The City has effectively and reasonably used TIF as a development incentive for blighted areas within the core of our community.
Tax Increment Financing assists local governments in attracting private development and new businesses into blighted areas.
As you can see, the city’s policy is to use TIF’s for blighted areas. So what is blighted about the current TIF request downtown? A developer is looking to build apartments just North of Sunshine grocery store downtown. Currently the Tyler building and parking exist at this location. As far as I can tell, the Tyler building is still useable and NOT blighted. Besides the expense of tearing down a building, there really is NO blight involved. So what is the TIF applicant asking for? Are they applying for the TIF for demolition purposes? That isn’t a definition of blight in my opinion;
An area of a city, often a large metropolitan city, in which most buildings are abandoned or in severe disrepair. See also brownfield site, greenfield site.
The townhouses being built across the street actually had to demolish (blighted) homes before building, and it was done without the use of a TIF. So what is the difference? There really isn’t one. I understand that property downtown IS more expensive than in other areas of town, but that also relates into a ‘better investment’ return for the developer once a project is completed. Unless the planning commission and city council can find some kind of ‘blight’ in the Tyler Building area, I recommend they deny the TIF request.
I have also heard there are rumblings of another TIF request for a new retail/office/residential mixed use building near the Washington Pavilion. The rumored proposed area is ALSO not blighted.
The mayor often talks about letting FREE enterprise do what they want to without a lot of government intervention. I would agree, and that is the exact reason why the city should get out of the business of subsidizing free enterprise with property tax rebates and let them sink or swim on their own.
Looking a little further down the Google result for “blighted area” than just the first result:
“Thesaurus” – “…anything that mars or effects growth or prosperity.”
Just sayin’, as with all words – there is usually more to one definition. You an pick and choose.
The “financial definition” of a blighted area, for another example, includes the notion of less than optimal occupancy, relatively lower property values, lack of investment.
Very true Ruf, but as I pointed out in my post, Signature homes tore down actual blighted homes to build their townhomes, and received NO TIF for doing it. How is it that they can get a bank loan to demolish property DT and rebuild new but this other developer cannot? As I have stated before, this has to do with credit ratings of the businesses, and if you are a reputable company like Signature or do I even dare to say Lloyd companies, banks WILL loan you money to redevelop property without securing a TIF, it happens everyday in Sioux Falls.
What is this about the city giving a million to help affordable housing? Damn.
First, I will acknowledge your general skepticism of TIFs and appreciate that often they are used for projects of somewhat questionable nature, like Sanford’s sports complex. I also appreciate your skepticism about local developers.
That said, what I know of this development indicates that TIF is probably an appropriate use. This project differs from that townhouse development you compared it to in a key way. Namely, those townhomes, as I recall, are market-rate developments. When the units are finished the developer charges what the market will bear and can maximize his profit. Given the relative lack of quality, owner-occupied housing in the immediate DT vicinity (by immediate I’m talking 2-3 blocks here), and the increased demand for housing DT, those market rates are going to be pretty high. Good for developers.
But what I’ve read of this project across from Sunshine, about half of these units will be offered at below market rate, and the others will be offered at the base market rate.
As someone who works in affordable housing, I will assure you that affordable housing doesn’t get built without some kind of government assistance to keep the builder whole. Let’s say I have a widget that I can sell to the general market for $20 but you’d like me to sell it to a lower-middle income family for $10. It costs me $12 to build the widget. Now, I can sell these for $10, but my first question is how you’re going to help me make up the difference. I might not need to get to $20, because you might be able to guarantee me a certain volume of business. But I can’t do $10 because I don’t run my business for charity.
Affordable housing is, at its best and with government assistance to cover financing gaps, a low-risk, low-reward proposition for developers. Demand is ridiculously high because there’s just not enough of it available, but the fact that rents are restricted means that in a good economy with tight demand, they’re often leaving 40-50% of their revenue stream on the table because they’ve agreed to restrict rents to a percentage of tenant income.
So developers agree to take reduced rents for an extended period of time usually contingent upon the financing method. But whether it’s a TIF district, 9% or 4% federal credits, other methods of abatement, etc., developers need some way to cover that gap or it’s just not worth their effort to build. Often, the viability of their financing plan is contingent upon all of those methods.
You may not like the definition of blight in SDCL 11-7-3, but most all of the area around this proposed development meets it. And it’s more than fair to say that affordable housing is an enhanced use at this site. It’s next to a grocery store, the bus terminal is a few blocks away, and it’s within close proximity to social service offices. And it helps to create the kind of density that *should* exist in a downtown area, which is presently being deterred in that area by a bunch of suboptimal uses; namely low-rise office buildings and giant surface lots. That density also helps to preserve elements of the neighborhood critical to the neighborhood’s success – like that Sunshine Foods.
Thriving downtowns can’t just be about fancy-pants bakeries, urban lofts that cater to the Sioux Falls Young Professionals Network, and half-million dollar residences where the city’s elite can retire.
Horndog, while I agree with a lot of what you said, it has been determined that an ‘affordable’ 1-bedroom apartment in Sioux Falls is in that $450-600 range. I don’t think these apartments will get close to that range.
hg – n very nicely put. I’m borrowing your writing for future use with local council/development corps. You should write a book.