Stu Whitney

swhitney@argusleader.com

As Gov. Dennis Daugaard considers the fate of a transgender “bathroom bill” that critics call discriminatory and potentially damaging to South Dakota, his stated strategy is to downplay opinions from outside the state.

But what about backlash from South Dakota’s largest city?

From Mayor Mike Huether to major employers such as Sanford Health, Citibank and First Premier Bank, there is concern about how Sioux Falls could be impacted by legislation that puts the state on the firing line of national debate over lesbian, gay, bisexual, and transgender (LGBT) rights.

“When it comes to the potential economic impact, many groups in Sioux Falls are watching this like a hawk,” Huether said. “There is little doubt it will have an impact on all kinds of fronts.”

Transgender bill forcing school district conversations

That includes the NCAA, set to hold its Division I women’s basketball regional finals next month at the Denny Sanford Premier Center, in addition to seven Division II national championships slated for Sioux Falls between now and 2018. The athletic association has weighed in on discriminatory legislation at other sites and is keeping tabs on the South Dakota situation, according to public relations director Stacey Osburn.

“Our commitment to the fair treatment of individuals, regardless of sexual orientation or gender identity, has not changed and is at the core of what we believe,” the NCAA said in a statement released to Argus Leader Media. “We’ll continue to monitor current events in all cities bidding on NCAA events, as well as cities that have already been named as future host sites.”

Daugaard has until Tuesday to decide whether to veto HB 1008, which would ban transgender students in public schools from using bathrooms and locker rooms of the gender with which they identify. Transgender students who don't want to use restrooms based on their biological sex would be required to submit a request for a “reasonable accommodation.”

The bill runs counter to federal Title IX law as outlined by the U.S. Department of Justice, as does proposed legislation to deny transgender students from participating in sports teams aligning with their gender identity. Potential backlash is a source of consternation in Sioux Falls, where the perception of social intolerance could keep employers or events away and create friction for those already here.

“We need to worry about unintended consequences,” says First Premier chief executive officer Dana Dykhouse, a member of the South Dakota Chamber of Commerce board of directors. “This is a big world now, not just South Dakota, and there are consequences to our actions. When you try to legislate morality, it can become a slippery slope.”

The Sioux Falls Area Chamber of Commerce publicly opposed a “religious liberty” bill that drew fire for potentially allowing discrimination against same-sex couples, unmarried pregnant women and transgender people. That bill was tabled by sponsor Rep. Scott Craig, R-Rapid City, on Thursday despite passing the House on a 46-10 vote.

As attention turned to the transgender bathroom bill, the Sioux Falls Chamber didn’t take a direct stance on the measure but stressed to Daugaard and his staff that the measure could have reverberations well beyond public school restrooms.

Financial institutions Citibank and Wells Fargo – who pay the state about $70 million annually in bank franchise tax and unclaimed property receipts – expressed opposition to the bill and urged Daugaard to veto it.

Daugaard on transgender bill: 'I�m less concerned about opinion outside of S.D.'

“The reality is that when businesses look to South Dakota to determine if they might want to locate or expand here, they don’t always just look at things that affect them on the face of it, but what sort of environment they are associating with,” said Mark Lee, public affairs director for the Sioux Falls Chamber. “If they view it to be a hostile or discriminatory environment, they are crossing it off the list.”

This approach to social issues being considered in Pierre is a recent phenomenon in Sioux Falls, where multinational banking and health care companies are looking increasingly beyond state borders. The same is true for groups trying to lure national conventions or sports and entertainment events to the city of 170,000.

“Employers have to be sensitive to these issues and try to let individuals guide their own decisions about their lives,” said Sanford Health chief executive officer Kelby Krabbenhoft, whose $3.8 billion integrated health system is the largest employer in the Dakotas. “Our sponsorship and support of everything we do takes into account the human condition, which means being as tolerant and accommodating as we can.”

Sanford Health and First Premier are major drivers behind the Sioux Falls Sports Authority, entrusted with luring and staging large-scale athletic events at venues such as the Premier Center and Sanford Pentagon. That includes numerous recent bids from the NCAA, including this year’s Division I women's regional, with the winner advancing to the Final Four.

But the NCAA has been active in monitoring discriminatory legislation and how it could affect such events. The association made it clear it would reconsider host cities amid last year’s controversy surrounding Indiana’s Religious Freedom Restoration Act, which critics viewed as an anti-LGBT measure.

Indianapolis hosted the 2015 men’s Final Four despite boycott threats, but plans to host the same event in 2021 could be jeopardized if discriminatory laws remain. Houston’s status as a 2016 Final Four site came under fire after voters repealed an ordinance that banned discrimination based on gender identity and sexual orientation, but the venue will not change on short notice.

Sarah Mannes Homstad, a Yankton architect who played college basketball at Vanderbilt University, contacted the NCAA after becoming concerned about how Pierre legislation could affect Sioux Falls events. She noted that the association’s guiding principles include a “commitment to diversity in all elements of operations, including site selections.”

As a former college athlete and Yankton native who moved back to South Dakota a decade ago to raise a family with her husband, Mannes Homstad is determined not to “throw in the towel” when it comes to her home state.

“When I told people I was coming back, most of them said, ‘You’re moving to South Dakota?’” she recalled. “We did it with pride, convinced that if the opportunity presented itself to make a positive difference and make it a better place, we would do that. The time to act is probably now.”

National attention surrounding South Dakota’s bathroom bill – including a New York Times report and pro-veto urging from transgender icon Caitlyn Jenner – raised concerns about the state’s stance on civil liberties, as did the since-tabled “religious freedom” bill pushed by conservative Christian groups.

If nothing else, the controversy has fostered greater understanding of still-evolving social realities and underscored how state laws can be complicated by national impact and perceptions.

My Voice: Transgender bill is fair to everyone

“I will credit proponents of these bills with being sincere in how they view the world and genuine in their moral judgement,” said David Owen, president of the South Dakota Chamber. “But while our statutes are often an expression of right and wrong, we don’t live in a theocracy. We have protections in place, and (the chamber) is sympathetic to employers that embrace different lifestyles and diversity and allow people to live the way that they are.”

In the end, of course, Daugaard will make the final call. The Republican governor has spoken of consulting his “own set of values” in deciding whether to cast the controversial bill aside.

Krabbenhoft believes Daugaard will make a well-reasoned decision based partly on nearly two decades of experience at Children’s Home Society, which benefits abused or neglected children. The Sanford Health CEO recalls meeting with the future governor at the Sioux Falls facility and being affected by scenes of suffering.

“I walked away more emotionally torn than in any other capacity, because of the tragedies that young people faced,” Krabbenhoft said. “That experience had to have shaped him, and it probably made him a better governor. If he comes out and makes a decision sensitive to those people dealing with transgender issues, I’ll fully understand that, and I hope that others will too.”

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Argus Leader Media city columnist Stu Whitney can be reached at swhitney@argusleader.com. Follow him on Twitter @stuwhitney