing Rapid City’s soul.

When built, OneHeart will sit on the 4-acre campus on Kansas City Street. It will be a resource center for the homeless as a way to help them break the cycle of poverty. The center is part of a larger plan to lift up people in the region so they can find success.

Ray said business leaders will be needed to take the lead and make sure the project is sustainable. He operated under the idea that he wouldn’t get something off the ground, whether in business or philanthropy, unless he had a plan to sustain it.

“Once you get that good culture in OneHeart, you can take that culture and just keep it going,” he said. “It’s just like a good company — that feeds on itself.”

He asked leaders to have a long-term approach to their community and giving back.

But he also preached patience.

“The real payoff for this is not immediate,” Ray said. “In a generation, you might start to see substantial change.”

By helping Rapid City’s most vulnerable population with OneHeart, Ray saw a scenario where all boats rise in the Black Hills.

People will get the help they need to get off the street, they will enter the workforce and help create sustained economic growth. Ray said when people hear about the innovative approach Rapid City has taken to homelessness, they will be drawn to the region.

“If you are a part of a community, you have to make the community live,” Ray said.

“To make a community live, you have to have a heart and a soul, along with successful business.”

‘HELPING PEOPLE, HELPS THE BUSINESS’

Ray always gave back. That’s the way he was raised.

Before he came to Rapid City in 1980, Ray was the leader of Hillenbrand Industries in Batesville, Ind. The Hillenbrand name in Indiana was synonymous with philanthropy and community involvement. It was also a massive company.

“There was always a responsibility to take care of your people and your community,” he said.

The company that Ray eventually ran was started by his grandfather, John A. Hillenbrand. “He was just a farmer and had a sawmill,” Ray said.

John rescued the Batesville Coffin Company from bankruptcy in 1906 and employed German woodworkers to craft his high-quality coffins. The business flourished.

That venture grew into Hillenbrand Industries, Inc., a multi-billion-dollar, family-run

The OneHeart campus in Rapid City is slated be built in this area of Kansas City Street. Ray Hillenbrand said the project will help “heal the soul of Rapid City.”

Ray Hillenbrand said Main Street Square helped fix Rapid City’s heart, now he is looking for the help of business leaders to heal its soul.

corporation whose stock now trades on the New York Stock Exchange.

Ray had been an officer, board member or in management for Hillenbrand Industries since the 1970s. He retired as chairman of the board in 2006.

He said giving back was just “what you did as a business leader,” because “helping people, helps the business.”

“We built the first hospital, we built the library, the first swimming pool,” Ray said of his family’s contributions to Batesville, Ind. “We had electricity in Batesville before they had it in Cincinnati.”

When he came to Rapid City, that giving didn’t stop.

He poured his time, money and efforts into projects from the Catholic Diocese to the YMCA, and of course, Main Street Square. Ray was the silent contributor behind the scenes of dozens of Black Hills projects.

“Rapid City is a part of me, and I want to be a part of it,” he said.

POWER TO THE PEOPLE

Ray’s philosophy for business was much like his philosophy for philanthropy: Gather the right people and use them properly. He said they will develop the right ideas and input

as long as you give them the space to operate.

“The secret that I always thought was important was finding your people,“ he said.

“If you get the right people, you really don’t have to do very much.”

It’s a technique he used while diversifying his family’s company to help it secure a more stable future. That same blueprint was used for the Main Street Square project and now with OneHeart.

Ray told the story of forming a new board to help the casket company develop a future through diversification.

“When we broke off, we were 100 percent death care,” Ray said. Now that sector of the company is only roughly 20 percent, with the other 80 percent made up of several companies that design, develop, manufacture and service highly engineered industrial equipment around the world.

Ray said he didn’t want just “buddies” on his board. He wanted a mix of people who would challenge conventional wisdom, who had experience in different fields and who had institutional knowledge from the area. He made a point to hear from all members of the board during every meeting.

“We had to get the talent, not just the ‘yes’ vote,” he said.

‘A REAL LUCKY STRIKE EXTRA’

Ray said he could feel a groundswell of excitement for the future of Rapid City and the Black Hills region.

It has a few things going for it — “good people, with good hearts,” and a “great future.”

By being “the most caring community of our size to help our people in need,” Ray said businesses will be attracted to our area. That will be “a real lucky strike extra,” — a reference to an unexpected bonus.

“If you have a community of people that are really respected and treated in a dignified way, your business is going to prosper because of that,” he said.

“We have so many things right now going in the right direction,” he said and urged business leaders, the government and the community to work together to make it even better.

“I think the future of Rapid City as on the edge of being great,” Ray said.

JULY 2019 | 25

COVER STORY

THE HEART AND SOUL of the Rapid City community

F

A column by Ray Hillenbrand

or a community to thrive, it needs something to define it, to make it feel like home, to make it attractive to visitors. This is the heart of our community. But a community needs more than just a heart, it needs a soul. The soul of a community is its people, who they are, what they stand for, and how they care for one another. It is my desire to lay the foundation to cultivate a soul for Rapid City that engages both business and civic sectors, working together, to solve some of our toughest challenges, producing results we can all get behind and cherish.

The heart of Rapid City encompasses the Rushmore Plaza Civic Center, Memorial Park, Legacy Commons and expands to bring Main Street Square into the fold, spreading south to our arts corridor which includes the Dahl Arts Center, Art Alley, and Performing Arts Center.

This core area is what many Rapid City area residents associate with the heart of our community. Currently, due to many revitalization efforts, and significant support from our local private sector, our heart is strong, healthy, and thriving. And it is a tremendous source of pride.

But the soul of this community may not be as vibrant and healthy as it can or should be. A community is nothing if not its people, and the local private sector can play a major role in transforming Rapid City into the most caring community of its size in the nation. This “culture of caring” should have three main principles: • All lives have equal value; • We take care of our own; and • We help our people in need to try to create a sense of self-worth and build healthy, productive lives.

With all the local caregiving initiatives underway, it is important to take into account the places and circumstances people come from and ensure all are treated with respect and dignity. For example, honoring the heritage and traditions of our Native American residents; honoring the service and challenges of our Veterans; honoring the struggles our single parents face in raising a family alone; and acknowledging the wounds and trauma suffered by so many of our residents, clouding their lives with crises and hopelessness. Through concerted, intentional

26 | BLACK HILLS BUSINESS

efforts (i.e. Collective Impact) to address gaps in the system, with time and perseverance this community can accomplish our overall goal and principles and help our people build better lives for them and their families.

SHORT TERM GOALS

The way I see it, within the next three years or so, our community’s people in need

should have timely, affordable, respectful, and dignified access to food, housing, addiction treatment, mental health care/counseling and physical health care—with dignity and respect being paramount in this effort. To illustrate what I mean by dignity and respect, I once viewed a news program showcasing a community with a free meal facility for the disadvantaged where, instead of a prison-like

cafeteria food line, volunteers seated the diners, waited on, and cleaned up after them, just like at a nice restaurant. A small gesture, but it was meaningful and, more importantly, respectful and dignified.

FOOD AVAILABILITY

There is a lot going-on at a local level, too much to list. One example is Feeding South Dakota’s new Mobile Food Pantry. It brings available food within walking distance for many of our people in need who do not have access to transportation to get to food drop-off sites. Feeding South Dakota calls the new Mobile Pantry a real game-changer. The many good organizations that help feed our people in need are working together, sharing resources, and feeding more people in creative ways as a result and we’ll continue to grow from there.

AFFORDABLE HOUSING

Many good local developers are planning affordable housing projects, and the collaboration needed to make the housing market meet the needs of the community is well underway.

ADDICTION, MENTAL HEALTH AND OVERALL HEALTH

Pennington County’s new Care Campus places under one roof many scattered current treatment providers including Detox, Safe Solutions, Health & Human Services, Crisis Care Center, treatment beds (near future), and RCPD’s new Quality of Life Unit. To build on this effort, OneHeart will be right next door to help form a continuum of deeper services to enhance treatment for people after the acute phase of these challenges. Together, these two facilities will make it much easier for people to gain access to multiple services in a central location with a goal of helping our people in need become self-sufficient, contributing citizens.

Additionally, Community Health Center of the Black Hills will operate an urgent care clinic on the OneHeart campus, giving easier access to healthcare and medications to foster healthier lives.

get a good education obtain the skills needed to have a productive career; strengthening secondary school systems where students can get the education needed to continue their path to obtain the skills needed for their desired careers; establishing a state of the art workforce development program creating the skills needed for the jobs available; providing an adequate number of meaningful jobs available for all levels of skills; and having an overall community culture of caring for and helping our people so that very few reach a point of needing charitable help.

HOW DO WE DO THIS?

There have been about twenty million private sector dollars and years of private sector talent pledged or already given to our local Collective Impact efforts. Black Hills Area Community Foundation is leading this work. I believe our Collective Impact efforts will be the most successful example of any joint City and private sector project undertaken in our community’s history. We will be a shining example of how a community can come as close as possible to eliminating homelessness.

LONGER TERM GOALS We can truly accomplish more together I define these longer-term goals as those in in solving these community-wide problems. which it could take up to a generation or two to accomplish, with prevention being the focal Many wonderful human services agencies have stepped up to change the system to point. Data shows that prevention dollars are produce better results. This is the essence of a smarter investment than reaction dollars.

Collective Impact and the various initiatives If we can prevent people from ever getting to thereof (food security, affordable housing, a point where they need charitable care, we and OneHeart). The process of Collective would become the most caring community Impact is an ongoing endeavor and I believe in the nation. Some of these long-term prevention goals should be: having few if any OneHeart should be the steward of these overall goals, coordinating efforts of all the race relation and diversity issues; fostering family environments wherein children want to various stakeholders to accomplish them.

CONCLUSION

We can do this. We already have a lot of other great things planned and happening within our community: a good city master plan, exciting growth at Ellsworth Air Force Base, momentum with Elevate Rapid City, a good city administration (mayor and city council), good city and county law enforcement organizations, good leadership for our public school system, a new Child Development Center of Rural America Initiatives, good leadership at South Dakota School of Mines, the Sanford Underground Lab, a new civic center, and a broad community desire to help our people in need.

Our current efforts are good, but they should continue to be connected and enhanced to achieve specific goals. The energy is here, all we have to do is channel it the right way, take one step at a time and “learn as we go”. It’s now or never, and the Rapid City community is poised and ready for positive change.

I would like to close my comments with some of Rob and Deb Mudge’s thoughts. On October 24, 2018 Rob and Deb Mudge received at the Annual Statewide Philanthropy Luncheon the Philanthropists of the Year Award. No one deserves it more than the two of them. Rob closed his comments on accepting the award by saying, “I hope all of you at the end of each day ask yourself: What did I do for humanity today?” I hope all of us can get to the point where we ask ourselves this question, and have a positive answer for it, every day.

If all of this happens, Rapid City will have developed the soul it deserves, and go from being a good city to being a great city.

JULY 2019 | 27

COVER STORY

Ray Hillenbrand’s

SEEDS will continue to grow

What has Ray Hillenbrand meant to Rapid City?

It’s been our privilege at the Black Hills Area Community Foundation to have partnered with Ray during the infancy of Main Street Square and now with Elevate Rapid City and the Rapid City Collective Impact initiatives.

Ray was a visionary leader in business and philanthropy, his efforts have improved the quality of life for all of Rapid City and his imprint will be visible for generations.

-Liz Hamburg, Executive Director Black Hills Community Foundation

CHRIS HUBER

Black Hills Business

A

s my one-year-old daughter took wobbly steps across the bright green turf at Main Street Square this May, I smiled and thought of Ray Hillenbrand.

It was a perfect downtown Rapid City evening. My family had just finished dinner at a restaurant and after a short stroll, we decided to enjoy the slowly setting sun with some ice cream at Main Street Square. My daughter, having just learned to walk, smiled wide as she waddled about in the golden light.

I know that perfect evening — and countless more like it in our future — are possible because of the work Ray Hillenbrand has done for our community. He shaped the type of place I want to not only be a part of, but also help grow.

His work, and work he inspired so many others to do, is why our community’s future is so bright.

Famously modest, I was surprised when Ray agreed to do an interview for Black Hills Business. Some of the sources I contacted for the cover story were shocked.

“Ray doesn’t do that,” one person said, staring at me in disbelief. Another quipped, “how did you manage that?” Another still actually asked Ray if it was alright to say nice things about him for the article. That was the respect he had by those that knew him.

28 | BLACK HILLS BUSINESS

That respect certainly wasn’t commanded

by Ray. It was earned through his hard work.

It was learned through his compassion. It was developed through partnerships.

During our interview, Ray said agreed to sit down with me because he wanted this article to “be a seed,” that helped the community grow and inspired others to action. He said he wanted people to realize that small actions for the right cause can have huge outcomes. He wanted our community to stop operating in silos and start developing more partnerships -- so we all prosper. Most of all, he wanted us to be kind.

I too hope these articles on Ray are a seed for growth. But when you start looking around, you realize Ray has already planted a forest.

That forest isn’t just visible in downtown Rapid City and Main Street Square. It’s in our community leaders that Ray quietly helped mold. That forest is the positive action that was taken after only a short meeting with this great man. Soon that forest will be helping our community’s most vulnerable with the OneHeart Center.

Because of Ray’s actions these past years in Rapid City, that forest will grow with more trees. Those trees will produce new seeds.

Those seeds will plant roots in the Black Hills and continue the cycle over.

Ray’s forest of kindness, community and business is already all around us. Because of his lessons, it will continue to grow.

“Ray Hillenbrand has meant a great deal to Rapid City, but he would have rather you not know about it. He was a good man and a natural born leader; he thought in terms of strategy and outcomes. His financial contributions to great causes and organizations go largely unnoticed, and he preferred it that way. He contributed because he cares. One of his goals for Rapid City was to be known as the most caring community in the country. He led by example and asked one thing of those he works with: In a world of givers and takers, be a giver. I have tremendous respect for him as a community member, business owner, mentor and friend.”

- Steve Allender, Mayor of Rapid City

The involvement Ray Hillenbrand has given to our area will go unknown by most in the community. His vision and leadership has put downtown Rapid City in a stable condition.

Many accomplishments that have been made for Rapid City will last for generations.

Unprecedented caring for everyone.

- Dan Senftner, President and CEO of Destination Rapid City

BLACK HILLS C

AREA COMMUNITY FOUNDATION The Black Hills Area Community Foundation provides philanthropic leadership to build community endowments to invest in people and solutions that positively impact the Black Hills area.

Connecting people who care, to causes that matter. www.bhacf.org

BLACK HILLS AREA COMMUNITY FOUNDATION

803 St. Joseph St, Rapid City, SD 57701 605-718-0112

YOUR DONATION HELPS TO

IMPROVE LIFE

IN THE

BLACK HILLS

INNOVATION

An under-the-radar

POWERHOUSE

Ted Pettyjohn co-founded Phase Technologies in 1999. The company is now considered a leading manufacturer of phase converter technologies.

PHOTOS BY CHRIS HUBER

Phase Technologies celebrates 20 years BRENT ZELL

Black Hills Business correspondent

I

t’s one of the more low-key 20th anniversaries you’re likely to see.

There hasn’t been too much planned for Phase Technologies’ completion of two decades in business, said co-founder and retired CEO Ted Pettyjohn. The Rapid City power electronics manufacturing company, which started in May 1999, may host a Chamber of Commerce mixer in the fall, he said, but that’s about it for planned celebrations.

That is in tune with the company’s quiet nature in the local business scene.

“We’ve been here 20 years and we’re a decent-sized company and nobody knows who we are or what we do,” Pettyjohn said.

The company’s accomplishments, however, run contrary to its under-theradar status. What Phase has done in the past 20 years is become a major player the

30 | BLACK HILLS BUSINESS

phase-converter market in North America and is challenging big multinational companies in the variable-frequency drive field.

Phase currently has 55 employees, Pettyjohn said.

Phase’s origin story includes a fair amount of struggles.

Pettyjohn said he had just retired from the biotech industry and was investing in small ventures when he met Dr. Larry Meiners, a professor at South Dakota School of Mines & Technology who wanted to make a better phase converter, one that would use power electronics as opposed to old converters that relied on aspects like rotating motors and capacitors.

According to phasetechnologies.com, Meiners developed his converter after having difficulties using a traditional converter in his machine shop. Phase converters are used to distribute a single phase of electrical power into multiple phases to handle devices like large air compressors or HVAC systems.

Pettyjohn said the basis of Phase’s power electronics is to use the logic of a switch to a control a silicon switch that converts the power. Power switching electronics allows a user to break down and rebuild the fixed voltage and frequency from one phase from a utility company into different voltages and frequencies.

Pettyjohn put up the initial capital and raised capital for the startup because the product fit a need.

“It seemed like a good product idea,” Pettyjohn said. “That’s the hardest thing about technology startup, is the product. You have to have a good product. Startup ventures are about products and people, and you’ve got to get the right people, and that’s always a challenge but it’s really hard to develop a good product.”

However, the converter didn’t immediately fit into what Pettyjohn called an odd market, a mostly North America-based one he described as being a mile wide and an inch

Tuan Luc works in the assembly department at Phase Technologies in Rapid City.

deep, and traditional methods of distribution weren’t working.

“It was really, really difficult for the first three years,” Pettyjohn said.

What changed for them was moving to a pay-per-click model of advertising online, Pettyjohn said, and customers began finding the company. The eventual success of the converter allowed Phase to begin working on other products, such as its variablefrequency drive, or the VFD, which launched in 2008. VFDs allow motors to be run at different speeds and give greater control. The company’s phase-converting VFDs jumped into a market that was international and filled with massive companies like Toshiba and Hitachi. As an example for what Phase was upgainst, Pettyjohn said those types of international companies have thousands of engineers, while Phase has six in its research and development department. Nonetheless, Phase has found its niche in the drive market in phase-converting application and rugged outdoor application, Pettyjohn said.

Another niche area of strength for Phase that is a fairly recent development is in lowharmonic VFDs, Pettyjohn said. VFDs can create distortion in utility power, especially when they are great in number, and pollute a power grid. Low-harmonic VFDs don’t cause that pollution.

Phase’s size compared to its VFD competitors can be an advantage. The company’s chief technology officer, Peda Medagam, a native of India who has been with Phase for about 12 years, said that at Phase he has freedom to work on new things, whereas at a large company he would likely end up as a small part of a group.

“I think it’s pretty amazing that a company this size in Rapid City, South Dakota does what we do,” Pettyjohn said.

Phase converters built at Phase Technologies are used to distribute a single phase of electrical power into multiple phases to handle devices like large air compressors or HVAC systems.

Phase Technologies in Rapid City produces phase converters and variable frequency drives.

JULY 2019 | 31

INNOVATION

PROPERTY

MELD

brings new technologies to property management

STORY COURTESY OF ASCENT INNOVATION

L

ike many good success stories, Property Meld was the brainchild of two colleagues who saw a problem – in this case, coordinating maintenance work in rental communities – and came up with a solution.

Co-founder Ray Hespen credits much of his company’s success to Ascent Innovation, a branch of the Rapid City Economic Development Foundation. Ascent provides an incubator, a building with spaces for startup companies such as Property Meld to gain a foothold as they attempt to establish a brand.

“Things like this are critical for companies like us,” said Hespen. He believes businesses just starting out require more than great ideas -– they need a place to exercise them. “If you don’t have a space like this, you present a barrier to them.”

Hespen and partnering Cofounder David Kingman, came up with the idea for Property Meld in 2013 while renting properties in cities thousands of miles apart and experiencing similar maintenance headaches. They started working on an automated system to help

property managers streamline the process in 2014 and joined the incubator in 2017.

“It was a phenomenal amount of space for a low cost, with flexibility to grow and not worry about being constrained by our own office space,” Hespen recalls. “When you are a young business you have to choose where your money is going to go...a space as large as this for as low cost it is allows us to use our resources to do something better.”

Something better meant adding staff as needed as the company began to grow. Today, there are numerous property management firms utilizing Property Meld’s software across the nation and in Canada.

The entrepreneurial resources aggregated and created by Ascent Innovation has served as a conduit to help many new and existing businesses in Rapid City bring their ideas to life. Property Meld’s success exemplifies this as they continue to grow their headquarters in this community.

32 | BLACK HILLS BUSINESS

sdsmt.edu

Governor’s Giant Vision

winner for 5 consecutive years Faculty who are

3X more inventive

than the national average Students who

turn ideas into businesses

In the past 28 years, we have provided a hand up to

more than 550 individuals through our new home and home repair programs. These homeowners pay

approximately $275,000/year in property taxes.

We need 3500 affordable owner-occupied homes. *

Habitat homes in the Garfield neighborhood.

We can only accomplish that goal by uniting together to build the foundation for lasting change throughout Western South Dakota.

INNOVATION

Elevate honored to be at the

FOREFRONT OF GROWTH PAT BURCHILL

Interim CEOElevate Rapid City

R

apid City is at a pivot point. Rooted in tradition, there are many aspects of our community that hold an immense value to our growth and development. From small businesses and universities, to manufacturers and investors, all are playing a vital role in our economic ecosystem.

Elevate Rapid City is a new and innovative approach to economic development for Rapid City and the Black Hills region. For the first time in our community’s history, four of the leading private sector economic development organizations have united their efforts under a joint partnership.

Our pillars of success as Elevate Rapid City are based on four strategies – Innovation and Technology, Workforce Development, Ellsworth Air Force Base, and Expansion and Retention of existing industries – aligning our resources through two divisions (the Chamber of Commerce division and the Economic Growth division), as well as Ascent Innovation and South Dakota Ellsworth Development Authority.

T h e pa s t 9 0 d ays h ave been extremely crucial to the

34 | BLACK HILLS BUSINESS

future of our community. The announcement of the B-21 Raider and introducing a new wing commander, to the continued success in downtown Rapid City and the East of 5th movement – there are exciting things happening here.

Elevate Rapid City is honored to be at the forefront of Rapid City’s growth. With a new vision for the future of business, Elevate Rapid City is one voice for the entities working diligently to improve our community.

Talented leadership is paving the way for overall success, and we are proud to unify efforts under a joint partnership. This is more than a new approach for Rapid City – it’s a gamechanging blueprint for the future.

Our vision is clear: to achieve the shared economic and community development goals of elevating the quality of life and employment opportunities for those who call the Rapid City area home.

For continuous updates on Elevate Rapid City, follow us at elevaterapidcity.com or on Facebook, LinkedIn, and Twitter.

NEW LOOK. NEW APPROACH. A BOLD PLAN. Our vision is clear: to elevate the quality of life and economic opportunities for everybody who calls Rapid City home through strategic partnerships and innovative ideas.

Learn more at elevaterapidcity.com or follow us on Facebook.

Ellsworth Development Authority

ISSUE YEAR | 35

Owners Eliza and Joseph Raney at Skogen Kitchen in Custer.

CULTURE

CHRIS HUBER PHOTOS

A CULINARY TRIP

through the forest

Custer’s Skogen Kitchen serves up surprises two-years running CHRIS HUBER

Black Hills Business

L

ike a meandering walk through the forest, the menu at Skogen Kitchen in Custer is full of surprises and ever-changing.

Perhaps then, it’s fitting Skogen is Norwegian for “the forest.”

The brainchild of husband and wife Eliza and Chef Joseph Raney, Skogen celebrated its second year of the intimate eatery on North 5th Street in Custer this May. The couple’s food, atmosphere and charm has drawn rave reviews from eaters across the Black Hills, willing to make the trip to Custer for weekend brunch or an evening meal.

“We have Rapid City regulars that come down sometimes two or three nights a week,” Eliza said. “The amount of support, and just wonderful connections we have made has been overwhelming.”

FOUND IN A BOOK

Listening to the couple talk about their journey to the Black Hills, it’s almost as if it didn’t happen.

“I think we read some book that had the Black Hills in it and started to look into it more,” Joseph said.

36 | BLACK HILLS BUSINESS

COURTESY PHOTO

Skogen Kitchen’s brunch is served on Saturday and Sunday.

Eliza and Joseph met while they both worked at a fine-dining seafood restaurant in Newport Beach, California and started dating. She grew up Lindstrom Minn., a small town of just over 4,000 about 45 minutes from Minneapolis, Joseph was California born-and-raised.

As the couple’s relationship grew more serious, Eliza pushed them to venture out and start their life anew. They started looking into the food scene in Texas and the Chicago area.

“But then Eliza reminded me she wanted to be in a small town like she grew up in,” Joseph said.

Joseph flew out to Rapid City alone and started having a realtor show him houses across the Black Hills. At first, nothing was piquing Joseph’s interest, then, at the end of the day, he drove to Custer.

“We came into Custer and it just had this great feeling to it,” Joseph said. “It just had this feeling of adventure.”

He looked at a house five miles out of town and put an offer in that day.

Growing up in Minnesota, Eliza had an impression of South Dakota that she would be moving to the middle of the plains.

“As we are flying low into Rapid City, I kept saying ‘why is there so many trees, you didn’t tell me there would be so many trees,’” Eliza said. “Then we got here and I was like, ‘this place is absolutely beautiful.’”

Still once settle in Custer, Joseph wasn’t sure the Black Hills food scene would be ready for the type of restaurant he wanted to do.

Chef Joseph is classically trained at Le Cordon Bleu in California and he loves to push

COURTESY PHOTO

Fresh asparagus ready for the evening meal.

Roasted diver scallops with yuzu kosho, white beans, and blistered tomatoes.

House-made pasta at Skogen Kitchen.

HOURS Brunch Hours: Saturday 8 a.m. to noon and Sunday 8 a.m to 1 p.m.

Dinner Hours: Wednesday through Sunday 5 p.m. to 8 p.m.

the envelope and be creative with his cuisine.

“I thought opening a restaurant was the wrong thing to do here when we first arrived,” Joseph said. “I didn’t think this area would be open to the types of things I wanted to do.”

Despite those concerns, Joseph wrote the type of menu he would want and submitted to a local to test the waters.

“All they said was ‘you are going to open this thing and you are going to close it right back down,’” Joseph said.

He called the conversation a “gut punch,” he thought of switching careers. There was also the lingering voice of chef friends in California that said if he moved to South Dakota he would become a “professional deep fryer.”

But Eliza, ever the supporter and optimist, pushed the couple to take a leap and open the restaurant the way they wanted, despite their concerns.

“I told him what’s the worst that can happen,” she said during an interview with Black Hills Business in May. “If it doesn’t work, at least we tried.”

Eliza says, for Joseph there was no other option. Making inventive cuisine is what he loves to do.

“This is how he needed to cook, if he was going to continue being a chef,” she said.

A RESTAURANT THEIR WAY

Once open, the couple found their initial fears were unfounded. They say the town of Custer and the entire Black Hills were yearning for a different culinary experience.

That experience is exactly what they have created in their quaint 45-person eatery in the middle of Custer.

Eliza handles the front of the house and did the impeccable interior design for the

Chef Joseph Raney prepares house-made cavatelli.

restaurant. The details of the space right down the blue countertop are inviting and fun.

Joseph makes food that he wants with the freedom to experiment with new dishes.

He calls the menu “small and focused” and his sous-chef Adolfo Salgado moved from California to Custer to help him his vision.

Brunch fair is a mixture of classics like Custer’s First Meal (two eggs, hash browns and homemade sausage) and more unexpected delights like Japanese french toast with green tea ice cream or morning walleye with a potato, bacon and mint emulsion.

Patrons love the couples pancake menu.

There are five options with toppings ranging from lingonberries with lemon cream to fried chicken, hot sauce and maple syrup. The couple’s website coyly says “trust us,” when referring to the latter. Brunch ranges from $9 to $25.

For dinner, chef Joseph leans on flawlessly prepared American favorites with a bit of modern, exotic and international flare.

The free-range chicken is prepared with muhammara, a hot pepper dip originally from Aleppo, Syria and found traditionally in Turkish cuisine. The bone-in pork chop is served with a green papaya salad and coconut lemongrass emulsion for a bit of an

island feel. The braised short rib comes with a cheese from Spain.

Fish is flown in via Dakota Seafood in Rapid City and the couple there are times when the seafood they are getting in Custer is fresher than what they could have gotten in California.

“I don’t know what we would do without them,” Eliza said of Dakota Seafood.

Prices for entrees range from $17 to $40.

Joseph tells diners not to get too comfortable with the menu. Because the couple owns the restaurant he is much more free to make changes on the fly.

“When you eat something at Skogen and you love it and you get comfortable with it; i’m going to change it,” he said. “Because you are going to find something else that you are going to love.”

Eating at Skogen you will likely see both Eliza and Joseph interacting with the customers during their meal.

“A dining experience is not necessary all about the food,” Joseph said. “People have all shorts of likes and dislikes and I want to learn about them.”

He tries to grow from those conversations and make a deeper connection with people eating his food.

“Niceness costs our business nothing,” he said.

JULY 2019 | 37

CULTURE

Shannon Schad loves to coach the Black Hills Ski Team and says his favorite place in the Hills is Terry Peak.

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ELLSWORTH

South Dakota becomes

RAIDER COUNTRY SCOTT LANDGUTH

Executive Director South Dakota Ellsworth Development Authority

O

n March 28, 2019 the United States Air Force announced Ellsworth Air Force Base would become home to the first two B-21 Raider Bomber Squadrons.

These squadrons consist of the first training squadron and the first operational squadron.

How did we get here? How did South Dakota and the Black Hills become Raider Country?

In 2005, Ellsworth Air Force Base was slated to close as part of the Base Realignment and Closure (BRAC) process. In the 14 years since, a coordinated effort by our Congressional Delegation, multiple Governor’s Offices and State leaders, and on a local level resulted in the Air Force valuing Ellsworth as the premier site to locate its newest bomber the B-21.

The efforts to make this possible are numerous, including these key initiatives that put Ellsworth over the top.

The expansion of the Powder River Training Complex was a gamechanger when it came to evaluating Ellsworth Air Force Base. The value of having the largest training range within the lower 48 states is tremendous to Ellsworth. Most of the credit for this expansion goes to Senator John Thune and his office. The hard work and perseverance from Senator Thune over a decade’s time resulted in a training range that moved Ellsworth from a site considered for closure to a site marked for growth.

The creation and continued support of the South Dakota Ellsworth Development Authority provides South Dakota an entity – and Ellsworth a partner – to solve a wide range of issues. The creation of the Authority under Governor, now Senator, Mike Rounds and the support under Governor Dennis Daugaard, which continues with Governor Kristi Noem, has let the Air Force know South Dakota and the Black Hills is a great place to conduct their mission. If Ellsworth has an

The new bombers, called the B-21 or Raider, will ensure a population and construction boom at the base, which had been at risk of completely shutting down in 2005.

issue, the Authority does everything in its power to fix it. From providing wastewater services to eliminating encroachment in accident potential zones at the end of the runway, the Authority has partnered with Ellsworth to address problems and make Ellsworth a more valued base to conduct its mission.

Ellsworth’s selection as the first home of the B-21 Raider will result in thousands of new jobs and millions (if not billions) in new construction.

It will boost the economy of not just the Black Hills area, but the entire state of South Dakota. With the bomber will come new neighbors and friends, many of which will stay in our community becoming permanent residents of the Black Hills. This growth will bring new challenges and opportunities, and with the leadership at the Federal and State levels, as well as the resources the Ellsworth Development Authority can provide, we are positioned to handle whatever comes our way. We have proven we can.

Scott Landguth is the Executive Director of the South Dakota Ellsworth Development Authority. The Authority’s mission is to ensure that South Dakota and the Black Hills are a great place for the Air Force to conduct its mission.

40 | BLACK HILLS BUSINESS

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ECONOMIC DEVELOPMENT

SPEARFISH

Growing business by nature

KORY MENKEN

Executive Director Spearfish Economic Development Corp.

L

ocated in the northern Black Hills, Spearfish represents one of the most broad-based economies in western South Dakota.

With roots in education, health care, tourism, natural resources and light industry, our local economy has grown and diversified substantially over the past several decades. The past five years has seen the average yearly new construction valuation nearly double that of the previous five years.

Recognizing the attraction of Spearfish’s strong economic advantages -as well our area’s outdoor recreation and active lifestyle appeal- Spearfish Economic Development Corporation (SEDC) has launched a strategic initiative to recruit additional outdoor product companies to our growing community.

According to the Outdoor Industry Association, outdoor recreation is an economic powerhouse in the United States, each year generating $887 billion in consumer spending and supporting 7.6 million jobs. Every year, American consumers spend more on outdoor recreation than they do on pharmaceuticals and fuel, combined. In fact, the impact of outdoor recreation on America’s economy is almost as big as that of hospital care.

Spearfish is fortunate to already be home to a handful of outdoor product companies including SRAM/Quarq, Polaris and DirtBags Bikepacking. SEDC is working hard to attract, foster and encourage more companies of this nature, as they create the type of clean industry and quality employment opportunities our community desires.

As part of this endeavor, SEDC attended last year’s Outdoor Retailer Summer Market tradeshow

in Denver. The Summer Market is North America’s premier tradeshow in the outdoor industry drawing attendees from throughout the world, including over 600 exhibitors from a variety of industries including backpacking, camping, hiking, climbing, mountain biking and fly-fishing. Our inaugural participation in the show afforded SEDC the unique opportunity to connect directly with key decision makers and influencers from the outdoor product market and resulted in continued communication with over three dozen prospective companies.

In addition to attending the Outdoor Retailer Summer Market again in 2019, SEDC will also be participating in the International Fly Tackle Dealer Tradeshow in October of this year. The largest international gathering of flyfishing manufacturers, retailers,

42 | BLACK HILLS BUSINESS

sales reps, media and fly-fishing organizations in the world, this event will allow us to further share the Spearfish story with hundreds of industry professionals.

Our participation in the tradeshows has been complemented by placing strategic advertisements in regional and national lifestyle and trade publications, and by boosting our social media and digital marketing presence. In today’s competitive business recruitment environment, it is not enough to just sit back and hope someone takes notice.

Spearfish is not alone in our efforts to capture a share of the outdoor product economy. In Colorado, where the outdoor industry has grown by approximately 200,000 workers in the past five years, outdoor-industry business parks have sprung up in Grand Junction, Golden and

Montrose. Outdoor businesses tend to cluster and have played a major role in the growth of communities like Ogden, Utah, Bend, Oregon and Bozeman, Montana.

Home to Black Hills State University, world-class trout fishing, miles of recreational trails, a robust arts scene, a thriving business community and a variety of top-notch dining and microbrew establishments, Spearfish possesses the amenities required by the outdoor industry.

Combine that with a probusiness tax climate, a talented workforce, and outdoor-centric commercial developments like Elkhorn Ridge, the Village at Creekside and Spearfish Canyon Village, and Spearfish has all the ingredients to become a major player in the growing outdoor recreation economy.

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FINANCE

ESTATE PLANNING for your digital life

REX VIGOREN

CPA, PFS, Partner at Ketel Thorstenson, LLP

D

o you have a digital footprint? If so, what provisions have you made in your estate documents for the recovery and use after you are no longer here?

Our world is becoming more and more based on our electronic use. We can access accounts and handle transactions electronically with our banks, credit card companies, and even our health care providers.

You can order almost anything from online companies around the world, including ordering groceries for pickup or delivery.

But, have you given thought as to what happens to these accounts when you pass away? Who and how will your digital executor access these accounts?

Michael Kitces (financial planner, author, speaker, and former practitioner editor of the Journal of Financial Planning) describes digital assets as anything which is stored in electronic form (but separate from the physical hardware on which the electronic data lives). So, this includes things like cryptocurrencies (i.e. Bitcoin), to your login credentials to your bank, credit cards, social media, music or email accounts.

44 | BLACK HILLS BUSINESS

You may have addressed this challenge by simply writing down all of your usernames and passwords and made them available to a trusted family member or advisor. However, the legal profession identifies a hacker as anyone who knowingly accesses a computer or account without proper authorization.

Accordingly, the Computer Fraud and Abuse Act and the Electronic Communications Privacy Act provides punishment by law for hacking. So, if someone other than yourself accesses your account, they are technically hacking and punishable by law. The current law regarding protection of digital assets, the Revised Uniform Fiduciary Access to Digital Assets (RUFADDA) has had a rocky road since 2014.

However, currently, almost 40 states have adopted RUFADDA, with another five jurisdictions introducing consideration of the digital assets legislation. South Dakota adopted RUFADDA July 1, 2017, Wyoming enacted legislation on July 1, 2016; however, n e i t h e r No r t h Da ko ta n o r Montana have been able to enact any such legislation.

Are you aware, if your estate documents do not address and grant post-death authority to your digital executor, access to your digital accounts may

be lost. For example, each of the internet browsers (Google, Microsoft, Yahoo) all have Service Agreements or Terms of Service which most of us have not read, but all marked “agreed” when we set up the account. These agreements have different positions of what happens to the account when a user passes away, and limitations on who may access the account.

Google’s Inactive Account Manager will allow a “trusted contact” to be named and if desired, to share information with this contact. Or, the user can direct Google to delete certain information. Facebook’s Legacy Contact contains similar features.

Be aware, if you use these online tools, referred to above, and name someone other than your digital executor identified in your estate documents, account access will be granted to

the named individual contained in the online tool, and not your digital executor. Under RUFADDA, use of the custodian’s online tool will render all other instructions (including the estate documents) irrelevant. However, if the online tool is not available or not utilized, RUFADDA will then look to the estate documents granting access to the deceased account by the digital executor.

It is imperative we correctly manage and ensure continuing access to our digital accounts at our passing. Accordingly, estate documents should contain identification and access to our digital assets and consider the appointment of a digital executor. Our individual digital footprint will continue to expand. How we and our trusted advisors plan for this inevitable outcome is definitely a conversation which must be undertaken now.

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World is a better place

FINANCE

On the money with

RICK KAHLER Don’t forget: Small companies get tax breaks, too

A

recent headline in The New York Times got my attention: “Profitable Giants Like Amazon pay $0 in Corporate Taxes.

Some Voters Are Sick of It.” My immediate reaction was outrage. Amazon had a 0% tax rate. My company’s overall tax rate was 24%, and its net profit was less than 0.000025% of Amazon’s. How can this possibly be fair?

The Times article, by Stephanie Saul and Patricia Cohen, gave few specifics but left the impression that Amazon simply gets out of paying taxes on its profits because of a legal, but unfair, manipulation of the tax code afforded only to wealthy corporations, leaving the heavy lifting to the rest of us poor saps.

I wanted to know how Amazon did it, so I did some research. First, let’s put the $11.1 billion profit into perspective. The past 18 months are the first time Amazon has shown any meaningful profit since 2011. Many of those years saw them losing billions of dollars.

The total value (market capitalization) that shareholders have invested in Amazon is $954 billion as of April 29, 2019. That means the 2018 profit of $11.1 billion represents an earnings yield of 1.16% return on investors’ money. The average earnings yield on a large US company is 4.5%, significantly higher than Amazon’s.

While $11.1 billion sounds like

46 | BLACK HILLS BUSINESS

a lot of money in dollar terms, when viewed in the amount of money it takes to generate those profits, Amazon’s financials are significantly subpar.

Amazon reduced their taxes to zero by primarily doing four things.

1. They reinvested their profits in equipment and buildings, and were able to deduct a portion of these expenses. They will have to repay the taxes they deferred on these purchases when they sell the equipment or property. And the money spent was not available for distribution to their shareholders.

2. They received a tax credit for spending on research and development. This credit is an incentive for any company to help offset the high risk of the up-front costs of developing new ideas, not all of which pay off.

3. They paid some employees in the form of stock, rather than cash. While still a real cost to the company, this is used to minimize cash outflows, while giving employees an opportunity to reap the rewards of their hard work in future profits.

4. In their start-up years, Amazon lost billions of dollars.

Out of fairness, the tax code allows any business to carry losses over into future years to offset profits, when and if they ever materialize. This type of “write-off” is real money that was lost.

The article cited a carpet layer who had a profit of

$18,000 and paid more in taxes than Amazon. He was so upset at this injustice that he joined the Socialist Party.

The article failed to mention that many of the same writeoffs used by Amazon were available to him, too. If his business was incorporated, the tax bill on his profits was probably 21%, or $3,780. If he had reinvested his profit in a new carpet cleaning machine, had losses from previous years to carry forward, spent money on developing a new type of carpet cleaner, or paid his employees in stock, he would have paid nothing in taxes.

Critics of big corporations might say such strategies would not be realistic for a one-person company. Yet I have seen many small business owners use them, particularly carrying forward losses that result from the essential start-up costs. The corporate tax code generally applies equally to all businesses and is meant to encourage small companies as well as large ones to take the risks necessary to create new jobs.

Rick Kahler, MSFP, ChFC, CFP, is a fee-only financial planner and author based in Rapid City. Find more information at KahlerFinancial.com.