Entries Tagged 'Downtown Sioux Falls' ↓

Before I even had a chance to allow the thought to pop into my head, someone said to me,

“How much you wanna bet this project will come to the city to help fund it, either in capital, operations, or both?”

I have yet to hear that, but seeing some of the players involved with this, I’m not going to hold my breath.

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.

UPDATE: You will see in the Planning Commission Working Session on December 3, they are already going to be talking about the TIF for the Sioux Steel Development. They will try to ramrod this TIF through as fast as they can before anyone notices what is going on.

I will stick with my main four arguments against this TIF;

• Free Enterprise and Capitalism. I think this development will do just fine with private investment and doesn’t need any tax rebates. It is just corporate welfare.

• The development is already going to receive around $10 million in tax payer subsidies from the River Greenway upgrades.

• Sioux Steel is moving all of their operations out of Sioux Falls to Lennox and replacing those good manufacturing jobs with low paying hospitality jobs.

• TIFs have yet to be proven they improve the overall economy of Sioux Falls. Oh, sure, they help the bottom line of the developer, but NO comprehensive study has ever been done in Sioux Falls showing TIFs pay for themselves in economic impact or workforce development. All they really do is raise taxes on the rest of us.

It will be interesting to hear the arguments as to why they need this TIF. It also will be interesting to hear how they are building a parking ramp twice the size of the bunker ramp for the same price.

The rumors were true, the Sioux Steel development is asking for $21.5 million in a TIF for their project they are coordinating with Lloyd Companies. They say it will be used to offset the costs of an 8 story parking ramp with over 900 stalls. Interesting they can build a parking ramp twice the size of our bunker ramp for the same price.

This is the area we should have put the bunker ramp to begin with. So now they want a tax rebate to build a parking ramp when we will have an empty one sitting downtown.

And isn’t the timing of this project also interesting? Suddenly the city didn’t want to work with Lamont so they breached the contract and now ‘another’ hotel is being announced DTSF that wants a tax rebate to build a parking ramp. And isn’t it interesting that the Mayor’s COS used to work for the developer who is working on the project and is considered an expert in writing TIFs?

As for the TIF, you know my feelings on them. They have yet to prove that the TIFs that already exist in Sioux Falls or ones we may grant have ever helped our economy. They have certainly done one thing, raised property taxes on the rest of us. And every time I have asked to show evidence all I hear is crickets. Even if I was for TIFs, I would certainly question why this development needs one? We are already going to invest $10 million in the river greenway along this development (essentially paying for their riverside landscaping and curb appeal, walkways and bike trail upgrades).

But the biggest reason we should oppose the TIF is that Sioux Steel will probably be moving all of their Sioux Falls operations to Lennox and NOT relocating in Sioux Falls. Why would we reward them with a TIF as they are taking their manufacturing business elsewhere and replacing it with low paying hospitality jobs?

Of course, most of the council will support this, and probably will give us NO evidence that TIFs work. That’s because the evidence doesn’t exist.

I have come to the realization that bitching about this project at this point is almost futile;

After a contentious five-year saga of fits and false starts, we’re left with something that looks more like it belongs in downtown Chernobyl post-meltdown.

Now we’re faced with setting aside our dreams of a silk purse in return for a sow’s ear.

But we find the current state of affairs unacceptable. The “finishing” touches on such a huge and visible public initiative should excite and energize the citizens of Sioux Falls. Instead, we stand disappointed and disillusioned.

TenHaken has an opportunity to begin earning back public trust in City Hall.

While the editorial makes some good points, I sometimes wonder if it is too late. I don’t think that Mayor TenHaken or his administration have ANY intention of becoming more transparent, in fact, they have been in hunker down mode for over a year, and it gets worse by the day. The super secret, hurry up and ramrod through the 5G implementation without (real) public meetings is proof of this. I said to someone the other day, “It makes you wonder all the things they are doing behind the scenes we don’t know about?”

While the previous mayor was very OPEN about his SECRECY – it was almost a badge of honor with him, this mayor pretends like it isn’t going on, but they are one in the same. I saw when Munson did this, when the next guy did it, and now our current mayor, and it is getting worse and more deceptive by the day. God help us, because I’m not sure there is much the rest of can do to stop this.

I’m going to break his comment up into pieces since it is kind of long, and I will add my commentary. This is from Planning Commission member Larry Luetke responding to a post Councilor Stehly had on FB about the Bunker Ramp;

Larry Luetke I really think there is more to this story. The city cuts off communication with their partners two weeks before their deadline of 30 days to respond to changes with the project. It is stated in the contract that the city must respond within the 30 days. Either ok with the change, a modification or build what they were supposed too. There was no response back to them and contract was cut. It is fine if you don’t agree with the company that got it but there was a contract that was signed. Which puts us at citizens liable. Reading through the contract I don’t see where the city will win this one (I am not a lawyer). Which will put us liable for a lot of stuff beyond the 1.5 million that is short.

I’m with Larry on this one (I am also not a lawyer) but I do agree that modifying a contract is NOT unheard of, and when you cut off communication early, some wonder if something else was going on behind the scenes (not like that ever happens in city government 🙂

I think what is best for us is to allow the modifications to the project and allow the developer to start building. The lawsuit will cost us so much more.

He is absolutely correct, but we should have never taken out the bonds to begin with, and we should have halted this until we had substantial proof that the investment dollars were there from the developers. All we got was a lousy piece of paper that basically amounted to a IOU note in your piggy bank similar to when one of your older siblings stole from you.

Once finished it will bring in sales tax revenue and property tax to the city and county. Currently as a parking ramp it will pay no sales tax, no property tax and we will collect a minimal amount of parking fees.

As taxpayers, I never thought we would make much on this anyway, completed or NOT. This is why the city needed the 2nd Penny for collateral, because like most other projects we have bonded for over the past 20 years, we have had to have the 2nd Penny pay the mortgage. We have a very solid track record of multiple projects that will NEVER pay for themselves, such as the Pavilion, Events Center, MAC, Orpheum, etc.

I feel that it is our best interest in allowing the developer to move forward with their project. Some questions I would ask our city officials. If there was a meeting at one of the country clubs about another downtown hotel project in which a person said that we need to keep this quiet for a couple of weeks (which is the same time frame of when the city was not responding to their partner). Also a rumor is that the hotel project that I was just talking about was also in question of not being done because of the Village on the River project would be finished first and the other hotel would saturate the downtown hotel market. So because of that a certain project downtown would not move forward. The information I just stated is third hand but really has made me question what the real issue of why the city did not respond to their partner Village on the River.

I have no idea what project Larry is talking about, but if I was going to bet my ass on a guesstimation it would be the hotel and convention center Sioux Steel in partnership with Lloyd is proposing on that redevelopment project. But at this point, just pure speculation.

Also based on the contract the contractor is the one responsible for the performance bond. What I have heard from a partner of the developer is that this project is still a go with the modifications once the city agrees to their modifications. With the modifications they have more hotel rooms then proposed even without the extra two stories. Just as a disclaimer I have nothing to do with this project but feel based on my research and hear say we as citizens will be the burden of costs if we don’t allow this project to move forward.

Well, I hate to break it to you Larry, but the taxpayers were and are getting stiffed on this project either way. We were never going to get the parking spots we needed publicly, we paid too much for the spaces and foundation, the lease was a steal, and it is being built in the wrong place.

I will stay with my original emotions on this project – it was a bad idea out of the gate and should have NEVER even made it to a city council agenda. Thanks to Mayor Bucktooth & Bowlcut, another money sucking project he cooked up that is screwing over the constituents.

You can say what you want about Stehly, but she warned that the Parking Department Enterprise Funds would NOT be able to support the bond payments for the Bunker Ramp, and this is why we used the 2nd Penny Road Funds for collateral;

Mayor Paul TenHaken wants the City Council to dip further into the city parking fund to come up with another $1.5 million, which his administration says is needed to open the ramp. Using that cash would drain the account the city is using to pay back the $18.5 million it borrowed to build the ramp, making it more likely that the city could need to dip into tax dollars to pay off the debt. 

Once again folks, we are dipping into our infrastructure funds for projects that have nothing to do with needed infrastructure.

UPDATE: Joe Sneve found this great quote from TenHaken;

“Unfortunately, the public doesn’t have all the facts and getting at the ones the taxpayers do have has been a challenge. The City government needs to be open and transparent with taxpayer dollars, which includes settlements like the one in question. We all can agree that bringing openness to historically closed door processes of City government is a great move,” Paul TenHaken told KSFY News while campaigning for mayor.

Apparently we are all out of extra money, go figure. The money is needed to fill all the ‘holes’ in the building. It’s too late, the money has already gone down the tubes 🙂

The administration waited until tonight at 10:40 PM to give the information. Erickson suggested they defer it to digest it more and she said it was unacceptable to not get the information last week, saying they knew the numbers then.

Councilor Stehly railed on them about ramrodding this project and asked for an audit of the parking department. She also asked for a deferral.

Councilor Brekke also raised concerns about last minute information and is concerned about the continuing trend of inadequate information given to the city council. She also wanted a deferral.

Councilor Soehl suggests they just approve it and it doesn’t matter if they are ‘pissed’ at the administration about the information. (yes it does).

Neitzert agrees with him, and admits he got information in advance this afternoon. He also says the councilors are being ridiculous by acting like engineers. He is right, they are not engineers, but they are in charge of the purse, and should be watching how money is being spent.

The deferral passes 5-3 (Neitzert, Selberg and Soehl voted against it).

Brekke said it best, “We have this false sense of urgency all the time, and it needs to end.”

As I heard earlier in the week, the rumors were true (Item #79);

Public Parking
Amend Capital Improvements Program Project No. 19002, New Parking Facility, by increasing the amount of funding for construction by $1,500,000 in 2019. The additional funding will not require an increase in appropriations as it will be funded by public parking user fees.

As you can see from the resolution, few details of what the money is for. I asked some city officials today about it and they said the administration is giving few details, and that the city attorney says they will probably get very few on Tuesday night. I guess they think this will be a way to quell the litigation by blocking the holes.

Why do I have an image of a Dutch boy and a leaking Levee in my mind?

The biggest question is why we didn’t have enough in our contingency fund to complete the ramp? Isn’t that why we have CMAR’s is to handle these things? You know, like when we got the million dollar event center settlement from money that was ours to begin with.

This of course will pass, but I at least hope a little shaming ensues by those opposed before hand.

I think I have already written that headline . . . a couple of times. Yes folks, the lawsuits keep adding up. Now a neighbor is pissed about this unsightly project;

The owners of a neighboring building just east of the Sioux Falls parking ramp, which was supposed to become a mixed-use facility, are serving notice to the City that they may sue because the project fell through.

River Centre at 200 E. 10th Street has several owners. Earthbend Properties, LLC and Riverview Holdings, LLC, which both have interest in the building, claim the City’s failure to complete the mixed-use portion of the project has caused them a loss in business and the value of their property to go down.

This is the building to the east. I think they are suing because the bunker ramp is uglier then their building, that’s my guess anyway.

I can’t even write angry rants about this anymore because it is turning into the worst decision city elected officials (and unelected officials) ever made, and when they had an opportunity to fix it, they made more bad decisions. And get this, no one has apologized yet. Not only is Trump running our healthcare institutions in Sioux Falls, apparently he is running city government to. I’m just waiting for one of the RS5 councilors to come out and say, “My vote on the Bunker Ramp was PERFECT!”.

The 5G towers are starting to go up downtown. This one is right in front of the Federal courthouse. I think I have randomly counted about 5 sites downtown (there may be more).