Sioux Falls Rubberstamp City Council passes $25 Million Dollar Corporate Welfare TIF Tax Rebate to wealthy developer with ZERO discussion

While the almost 5 hour meeting last night had many fireworks from the Med MJ ordinance discussion (this was only 1st Reading) towards the beginning of the meeting they approved TIF #25 with almost zero discussion (they moved it up so the VIP wealthy developer getting a handout wouldn’t have to sit thru all the people’s REAL business).

Besides the same lame brain presentation from the Planning Director about the TIF itself only one speaker emerged to defend the TIF, and it wasn’t the developer. In fact the developer has said NOTHING about the TIF except when he made a presentation to the council at an informational meeting. His daughter did say a handful of words when the Planning Commission approved the TIF, but the developer himself has said NOTHING at the 2 readings of this ordinance. Not even a please and thank you for getting this handout that the rest of SF property tax payers will have to make up for. Of course, why should he? All of those negotiations were done in secret over the past several years, this is also why you didn’t hear a peep from the councilors either, just a gigantic sound of 7 whaps on the dais with a rubber stamp. (Marshall Selberg was absent)

Wouldn’t it be great if getting food stamps was that easy?

So who was the only defender last night? Joe Batcheller, Director of Downtown Sioux Falls. While Joe and I are on good terms, even if I disagree with him about bringing snakes to outdoor events (he thinks it is fine) 😊 we also disagree on TIFs. As a trained urban planner, Joe adamantly thinks they are good thing. He also even makes the tired old argument I hear councilors make ‘TIFs may not work well in other communities, but golly gee they work great here’. The problem with the argument is that we have NO economic or financial evidence of that, NO studies have been done on TIFs in SF or SD that shows an actual benefit to the public.

Which brings us to another point Joe made. He said this TIF was justified because we are getting a Return on Investment (ROI). I’m not sure a parking ramp (this is what most of the TIF will be spent on) that can only be used by the public on nights and weekends is much of an ROI when you consider that the Bunker Ramp is mostly empty at night and barely filled during the day, we will have another parking ramp sitting at the Sioux Steel Project and my long term argument is parking ramps really probably won’t be needed in the next decade. The irony of it all is that by the time this TIF runs out in approximately 20 years, it will probably NOT be a parking ramp.

The King of Sioux Falls TIFs himself (Stormland TV Screenshot)

Joe also made the argument that TIFs are not ‘Handouts’. I’m not sure what else you would call them. TIFs are essentially a tax rebate you get to use on your private property. The developer builds a parking ramp that they will be using during the day, and likely charge for access and they get that ramp paid for by getting a rebate on the $25 million dollar taxes they are supposed to be paying to the county, the school district and the city while raising taxes on the rest of us due to the total valuation of the project. It would be like you personally getting a $500 dollar property tax rebate to fix your front door. While that benefits YOUR property, it has very little benefit to the tax payers who have to pay their full tax bill, while also supplementing your rebate. Sure they throw us a few crumbs saying the TIF will also build roads (to their private project, to their benefit) and we get to use the parking for the Levitt (even though I have yet to see a parking issue at the concerts even when the lawn is packed) the true beneficiary of this REBATE is the developer and his investors, this is why it truly is a HANDOUT.

The most egregious part about the almost $200 million dollars in TIFs the city council has gleefully handed out this year is that this could ALL be done with private investment. The money is there. It has been proven by the past decade of record breaking building permits that have been issued to contractors in this city who have asked for ZERO tax breaks. Besides the public building permits, I think most of the private permits issued by the planning department are 100% privately funded. It would be a great presentation and study done by our Planning Department, but of course that would shoot holes in the whole NEEDING TIFs to succeed in Sioux Falls. Believe it or not, I think that is fantastic that private business, can invest privately while providing good jobs without a government HANDOUT.

Which brings us to Joe’s last point, that was so ridiculous when he said it, I laughed for about 5 minutes. Joe said it was important to remember that Cherapa II’s developer was taking on 100% of the risk for this approximately $350 million dollar project.

Really Joe?!!!  He should be commended for that after getting this handout from the city?

Isn’t that how the Free Market system is supposed to work? Oh never mind, in Sioux Falls it’s called Developer Socialism. You give us massive tax breaks and we will make sure we spend it on us and never present data that shows otherwise.

And lastly, Jeff, a Thank You would have been nice.



18 comments ↓

#1 The Guy From Guernsey on 08.18.21 at 11:44 pm

Ah yes, the crowd of Country Club Democrats Registered As ‘R’ which run our city trot out the same tired tropes about the government teat which are TIFs.
BTW Joe, Government Teat = Handout = TIFs

#2 D@ily Spin on 08.19.21 at 9:57 am

Isn’t 200 mil about half the annual city budget? I need one of those lottery tickets. The future is not office buildings. We’re working from home. There’s already to much vacant space. We need homes. Cherapa is destined to be like another Empire State Building. It was empty once built and less than 50% occupied 10 years after it was built. There’s a distinct con here. Namely, build it with public money then take bankruptcy and eventually lease it for a third the going rate to insiders.

#3 Mike Lee Zitterich on 08.19.21 at 1:08 pm

Who do you think ‘owns’ a city? Land Owners.

All this Capital Investment is really enriching the City of Sioux Falls which carries a net worth of $1,900,000,000 billion dollars. The more “ASSETS” owned by the city, the more profits are allocated back the LAND OWNERS/property holders should a city ever dissolve itself.

Land Owners control the shots, they then hire land developers to build out their lands, so they can build buildings, infrastructure, parks, roads, placing housing on top, and bring in the residency. The more ammunities you provide, the more residency you shall have.

IF ‘we’ mismanage our lovely city, and the residents begin to leave, and at some point dips below the statutory # of 250 – the LAND OWNERS and the remaining Property Holders then petition each other to ‘dissolve’ the City, submit such plan to the Circuit Court they reside in, and the COURT sets up the process of which the City shall be dissolved. At that point – the City works at half staff just enough to manage and pay off all the expenses, collect all the receivables, pay off all the liabilities, debts, obligations, and when that is said and done … the profits left over are distributed, or proportioned back to the LAND OWNERS (property holders) remaining, while the LAND resorts back to its original state and/or Local Subdivisions, Townships, Land Claims.

Perhaps the goal is not to ever fill up these office buildings, parking ramps, but to maintain the status quo, build up the “City Net Worth” as such, if something should happen years from now, the very LAND OWNERS can capitalize on their investment.

The process to dissolve a city takes roughly 10 year, sometimes an additional 10 years, all depends on circumstances.

TIFS are not a hand out, they pay for Public Roads, Parks, Infrastructure, Parking Ramps, Water, Sewer, etc …

TIFS were always designed to help the LAND OWNER clean up and repair blights caused by well, the land owner himself. They originated from the negative effects of the early Homestead Claims from 1862 to 1950.

#4 Jeff Barth on 08.19.21 at 4:58 pm

The TIF money from Amazon is going to the economic development people in Sioux Falls so they can bring in more $15 an hour jobs.
The roads are being improved by the taxpayers.

#5 Mike Lee Zitterich on 08.20.21 at 12:32 pm

Got to agree with Jeff Barth, the TIF is being used to build out the Roads, Plat the land, and develop infrastructure. This allows for businesses to come, and new residents to come.

As the Land Value increases, due to the Capital Assets on top, the value goes up. But like I said above, the Land Owners “control” the strings. The CITY cant do squat if the land owners, property holders, local sub-divisions, townships do not agree to develop their land.

All “Power” is vested in Land Ownership- the Right To Vote, the Right to Life, Liberty, and Prosperity.

SO much of SOuth Dakota was first ‘claimed’ by Early Pioneers moving from the East Coast between 1862 to 1902 – those were years all these Homestead Claims were popping up.

Sioux Falls derived from two Claims – the Dakota Land COmpany Trust and the Western Town Company Trust. Both companies staked claims of 160 acres on both sides of the river, Dakota Land COmpany was from St Paul, and the Western Town Company was from Dubuque, Iowa.

These “Two Homestead Claims” have ruled this area ever since, You simply need to connect the dots thru time, to today.

TIFS was a creation of the Federal Govt during the 1940’s to clean up blighted lands, mostl due to early farming techniques, but also due to early development techniques as well, they do were not necessarily designed toprovide affordable housing, but to “REPAIR” the land to entice ECONOMIC DEVELOPMENT. It is this major reinvestment in the land that ushers in New Businesses, Brings with it New Residents, which creates the Growth you see in future taxes.

LAND OWNERSHIP – The True Power Behind any Community.

#6 l3wis on 08.20.21 at 2:41 pm

Wrong. Taxpayers already doled out $50 million for infrastructure, most of the $94 million is for recruitment, as Jeff pointed out to bring in low-wage jobs. As I pointed out in my post, we don’t have a problem with companies coming here, and we certainly don’t need to subsidize them. I would love it if the Planning Department put out a report of the percentage of private building permits that got tax breaks, my guess is it is around 1%.

#7 "Woodstock" on 08.20.21 at 3:24 pm

“Say, do you think I could get away with wearing some luggage tan wingtips with white shoes with a preppy plaid jacket?”

#8 Mike Lee Zitterich on 08.20.21 at 5:42 pm

Lets look back at the TIF for the Sioux Falls Development Foundation Park – what the TIF revenue was being spent on was all itemized out, and it was for things such as Public Roads, Water-Sewer, Utilities, Platting Fees, Clean Up Fees, etc.

About the only thing I question here was the Economic Development Fund allowign them to borrow money to finance future public infrastructure projects in the area.

I dont know where the subsidy is, but lets remember AMAZON got a Federal Grant to build their ‘plant’. Yours truly, the Federal Govt used your federal tax dollars to build the Amazon Building.

#9 The Guy From Guernsey on 08.20.21 at 6:47 pm

Several points of contention with points offered by Mr Zitterich.
Tax Increment Financing originated in 1952 (California).
Was applied as an urban renewal strategy (more likely to clean soiled by crude manufacturing processes) NOT to reclaim agricultual land blighted by farming practices.

#10 The Guy From Guernsey on 08.20.21 at 7:13 pm

The fund to which Mr. Zitterich refers is an economic development competitiveness fund, amounts to $30 million and has no defined use except to allow our ace roster of economic development people “flexibility” in working with prospective employers.
This money is more likely to end up as a direct payment into someone’s pocket (you know, for Sioux Falls to be more competitive) moreso than used as collateral to borrow more money.
Rest assured, when the socialists at the Sioux Falls Development Foundation need to borrow more money to finance future infrastructure projects, they will be back in front of our rubber-stamping Mayor and City Council to ask for another government teat upon which to suckle.

#11 The Guy From Guernsey on 08.20.21 at 9:17 pm

Amazon did not receive a federsl grant to build s distribution center in Sioux Falls.
In fact, the recipient of that governmenf teat was … the Sioux Falls Development Foundation.

“The Commerce Department’s Economic Development Administration announced a $1.9 million grant Wednesday to the Sioux Falls Development Foundation.”

https://www.sdpb.org/blogs/business/federal-grant-for-sioux-falls-site-fuels-amazon-speculation/

Just another government teat on whicb to suckle in the multiple series of government welfare provided to the Sioux Falls Devrlopment Foundation.

#12 Joe Batcheller on 08.25.21 at 11:25 pm

C’mon Scott… It’s not like a developer gets a check for millions of dollars once TIF is approved. The developer fronts 100% of the cost for whatever the public benefit is (typically parking in SF) and is reimbursed over a 10-20 year period. TIF allows developments to be scaled up, which generates more wealth for the City in the long run by facilitating more jobs, residents, and revenue per acre. Eight out of eight City Councilors agree.

#13 The Guy From Guernsey on 08.26.21 at 9:03 pm

Welcome Joe.
What is the total amount of the Cherapa II TIF which represents reimbursement of fixed cost of the development (engineering, architecture, etc)?

#14 Joe Batcheller on 08.27.21 at 12:22 pm

$25,375,392

#15 The Guy Ftom Guernsey on 08.27.21 at 4:51 pm

So none for the ‘public use’.
Only Scherschlict’s engineering, architecture and legal included in the Cheraoa II TIF and these costs total $25+ million (i.e. nothing for materials, trade labor)?

#16 Joe Batcheller on 08.27.21 at 7:44 pm

Take a look for yourself: https://amv.siouxfalls.org/OnBaseAgendaOnline/Documents/ViewDocument/Cherapa%20Place%20TIF%20Presentation.pdf.pdf?meetingId=3178&documentType=Agenda&itemId=149171&publishId=88124&isSection=false

#17 Joe Batcheller on 08.28.21 at 11:54 am

ESTIMATED ELIGIBLE TIF COSTS = $57,600,000+

Ramp Parking = $15,752,417

Site Work = $4,775,765

Architectural & Engineering = $6,800,000

Financing = $14,816,650

TOTAL TIF REQUEST = $25,375,392

#18 l3wis on 08.28.21 at 12:08 pm

‘Financing = $14,816,650’

This is the most interesting point in the march to TIFS. I have suspected for a very long time that it is the bond salesmen are the ones that get all warm and fuzzy over TIFs, and there is a monopoly in SD and only one show in town. Bob Litz challenged this monopoly one time and suggested the county use a different company out of Minneapolis and a fire storm came down on him. They have a lot of lobbying power in SD. My suspicians came true when a friend of mine told me one of the bonders said that I was spreading lies about raising taxes on the rest of us and the ROI. My friend asked him to show him the numbers and the proof. The bondsman just grumbled something and moved on. The issue I have often had with the talking points from the TIFFERS is that they have ZERO data to back up ROI. NONE. Across the country even the TIFs that had a measurable ROI were dismal. They know if any real study was done, that SF TIFs would show virtually NO ROI. As for taxes, that one is simple to prove. When it comes to property taxes the 3 governing entities base those taxes on total valuation. And if a certain property isn’t paying it’s full taxes that valuation has to made up from the rest of us. As for the school district itself, that money has to be made up from the state coffers in which ALL South Dakotans are propping up SF TIFs in the form of sales taxes. I will still stick to my guns, TIFs are handouts, if you have real data and proof to show otherwise, show me. Otherwise go home.