Property Tax Hypocrisy

While the city and county are considering property tax increases on the rest of us, developers are pushing for a huge tax cut incentive;

Sioux Falls Mayor Dave Munson’s budget for next year includes a 2.4 percent property tax increase for city residents, designed to raise almost $960,000.

Developers want the city to give them a significant tax cut in the first 5 years they develop new property;

Those officials have proposed a formula that would give builders a two-year window to start projects that would qualify for a lower property tax bill. The program would apply to some commercial, multifamily housing and industrial projects. It wouldn’t apply to single-family residences because state law does not permit local governments to offer tax breaks for that type of construction.

A qualifying project would pay 20 percent of the taxes in its first year after completion. The bill would rise 20 percent each year thereafter until it hit 100 percent in the fifth year.

While our city leaders(?) are lauding a property tax increase as something we NEED to do (actually we don’t) the special interests that fund their campaigns are asking for a handout. I might be for the plan if Sioux Falls was behind on commercial development, but we are not, in fact their is tons of office space available for lease right now, just drive around and count the signs. I have often said that DEMAND drives development, not tax cuts. This whole idea was cooked up by Clayton Jamison who co-owns his development company with his father former concilor Bob ‘General’ Jamison and his brother current councilor Gregg Jamison;

Industry officials are billing it as a mini economic stimulus that could save jobs. Developer Clayton Jamison, who is among those pitching the plan, said there have been widespread layoffs in the industry. For those still employed, hours and overtime have been slashed, adding burdens to families.

Hey, Clayton, every industry is hurting in Sioux Falls. Why not give the working stiffs tax cuts instead of yourself? The worst part about the proposal is that his brother Gregg helped cook this up. Not only should Gregg not be voting on the proposal, he shouldn’t even be discussing it in his official position. It is a huge, huge, conflict of interest, considering Gregg is partners with his brother in the business, which ironically is behind on property taxes on his new developments. Is their proposal a plan to help spur development or is it a plan to help them out personally? I think the answer is pretty freaking obvious.

Steve Van Buskirk of Van Buskirk Cos. said the tax savings could be enough to persuade some businesses to start projects now rather than wait.

Hey, Steve, how about leasing the space you have available right now instead of building new space. I think Mike Cooper and Vernon Brown sum it up best;

“We don’t really have any suitable data to understand what impact this may or may not have,” Cooper said.

Officials also wonder whether the program would contribute to a glut of open commercial and office space in Sioux Falls.

“Does it compound the problem?” Councilor Vernon Brown asked.

During the years a property receives tax breaks, the difference between what it pays and what it should have paid is spread among existing taxpayers, said Ken McFarland, administrative assistant to the Minnehaha County Commission.

“In other words,” Brown asked, “property owners would subsidize this tax break?”

“Basically,” McFarland responded.

I hope the city council is least smart enough to not let this proposal see the light of day at a council meeting. This proposal should be shot down before it even gets voted on – and councilor Jamison needs to excuse himself from the negotiations, because trust me, if he doesn’t he will find out what a real ethics complaint is.