Breaking Down proposed Sioux Falls TIF 23

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During public input today at the Sioux Falls City Council informational meeting (FF: 1:39:00) I touched on the morality and ethics of tax incentives and rebates for citizens and local contractors and business owners opposed to International Companies. What I did not touch on is what this TIF is really about, a select group of investors making a buttload of money while using the city as collateral.

Before reading anymore, I encourage you to first watch the presentation of TIF 23 than consider what I think I saw;

• The real beneficiary of the TIF would be the Development Foundation, not the businesses coming in or the citizens of the city.

• Basically the DF is using the TIF as a slush fund (for about 15 years) to make the land more appealing by spending the money on upgrades and infrastructure instead of putting it back into the existing city infrastructure for street improvements, public education or judicial/public safety expenses. In other words they are robbing from the other governmental entities (that benefit us all with their services) to build an industrial park we never needed to begin with (seriously folks, it was much better as farmland).

• Do you think this slush fund will just sit in a metal box down at the executive offices of the Foundation? Nope, now we bring in the banksters and bond salesmen to get their cut while they use the city (taxpayers) as collateral if any of these deals fall thru.

I ask a simple question; If you had two choices as the Mayor and City Council where you could spend $94 million in tax incentives/rebates over the next 15 years? Would you . . .

• Spend it on upgrading existing infrastructure in our city which would improve neighborhoods, reduce crime, create much needed affordable housing, employ local contractors and enrich local small multi-housing property owners or would you . . .

• Spend it on building NEW infrastructure (that we will eventually have to maintain) that will house International and National businesses (which pay substandard wages and little in local taxes while shipping profits overseas) attracting more people to our city who will be looking for housing, public education and creating more social headaches.

Don’t get me wrong, I don’t have an issue with attracting good employers to our city, but why do we always have to dangle the TIF carrot? If our economy was truly strong in Sioux Falls (I think a certain sector of it is) why would we have to offer property tax breaks? If a business truly has a good business model, they should have no problem paying for land upgrades, infrastructure upgrades, living wages and 100 percent of their property taxes on day one. Isn’t that what Free Enterprise and Capitalism is founded on? Not to sound like Ayn Rand, but Cheese & Rice!

But like I said, TIF 23 isn’t about investing in any of these things it is clearly about a handful of bloodsuckers who want to scrape up the fat drippings from the bottom of the broiler pan while our council and city administration is either too blind, too dumb* or too paid off to see it.

*During the Q & A session Councilor Marshall Selberg (who was actually awake for a meeting for once) asked if he could build a Burger King out there. Remember, Marshall is NOT a self-employed piano teacher, he has worked in commercial real estate for a very long time. After asking his question of the DF director, Bob responded, “It’s an industrial park, you can’t build a Burger King out there.” Think about that the next time you hire Marsh as your realtor. Whopper’s are on me!!!!

Washington Square Developer whines about the easement process

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(FF 41:00)

Yes, folks, only in good old Sioux Falls would a developer complain about how he had to front a little money in legal fees and surveying (City Council Meeting, Items 16-17) after receiving some easements.

First the obvious, and replying to one of his main complaints, that while taxpayers are essentially giving him FREE land, that this gifting party should somehow also pay these fees?!

This same developer also received millions in a TIF (massive tax rebate) before the project was built. While I do complain sometimes when the council doesn’t discuss an item or answer constituent questions, I did chuckle a bit last night after this developer stood at the microphone and cried about how he had to spend a couple of grand (to receive FREE property). Their non-response to this unwarranted fit was completely appropriate. Not a single councilor, the mayor, the city attorney or any of the planning/environmental staff responded to his rant.

It reminds me of when I used to wait tables and people would want a free meal if I forgot to give them complimentary free bread. This developer has received free property and millions in tax breaks and has the nerve to complain about it?!

What are the Benefits of Amazon coming to Sioux Falls?

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As we have known for several years, Amazon was looking to put a distribution site in our area, it was only a matter of time. We also know, like most businesses that move here, they want handouts, and if there is one thing we love in Sioux Falls and South Dakota is giving out massive amounts of corporate welfare. Flopdation Park has already received around $50 million for infrastructure from the taxpayers. Amazon has received a Federal Grant and now the SF Development Foundation pretty much wants an open ended TIF to attract more businesses. Their argument is always the same, growth for growth’s sake (which I have never understood, because growth only drives up the prices of affordable housing due to infrastructure and public education costs) and JOBS! JOBS! JOBS!

So let’s look at the kind of jobs Amazon supplies. Most workers will be pickers that make around $15 to start. So where will Amazon get these workers? I have argued that they will suck from other businesses in town that pay less (and there is quite a few of them) and once that bleeding is done, people will start moving here. I also believe many workers at Smithfield will try to move over to Amazon. So in essence, Amazon will not be depending solely on our current workforce, they will have to do a lot of transfers.

Another reason I think it will be hard for Amazon to fulfill their worker needs is because of a very difficult qualification process, like background checks, drug tests and physical fitness. It will also be interesting to hear what Amazon’s policy on marijuana use (outside of the work place) will be if it becomes legal in our state.

But all of those things aside I think there are a few benefits to bringing Amazon here. First off, they will support many other businesses in town, maybe even create some new ones. I also believe once they start stealing workers from local businesses, it may force some of them to raise their wages to keep people.

Amazon coming to town will have some benefits, but I often am confused by Sioux Falls’ mantra ‘Growth for Growth’s Sake’. Which just ends up costing taxpayers more in infrastructure and public safety and public education while the fat cats get their TIF’s, tax breaks and government grants. Let’s face it, Sioux Falls has just turned into a welfare state for the rich, which is no surprise when it is so cheap for them to buy the city council and mayor’s office.

City of Sioux Falls to give $350K interest free loan to developer

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On the Sioux Falls city council agenda Tuesday night you will see a little tidbit in item #7, approval of contracts, sub-item #4;

Don’t be fooled by the title, this interest free loan is a pass through from the Feds for affordable housing to Lloyd Companies. I wonder if someone will ask exactly what the rents will be for this supposed affordable housing. Once again, developer welfare for a developer that doesn’t need it.

Just imagine if we gave interest free loans to people in the core of our city to help clean up their property? How far would this money go? Maybe we could clean up 50-100 properties with sidewalk repair, roof and siding repair, windows, landscaping? Let’s go even a step farther and give mini-TIFs to property owners in these affected neighborhoods in the form of property tax relief.

I truly believe the death of Tracy Saboe could have been avoided if we would have started cleaning up these neighborhoods over 12 years ago when first proposed by Mayor Munson. NOTHING has been done. So now crime increases while wealthy developers continue to cash in on projects that do nothing to prevent crime. But hey we have a $115 million dollar dented up events center (that sits empty while we pay a $10 million dollar a year mortgage on it). A $26 million dollar bunker ramp (that has yet to open) and a $20+ million dollar TIF to a project that is in flux while we go ahead with a $11 million dollar bond to build a greenway project around it (even with speculation if the project will ever happen). Why do we keep blowing the money on welfare for wealthy developers instead of helping hardworking Sioux Falls residents to clean up their properties and ultimately their neighborhoods? Because of the greedy fools we continue to elect.

So instead of using the money to clean up these existing neighborhoods we are using it to tear down a nature area and create more density where it is NOT needed.

You are going to see a lot of this over the next two years especially with a banker on the council and only two councilors left to ask the tough questions and a mayor who is more concerned about cashing in on his 5G investments(?) (That’s the rumor going around that our local media refuses to look into because the mayor has a tight grip you know where).

How Strong Towns Principles Relate to Sioux Falls — Municipal Ponzi Scheme

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I was sent this article, that I found very interesting relating to the urban sprawl of our city;

Since 2010 the City of Sioux Falls has annexed 3996 acres of land into the city. That is almost 400 acres per year. How much tax revenue did that additional property bring in? How much did it cost to annex those areas? How much will it cost to replace all the associated infrastructure when it needs replacement? The answers to those questions are hard to piece together (maybe a good use of tax dollars would be to hire a company specializing in this kind of data to pull it together for us). In the meantime, we have some anecdotal data to look at.

So Detroit is a cautionary tale for cities caught up in a municipal Ponzi scheme. Here in River City things look pretty good . Sales tax revenue is floating our boat right now. We have money in the budget. Marohn refers to this as the illusion of wealth. It looks like we have money but the residential developments on the edge of town — which don’t generate sales tax directly — are new and don’t require replacement. When that infrastructure requires replacement the property tax revenue collected in those areas probably isn’t going to be enough to pay for it. Other areas of the city that are generating revenue will have to subsidize those areas — until they can’t. It happens slowly then all at once. Welcome to Detroit.

Ironically, several years ago when I got into Strongtowns, one of the main reasons I was drawn to it’s message was what they were saying about Urban Sprawl. It soon will be very expensive to live in Sioux Falls, if we are not already there.