City Council Weighs Extension for AirStay Hotel Project as Testimonies of Downtown Struggles Continue
- Steve Jurrens
- Jun 1
- 7 min read
Northeast Radio SD News – Watertown, SD - A nearly full Watertown City Council chamber became the backdrop for a robust discussion on Monday evening, as local government officials, passionate small business owners, and frustrated citizens conflicted over the ongoing construction delays plaguing the “AirStay” hotel redevelopment project.
At the heart of the intense debate was Resolution No. 26-22, a measure that would grant an extension to Occupy Right-of-Way Permit M-25-20. This permit allows the full closure of a portion of 2nd Street NE to facilitate the redevelopment of the former City Hall building into a boutique hotel. However, following several community members giving public testimony detailing financial losses to downtown mainstays and criticism of an absent developer, the City Council voted 5-1 to defer action on the extension for one week, scheduling a special meeting for Monday, June 8, 2026, at noon.
Standard Utility Easement Passes Quietly
Before the meeting descended into a debate over road closures, the council addressed a separate, less contentious matter regarding the same development: Item 8I, the approval of a perpetual utility easement.
City Manager Alan Stager introduced the item, explaining that the easement would allow Watertown Municipal Utilities to install an electric transformer, wires, and equipment to serve the future AirStay hotel. Because the project is being built “property line to property line” with an approved zero-setback allowance, placing the infrastructure on public city property was the only logical choice.
“That project is being constructed property line to property line, and the only place to really logically place that transformer is on city property,” Stager noted. “And so this will grant a perpetual easement for the placement of that transformer. Staff recommends approval of the item.”
The easement outlines a specific 10-by-10-foot location on public property, described as the Southerly 10 feet of the Westerly 10 feet of the Easterly 20 feet of Lot 3, Block 3 of the Original Plat of the Town of Watertown. Under the agreement, AirStay Watertown LLC is required to hold the city harmless from any third-party claims and must promptly refill excavated areas and restore sidewalks or driveways to their original topography.
Councilman Schutte asked if this arrangement aligned with standard city practices over the years for similar projects. Stager confirmed it was standard for tightly packed footprints where neighboring properties do not share private transformers.
The council approved the utility easement unanimously via a roll-call vote, setting the stage for the main event of the night.
The AirStay Extension: A ‘Quagmire’ of Delays and Disruption
Mayor Ried Holien called up Item 8J, the resolution to extend the right-of-way permit. Although Occupy Right-of-Way permits (formerly known as Materials on Street permits) are typically handled administratively by city staff under local ordinances, Mayor Holien pulled the item into the regular agenda as a courtesy due to intense council and public concerns.
Stager explained that the developer had originally negotiated a 15-month timeline matching their construction projections. However, the project has fallen significantly behind schedule. To regain regulatory leverage, city staff drafted Resolution No. 26-22 with four stringent conditions designed to give the city “more teeth” regarding communication and site management:
1. AirStay Watertown LLC must submit an updated construction schedule to the city every two weeks.
2. The developer must maintain 2nd Street NE as two-lane traffic at all times reasonably possible and when requested by the city.
3. The developer must communicate full right-of-way closure requests to the city, emergency personnel, and adjacent businesses at least 48 hours in advance.
4. The developer must repair and maintain the adjacent right-of-way to a condition equal to or better than its pre-construction condition.
Stager revealed that the developer planned to temporarily reopen 2nd Street NE at the end of the week for approximately three weeks while awaiting materials. However, a massive crane with a footprint exceeding 30 feet in width is scheduled to arrive in late June, mandating another full closure to erect the building’s precast concrete pieces.
‘Save County Fair’: Downtown Merchants Plead for Relief
When the floor opened for public comment, the narrative shifted from bureaucratic logistics to small business survival. Jeff Gamber, part-owner of County Fair Foods—a family-owned independent grocery store operating downtown for 37 years—delivered a gut-wrenching plea.
“We’ve battled against big box stores, super Walmarts, and COVID. Through all that, we survived—little tiny independent grocer, downtown Watertown,” Gamber said, his voice heavy with emotion. “If this road closure and the way this has been handled continue at any point... we are not going to make 37, 38 years. I can guarantee you that. That we will be closed.”
Gamber reminded the council of the rarity of their establishment. “Did you know that in the state of South Dakota, there is only two grocery stores that are downtown in cities? Which is a real gem to have in your city... And we’re going to be losing one here soon. This is just our last-ditch effort, and hopefully we can get some kind of relief.”
Megan Olson, owner of a retail store on West Kemp Avenue, mentioned the council’s ethical responsibility.
“When you took the oath of office, did you think you were going to be in the business—excuse me—the business of deciding winners and losers?” Olson asked. “Because tonight, that sits in your hands when you’ve got people like the Gambers who have done more for this community than most of us will ever dream of doing, pleading with you to do the right thing. I implore you, this is your opportunity to right a wrong.”
Jill Makepeace, co-owner of Makepeace Jewelers, a 44-year downtown fixture, echoed the sentiment, emphasizing that the persistent disruption is altering local consumer habits. “At Gather, my girlfriends, we’re going to coffee—all the roads are closed. Hey, I’m just going to go to Caribou.’ They’re losing business, too... I just ask you save the Gambers. Save County Fair. We need it up here.”
Colin Paulsen, a contractor, former council member, and former assistant city engineer, sharply criticized the execution and environmental management of the construction site itself. “Being watching this happen is not normal for Watertown. This is not a normal circumstance,” Paulsen stated. “I drive by and see no inlet protection, no silt fence up. I mean, it’s mind-blowing to me as a contractor, as someone who is certified in approved control practices.”
Council Rebels Against Developer’s Absence and Broken Promises
The frustration inside the chamber intensified as council members realized representatives from AirStay Watertown LLC were not present to answer questions. Stager admitted the developers made a conscious decision to skip the meeting to avoid a social media-driven “attack,” a defense that found little sympathy around the table.
Councilman Allen noted that other developers facing public backlash in the past had shown up to present their plans. Councilman Jurrens expressed an exhaustion of patience.
“What I don’t trust is them doing what they’re going to say they’re going to do,” Jurrens said. “We had a meeting here, they were going to go talk to their neighbors and ask them and fill them in on what’s happening. To my knowledge, that didn’t... I go back to something that’s been around for many years. I’d look up the words; it’s called the second greatest commandment: Treat your neighbor as yourself. I have not seen that.”
Councilman Mohrmann argued that the developer’s empty seats spoke volumes about their lack of accountability:
“The fact that the contractor that’s causing all of this, all these problems, all these concerns and all these issues within the community are not even here tonight to face their peers... I think that speaks volumes. They’re not even here to ask for forgiveness, or they’re not here to explain their stance on why we’re in the situation that we’re in.”
Mohrmann also questioned why the developer couldn’t utilize the wider 1st Ave NE turn lane for their crane instead of choking 2nd Street. Stager responded that staff had explored multiple alternatives, including City Hall parking lots, but the developer insisted 2nd Street was structurally necessary for their equipment layout.
Councilman Peters spoke to the lack of contractual safeguards in the original real estate transaction.
“The reality is that it’s not a public-private partnership,” Councilman Peters noted. “We transacted with them a site and other responsibilities on them. Hindsight, I wish it was a public-private partnership, because then we would have some clawbacks. We would have some securities. Because right now we do not.”
Councilman Heuer mentioned the developer’s sudden burst of activity when deadlines loomed, calling out the weak enforcement mechanisms in the proposed resolution. “I personally feel that in government, especially in our local government, we don’t always have very good consequences for when people don’t do things. And I think that’s created a culture of ‘ask forgiveness after’... We have control measures, but I don’t see any teeth. I don’t see a fine if we don’t comply.”
Deferral and a Hard Friday Deadline
Seeking a middle ground, Councilman Schutte reminded his peers that the council’s true mandate is maintaining institutional fairness. “Our job, I believe... our duty is to create a level playing field for businesses, for citizens, for developers... so there’s not partiality, equal scales, level playing field. That’s what we’re deciding tonight.”
Faced with a choice to vote the extension down entirely or delay it, the council found a procedural opening. Because the developer’s original right-of-way permit had officially expired, City Manager Stager confirmed that the city possessed the immediate authority to force the road open, regardless of how they voted on the extension tonight.
Stager recommended a hard timeline: “If this is voted down tonight, we will inform the contractors on site that they have until Friday to vacate the street... The street will be opened by this time next week.”
Councilman Heuer urged a strict, measurable benchmark, establishing that 2nd Street NE must be fully open to two lanes of traffic by 5:00 PM on Friday.
Councilman Jurrens praised Stager’s administrative efforts over the past year and strongly condemned anonymous online attacks against city staff. Jurrens then introduced a substitute motion to defer voting on Resolution No. 26-22 for exactly one week. This delay aims to force a face-to-face dialogue, legally requiring the developer’s presence to negotiate stricter terms, performance bonds, or explicit project milestones.
The roll-call vote to defer the resolution passed 5-1, with Councilman Mohrmann casting the sole no vote, preferring an immediate denial.
The Watertown City Council will reconvene for the special meeting on Monday, June 8, 2026, at 12:00 PM to decide the ultimate fate of the AirStay right-of-way permit extension. Meanwhile, local businesses and residents will keep a close eye on 2nd Street NE, waiting to see if the barricades clear by Friday evening.
