TIFs

Libertyland TIF should go to a vote of the entire state!

While the petitioners did the right thing by putting this to a vote of the people of the affected area, the TIF should really be voted on by the entire state. Why?

So this is how TIFs work in SD; The developer’s property is valued at a new higher rate once the project is completed, this rate is used to fund city, school and county government, except that new valued tax revenue goes back to the developer for improvements (in other words he gets a tax refund to build his personal project). So while these values are up, the money isn’t coming in so the county and school district must make that revenue up by taking it from the state which is funded by sales taxes paid for by the entire public body of the state. So while there may be a TIF in Pennington County, Minnehaha County residents are funding this TIF thru sales taxes to make up for the lack of school and county funding. TIFs are not only BAD for the effected communities but they hurt every resident in this state! Some would argue we pay these taxes anyway, and you are correct, but instead of bailing out school districts and counties we could use the revenue to improve state infrastructure. What a f’ing concept!!!!!!

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TIFs get first major electoral challenge in Rapid City

I have been watching this with intrigue.

This is the first time a TIF has been put up to a vote EVER in the state. I think any TIF over $10 Million should get voter approval, it should also get county approval. I find the coalition of right/left leaning folks who gathered the 5K sigs in 20 days remarkable. If they can get that many sigs in RC in 20 days, that tells me the voters will kill this by a large margin. The astonishing thing is EVEN if the $125 million dollar TIF is eliminated by the voters, this f’ing amusement park will still receive over $60 million in other tax incentives, yet the state couldn’t figure out SNAP or TANF. TIFs have gotten ridiculous, but they have always been. Where were these lawmakers 10 or 20 years ago? The research was out there that they don’t work, yet you let taxpayers get rolled for decades while bailing out developer welfare queens. I guess I am happy there is FINALLY opposition to TIFs statewide, but what took yah so damn long!!!!!!?????

One 2 . . . Three and Four and the disappearing TIF act

Photo; Sioux Falls Business Journal

Last night during the discussion on selling the parking lot downtown, something interesting came up. Councilors were concerned that someone wanted to buy the parking lot just to convert into a private parking lot and wanted to make sure there was enough parking if housing was built there and compared it to the One 2 building next to Ace Hardware downtown (the city sold the lot for a song). In the discussion it was revealed that instead of retail on the main floor of the building it is actually now 2 levels of parking (basement, 1st floor) and in making this decision they decided to add 2 floors of apartments to the building. Now, no big deal, development plans change, but it never got re-approved by the council. Which tells me an un-elected city employee made the decision and was likely backed up by the mayor’s office.

TIFs MAY BE A THING OF THE PAST IF THE SD STATE LEGISLATURE HAS THEIR WAY

During the working session yesterday the council discussed the legislative proposals for the 2026 session and their desire to change TIF applications;

• 50% of property needs to be blighted

• TIF must also get County approval (I would also suggest school board approval since they are the most impacted – remember COSTCO refused a TIF because of school funding)

• No grants can be approved with TIF

• Any TIF over $10 million must be approved by voters in a special election

I think these are all a good start, but I would suggest one quick fix; eliminate all TIFs except for community infrastructure like water and sewer services or fire stations.

TIFs have almost NO ROI unless used to fix a community problem like blight and infrastructure needs.

At the end of the discussion Rich Merkouris asked the city attorney ‘How many TIFs in Sioux Falls were granted for just blighted areas?’ Of course, Fiddle gave his normal answer, ‘I will get back to you.’ I might dig around on it this week and see for myself. If I had to guess we have probably only put out 20% of TIFs for blighted areas.

Finally, someone in the local media is digging around on TIFs

It took the property tax discussion to get this out in the open, TIFS ARE NOT GOOD, ESPECIALLY IF USED ONLY FOR ECONOMIC DEVELOPMENT;

“That told me they were not providing the oversight on these TIFs, that they were just rubber stamping them,” Sibson said.

Well, Sibby, that is what communities across the state do. They are sold a shiny ball and they approve it.

“If they’re not done correctly, they end up being simply subsidies for certain private entities. That’s my overall concern,” Sibson said.

And that is ALL they are these days. Developer Welfare. Parking ramps and condos? How does this benefit the general public? I think if reverted back to Industrial and Affordable Housing which combined only make up 8% of TIFs across the country, you would see more value in them. I think that is what the State Legislature plans to do, or at least make an attempt at changing the law. Good Luck! Sioux Falls and Rapid City and all other larger communities in SD will fight you tooth and nail on this one.

UPDATE: Anonymous Legislator drops the bomb on property taxes and developer greed

UPDATE: I was told by a former legislator that used to serve with this person, that the person who likely wrote this is Gary Moore.

Not sure ‘who’ this legislator is, but they apparently were in the legislature for at least 14 years, they left the comment on a thread on that ‘other’ blog. Notice the trashing of TIFs, they are absolutely right, they are driving up our taxes;

A few comments on property tax and what needs to be done to accommodate meaningful and responsible legislation to address the issue.

First of all the problem was created at the local level in the name of economic development by local officials and developers. The locals wanted tools in their “economic development tool box” and the legislature always pandered to their wants. In addition developers no longer want investors to in their vocabulary, They want that investment to come from the taxpayer.

This is a complex issue and cannot be resolved in 1 legislative session, but it must be done. I saw this issue become out of control during my 14 years on the tax committee when I was in the legislature, and it has only become worse over the past 10 years.

I believe that to address this issue some concessions must be made now, they include but are not limited to:
1. Put a moratorium on the creation and limit the use of TIFD’s, by local governing bodies beginning immediately. These things have proliferated and one is never paid off before several more are initiated. 12 to 20 active TIFD’s in any local government is profound abuse.
2. Put a moratorium on the creation and/or use of any further discretionary tax formulas. These can also be used in a TIFD and that provision needs to explicitly deny that.
3. Put a moratorium on the creation of any additional subdivision taxing districts within local government.
4. Prohibit the creation of any new political/public subdivisions by the legislature.
5. Restrict/prohibit any new “opt outs” and freeze those already in place from renewing or or expanding those opt outs.
6. Freeze levies for a period for those subdivisions already in existence, except if they should choose to lower the existing levy.
7. Freeze all specials and road tax on real estate at current levels, unless it is a reduction.
8. Reduce bonding authority levels of all local governing bodies.
9. Further restrict growth in local governing bodies budgets.
10. Restrict the BBB tax, BID tax, and city sales tax to current levels, and prohibit the use the use of these taxes to only the general fund with an obligation to reduce property tax. It has become increasingly evident that these dollars are being used as a cash payout to developers with little or no regard for the taxpayer. Restrict BID boards and all other political subdivisions from giving tax revenue to any other body with taxing authority.
11. Require local governing bodies who have acquired real estate to get at minimum the price they paid for the property, rather than just a fraction of what they paid for it.
12. Prohibit any non-profit with taxing authority from asking for any local governing body for contributions outside of their tax base.
This certainly is not a complete list, but it is a beginning. I firmly believe many of these things need to be done for accountability at the local level. I blame the legislature for many of the problems associated to property tax increases. Most off the issues prevalent today are caused by the term “economic development”, in an effort to lower taxes. It doesn’t work, never has worked, and will never work. Countless studies have indicated, time and again, that these issues cause an increase in taxation rather than a reduction.

Furthermore these thing are being abused by the affluent, developers, “non profits”, and the unknowing and uninformed (local elected officials), all at the expense of the local taxpayers,
and that is a fact. Local property taxpayers are being lead to slaughter in the name of corporate welfare, and it needs to stop. If a developer thinks he/she has a valid idea he/they should have no problem finding investors to support the idea without the taxpayers investment which, is a liability on them and never produces a dividend.

I know this will be a hard sell as developers and the unknowing locals will fight it with a vengeance. It has become apparent locally that elected officials don’t run the show, they are kept in the dark and fed sh_t like a mushroom.

Ask some hard questions of local officials about current activities in your area. They refuse to answer, skirt the issue, or lie. I have investigated and found the answers and the truth. Documentation is damning.

To provide adequate property tax relief requires doing a responsible study as to the real problems associated with it. To get a responsible study all of the issue listed previously must be considered, and that cannot be done responsibly during a short legislative session.

Initiating some or all of the previous stated issues can go a long way to improve a comprehensive study and reduce inflated values and property taxes. I understand the legislature did not cause the problem entirely, but they did enhance it and became enablers for the local governing bodies, who do not responsibly use the tools given to them. I know they asked for it, but like a child who doesn’t understand, sometimes you must take away their gift until they can totally understand the ramifications of improper use.

Municipalities are allowed a sales tax. The purpose behind that was to supplement their general fund budget. Not to use as grants to developers for millions of dollars.

There is a lot going on, misuse of those dollars needs to be cornered, if it is not it will only become worse for the taxpayer.

No new taxes would be necessary if local governments were made to be responsible.