Entries Tagged 'Development' ↓

Not so TIFilicious?

Imagine my surprise when I read this article;

Questions about the ownership of a strip of land within the Sioux Steel Co. site in downtown Sioux Falls has created a new, unexpected hurdle for the proposed $185 million redevelopment of the property.

The land in question was once a channel of the Big Sioux River and has ownership origins that stretch back beyond South Dakota statehood all the way to the presidency of Abraham Lincoln.

Archived press clippings appear to indicate that the channel that separated Seney Island from the western bank of the Big Sioux River was filled in and, along with the former island, was turned into usable land in the early 1900s. Sioux Steel Co. has owned and operated on the site since 1918.

Officials in the state School and Public Lands and Attorney General’s offices are reviewing maps, historic documents and other information to determine whether the state may have a claim of ownership to the strip of land.

I’m not naive, I’m sure the State will probably come back and say they don’t have rights to it, or if they do, sell it for very little coin. I know how palms are greased in Pierre.

But what makes this story frustrating is with all of the people from the Sioux Steel Company, Lloyd Company and the city’s planning office, NO one came across this possible conflict? It took a hobbyist in history to find it?

Not to mention that around $3.5 million has already been spent on planning this project and NONE of these questions were asked before passing a $20 million dollar TIF.

Sometimes I think developers in this town just fly by the seat of their pants, cross their fingers and hope things turn out.

There is nothing ‘Gutzy’ about approving TIFs

Similar to Donny T’s touchdown victory dance this past week, the receivers of an unneeded TIF downtown for the Sioux Steel Development couldn’t resist their own little victory lap, via the paid media (I’m not sure if this piece is paid for or not, because it looks like Jodi’s weekly column);

It takes guts to decide to forego certain property tax revenue for 20 years. And to approve the largest incentive of its kind in the city’s history. And to tackle another parking ramp project – even though it’s significantly different – while many are probably still stinging from the last one.

Sorry folks, it takes zero courage to approve a 20 year tax rebate. ZERO. I have seen this travesty across the nation, developer welfare run amuck. Courage would have either been denying this all together, or as I have suggested, at least amending it so we gift them the greenway and limit the TIF to $10 million.

Leadership is Courageous, going along to get along is NOT leadership, it’s a mamby pamby pitty party at most.

“The City Council took it very seriously to sit down with us and talk through it,” said Jake Quasney, executive vice president for project development at Lloyd Cos.

Of course they did, everytime this company has asked for a TIF, the city council has rolled over like old dogs and gave it. Heck, the city even held onto to property for over a decade, tax free for the last Lloyd project and gave a TIF to boot. When this company asks, they receive, 100% of the time.

But these two votes really mattered, and it was reassuring to see the fairness and logic that all council members used in approaching them.

Let’s not kid ourselves, there was ZERO fairness and logic going on. 1.) Everytime this developer asks for a TIF they get it 2) There has been no hard evidence that ANY of the TIFs given to them have had significant economic impact, and no studies to this day to prove it. Sorry, but ‘logic’ is based on ‘Facts’ and ‘Fairness’ is based on making decisions based on those ‘Facts’. The only FACT here is that this developer has a perfect batting average when it comes to TIFs.

It’s another to stand up, vote on what could be a politically sensitive issue and thank the business for investing in the community.

There was NOTHING politically sensitive about this issue, this was just another walk in the park for the city council. They always approve this stuff, the public knows or cares little about it, the ink dries on the rubberstamps, and the developers smile all the way to the bank.

There are other developers and other businesses looking at investing in Sioux Falls.

Investing or bilking? Isn’t that the question here? When I think of the FREE enterprise system and investment, that investment is coming from them privately, and they get to reap and keep the rewards. In the TIF system we have set up, we require the taxpayers to pay more to invest in these schemes and get nothing back but higher taxes and mediocre jobs. If you make a great investment, and you do it all by your lonesome, you deserve the booty. If the taxpayers have to supplement you, and you make money, you should share. And that is the tragedy of a TIF, they never do.

They say all politics is local. In this case, some higher-ups could take a cue from Carnegie Town Hall last week.

I think I’m going to be ill.

Sioux Steel TIF passes

It passed 7-0 (Stehly absent). There of course were pie in the sky statements made, like how we are going to get huge property tax revenue from it – 20 YEARS FROM NOW! They also talked about how they could have asked for $50 million, but they didn’t – how nice of them.

They also falsely stated their is NO cost to the city. Uh, yes there is. We are missing out on millions of tax revenue over the next 20 years, we are going to spend $10 million on the river greenway that fronts this development, which is beneficial to them. They also did not mention that it competes with our taxpayer funded convention center. But lastly, when big private developments get tax rebates like this, the rest of us have to supplement them. So YES their is a taxpayer expense here. You also have to remember here, in a world that constantly talks about ‘Socialism’ this is exactly what this is. A $21 million dollar tax rebate to a private business is ‘Socialism’ and developer welfare.

I still believe the Bunker Ramp was stopped from moving forward because of this TIF and development. I haven’t been able to connect the dots yet, but it is highly suspicious that we stop the construction of a DT hotel then turn around and give this development a TIF. Things that make you go hmmmmm.

So now we have two parking ramps we don’t need that were directly and indirectly funded by taxpayers. I knew the council would support this, and it proves what I have known for a very long time, there isn’t one iota of fiscal responsibility when it comes to our city’s elected official’s decisions, it’s just more of sticking it to the little guy. Thanks for nothing!

Guest Post; Seney Island & the Sioux Steel TIF proposal

As we embark on this massive re-development of the Sioux Steel Property, let me take you back in time to when this chunk of property was like no other in this city.

Prior to 1930 – this land area was once a proud picnic area situated on the west bank of the Big Sioux River. Once known as “Seney Island” or Brookings Island prior, people used to walk along 4th Avenue, cross a little foot bridge, thuis crossing the West Channel that helped form the boundaries of the island. This was once a wooded area, with a two smaller islands off the northeastern side, a swimming beach on the southeastern side, while children once ran thru and played in the massive wooded area of Pine Trees, Elm’s, and Cottonwoods, Evergreens, and Oak Trees.

During the 1930’s, Sioux Steel, the St Paul and Omaha Railroad Companies purchased the land closing off the “West Channel” while turning the land into a massive Railroad Yard, Dumping Grounds, Steel & Lumber Yard, while on the northern portion of the property along Phillips you had Pitt’s Steel a steel recycling center.

There is really no evidence let of the West Channel unless you know where to look and find the markers, all you need to do is find the boulders on the north end of the property, follow the water pipeline around the fence line, while 4th Street marks the apex of the West Side of the Island. This island was a “D Shaped” island.

This current development project may not be the greatest, it may not always be supported by those of us whom adore nature, but lets be honest here shall we, this is the perfect compliment to returning a piece of property back to the people. Gone is the West Channel, the Sand Beach, the Forest of Trees. That part of our history is lost in time, it exists only in our memories today. But – any project that attempts to the return the once proud property back to its glorious past, is a win in my park. Gone may be the beautiful island park, but in its place today we will have a wonderful Hotel, Retail, and Convention Complex, along with a beautiful river walk along the river. As I ponder this new found development, I wish to share a few pictures from our past, below – I provide you a few pictures that include a zoning map of the area, and an old news article of the island. In it – the dream by many was to establish a wonderful and beautiful City Park. Who knew, that nearly a century later, that dream would actually happen, just not in the way it was intended all those years ago. Instead of a nature resort as the article stated; we have a commercialized form of a resort. I present to you – Seney Island.

Sincerely, Mike Zitterich
(Sioux Falls)
Link to TIF presentation

Several Reasons why the Sioux Steel TIF should be voted down

Last night at the Sioux Falls City Council meeting it was the first reading of the Sioux Steel TIF proposal (2nd reading is on  February 3rd). I spoke for my whopping 3 minutes about why it is a bad idea, I was able to run thru these points (FF video to 1:30)

• Planning Staff (Public employees) SHOULD not be recommending tax cuts or rebates to publicly elected officials (city councilors). While it is their job to lay out the pros and cons and basic criteria, employee salaries funded by our tax dollars should not be cheerleaders for private business. It goes against our free enterprise system and frankly is unethical.

• The property does not provide affordable housing OR clean up blight (The blight that does exist on the property is from the current property owner who is going to redevelop the property). We have known about environmental issues with this kind of manufacturing since the 1960’s. We were not born yesterday, you blighted this land, it is your responsibility to clean it up.

• Very little new economic growth will be produced, it will only be diverting development from other parts of the city, as well as diverting lodging from other parts of downtown. We know that over the past 5-6 years the city has seen a decrease in lodging taxes and stays do to a popularity in Air BNB, and the fact that people are not spending the night in Sioux Falls. The Events Center is a great example of how NEW economic growth and taxes will not come rolling in due to this project. In fact it competes with our current taxpayer subsidized convention center. Since the EC has been in existence, sales tax revenue has been at it’s normal snail pace until last year.

• We really don’t need more parking ramps downtown. We already have one waiting for a hotel to be built on top of it. Why are we not focusing on fixing that fiasco?

• The 20 year TIF will only produce $1.1 million in property taxes. If we forgo the tax and the project is scaled back, we would bring in around $10 million in the same time period. And if we also forgo the river greenway improvements of $10 million and just gift the development the property, it would be a $20 million dollar windfall for taxpayers instead of $1.1 million. I actually believe the development is bluffing about scaling it back, they would find the financing elsewhere, and even if they canceled the whole project (which I think they won’t) it wouldn’t harm us one bit.

• Most of the jobs created by the project will be hospitality, most of which are part-time and with few benefits.

THERE HAS NEVER BEEN AN ACTUAL TIF ECONOMIC IMPACT STUDY IN SIOUX FALLS. This is one of the main reasons why this should be voted down. A comprehensive study would show us that there has been very little economic impact to citizens, in fact, it has probably forced individual property owners to pay higher taxes.

TIFs that don’t address real blight and affordable housing are really only a handout. It is unfortunate that the public is very ignorant about TIFs and the effect it has on their personal taxes while providing very little benefits. I can’t blame the developers for asking for this. What if your banker said to you one day, “There is this tax incentive program that will refund your property taxes for 20 years so you can improve your personal property.” Wouldn’t you jump at it? I would. Damn right I would. This is why I have argued to any city official that would listen for well over a decade that TIFs should be used to cleanup personal properties in low income working class neighborhoods instead, this would be real economic impact to the residents of Sioux Falls. But, hey, shiny things are fun to look at when the business elite are laughing all the way to the bank.

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.

UPDATE: Just How does the Sioux Falls Development Foundation use our money?

Just for clarification on the video below, it may have been Rick Kiley who actually said ‘More Fabrication’ and NOT Neitzert, but we are uncertain.

UPDATE: Stehly questioned the head of the Development Foundation today at the informational meeting about this. It was a good discussion. I think Brekke and Danielson explained the reason why this isn’t protected speech;

Councilor Janet Brekke as well as civic watchdog Bruce Danielson countered, though, saying because the Sioux Falls Development Foundation receives public funds, it is held to a higher standard when it comes to political speech.

State Law on this is also very clear;

Universal Citation: SD Codified L § 12-27-20

12-27-20. Expenditure of public funds to influence election outcome prohibited. The state, an agency of the state, and the governing body of a county, municipality, or other political subdivision of the state may not expend or permit the expenditure of public funds for the purpose of influencing the nomination or election of any candidate, or for the petitioning of a ballot question on the ballot or the adoption or defeat of any ballot question. This section may not be construed to limit the freedom of speech of any officer or employee of the state or such political subdivisions in his or her personal capacity. This section does not prohibit the state, its agencies, or the governing body of any political subdivision of the state from presenting factual information solely for the purpose of educating the voters on a ballot question.

Source: SL 2007, ch 80, § 20.

I was happy to hear the head of the Development Foundation say that the board will look into this.

The taxpayers of Sioux Falls have donated millions of tax dollars to the SFDF for supposed workforce development. So how do they spend their money? They buy an article on Siouxfalls.business about the treasurer of Alex Jensen’s council campaign, Matt Paulson. Can you say possible conflict of interest?

This paid piece is sponsored by the Sioux Falls Development Foundation.

While I don’t take issue with them paying for an article about Paulson, he has many achievements, I take issue with an organization who receives tax dollars from us (even if it is coming out of a different ‘pool’) on a person who is currently engaged with at least one city council race (maybe two).

The SFDF should have steered clear of this possible conflict. I do think they are a decent organization that does some good in our community, but when you are receiving tax dollars and other special incentives from the city and citizens, this just looks bad.

It is extremely unethical for public employees to recommend approval of a TIF

As I have complained about in the past, it rubs me the wrong way that the Sioux Falls Planning staff recommends approval or denial of items on their agenda. It is the job of the Planning Commission to study the merits of a proposal from the information staff provides, it is NOT the job of public employees to recommend approval. Layout the plan, show the compatibility than let the Planning Commission decide based on the information.

While zoning and development in general is one thing, a massive 20 year, multi-million dollar tax rebate is totally different.

The Planning Commission can deny this proposal simply based on the fact that we don’t really know if the TIF will be beneficial or not. Denying the TIF would simply mean the PRIVATE developer would have to go back to the drawing board, the citizen taxpayers would not be harmed one iota if this was denied. In fact I would go step further and say that approving this TIF would be harmful to the 100% property tax paying citizen of our city because we would have to pay more in taxes to prop up this private venture.

I still think the city council needs to pass an ordinance forbidding planning staff or any public employee (that is hired, not elected) from recommending approval of endeavors that benefit private business. It’s unethical, if not highly suspect.

Sioux Falls Planning Department explains Sioux Steel TIF

Dustin does a nice job of explaining the proposed TIF. While I disagree with ‘editorilizing’ the proposal, at least he does explain it in detail. I believe the TIF will pass 8-0. I don’t think one single councilor has the appetite to vote against it. What I do hope though is they negotiate a better deal for the taxpayers. I would really like to see the parking ramp FREE 24/7 not just at nights and weekends (unless you are using a valet service from the hotel/convention center). I would also like to see a non-compete clause with the CVB when it comes to the kind of conventions they book there. We are really cutting the private developer a ‘blank’ check’ worth well over $30 million (TIF + BID + River Greenway). I also struggle with the $25 million dollar yearly economic impact. Whether the place gets built or not, people still have other places to stay downtown, eat downtown and park downtown. That money is being spent already with or without this project. All they are saying is that money is being re-directed to their site from other competition that already exists in Sioux Falls and Downtown.

Sioux Steel Development justifying 20 year, $22.6 million dollar tax break on economic impact patrons will contribute to

While I have no reason to argue with the data (maybe a little), what they left out of their presentation this afternoon at the informational meeting was that the supposed $25 million dollar a year economic impact doesn’t come from the owners of the development, it comes from their customers, whether local or visitors. They also left out that a large amount of this ‘economic impact’ goes straight into their pockets. So really, what is the justification of the TIF and BID Tax rebates?

When you build a ‘for profit’ business in a capitalist society, you expect to make a profit. Why should you be also rewarded tax breaks? I would think a ‘for profit’ private business that is expecting to have a $25 million dollar impact a year, wouldn’t need any handouts, breaks or rebates. I would think they would be smiling all the way to the bank and simply thanking the city for issuing the permits.

When I look at TIFs I always ask the same question, “What is the benefit to the public as a whole, you know, the ones who have to pay higher property taxes to supplement this TIF?” While I appreciate the study, the only thing it shows me is the money that it will be generating will mostly be helping them.

I would be willing to still give a BID and TIF to the development, but only for the benefit of the city. As I have suggested in the past, I think the city should gift them Kiwanis Park and grant them a TIF for the amount it would take to redevelop that part of the project and forgo the additional $10 million it is supposed to cost taxpayers to redevelop the river greenway, which really makes this a $32.6 million dollar tax break when you add it all together.

I think the city council should amend this TIF, make it a lot smaller and reduce the TIF time limit to 5 years.

After hearing the council tonight discuss the TIF, I have no doubt this will pass. And hey, if you want to support corporate welfare based on a study the developer produced (not the public) so be it, but at least ask for a study that shows the REAL benefit to the rest of us in this community who are paying 100% of their property taxes and always have. You know why they will never produce such a study? Because they won’t like the results.

You also have to take into account, the study they did on economic impact is a ‘prediction’. The study I have asked for is of our current TIFs and what benefit we are getting from them. This would give us REAL data to base their prediction on. Government should never base a 20 year, multi-million dollar tax break on ‘predictions’ of what could happen, but should base them on actual data that already exists. Will they have to courage to ask for it? Probably not.