When will we see a TIF Economic Impact Study?

It should be no surprise that in Jodi’s weekly column she is (gently) ringing the benefits of TIFs;

The projects that can be created here also likely won’t happen without some cooperation between the public and private sectors – whether it’s in the form of land sales, tax increment financing or use of sales tax revenue to enhance the riverfront. Maybe all of the above. And I believe as a community we need to be open to those partnerships because these are opportunities. Not guarantees.

As we know, Jodi makes her living with content marketing and advertising. Her clients would wonder what was going on if she wasn’t encouraging their ideas. She gets a pass on this one (in an otherwise great article).

Many people wonder why I am so against TIFs or other tax incentives for developers. Mostly because of the research I read on the topic. I have read studies from the East Coast, the South and the Midwest (Kansas and Iowa). Most come back with the same results, TIFs don’t pay for themselves in economic impact (jobs, etc.) Most of the studies have shown that TIFs usually have either a very small return or NO return at all.

It is important to know that in order for TIFs to be considered good for the local economy it has to have an impact on the regular Joe. When we give tax rebates and incentives to the ‘Big Guys’ those ‘unpaid’ taxes get spread around to the rest of us. In an essence we are propping up these developments in hopes of a payoff that may never come. It would be like the bank forcing your neighbor to pay your mortgage if you defaulted.

What we have seen in Sioux Falls is quite the opposite. Our property tax (rates) have continued to climb due to growth (crime/drugs, public education, infrastructure). This isn’t some study I have done, it’s just reality.

I have often chided the powers of be to provide a comprehensive TIF study actually showing us the benefits of TIFs in the Sioux Falls area. Some have even suggested to me that some of those studies have been done privately but haven’t been shared with the public for obvious reasons, dismal results.

Just because you ‘SAY’ something works, isn’t enough, you have to back it up with real data. I think the THRIVE report last year was the closest glimpse we have had that has shown our massive growth in Sioux Falls is having an opposite affect on the populous, higher taxes and the plague of low wages in South Dakota.

TIFs haven’t relieved us of our ills, one might argue that they have actually made things worse (I’m not at that point yet).

I have often said we need to revamp tax incentives in Sioux Falls by having a strategic plan to clean up our core neighborhoods from the streets up. This would have an immediate and direct impact on the people living and working in Sioux Falls and it would make our city a better place to live, which improves quality of life and helps to attract a solid workforce.

Until someone can prove me otherwise with actual data, TIFs will always be just corporate welfare to me, and little else.



11 comments ↓

#1 "Very Stable Genius" on 04.01.19 at 12:04 am

Welcome to “‘Blight’ City.”

#2 Scott on 04.01.19 at 8:48 am

Going a little beyond the TIF, consider how much taxpayer money has been spent on downtown Sioux Falls.

Downtowns are the biggest taxpayer welfare areas in every community. I struggle, even in places like Sioux Falls where the downtown seems to be doing rather well, if all that money spent could have been better used on infrastructure improvements. I also have to wonder if taxpayer support of the downtown will ever end.

#3 l3wis on 04.01.19 at 9:09 am

My favorite line from developers when they want a TIF, “We can’t develop this property and make it successful without a TIF.”

Golly, Gee, Welcome to the Free Market Bitches! Sink or Swim.

It would be like me asking for a property tax freeze because I didn’t get a raise last year.

#4 scott on 04.01.19 at 10:06 am

“It would be like me asking for a property tax freeze because I didn’t get a raise last year.”

i wonder what would happen if people actually did that.

#5 l3wis on 04.01.19 at 10:44 am

One day later and a story about record building permits. So why do we need to incentivize developers? So they can continue to break records?

http://siouxfalls.business/sioux-falls-building-activity-closes-first-quarter-ahead-of-last-year/

#6 "Very Stable Genius" on 04.01.19 at 7:52 pm

They will never admit it, but TIFS allow the City to have a seat at the table of development, which in their minds give them hope in controlling when, how, and what will be developed, and developed first.

#7 disgusted on 04.01.19 at 11:41 pm

VSG it also lets some of them the ability to invest?

#8 l3wis on 04.02.19 at 8:11 am

Right after COS Beck left the city the first time we had coffee. She told me one of the main reasons for her leaving was because Bowlcut forced her to write the Sanford Sports Complex TIF (which set a precedent, not only in size and scope but because it was NOT blight, just a piece of swamp land no one wanted (notice Sanford tried to give it away for the EC and for a new HS). She also was upset that Bowlcut wouldn’t sit down with the Royal River peeps in trying to find a solid funding source to pay the EC mortgage, Bowlcut refused saying he ‘hated gambling’. Which is ironic since he gambled with our tax dollars for 8 straight years, and some of those bets aren’t turning out so well. But one of the kicker’s from our convo was when she told me that during developer meetings in which Bowlcut and Planning staff were present, he would openly ask developers if he could invest with them.

#9 D@ily Spin on 04.02.19 at 9:12 am

Aren’t TIFs also political paybacks for election contributions? It just seems every TIF warrants an attorney general investigation. If economic impact and more jobs can’t be substantiated it’s a gift that’s misappropriation of public funds. Can’t we just buy developers a $10k Ostrich jacket instead?

#10 l3wis on 04.02.19 at 10:21 am

Ultimately I would like to see TIFs outlawed, but since that will probably NOT happen I would like to see a change in state law which requires an unanimous decision from the 3 taxing authorities involved (County, City and School District(s). In other words if the 3 bodies as a group VOTE to approve the TIF, it should move forward, but if 1 or 2 of the groups only approve the TIF it should fail. I have never understood the logic in allowing the city the authority to make a tax reduction decision for all 3 entities, especially since the School District receives the Lion’s share of property taxes.

#11 Rachel on 04.02.19 at 2:56 pm

Hey, could you post a list of TIF’s that have occurred over the last year or two? Just curious. Thanks!

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