Events Center Hogwash

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UPDATE: Cheryl Rath and I will be on Jon Micheals FORUM tomorrow morning (Sunday) at 7:30 AM, KELO FM 92.5 talking about the EVENT CENTER proposal. Tune in.

It only took a few days but the Event Center task force’s spin cycle kicked in. So let’s start shooting some holes in this plan;

For 18 months, we have worked with 18 wonderful Sioux Falls citizens. And they’ve unanimously endorsed one method to pay for this needed project. We estimate it will cost $137 million to $169 million. We recommend paying for it with a temporary 1-cent sales tax.

First off, as mentioned by an opponent at the city council meeting Monday night, the cost figure is a ‘pie in the sky’ number. Nobody knows what the place will cost until the bids start coming in. Could be less, but my guess is that it will be over $200 million. The city has a track record of overspending on projects. Remember the $18-21 million dollar Pavilion that has cost us almost $40 million in renovation costs so far, and that isn’t counting the city’s subsidy it has received over the last 12 years.

A 1-cent sales tax equals an additional dollar for every $100 you spend. In our case, it would last three to four years.

I always like how they give the smaller number in this comparison. But let’s add up this additional tax in a year’s span. Guessing that most low income working poor spend about 80-90% of their paychecks on goods and services that could be an additional $150-$250 dollars a year in taxes. Is an Events Center worth $250 a year to a person who will never use the facility? Doubtful. As for the 3-4 year time period, this number is murky for two reasons, as I mentioned above, nobody knows what the place is gonna cost mainly because the task force stupidly didn’t nail down a funding source and budget first before proposing this monstrosity and secondly, Sunset provisions rarely work because the city council can vote to extend the tax to build another building we may ‘need’.

You’d need to find those payments somewhere. A so-called bed, board and booze tax raises $5 million per year. So you’d need at least two extra cents on it to make your first 30-year payment. That raises the total tax on entertainment from 7 percent to 9 percent. And we’d need state authorization.

This is where the tax force gets very closed minded. I have often thought that the reason the BB & B tax was never pursued was because the hospitality industry lobby shut it down. Not sure how I could prove it, but their has been rumblings. As for the percentage figures on what you can charge for taxes on liquor and hotel rooms those are obsolete. If you have to go to the state to ask for the increase, you most likely can ask for whatever you think you need. There are also other ways to raise the money that the EC TF did not pursue;

Corporate Sponsorship • Tenant Sponsorship • Parking fees • Ticket fees • Advertising Tax • Luxury retail taxes on luxury items (ex; Homes, rec vehicles) • Corporate entertainment tax

And remember, if you borrow money, you pay interest. A 20-year loan for this project results in almost $92 million in interest costs over the life of the project. A 30-year loan means an extra $138 million in interest.

We think we should pay for this today, avoid the debt and have it paid for nearly by the day it opens.

Who cares how long it takes to pay for the facility? Not to mention it is only fair to stretch the cost out over a long period of time so people who are using the facility are paying for it. Why is the responsibility of residents living in SF now to pay off the whole thing in 4 years? Do most people pay off their homes in 4 years? No.

The temporary tax could be refunded to income-qualified residents. We are working with nonprofits to create the best refund program possible. We want it to be simple. Fill out a one-page application. Turn it into the city, an agency that helps you with other needs, or your church. If you need help, we’ll train volunteers to help you. We think that’s the right thing to do.

Refund programs have a proven track record of NOT working. And if we are taking in $50 million a year in taxes, why should it be the responsibility of churches and volunteers to help administer this program? I have a better idea, stop taxing nessecities to pay for entertainment.

We also need to remember that this project is an investment. It will generate $51 million to $53 million in economic impact annually, a level of activity that supports 1,900 jobs, with more than 400 new jobs, plus 1,275 additional construction jobs.

While I agree it will have an economic impact on our city, what they don’t mention is that the economic impact will go straight in the pockets of people who will pay for this project the least, wealthy business owners. Most of the jobs they mention are low wage part time hospitality jobs and unsecure, non-union temporary construction jobs.

If this proposal makes it to the voters, it will fail, and it will fail hard, not just because of the funding, there is also other opponents to the plan. Some don’t like the location, some don’t like the size, others are concerned about the lack of hotel rooms and our inadequate airport to handle major conventions. I hope the new council and mayor squelch this blind proposal and come up with a new plan before next November.

Let’s stop chasing our tail already and get a events center built!

Posted in: Event Center

Gee, willickers, could have seen this coming a mile away

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Construction values are 50% of what they were last year at this time;

The number of building permits issued in Sioux Falls through August this year is up from the same time in 2008, though the value of that construction is down significantly.

Sioux Falls has issued 4,308 permits this year, up from 4,242 in 2008 but still down substantially from the 4,564 permits issued in 2007, according to city records.

But the total construction value in 2009 of $176.7 million is down from 2008, when the numbers through August were at $294.1 million.

There have been 681 new single-family, two-family and multiple-family permits issued in 2009 at a value of $71.3 million.

That compares to 1,016 new residential permits approved through August of 2008 at a value of $114.6 million.

This is no surprise to me, if you have been following the local economy as I have since last fall, you could have seen this coming a mile away. But city hall put their blindfolds on and approved a tax increase to build new roads anyway. While this is bad news for our local economy, it is good news to taxpayers. It means we can hold off on building new roads until it picks up, therefore saving us millions in the CIP budget, money we can either put in reserves or use on infrastructure upgrades (which should be the priority anyway). If developers can’t pony up their 50% towards new roads, taxpayers shouldn’t pony up either. According to the July financial report, taxpayers have put in $1.6 million into the new fund this year while developers have put in a whopping $90,000. Yes, we have put in 17x more money then the devolpers. Yet, the SD MSM doesn’t see a story here? Go figure. Of course this would require a new council that isn’t spend happy. In the informational meeting on Monday, councilor Beninga had a pity party about not having enough time to offer amendments to 2010’s budget, which probably means he will offer very few if any at all. The funny part of the conversation was when clerk Owen informed all the councilors that Staggers already turned in his (he was absent from the meeting). They seem shocked, and one councilor joked, “He has been probably working on them for a year.” Not quite. Then they asked if they could see them, and she replied that she would have to get permission from Staggers to show them. The city attorney’s office apparently is unaware of the new open records bill that started July 1. Quen Be De also got on her soapbox about wanting to raise the retail tax by a penny, and joked that not all the wisdom in the state resides in Pierre in the winter. While I do agree with her statement, I would have to say most legislators probably have more intellect in the tip of their little toe then she has in her whole body.

I can’t wait for the retail tax increase legislation to fail. Maybe I will throw a party.

Posted in: economy, Sioux Falls, State Legislature

Property Tax Hypocrisy

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While the city and county are considering property tax increases on the rest of us, developers are pushing for a huge tax cut incentive;

Sioux Falls Mayor Dave Munson’s budget for next year includes a 2.4 percent property tax increase for city residents, designed to raise almost $960,000.

Developers want the city to give them a significant tax cut in the first 5 years they develop new property;

Those officials have proposed a formula that would give builders a two-year window to start projects that would qualify for a lower property tax bill. The program would apply to some commercial, multifamily housing and industrial projects. It wouldn’t apply to single-family residences because state law does not permit local governments to offer tax breaks for that type of construction.

A qualifying project would pay 20 percent of the taxes in its first year after completion. The bill would rise 20 percent each year thereafter until it hit 100 percent in the fifth year.

While our city leaders(?) are lauding a property tax increase as something we NEED to do (actually we don’t) the special interests that fund their campaigns are asking for a handout. I might be for the plan if Sioux Falls was behind on commercial development, but we are not, in fact their is tons of office space available for lease right now, just drive around and count the signs. I have often said that DEMAND drives development, not tax cuts. This whole idea was cooked up by Clayton Jamison who co-owns his development company with his father former concilor Bob ‘General’ Jamison and his brother current councilor Gregg Jamison;

Industry officials are billing it as a mini economic stimulus that could save jobs. Developer Clayton Jamison, who is among those pitching the plan, said there have been widespread layoffs in the industry. For those still employed, hours and overtime have been slashed, adding burdens to families.

Hey, Clayton, every industry is hurting in Sioux Falls. Why not give the working stiffs tax cuts instead of yourself? The worst part about the proposal is that his brother Gregg helped cook this up. Not only should Gregg not be voting on the proposal, he shouldn’t even be discussing it in his official position. It is a huge, huge, conflict of interest, considering Gregg is partners with his brother in the business, which ironically is behind on property taxes on his new developments. Is their proposal a plan to help spur development or is it a plan to help them out personally? I think the answer is pretty freaking obvious.

Steve Van Buskirk of Van Buskirk Cos. said the tax savings could be enough to persuade some businesses to start projects now rather than wait.

Hey, Steve, how about leasing the space you have available right now instead of building new space. I think Mike Cooper and Vernon Brown sum it up best;

“We don’t really have any suitable data to understand what impact this may or may not have,” Cooper said.

Officials also wonder whether the program would contribute to a glut of open commercial and office space in Sioux Falls.

“Does it compound the problem?” Councilor Vernon Brown asked.

During the years a property receives tax breaks, the difference between what it pays and what it should have paid is spread among existing taxpayers, said Ken McFarland, administrative assistant to the Minnehaha County Commission.

“In other words,” Brown asked, “property owners would subsidize this tax break?”

“Basically,” McFarland responded.

I hope the city council is least smart enough to not let this proposal see the light of day at a council meeting. This proposal should be shot down before it even gets voted on – and councilor Jamison needs to excuse himself from the negotiations, because trust me, if he doesn’t he will find out what a real ethics complaint is.

Posted in: Property Taxes, Sioux Falls

Beer: is there anything it can’t do?

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hops

President Obama, Dr. Henry Gates, and Sgt. James Crowley of the Caimbridge police will meet over a beer  (link opens new window) on Thursday, presumably to talk race relations.

After the whole flap about Gates’ arrest and Obama’s comment afterwards, the president has taken a completely different tack than right-wingnut pundits expected. He invited his friend and the officer who arrested them over for a beer. While I preemptively agree with the president’s detractors that this is a PR move, you have to admit it’s a brilliant one. It wasn’t a statement issued and read at a press conference, not a half-assed apology, just a simple meeting over mankind’s favorite beverage.

Now, I wonder if an invitation to have a beer would get me out of my next speeding ticket…

Posted in: beer, cops, obama ⋅ Tagged: , , , ,

The Pros & Cons of a Casino in Iowa

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casino

There was two very well written letters in the Gargoyle Leader yesterday about the pros and cons of a large scale casino in Larchwood.

In the letter that was against the casino I found this statement encouraging, not negative;

The report goes on to say that “Video Lottery Terminals (VLTs) are located in bars and bar/ restaurants throughout South Dakota, including a total of 1,551 VLTs in Minnehaha County, which is the Sioux Falls area. These VLTs in Minnehaha generated net win of more than $66 million last year, or about $500 per adult resident. From this data it is clear that the propensity to gamble among Sioux Falls area residents is already quite high, although a relatively small proportion of this gaming flows to area casinos due to their distance from Sioux Falls.”

GVA Marquette Advisors believes that a new Iowa casino will shift gaming patrons from VLTs in Sioux Falls to the new casino. The company says: “From our analysis, we would expect a new casino at Lyon County would have a significant impact upon VLT revenues in south[eastern] SD, particularly in the Sioux Falls area, as more of those gaming dollars would be spent at the casino, which would offer a much more appealing facility and overall gaming experience.”

While beauracrats and development big wigs see this as a bad thing, I think it is a very positive thing. Video Lottery is a horrible way to fund government, not to mention all the crime and other social costs it brings. Anything to reduce the number of VL casinos in Sioux Falls is a move in the right direction, for society. Pierre might not like it, but who gives a shit what they think? It might finally force them to get rid of the awful funding source once and for all.

As for the pro-casino letter, I found this statement at the end of the letter very telling about how South Dakota and Sioux Falls politicians like to do business; their way or the highway;

We need to look at every so-called threat and find the opportunity. I would like to personally extend a hand across the river to the economic development team representing Sioux Falls to meet in person to work together in making our area within 100 miles of Sioux Falls the best place to work, live, play and raise a family.

Good luck with that Iowa. Our city council and county commissioners can’t even work together, what makes you think you will be able to work with them? Don’t get me wrong, I agree 100%, we should work together. Instead trying to create stupid legislation and denegrating Iowa in the media, Sioux Falls should embrace this casino, and make it a partnership effort. Sour grapes won’t help either of us.

But I’m not holding my breath. Now excuse me while I bang my head against the wall.

Posted in: Casino