Entries Tagged 'Developers' ↓

Do Record Building Permits really matter?

The smoke machine at city hall is in full burn this afternoon;

Today, City officials announced a fifth consecutive record-breaking year of construction values. The construction valuation for building permits issued by Building Services in 2017 reached $720,369,333 by 3:30 p.m. on Wednesday, December 13. Last year’s record (2016) was $701.9 million, and the previous record set in 2015 was $676.3 million. 2014’s total was $619.5 million, and the total in 2013 was $588.2 million.

“The confidence, the momentum and yes, the record breakers just keep growing, and I can’t thank the builders, investors and dreamers enough for making it happen. Look what you’re accomplishing, Sioux Falls!” says Mayor Mike Huether.

But does it really matter, at least for the rest of us working stiffs? Think about it. In the last five years while the records keep breaking (obviously due to population growth) what does it mean for us?

Like the lie Washington DC tries to sell us every year since Reagan was president, trickle down economics just doesn’t work. Since this was first proposed by Ronnie, wages have stagnated, unions continue to disintegrate, the gap between rich and poor grows wider, poverty is at an all time high and the middle class will be gone within a decade or sooner.

Why doesn’t it work? Besides the mountains of evidence, the facts remain the same. The rich don’t re-invest their savings in taxes and tax incentives into jobs or higher wages, they simply just stuff it away.

But let’s look at this locally. While city hall has gone into ramrod mode with TIF’s, tax incentives and handouts to local developers (because they are suffering so much, just look at the building records we are breaking each year) has it really affected ‘growth’ in our pocket books? Nope. Because whether you look nationally or locally, trickle down does not work.

1. Wages are still low in Sioux Falls. Wage collusion runs amuck.

2. Food Banks continue to grow at a record rate.

3. Besides drug crimes, domestic violence continues to soar in Sioux Falls. One of the number one things couples argue about? Money.

4. Even with a new events center, sales tax revenue continues to be stagnate.

5. Even with all the record building in housing, affordable and even working class housing continues to elude us.

So while I am glad developers, builders, investors (which include our mayor) and banksters are making oodles of money, it really isn’t reflective of our total economic picture in Sioux Falls. But let’s not talk about it, because that would be negative and sinister.

Parking Ramp passes but not without a little dust

As predicted the parking ramp passed by 6 votes tonight. Stehly voted NO and Pat Starr abstained by saying ‘Present’ during the vote. Which put the Mayor in a tizzy. It was determined by the city clerk and city attorney that he could not abstain unless he left the room before the vote. So Starr walked out. Council chair Kiley went out after him but Starr refused to return until all the items were voted on concerning the ramp. The mayor, of course, took the opportunity to shame Starr for not playing the reindeer games. I applaud Starr for taking a stand and not participating in this fiasco. In fact several of us clapped during the meeting.

Starr I believe was frustrated because the mayor cut off public testimony after an hour in which Starr asked for more time and the mayor denied it.

The discussion was actually very interesting, besides the President of DTSF and a pastry chef that owns a downtown business nobody else testifying thought it was a good idea. In fact a couple of the people even mentioned if the developer was paying more towards the project they would support it.

Three of us raised concerns about Legacy and the Hultgren construction connection. I said it was a liability. Stogeez and Eastwold Smokeshop owner Tim Kant said he is embrawled in a possible lawsuit against Legacy over his building being torn down and an attorney representing Emily Fodness warned about doing business with Legacy due to liabilities also.

Besides Stehly offering an amendment about the 2nd penny there was ZERO discussion from the rest of the council before voting on it.

This was a very shameful night by the council, they let a developer with a bad reputation take the taxpayers to the cleaners.

Sadly, I don’t think this is over. I have a feeling there will be repercussions for the city, which means we will all be paying for the very bad decision made tonight.

UPDATE: Proposed Downtown Parking Ramp; A BAD DEAL for taxpayers

Trust me, I’m still baffled why possibly six city councilors and the mayor support this ramp with so many strikes against it. I am not one least bit surprised though that the development community and their upper crust friends support this, if this passes it will set a precedent paving the way for them to cut the same deals.

The laundry list of issues are obvious; A rock bottom, 80 year lease. Taxpayers covering over $6 million in ‘soft costs’ that should be either shared or paid entirely by the developer. Not enough parking spots (we will only net beween 290-390) for the price we are paying. No clear explanation of rate increases and how the bond will be paid back besides the detrimental idea of using the 2nd Penny as collateral. Not even an inkling of who the hotel franchise might be, the retailers or ‘possible’ private investors – lack of transparency. And lastly, the most egregious, we are possibly signing a contract with the person who is responsible, according to OSHA’s levied fines, for the Copper Lounge collapse making him an obvious legal liability.

But what is even more troublesome is the ‘deal’ we cut for the taxpayers. If we are going into a Private/Public partnership, shouldn’t we be negotiating a good deal for the taxpayers instead of the other way around? Especially after we have spent almost $1 million on engineering, architectural and legal fees, not mention this will be built on OUR land.

This has to be one of the most poorly constructed proposals the city has ever presented in the past decade, and I really mean that. As a councilor, I would be ashamed and embarrassed to vote for such an obvious scam.

If the council thinks they heard a lot of vitriol and rancor from the public before the vote, if they vote for this, I think the second round of frustration will be a lot worse.

Good Luck tonight, you are going to need it.

UPDATE: I just got a tip from someone who works in the hotel/motel industry in SD that the hotel partner will most likely be a ‘select service’ provider (similar to a Homewood Suites). This is NOT considered a FULL SERVICE Hotel. So I asked him if Legacy (and the city) probably knew who that was provider was, and that it was most likely. So I wondered why they have not said who it was yet, and encouraged a city councilor to ask tonight.

So I also asked this person about the lease agreement. They basically said what we have all known for awhile that it was a heckuva a deal and really unheard of (one time payment for 80 years). Like I said, we are getting hosed on this all the way around.

South DaCola Podcast 10: Downtown SF Parking Ramp

We discussed all things downtown parking ramp with guests Sioux Falls City Councilor Pat Starr and Cameraman Bruce. No lies or misconceptions on this broadcast.

Councilor Erpenbach calls Stehly and her ‘cohort’ liars

This is possibly a new low by a city councilor. Michelle emailed a constituent over the weekend and said this;

Honestly, I’m disappointed by the direction of the dialogue around this project. You know that a good leader doesn’t cast fear and doubt in his/her constituents’ minds. When citizens say they are seeking transparency in our government officials, they really mean they’re looking for the truth.

To hide the truth under insinuation and flat-out lies is not transparency in government. But that is what is happening with the garbage being spread by Councilor Stehly and her cohort.

Michelle is probably referring to the NOTICE postcard Theresa sent out below. All the facts were verified by Community Development Director Daren Ketchum 2 weeks ago at a city council meeting. If any of this was a false, Ketchum should have said so and clarified with Theresa at the meeting. He told councilors later that ‘he just didn’t want to argue with Theresa’. So when did Daren plan to have the ‘argument’ if none of this was true?

Besides the egregious remarks about Theresa, who is her ‘cohort’? I would assume it is Pat Starr, but it could be a whole host of people? The Argus, Me, Bruce, etc. Seems funny she supports transparency but can’t name this mysterious ‘cohort’.

She continues her mysterious rant;

The facts are:

1.  It is against the code of ethics set in law, and it is against the terms of this specific contract for city employees or elected officials to be investors in a project of this magnitude. Councilor Stehly and local media who quote her are implying that the mayor or other city employees — even Council members — are secret investors in this project. If you believe what she is implying, we are all going to make off big and head for Cancun with our plunder from the parking ramp/hotel project. Honestly, it’s insulting and hurtful. I will say as much on Tuesday.

Michelle, we have learned that we can’t just trust this administration’s ‘word’ on something, that was proven with the siding settlement in which the mayor lied about the settlement amount. Besides, when it comes to our taxdollars the prudent thing to do is put it in writing.

2.  The cost of the parking ramp is being reported with a twist in the figures. It will cost upwards of $20.6 million to build the city’s share of this project. But that includes far more than just construction costs and it is disingenuous to make people believe the city is paying some ridiculous amount per parking space. I’m not going to try to convince you otherwise. You need to see it for yourself. Please spend some time viewing the truth on this website: http://www.siouxfalls.org/active-projects/active-projects/parking-ramp-project.aspx. All of the information around this project is included there. Please also watch and review the documents from the city council’s Nov. 21 meeting. It is Item 45 on this webpage: http://docs.siouxfalls.org/sirepub/mtgviewer.aspx?meetid=2656&doctype=AGENDA. Again, facts = transparency.

This is not a good value, the numbers you quote above are proof of this. We simply are not getting a significant amount of parking spaces for the money and really are not solving the problem we should be solving. This is a economic development handout, not a parking solution.

3.  This point is the most important for me. I’m incredibly concerned about the dramatic decrease in sales tax revenues for the city of Sioux Falls, and for the entire state of South Dakota. There are two facts behind this financial hole that is only growing deeper: First is the drought and its effect on the ag economy. Farmers don’t shop in Sioux Falls when their incomes are in the tank. Second is the fact that more and more of us aren’t shopping in Sioux Falls either. All of us local shoppers are online, spending hundreds and thousands of dollars without paying sales taxes. But we’re still demanding that our streets be pothole free and plowed curb-to-curb within hours after the last snowflake. These services require tax dollars. A full-service hotel of the magnitude involved in this public/private partnership will help improve our sales tax collections by attracting precious out-of-town visitors. The NCAA tournament structure (for example) requires a specific number of full-service hotels (I think 12 but I have to confirm that) and this is one more on the scorecard. The fact that it is a public private partnership makes it all the more attractive. This means tax dollars that you and I don’t have to provide (unless we choose to stay overnight downtown which is more and more attractive!).

This one is almost hilarious in itself, and pure speculation. One hotel (that will be competing with 4 other DT hotels for business) certainly isn’t going to pull Sioux Falls out of a tax collection hole. The retail isn’t either. As we know now, many DT retail businesses are closing as fast as they are opening. Financial experts across the country are also predicting another recession coming in late Spring.

It’s critical for you to understand the parking ramp will be paid off in 13 years (or less) and it will not be paid with tax dollars. It is a user-funded project. Some people call that a tax of its own. But if it’s a “tax” it’s not something every taxpayer will pay UNLESS they choose to park in a city parking space. There are lots of other options.

This is debatable, as I have already said, paying government for a service is a tax.

Also important to understand is that we’re not inventing some weird, corrupt new wheel here. This model is highly successful in communities across the country. Anyone who travels outside South Dakota has experienced the benefits of projects like this.

Like the Sanford Sports Complex TIF, we are setting a precedent in Sioux Falls, don’t care about other communities. We should be treading very lightly here, and we should be getting the best value for the citizens. I don’t see this here. When setting a precedent in governing we shouldn’t take the ramrod, get R’ done approach we should review this project with a fine tooth comb.

And, finally, providing public parking in Sioux Falls only serves to keep parking rates low. There are far more privately-owned parking spaces in Sioux Falls than public. The per-day/per-month/per-year rate would be far higher if it weren’t for the low-cost competition provided by the city.

Rates will go up, they have to support the payments of the bond.

I’m proudly voting in favor of this project on Tuesday as another step in the positive, progressive growth of this amazing community I call home.

Michelle Erpenbach
Sioux Falls City Council
Central District
merpenbach@siouxfalls.org
(605) 367-8110

It still baffles me that at least 6 councilors and the mayor support this project. I have been following city government closely for 12 years and this appears to be the biggest scam I have seen in a long time. It just shows in the fierce defense of the project in Erpenbach’s email in which she calls Stehly a liar. Kill the messenger is the only line of defense they have because they truly know, when you look at the ‘facts’ of this project, the math just doesn’t add up.

It’s NO misconception we are getting hosed on the Downtown Parking Ramp

God Bless Him! You can’t ever deny that Councilor Neitzert really digs in his heels when it comes to issues facing our city and does his research. He sent out this press release explaining the 12 misconceptions of the parking ramp debate. While I agree with him on some of these, the problem is that Greg gets so lost in the weeds on the finer details he misses the ‘Big Picture’ and doesn’t answer many key questions, mainly “Why are we subsidizing the building of the Hotel?” AND “Why are we signing a contract with Aaron Hultgren before his OSHA fines and legal problems are settled?”

But let’s take a finer look at what Mr. Neitzert came up with;

Misconception #1: The parking ramp cost has increased

Reality: This is the first time we have a specific project with a detailed design with a concrete number we can be confident in.  All previous estimates were just that – estimates based on theoretical assumptions and ballpark figures for planning purposes only, and many only included construction only costs.  Comparing this final project plan to previous conceptual projects is not appropriate.

While that is true, many want to know why some of these ‘ballpark’ figures were off by over 50%? That is either lazy or incompetent government at it’s worst.

Misconception #2: Tax dollars will be used to fund the project

Reality: The parking division, like our water, sewer, and landfill divisions, is an enterprise fund.  This means it gets 100% of its funding from user fees – in the case of the parking division parking meters, leases on ramps and parking lots, and fines.  Likewise, 100% of its expenditures come from user fees.  No general sales tax or property tax dollars can be used to fund the system.  Your property and sales tax dollars will NOT pay for this ramp.

True, the bonds will be paid for by user fees (and the 2nd penny if the enterprise fund runs low). But the real misconception here is that DT employers are going to be able to just float or eat those additional costs for parking for their employees. Those costs will be passed onto their consumers in higher prices for their products and services. All costs get passed on. It’s the left pocket, right pocket argument, is it a tax or a fee? IMO, any time government charges you for a service, that’s a tax.

Misconception #3: Rates for parking meters and leases of parking will have to be increased to pay for this ramp

Reality: Rates were already adjusted two years ago so that the parking enterprise collects enough revenue to fund operations, repair and maintenance, and capital cost to replace or add new parking ramps.

Greg must have missed the email from the council’s legislative and budget analyst showing that rates will be increased over the next 10 years. Maybe he needs to check his email box.

Misconception #4: The parking division cannot afford the debt service on this ramp

Reality: The parking division has no debt currently.  Stress testing scenarios and a detailed financial analysis have been performed on the system.  Even with a loss of major tenant’s downtown, the parking fund can make the debt service payment, maintain a cash reserve, fund operations, and continue repair and maintenance on existing ramps and parking lots.

If the parking division can handle the debt on their own, why are we using the 2nd Penny as collateral?

Misconception #5: The investors in this project are being kept secret

Reality: The public portion of the ramp is being financed with bonds that will be sold on the open market.  The private portion will be financed by investors and banking institutions that the developer must obtain.  When we enter partnerships with private firms, award bids for major road and sewer projects, or enter into contracts with private entities, we know who the winning firm is.  However, we do not know all of the investors, shareholders, or part-owners in those entities.  This is not something we obtain as a matter of course.  The city does not and will not know who the investors are in the private portion.  The city cannot keep something secret that it doesn’t know itself.

I can partially agree with Greg on this one and I understand his argument to an extent. The difference is 1) we are subsidizing this developer by at least $6 million on this project unlike a road project 2) Of the investors listed (4 guarantors) one of them is contesting $200K in fines from OSHA for the Copper Lounge collapse. I guess I’m more concerned about the liability of Mr. Hultgren than I am of the UNKNOWN investors.

Misconception #6: The City is paying for private development

Reality: The development agreement which runs over 100 pages stipulates in very specific detail who is responsible for what.  The city will construct the ramp, and the private entity will construct their private portion.  The developer is paying a portion of the storm drainage work, which both the ramp and private development will benefit from.  The developer is paying for the incremental share of the cost for the foundation which must be larger to support the hotel on top of the parking ramp.  The city is not paying or subsidizing the private development.

While it may be true that the developer is sharing ‘some’ costs, it is a very big stretch to say they are sharing all of the soft costs, because they are not (that has already been admitted by councilor Neitzert). It’s obvious in the price tag of this project and the number of spaces we are getting that we are paying a much bigger share of the ramp than what we should be. He can call it whatever he wants to, but I call that subsidizing the project.

Misconception #7: We are building a ramp for a private developer

Reality: All of the parking spaces will be publicly owned.  The developer will lease spaces like anyone else – at market rate.  The developer does not get any free or reduced price spaces.  The public will be able to lease or use spaces in this ramp, because they are owned by the city.

Not sure if this has ever been a misconception or even a concern. It’s a given. The concern is we are not getting enough (public) spaces for what we are paying.

Misconception #8: We are building a foundation for a private developer

Reality: The developer is paying for their share of the foundation, specifically the increased cost of the foundation to support the hotel on top of the ramp.

Can we see those numbers broken down? While I think they may be kicking in a portion, I don’t think they are truly sharing 50% of those costs. As I mentioned above, the high price tag for this ramp blatantly shows we are subsidizing either the developer or the construction company, and my money is on the developer.

Misconception #9: The developer is paying $1,041 dollars a month to lease our land

Reality: The development agreement is not a month to month lease and the developer is not obtaining exclusive use of the parcel.  It is a lump-sum payment based on current market value and appraisal for the rights to lease the air above the ramp and the portion of our city property in front of the ramp where the private commercial development will sit.  The appraisal takes several factors into account including the fact that the city is still able to use the parcel to its fullest potential for a parking ramp and the increased cost for the developer to build on top of a structure instead of bare ground.  The city will receive 1 million dollars in three portions before, during, and upon completion of the private development.  This lump sum payment takes into account the cost of the increased foundation that must be built to support the hotel and the fair market value of the air rights and partial use of the parcel in front of the parking ramp.

If you do the math, the lease payment does come to $1,041 per month. But that is neither here nor there when you look at the bigger deal. This is the first time the city has gone into a lease agreement like this of a one-time payment for 80 years. Not only is it unusual and poorly negotiated by the city, by allowing this kind of lease to be setup we are setting a precedent for other private businesses that want to lease from the city. I can here it already, “I want the Legacy lease deal.”

Misconception #10: We are only getting 390, 270, or X parking spaces

Reality: The ramp is projected to have 525 spaces.  All of the current spaces on the surface lot we are building on will be replaced with spaces in the ramp.  While the net increase in spaces will be about 390 (525 – 135 current surface parking spaces), the total number of spaces is 525.

So what was the misconception?

Misconception #11: We are not building enough spaces because we are allowing a developer to build on top of our ramp

Reality: We are building enough spaces to satisfy projected demand for the next decade.  Regardless of whether something is built on top of our ramp or not, we would not build any higher than we are building our ramp.  We also cannot go any farther horizontally.  Even if there was no private development, we would not build the ramp any larger or higher.

We are not building enough spaces for the value we are getting. But that has nothing to do with the size of the lot or the height of the ramp, it has to do with this NOT being the right plan. We should be getting 600 Public Parking spots for around $13-15 million. Instead we are getting 2/3rds that for $20 million. Having this partnership with a private developer is actually detrimental to our parking needs downtown. We would be better off and get more value and space building the ramp on our own. The city’s job, especially with an enterprise fund (sewer/water/parking) is to provide a service from a fee/tax. It is not the responsibility of an enterprise fund to subsidize private economic development. One of the reasons a partnership like this has probably never been done before, because it simply isn’t a good deal for the taxpayers.

Misconception #12: We are paying twice the national average for this parking ramp

Reality: The price for this ramp is approximately $26,000 per space using the standard construction cost only number.  The national median cost of a parking ramp per space is $20,000.  The standard median parking ramp for purposes of comparison is a basic bare bones ramp.  Our cost is slightly more because we are adding features and amenities either by code requirement (fire suppression systems) or for user comfort and increased service levels (example: wider drive aisles and parking spaces).  The newspaper article that stated this ramp would cost twice the national median price was based on an apples-oranges comparison of our total project cost (including construction, site prep, financing, debt reserve, architectural, engineering, and other costs) to the national median cost which includes ONLY the construction cost.

When San Franciso and LA can build EARTHQUAKE proof parking ramps for cheaper than we can, you have to question the price tag. As I said above, it isn’t a misconception, it’s pretty obvious with all these extra soft costs, etc., we are subsidizing the building of the hotel AND building them a Cadillac parking ramp. With the mention of the fire suppression system my guess is that the hotel’s portion of the ramp will be enclosed and heated. Still waiting for them to spring this on us, of course, after the contract is approved.

Like I said, many of the councilors, the mayor and his staff are missing the big picture on this project. It’s too damn expensive, it doesn’t provide enough public parking and we are signing the contract with a person who is a major legal liability. Argue about foundations and investors all you want. The simple fact is we are getting HOSED on this deal.

Starr and Stehly lay out their concerns about the DT parking ramp at Dem Forum (12/1/2017)

As you can see, many people in the audience (one of the largest crowds they have had) agree with the councilors that the math just doesn’t add up on this project.

Argus Leader writes a poignant editorial about the Downtown Parking Ramp investors

Like most of us who follow city hall politics, the AL has written off this current council and mayor;

It’s a shame that city leaders – for reasons at worst nefarious and at best simply tone-deaf – seem determined to dig in their heels and undermine public confidence.

We call on current city councilors to insist on a framework of transparency.

We call on the future members of the council to make open dealings a top priority, to act as a check against the worst impulses of the executive.

And we call on the future mayor and his or her administration to learn from the lessons this administration refuses to accept, paving the way for a new era of accountability.

They also bring up the 700 pound gorilla in the room;

— Legacy guarantor Aaron Hultgren’s construction company was heavily fined by OSHA for workplace safety violations after last year’s downtown building collapse, which killed a construction worker at a property owned by Norm Drake and Legacy.

This is a huge red flag, especially after reading this story today in the AL;

Both Hultgren and Command Center appealed the penalties. The appeals mean that OSHA’s investigation isn’t closed. Which in turn means that the investigation isn’t available to the public or lawyers representing various parties who might have a claim because of the accident – whether it’s the family of McMahon, Emily Fodness, the young woman who firefighters rescued, or downtown business owners who lost sales when parts of the city were closed.

The two most serious citations against Hultgren were classified as “willful,” the most serious OSHA levies. Willful violations are given to employers who knowingly failed to comply with legal requirements or acted with indifference to employee safety.

As they point out, Mr. Hultgren could be sued for millions once the smoke clears. Why would the city want to sign an 80 contract with this guy? If the lawsuits ARE filed and are successful the city could be holding the bag on this project. It is likely we could have a very expensive parking ramp with an unfinished hotel attached to it. The blatant ignorance of the city’s legal counsel is astounding on this part of the deal.

Is Mayor Ramrod putting the cart in front of the horse?

Talking about horses, the mayor is chomping at the bit so bad to get this boondoggle of a parking ramp done, he is asking the city council to approve $246K in utility relocation expenses in Item #1 (consent agenda) on Tuesday at the council meeting BEFORE Items#44-45 are approved (the parking ramp contract).

Talk about confidence. Not even sure if this is procedurally legal? Where’s Fiddle-Faddle when you need someone to bend the rules?

While I will agree this will probably pass by a 6-2 vote, it seems pretty arrogant to ask the council to approve an expense that wouldn’t be necessary if the contract isn’t approved.

Oh, but it gets better. The administration is also so confident this will pass, they are also asking the council to approve the construction contract, admend the capital program and approve easements just a few minutes after the contract is approved. They couldn’t even give the council a week to review those documents after approval.

Just goes to show just how big of a scam this is, they have to ramrod it through ASAP.

DT Parking Ramp Contract Guarantor trying to skew the public opposition

I just attended Democratic Forum where councilors Starr and Stehly talked mostly about the parking ramp and (lack of) transparency in city government. Both Pat and Theresa got applauses throughout their presentation and Q & A. While there was no official poll or raised hands, it seemed pretty obvious that most people in the crowd were NOT supporting the ramp. One of the main reasons was the math just wasn’t adding up.

City councilors received this email from a concerned constituent today;

Good morning.

I received this email* this morning and felt compelled to contact you regarding the parking ramp project.

I DO NOT support this project until additional information is forth coming. There is an alarming lack of transparency in city government.

Please do not vote to move this forward.

Thank you.

*I will not show the email from Larry Canfield, one of the guarantors and investors in the public/private partnership, but to summarize he basically sent an email to friends and colleagues asking them to contact the city council in SUPPORT of the project.

As you can see, the person above was NOT very happy about receiving the email. I wonder how many others contacted the council with the same concerns?

I suspect there will be the normal flock of sheep in suits at the council meeting Tuesday supporting the project.