Entries Tagged 'TIFs' ↓

As we have been hearing through sparse media reports, the project is on hold until 2021. What does this mean? Well, it means if it does rear it’s head next year, and that’s a big if, the project may change. This of course means the TIF would be null and void. I have encouraged councilors to rescind the TIF ASAP and get it off the books until we actually know what is going to happen.

There has been some people asking me lately ‘What’s going on with the Sioux Steel project?’ I have no idea. There have been rumors that since the land snafu was discovered there has been a state investigation. Don’t know. Some also are wondering if investors have pulled funding due to Covid. Don’t know. Either way, good times or bad, state land deal aside, TIFs are worthless and only benefit the developer.

This story shows after 30 years, and $500 million in TIFs there has been virtually NO economic impact.

The results were persuasive: the CTBA study found no evidence that the massive package of tax incentives made a long-term difference to the economic well-being of Hoffman Estates compared to that of other similar nearby suburbs that did not make such corporate deals.

Simply put, the study found that the Sears deal was the economic equivalent of an energy drink: It provided a jolt of caffeine and sugar that quickly wore off.

The truth is, Hoffman Estates and its neighbors were already primed for strong economic growth when the Sears deal was hashed out in 1989.

This has often been one of my biggest arguments against TIFs in Sioux Falls. The developers are already doing well (well at least up until Covid hit). We have had record breaking building permit valuations 6 years in a row even without all the public buildings and non-profit facilities that pay NO property taxes. Why would developers need an incentive? TIFs are, and remain to be developer welfare and little else.

Hoffman Estates and Illinois provided $536 million in incentives to Sears to build its headquarters and other development projects. Despite the infusion of funds, Hoffman Estates’ property values trended the same as other, nearby towns that did not spend nearly as much in tax breaks. (Chart: Lylla Younes Source: Illinois Department of Revenue)

Guest Post Bruce Danielson

The recent story (Land ownership question hovers over $185 million Sioux Falls redevelopment plan) of Seney Island tripped a few issues long ago buried in the back of my mind. I have no dog in the show being presented in the Sioux Steel – Seney Island project, but I feel the history of the project needs to include a proper land title search being performed and then presented.

SEE ALL MAPS HERE.

Also, the interesting bit of data in the article claims 160 acres being granted but the original 1859 clearly shows the town lot company survey had the planned layout and 1865 – 1869 maps show the Fort Sod fortification lines of the new settlement. From my research of many years ago, there would not have been a granting of homestead rights in the 1860’s to land already committed to being a townsite.

The enclosed image of the original survey 1859 map of Sioux Falls, shows Seney Island and the village platting. These discrepancies have bugged me to the point where I matched the 1859 images over a current Google Earth image of Sioux Falls. Though not perfect, it does show the relationship of the Island and most of the Sioux Steel property being on Seney Island.

The 1881 drawing shows the relationship of Seney Island to the coffer dam rerouting the water for the mill.

For over 40 years I have heard from old-timers and read stories of how the west channel or oxbow of the Sioux River was used as the original community landfill until it closed it to navigation. The main channel of the Sioux had to be changed to allow for the dam to produce enough water for the mill and power plant.

The 1900 photo of the west channel shown in your story, was the result efforts to fill in the river channel. The old-timers I knew, used to tell stories of the smells coming from the rotting debris leeching to the surface until it was finally covered over. As the property is now being readied for a new purpose, opening up the land could bring back the environmental issues long ago covered up.

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.

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.

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!

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

Last night at the Sioux Falls City Council meeting it was the first reading of the Sioux Steel TIF proposal (2^nd reading is on  February 3^rd). 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 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.

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.