Entries Tagged 'Development' ↓

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.

It’s hard to charge a bankrupt LLC with a crime in South Dakota

We all heard the news today;

Hultgren Construction has been sentenced to one-year probation for “willful violation of the OSHA Act, causing death to an employee.” The company pleaded guilty to the federal misdemeanor in September.

They were also issued a $50 fine (which I doubt they will pay since the LLC is bankrupt).

While I could go on about worker safety laws in SD and even nationally and the lack of any local investigation of the collapse, I want to talk about something else; How easy it is to form and dissolve LLC’s in SD, something our MSM in SD needs to dig in a little;

To dissolve your Limited Liability Company in South Dakota, there is a $10 filing fee required.

I believe the charge to form an LLC with the state is around $150.

While Hultgren and others involved with this mess are paying a separate settlement, the LLC’s that were formed and dissolved throughout this have protected ‘the people’ involved.

I know I have beat this dead horse before, but our state legislature is a joke. Only in SD we would find it appropriate to charge people with a crime for ingestion, think industrial hemp is recreational pot, but if someone collapses a building do to negligence and kills a person, they walk away with NO jail and a $50 fine.

We need to start lawfully connecting LLC’s to ‘PEOPLE’. You know, the people who own them. An LLC is just a piece of paper, it can’t kill anyone on it’s own.

I would hope our legislature would revisit our LLC laws, but since a lot of the members probably own a lot of LLC’s themselves, I won’t hold my breath. Another sad, sad, sad day for justice and workers in South Dakota.

TenHaken interview reveals his lack of leadership

The first thing he does in this interview is blame the last guy for the problems with the Bunker Ramp. While there is ‘some’ truth to that, he could have put the brakes on immediately after he took office, instead he took a piece of toilet paper signed by developers that said they were good for the money.

Then he says he doesn’t want to do an audit until after it is finished, while that is SOP, and I get it from a financial standpoint, there is NOTHING stopping him from looking into what went wrong RIGHT NOW. That doesn’t take an audit to achieve, it requires him doing his job as the city manager and city employees boss (his main job according to charter) and putting a boot up their butts or at least a stern talking to and get them on investigating what went wrong before we sign on the dotted line for another developer to finish it.

He once again fails to lead.

I really believe one of the reasons the deal fell through towards the end is because of the Sioux Steel development and potential for a TIF funded parking ramp.

This is pure speculation of course, but think about it for a moment, what if they would have allowed the Bunker Ramp Hotel to be ‘scaled back’ and finished? That means a nice hotel in the center of our downtown would have opened at least a year before the Sioux Steel Hotel and Convention Center. Things that make you go hmmmmmm. I won’t get into all the players involved, but something smells funny here.

Towards the end of the interview, PTH continues to blabber about charging non-profits for police assistance, China and Kermit.

UPDATE: The ‘TIF’ Threat

I still remember attending the open house about the Sioux Steel Development at Josiah’s. Many people from the public offered their opinions at the meeting, as did I. I remember telling them it was a great idea, but I advised them to ‘go it alone’ and not get the city involved. I remember Rysdons’ incredulous look. Shocker! They didn’t take my advice.

It’s like the playbook never changes, when a developer in Sioux Falls wants a TIF they use the tired old threat,

Right now, the Sioux Steel site is valued at about $3.1 million by the county equalization office, resulting in an annual tax bill of $57,000. When the project is complete, the anticipated property tax payment would be around $1.58 million a year.

That equates to a 14 YEAR TAX BREAK!

Without it, parking to service the businesses included in the vision would likely be scaled down to surface parking lots, said Jake Quasney, executive vice president of development for Lloyd Cos.

“What would happen if we didn’t do the parking ramp, we’d build a scaled down version of the hotel and conference center, maybe some apartments and some surface parking,” he said.

Oh Well?

These are private developers that are already getting around $10 million from taxpayers to upgrade the river greenway along their property (something else I’m opposed to – because I think the city should just sell them Kiwanis Park and let them ‘upgrade it’). They are also ‘Private’. Why should the city be concerned if they scale back the project? Which brings us to another interesting factor. As we are trying to get the EC campus to get it’s poop in a group so the CVB (that we fund) can bring in more conventions, this private development wants to build a convention center, downtown. While I will applaud them, because it is a great idea, it is still private. So why would we give property tax rebates to a private development that will be competing with taxpayers for conventions? It is insane! It would be like paying Wild Water West to accept the City of Sioux Falls pool passes!

In this ARTICLE and STUDY they lay out what TIF’s really do;

“On average, [TIF] may be moving development from one part of the city to another, and changing the timing of the development, but there’s not more development than would have otherwise been made,” Merriman said.

Basically he is saying that you are robbing Peter to pay Paul. As I have argued, the development will happen anyway – with or without the TIF.

In addition, this is a tool with several drawbacks. According to Merriman, TIFs might “capture” some tax revenue above the capped “base value” that may have been generated anyway through natural appreciation in property values if the TIF hadn’t been created. This is money that taxpayers might have otherwise paid directly towards an overlapping school district, or for public services. And while TIF is not a direct tax increase, it may lead to higher rates or service cuts elsewhere, if the city plans on bringing in the same general property tax revenue as before TIF.

In other words, while this PRIVATE developer is getting a massive 14 year tax break, the rest of us are paying higher taxes to support it. Even with provable economic impact, those higher taxes for the rest of us don’t offset what benefit we would get from it. In other words the only one who is really benefitting is the developer.

Also take note that we have bonded for several major projects recently, the Denty, the City Admin Building, the Bunker Ramp, the new jail, the new schools and very soon the public safety training facility and water plant. At rough estimates that is about $680 million in new bonds over a short period of time with a payoff amount exceeding $1 Billion.

There is something else developers and city leaders like about TIFs;

Perhaps the biggest concern with TIF, though, is that of transparency, because of the way this mechanism effectively bypasses the public municipal budget process.

“Once a TIF is created, the operation of a TIF receives less scrutiny than other spending,” Merriman said.

In other words the public is essentially left out of that process and is usually given ZERO evidence that it will help us. But in this town, we love closed door deals, 5G is a great example of this.

Not everything about TIFs is bad, if used properly;

But TIF is good for sparking public-private partnerships that may help fund useful infrastructure that may not otherwise be appealing to investors, such as raising the height of a bridge tunnel so it can carry large trucks, for example. In the report, Merriman recommends several ways to use this tool more effectively, and make it easier for policymakers and researchers to evaluate. Most important: Cities needs to be more transparent about how they are using TIF. It’s not a magic free-money generator.

“It’s a concern about why those decisions are being made,” he said, “and why there’s a public subsidy for development that might have occurred even without the subsidy.”

So is the Sioux Steel development giving Sioux Falls residents something we need to improve quality of life and infrastructure? Not one iota. In fact the infrastructure upgrades to the river greenway along this development is being paid for by us. I would even be willing to gift the development the river greenway land, give them a smaller TIF, and have them upgrade it. There the taxpayers would benefit.

I also enjoyed this little tidbit;

The ramp portion of the project is estimated to cost about $22.6 million.

So they are going to build another Bunker Ramp downtown for about $25K a space. How is this possible? I will tell you – BECAUSE THAT IS THE F’ING GOING RATE! Never mind that hand soap sanitizer man child Neitzert has told you different. The cost for the Bunker Ramp was incredibly inflated and we said it from the beginning. With the new codes in place they will have to build this facility with the proper lighting, fire suppression and generator power – just like the bunker ramp.

I will say this, I think the concept of this development is fantastic, and I commend them on it, but like most things ‘FREE ENTERPRISE’ I also believe they can sink or swim on their own. TIF or NO TIF, it will be successful, and they know it, they just want to save a little money, that is obvious. I encourage every single public servant who is voting on this to request a comprehensive TIF study in Sioux Falls on economic impact and workforce development. I would even go so far to say that the city pays for it and has one of our public universities do it. It seems like when we ask for TIFs in Sioux Falls, it is all based on a whim, and NOT reality. Don’t be suckered by the ‘threats’. Make the one’s asking provide the evidence that this will help us. I already know the answer and this is why they avoid the study.

UPDATE: I see they are bringing out the ‘big guns’ on this, employing everyone in the (paid) media to tell us that this is a partnership with the community;

Both current downtown redevelopment projects require some level of partnership with our city government. In the case of the rail yard development, the city is being asked to sell land. In the case of the Sioux Steel development, the city is being asked to approve tax increment financing.

It sure is a partnership. The developer gets a gigantic tax break and all of our taxes continue to go up. Who wouldn’t be for this kind of ‘partnership’? Comparing the railyard project to getting a TIF is hardly a comparison. Did we get what we wanted for the land? Nope. But that was never going to happen. I think it is wise for the city to liquidate property so it can start generating tax revenue. Unlike what they did with Phillips to the Falls where the city ‘sat on’ land and held it for 11 years for a developer. They were never going to sell it to anyone else. And surprise, surprise, the same the developer is going to the trough once again.

It will be fun to watch the predictability of how this will play out. They asked for $21 million, but the city will come back and say we will give you ‘X’ amount instead. Then the city will brag about how they negotiated a better deal. It’s the old bait and switch the energy companies have been playing for years with rate increases. They always ask for double of what they really want or need then make it look like they cut a deal with the PUC. Old’s trick in the book, and our elected officials fall for it everytime.

VILE comments about Councilor Stehly on FB

During the joint Minnehaha County/Sioux Falls City Council Meeting yesterday, Councilor Stehly suggested that we need more mobile home parks in Sioux Falls. I have heard Stehly talk about this in the past. What she is essentially saying is we need to promote more affordable housing solutions for people in Sioux Falls. Whether that is mobile homes, tiny homes, smaller manufactured homes, etc. A new, modest family home in Sioux Falls will run you well over $250K. Other affordable pre-owned housing will run you around $150K, but those houses are few and far between in Sioux Falls. One reason is we allow the major developers and hospitals run the planning department. They admitted to it when I attended the Citizen Planning Academy a few years ago when an attendee asked why Sanford Hospital is allowed to tear up these affordable neighborhoods, the answer was it came down to ‘money’. They have a lot of it, so they get to do what they want to. Many people are being ‘priced out’ of housing in Sioux Falls, and all Stehly was asking for is options.

That didn’t stop this frequent commenter and A-Rod on Pitty Patt’s blog to comment on FB that suggesting more mobile homes or other affordable housing is ‘Stupid’. I just want to tell ‘Troy’ that the only thing that is ‘stupid’ is the greed of people like him. I can tell you why contractors are not building affordable housing in Sioux Falls – there’s no excessive profit in it.

Speaking of ‘Dead Jensen’ (My new nickname for him) his all knowing treasurer, Paulson, sent out this fundraising email the other day;

Good afternoon –

Over the last couple of years, I’ve become increasingly interested in local political issues. Your local city and county governments have a significantly higher influence on your day-to-day life than your state or federal government. They maintain infrastructure, build public amenities such as parks and bike trails and foster future economic development. Because of the role local government plays in our lives, I think it’s incredibly important to have a solid mayor, city council and county commissioners. 

This election cycle, I am backing candidates in Sioux Falls that will support future growth in the city, work collaboratively with stakeholders across government and private industry and put the best interests of the community first. Specifically, I have agreed to serve as the campaign treasurer for Alex Jensen who is running for the At Large position (currently held by Theresa Stehly) in next Spring’s city council election.

Alex is one of the most positive, sharp and community-minded people I know and he will be a fantastic addition to the city council. He and his wife Nikki just welcomed a son (Jack) into the world. Alex works as a business banker for First Premier and has volunteered with the YMCA, Junior Achievement, the Home Builders Association of the Sioux Empire and Faith Lutheran Church. He previously served in the state legislature where he voted to increase teacher pay, provide property tax relief and implement a new roads and infrastructure plan. 

There aren’t many politicians I get excited about, but Alex is one of the good ones. Alex hopes to reach every voter in Sioux Falls with his “positive and proven” message. I plan to give my all over the next five months to help get him elected and hope that you will consider helping too. 

Thank you for your consideration. 

Matthew Paulson

I think it will be funny if ‘Dead Jensen’ raises and spends $100K+ and Stehly decides NOT to run. It will show that apparently it costs $100K in Sioux Falls to just get on the city council without a competitor.