New Hilton downtown to collect a special tax to help w/improvements to the River Greenway

I think this is a great idea. The city council (Item #35) did the right thing in approving this special tax; hiltontax

What I can’t figure out is why are we expecting Hilton to collect a special tax for the improvements but Cherapa and CNA Surety are actually being granted tax breaks (TIF’s). Couldn’t they implement a special tax on the space they lease?

While I think having visitors help pay for our Greenway as a good idea, I’m wondering why Hilton is being singled out?


#1 Tiffing Point on 04.17.12 at 3:53 pm

A taxpayer in a TIF district is not getting a tax break. All the taxes are paid. Where the taxes go is different than normal, but all the taxes are paid by the property owner.

#2 rufusx on 04.17.12 at 7:21 pm

TIFs are not “tax breaks”. They are regular taxes directed to specific improvements(vs. the general fund) until those improvements are paid for.

#3 Tom H. on 04.17.12 at 8:00 pm

TIFs may not be tax breaks, but they are a monetary incentive provided by the city to a specific business, so it definitely counts as a subsidy. The second have of this article gives a nice overview of the more pernicious qualities of TIFs.

Why not enact a Greenway Improvement District and collect additional taxes all along the corridor? Sort of an anti-TIF which will help pay for the improvements that these businesses are benefiting from?

#4 Joan on 04.17.12 at 8:44 pm

Now they should have an event center tax too, on tickets, etc.

#5 mhs on 04.17.12 at 9:16 pm

A few years back the legislature allowed the creation of business improvement districts that could charge fees, not taxes, for improvements within the district. Room fees on a per-night basis (a buck or two) are what the law aims to allow. It’s a fee and set in dollars, vs. the percentage formula sales tax collections use. Hence, hotel guests pay the fee, commercial or residential tenants do not.

#6 l3wis on 04.17.12 at 11:21 pm

Tiffing – exactly, their is an incentive to get a TIF because that money can go directly back to benefitting the business getting the TIF. If there wasn’t a benefit to having a TIF, why do developers ask for them . . . hmmm.

As for the state law, I do realize some changes would have to be made in order to be able to allow property owners to charge and extra tax on leased property.

As Kyle Vanderlinden pointed out during the council campaign, our city continues to spend more and more on economic development and less on infrastructure. The handouts gotta start getting reduced.

#7 Andy Traub on 04.18.12 at 7:43 am

Joan, we ALL pay to subsidize MMM’s palace of hope. AND there will be parking fees on top of that for visitors. The whole thing is subsidized.

#8 rufusx on 04.18.12 at 9:13 am

As pointed pout, and recognized – all of this TIF/taxation/fee stuff is a result of STATE LAW – not city government. Lewis – you, Andy and others here seem to want to focus solely the city government in a lot of matters that they are OBLIGATED by STATE LAW as to their performance. If these are really serious concerns – at least direct your energies at the folks that could actually affect change. – Your STATE LEGISLATORS.

And again – TIFS (as mandated by STATE LAW) are not “handouts”. They are DIRECTED USES of normal tax dollars. Most typically they are used for street and utilities improvements necessary to support development/redevelopment of otherwise undevelopable properties. In the LONG TERM (if you want think of 10 years as “long”-term) they produce revenues to the general fund that would otherwise be non-existant.

#9 skybluesky on 04.18.12 at 10:20 am

mhs and rufusx are both right. Hilton is not getting singled out, state law allows BID taxes on hotels. TIF’s generally pay for “public” improvements. The Taxes on the increment go to pay for improvements to infrastructure that the tax payers would end up paying for anyway. The tax increment is just directly allocated to pay for that specific improvement. TIF’s are NOT “tax breaks”…common misconception.

#10 Tom H. on 04.18.12 at 1:49 pm

I’m sorry, but a TIF actually IS a de facto tax break. Imagine this situation. Business X wants to build a new store in town. The sidewalk in front of this store is in bad shape, and needs to be replaced. Normally, the developer of the land would pay for this sidewalk.

The owner of business X lobbies City Hall into giving him a TIF for his property. Now, some fraction of his property taxes are set aside to be used to maintain and improve infrastructure around his property, like the sidewalk. How is this a tax break?

Situation 1: If he hadn’t gotten a TIF, he would have paid out of pocket to fix the sidewalk, AND paid his property taxes into the city coffers.

Situation 2: Since he got the TIF, he didn’t pay out of pocket to fix the sidewalk, but instead had his own tax dollars diverted to pay for the improvement adjacent to his property.

In both cases, he paid his taxes, but in one case, he didn’t have to pay for the improvements. His own money paid for the sidewalk in both situations, but when he got a TIF this money was essentially deducted out of his property tax bill.

So while a TIF is not, by the letter of the law, a tax break, it sure seems like the spirit of the law is a tax break.

#11 mhs on 04.18.12 at 2:14 pm

A TIF is indeed a tax break Tom, well put. It is a common development tool and has been used very sparingly in Sioux Falls. By comparison, there are nearly 100 TIFs in Rapid City. They are commonly justified by referring to the difficulty of development in a mountainous area, drainage problems, etc, In reality, the community has just always supported developers that will invest to grab yet another tourist buck wherever possible.

#12 l3wis on 04.18.12 at 2:22 pm

Thank you Tom, I don’t know how much clearer you can get. As for the state law issue, I understand, but our mayor and city council need to very vocal on what kind of laws they want changed in order to change the tax structure in SF. I have often suggested that the city should have more control over taxation.

#13 scott on 04.18.12 at 4:51 pm

When Munson was mayor, didnt he advocate a bed and booze tax to pay for an event center? And didn’t all the hotel operators in town cry that any tax increase would result in all travelers staying in Brandon? Why is ok now?

#14 Detroit Lewis on 04.18.12 at 11:20 pm

I think it was an extra penny sales tax with a sunset.

#15 Analog Kid on 04.19.12 at 6:01 pm

Wasn’t this project a ‘public private partnership’ (that what Huther called it) where the tax-base bails out any additional costs over what the private entity was originally deemed?

#16 l3wis on 04.20.12 at 2:44 pm

It should get interesting to see how this naming rights deal turns out.