UPDATE III: I wanted to make a correction to some of the things being said about how the homeowners will be paying back the TIF. While I have surmised from Mr. Powers testimony last night that the repayment would go back to the developer, SF Simplified was told this from the city’s planning office;

The $2.14 million would help with the costs of getting the site ready for homes, designing, etc., and it’d be paid back to the city over the next 20 years via property taxes.

Which makes more sense since the city is footing the bill for the infrastructure, but it still puts into question what was said at the meeting last night.

Does the developer take on the $2 million in debt or the City? Is it a 15 or 20 year TIF? I’m not sure who is in charge of talking points for this project, but it gets more confusing by the day.

A city official told me today that the payback to the TIF will actually go to the bank who is giving the loan for the development, which makes sense. Oh, and guess who that bank is 🙁

UPDATE II: Finally! At the planning commission meeting tonight, commissioner Larry Luetke asks how the TIF works when it comes to the eventual purchaser. Planning staffer, Dustin Powers explained that as people purchase the homes they will have to pay their FULL property taxes then the county will pay part of those tax funds back to the developer until they hit the $2 million amount. In other words the developer is paying the full cost of the development and the homeowners will be paying back the developer thru their taxes over the next 15 years. So essentially, like Starr said last night, this is just a $2 million dollar break on the development itself, for the developer, and gives the eventual homeowner NO tax savings.

On top of that, there are NO guarantees the pricing will come in where they would like them to. The developer has already warned those prices could fluctuate (in other words go up) and there is no contractual agreement to keep the price where promised. Good for the developer, not so good for the homeowner.

*on a separate note, one of the newer commissioners called roads in a development ‘artillery roads’ instead of ‘arterial roads’. I’m not sure what an artillery road is, but if you drive around some central neighborhoods you can certainly see some streets that look like they got hit by artillery.

UPDATE: Tonight at the city council informational meeting they did a presentation on the TIF and it’s hard not to come to the conclusion that developer, not the future homeowner is benefitting from the TIF. Councilor Starr said it best when he suggested that maybe the city should just pay for the $2 million in TIF expenses (infrastructure) out of the general fund and not mess around with the TIF.

Either way, the half ass promise made from the administration, planning and the council before the last election is we were going to target affordable housing in our core, building density while cleaning up our central neighborhoods. Instead we got a ham and cheese sandwich made from Spam and Velveeta.

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The Sioux Falls Planning Commission will be mulling over TIF #26 (Items 5C & D) this next Wednesday. As you can see from the drawings below these are pretty tiny houses. I was also surprised by the floor plan in which the bedrooms were not placed next to each other with one bedroom next to the front entry.

What is curious is there is NO mention in the agenda documents about who will be getting the 15 year tax break. The developer or the new homeowner? There is also the infamous recommendation from un-elected paid planning staff;

Both staff and the development team believe this amount of TIF support is appropriate and adequate for the project to move forward, and that without TIF in this amount, this project as presented would be unable to move forward.

The classic ‘We can’t do this without the TIF.’ But again, I ask, who will be getting the tax break? How do you give a 15 year tax break to a developer who will be selling the homes? Will the new owners be getting a 15 year tax break? I’m puzzled how this will work. It appears to me that the developer will be getting a $2 million dollar tax break up front and the new homeowner will have to pay the normal taxes.

Hopefully we will hear an explanation at the meeting.

*You will also notice that the planning agenda is NOT using the annotated agenda like the city council is using now. Not sure why transparency is so hard for these folks?

Thank goodness we have a new media source in Sioux Falls covering City Hall, otherwise I would not have had any idea DTSF was planning this;

Downtown Sioux Falls, Inc. (DTSF) this month will ask the Sioux Falls City Council to get behind a proposal to get rid of a decades-old cap on the amount of revenue it can collect on parcels within the boundaries of what’s known as the Main Street Business Improvement District (BID). 

However, not everyone is on board. 

Duff Robinson, owner of a pair of properties in the northern end of downtown, said he’s not opposed to lifting the cap. But he said DTSF could capture additional revenues with a more modest change to the special assessment.

Rather than leaving the base rate of the special assessment at $1.50 per $1,000 of valuation for downtown buildings and adding a 50-cent tax on valuation beyond the $1 million value, Robinson said DTSF could capture additional dollars by lowering the base rate and relying on the overall valuation increases assessed on downtown properties by the county equalization office and a reduced base rate for the BID.

“With an 18 percent increase in valuations, they’re going to get an increase anyway even if they don’t approve this,” Robinson said, referring to average assessment increases placed on downtown properties in 2021. “I’ve come to terms with removing the cap, but I just think they should flatten it out.”

Here’s a better idea, STOP HANDING OUT $50 MILLION DOLLAR TIFS FOR PARKING RAMPS DOWNTOWN.

Isn’t it ironic that DTSF is the first to hit the podium at Carnegie talking about all the TIFilicious benefits of Tax Increment Financing then turns around and asks for a tax increase to fund its organization. Make the organization DTSF and its employees a division of the city and fund it thru the general fund and parking fund.

When disgruntled, angry developers and bondsters look me straight in the face and tell me I am lying when I point out TIFs only raise taxes on the rest of us I gladly point to this proposed increase which is a prime example of how we give massive tax cuts to very top developments downtown then turn around and increase taxes on everyone else.

Duff is correct, the increase in valuations on properties over $1 million could cover the spread, if only they were paying 100% of property taxes on day one instead of 20 years down the road.

Just further proof that TIFs don’t spur true economic development just higher taxes for the rest of us.

Well not quite Brandon, but almost. (FF 1:30)

As I understand it the development is in between Washington HS and the city of Brandon on a current empty lot. They will use a TIF to help pay for the roads and utilities. The most affordable houses will be slab on grade (NO basements, not even unfinished), 1,000 sq ft, single stall garage, $250K.

I think a better approach would be building NO attached garage and putting in unfinished basements with egress windows so the basements could be finished later and a garage.

What is silly about this is that when we have talked about building density in our core and providing more affordable housing this was NOT what people were asking for. But it should be NO surprise since the public had ZERO input and the councilors were met with privately about the plan. This video is the first time anyone from the public has heard about it.

I think doing a pilot program in central Sioux Falls would have been a better way to go. You pick a 8 block area that needs some help. The city could use a TIF to rebuild the roads, sewer, water, sidewalks, curb and gutter and street lighting. Community Development could provide loans to fix up the homes in the affected area and Affordable Housing Solutions could demo and buy up empty lots for new housing in the area. Building slab on grade houses next to Brandon with no apparent public transit service will do little to solve our affordable housing issues in the core of Sioux Falls.

During his address today there were a couple of interesting tidbits;

• He is proposing hiring an Art Specialist. He didn’t give many details but it sounded like a full time position. While I am somewhat supportive, (I think this idea has been floated by Mayor Huether and maybe even Mayor Munson) as someone said to me tonight, it seems like more of an authoritarian move to control the arts advancement in Sioux Falls (tourism). Not sure if I see that, so I will keep an open mind about the job duties. I think this will be a controversial addition and there may be dissenters on the council. I remember when TenHaken asked for a cultural officer and she quit. He may have a fight on his hands.

• Paul said there will be an announcement soon about a TIF being granted for an affordable housing project. Like the Art Specialist there were few details. I have felt that TIFs for affordable housing is a reasonable use of them, but I want to see if the TIF will benefit the dwellers or the developers.

While the meeting WAS posted in advanced on the city website, the PPT was not included. When the meeting started there was NO link to the live feed on the city website for at least 10 minutes at the beginning. Fortunately, Dakotanews was streaming the meeting on FB with their own cameras. I just find it ironic that Mr. TechNology was so concerned about his PPT being posted in advance they had to delay the live feed so it would NOT appear until after the meeting started.

I didn’t know whether to laugh or cry when I read this article about the DTSF developers behind Cherapa XXX;

And concerns about Cherapa Place colliding with Bishop Dudley Hospitality House or Union Gospel Men’s Center have not made developers wary. Although there might be the possibility that rising values could cause the shelters to sell, overall Pendar Properties hopes to work on a solution that works for all parties.

“I think what we do is we make this work together. There is a division, but it can be something we make positive,” Scherschligt told the Argus Leader.

Gee, like putting them somewhere else to begin with? It reminds me of the quiet zones. This stuff should have been negotiated to begin with, now we are going to throw even more tax dollars at the problems (that is who is paying for the quiet zones and eventually the relocation of the shelters).

I don’t expect our leaders to have a ton of vision, well maybe I do, but common sense would be nice.