We would accrue more property taxes if Sioux Steel project doesn’t receive TIF

We have heard the argument already, if we give the $21.5 million dollar TIF the property will have a tax worth of $1.6 million a year. But folks those tax payments don’t occur until 20 years from now as Joe Sneve’s story pointed out.

So if we give them the TIF, for the next 20 years they will be paying $56K a year. So in 20 years they will be paying a total of $1.12 million in taxes for a $185 million dollar facility. Hardly anything.

BUT, if we don’t give them the TIF, the value of the project would be approximately $163.5 million (flat parking lot) with an annual tax bill that they must pay on day one of about $1.4 million a year with no rebate, a value of $28 million in collected taxes in 20 years.

Common sense would tell us that getting $28 million over the next 20 years in property taxes as opposed to $1.12 is a better deal for city coffers.

Also look at the economic impact argument. They said they would have to forgo the parking ramp if they don’t get the TIF. How many jobs does a parking ramp provide? ZERO. Whether they build flat parking or a ramp, there really isn’t a economic impact either way.

Not only could this project still be successful without the TIF, the property tax revenue is over 20X more if we forgo the TIF. On top of that, the owner and developer of this project could sell at the end of TIF and get all the benefits of the tax rebate without ever paying a 100% of the tax bill. It is a windfall for them, and little else.

Not sure who is doing the math at the Planning Department, but this TIF is anything but an economic impact. They will be voting on the first hurdle tonight at the 6 PM Planning meeting.



6 comments ↓

#1 Steve on 01.09.20 at 7:11 pm

There is no doubt that it will be approved. Most of the Councilors don’t know how to say no to big business. But they will have to drag out the meeting with their little speeches on why they support or don’t support it. So, during your speech and camera time, be brief, get to the point, and please take your glasses off and quit looking over them. It’s annoying.

#2 Joan Yost on 01.09.20 at 8:44 pm

This is a perfect example of how a TIF is NOT supposed to be used. The powers that be are taking advantage of the fact that most people have no idea what’s a TIF is, how they work, or how they are supposed to work. This ain’t it.

TIFs (and TIDDs, which are similar but more complicated) are designed as tools to alleviate POVERTY and ameliorate ECONOMIC BLIGHT. The property in question, is prime real estate. There is no question that anything built there will be profitable, provided that the developers and their neighbors are not complete morons and the economy does not entirely collapse. They will be able to afford to pay their taxes.

TIFs make it possible for developers to build things like commercial properties in areas where the economic prospects are so dismal that it is uncertain that the property will be profitable enough for building owners to be able to pay their taxes. TIFs are so that developers can build infrastructure for jobs and shopping in places where people don’t have enough of either of those things.

TIFs ARE tax incentives. They are GIFTS to the developer! TIFs are HANDOUTS! Yes, they are! TIFs are handouts with a purpose. When a TIF (or a TIDD) is designed, there is supposed to be a calculation of approximately how much tax revenue the development project will generate once it is complete. That tax revenue is estimated to offset the amount of tax revenue that the government is giving away with the TIF. The understanding is that if not for the TIF-enhanced development, the jobs or shopping would probably not occur at all because of blight or underdevelopment. In other words, no one is going to build there at all without the incentive. Ever. So looking at it that way, the government doesn’t really have anything to lose.

TIFs are NOT for waterfront, downtown parking garages attached to hotels (or supposed-to-have-been-a-hotel-but…) There are places in Sioux Falls where TIFs makes sense. There are lots of places in South Dakota where TIFs make sense. This project is not one of them.

#3 Freddie on 01.09.20 at 9:12 pm

I’m not sure your math holds up. Where would people park if there was no ramp? So without the ramp don’t they build less, thus not equaling your $163.5 million?

#4 D@ily Spin on 01.09.20 at 9:45 pm

Something citizens don’t know is that veterans considered disabled do not pay property taxes. Build it and I’ll smirk! I’ve given up on local government. The city is a great place to live if you’re not paying for the failed projects that make disreputable developers wealthy. I’ll join you when there’s a revolution. Meanwhile, if you can’t stop it, taxation will keep you poor paying for caviar and Dom Perinone for one percenters.

#5 "Woodstock" on 01.10.20 at 11:45 am

“Those Sioux Steel pup tents are rather blightful, but they could also be quite handy as Levitt staging arenas during a storm, too”….. #HowManyCouldOneHold?

#6 "Very Stable Genius" on 01.10.20 at 11:48 am

How many times do I have to tell you guys to stop worrying about TIFS? Because Councilwoman
Erickson said back in early 2018, during the discussion over the TIF granted for the land across from Levitt, that the state recognizes TIFS, and then appropriately makes up the loss, due to the TIF, to the local school district…. #AndIHaveABridgeIWantToSellYouToo

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