Events Center Hogwash

UPDATE: Cheryl Rath and I will be on Jon Micheals FORUM tomorrow morning (Sunday) at 7:30 AM, KELO FM 92.5 talking about the EVENT CENTER proposal. Tune in.

It only took a few days but the Event Center task force’s spin cycle kicked in. So let’s start shooting some holes in this plan;

For 18 months, we have worked with 18 wonderful Sioux Falls citizens. And they’ve unanimously endorsed one method to pay for this needed project. We estimate it will cost $137 million to $169 million. We recommend paying for it with a temporary 1-cent sales tax.

First off, as mentioned by an opponent at the city council meeting Monday night, the cost figure is a ‘pie in the sky’ number. Nobody knows what the place will cost until the bids start coming in. Could be less, but my guess is that it will be over $200 million. The city has a track record of overspending on projects. Remember the $18-21 million dollar Pavilion that has cost us almost $40 million in renovation costs so far, and that isn’t counting the city’s subsidy it has received over the last 12 years.

A 1-cent sales tax equals an additional dollar for every $100 you spend. In our case, it would last three to four years.

I always like how they give the smaller number in this comparison. But let’s add up this additional tax in a year’s span. Guessing that most low income working poor spend about 80-90% of their paychecks on goods and services that could be an additional $150-$250 dollars a year in taxes. Is an Events Center worth $250 a year to a person who will never use the facility? Doubtful. As for the 3-4 year time period, this number is murky for two reasons, as I mentioned above, nobody knows what the place is gonna cost mainly because the task force stupidly didn’t nail down a funding source and budget first before proposing this monstrosity and secondly, Sunset provisions rarely work because the city council can vote to extend the tax to build another building we may ‘need’.

You’d need to find those payments somewhere. A so-called bed, board and booze tax raises $5 million per year. So you’d need at least two extra cents on it to make your first 30-year payment. That raises the total tax on entertainment from 7 percent to 9 percent. And we’d need state authorization.

This is where the tax force gets very closed minded. I have often thought that the reason the BB & B tax was never pursued was because the hospitality industry lobby shut it down. Not sure how I could prove it, but their has been rumblings. As for the percentage figures on what you can charge for taxes on liquor and hotel rooms those are obsolete. If you have to go to the state to ask for the increase, you most likely can ask for whatever you think you need. There are also other ways to raise the money that the EC TF did not pursue;

Corporate Sponsorship • Tenant Sponsorship • Parking fees • Ticket fees • Advertising Tax • Luxury retail taxes on luxury items (ex; Homes, rec vehicles) • Corporate entertainment tax

And remember, if you borrow money, you pay interest. A 20-year loan for this project results in almost $92 million in interest costs over the life of the project. A 30-year loan means an extra $138 million in interest.

We think we should pay for this today, avoid the debt and have it paid for nearly by the day it opens.

Who cares how long it takes to pay for the facility? Not to mention it is only fair to stretch the cost out over a long period of time so people who are using the facility are paying for it. Why is the responsibility of residents living in SF now to pay off the whole thing in 4 years? Do most people pay off their homes in 4 years? No.

The temporary tax could be refunded to income-qualified residents. We are working with nonprofits to create the best refund program possible. We want it to be simple. Fill out a one-page application. Turn it into the city, an agency that helps you with other needs, or your church. If you need help, we’ll train volunteers to help you. We think that’s the right thing to do.

Refund programs have a proven track record of NOT working. And if we are taking in $50 million a year in taxes, why should it be the responsibility of churches and volunteers to help administer this program? I have a better idea, stop taxing nessecities to pay for entertainment.

We also need to remember that this project is an investment. It will generate $51 million to $53 million in economic impact annually, a level of activity that supports 1,900 jobs, with more than 400 new jobs, plus 1,275 additional construction jobs.

While I agree it will have an economic impact on our city, what they don’t mention is that the economic impact will go straight in the pockets of people who will pay for this project the least, wealthy business owners. Most of the jobs they mention are low wage part time hospitality jobs and unsecure, non-union temporary construction jobs.

If this proposal makes it to the voters, it will fail, and it will fail hard, not just because of the funding, there is also other opponents to the plan. Some don’t like the location, some don’t like the size, others are concerned about the lack of hotel rooms and our inadequate airport to handle major conventions. I hope the new council and mayor squelch this blind proposal and come up with a new plan before next November.

Let’s stop chasing our tail already and get a events center built!