Development

UPDATE: Sioux Falls Planning Commission passes TIF #23, 4-0

UPDATE: There has been some discussion today with my local government nerds on why the Planning Commission has 9 members but they rarely all show up. In fact, one member’s term was up last April and have not been replaced yet. In the last meeting only 4 members voted throughout the meeting even though 5 were present (the chair wasn’t voting) and over the past year it seems like only 5 members have been voting on things. Ideally you would say that you can only conduct business with a Quorum, 5 or more members, so what does it mean if only 4 votes. Robert’s Rules says this;

64. A Quorum of an assembly is such a number as must be present in order that business can be legally transacted. The quorum refers to the number present, not to the number voting. The quorum of a mass meeting is the number present at the time, as they constitute the membership at that time. The quorum of a body of delegates, unless the by-laws provide for a smaller quorum, is a majority of the number enrolled as attending the convention, not those appointed. The quorum of any other deliberative assembly with an enrolled membership (unless the by-laws provide for a smaller quorum) is a majority of all the members. In the case, however, of a society, like many religious ones, where there are no annual dues, and where membership is for life (unless it is transferred or the names are struck from the roll by a vote of the society) the register of members is not reliable as a list of the bona fide members of the society, and in many such societies it would be impossible to have present at a business meeting a majority of those enrolled as members. Where such societies have no by-law establishing a quorum, the quorum consists of those who attend the meeting, provided it is either a stated meeting or one that has been properly called.

So while having only 4 members vote out of a possible 9 is unfortunate, apparently it is legal, but I am still wondering why this body can’t get 9 people, even on the phone, together? Another sloppy move by this administration.

FF: 23:30

This occurred on Wednesday night and I forgot to attend for public input. Nobody else from the public showed up to speak against or for the TIF. This is unfortunate because it will literally raise property taxes on us $94 million over the next 15-20 years with $30 million of that as an ‘incentive’ slush fund. It is probably one of the most ludicrous TIFs I have ever seen.

What made it even more strange was there was very little discussion from the commission except that it was ‘good’. And besides the presentation from a planning department staffer, the representative from Development Foundation also said very little. It was pretty obvious this was pre-determined by the commission.

The other part about using $30 million of this for ‘business’ incentives also surprises me based purely on economics and development in Sioux Falls. Year after Year we are growing and year after year we are crushing building permit records. In fact we have a housing shortage and can’t keep up. So why do we have to ‘incentivize’ a business to come hereI recently saw that Tessiers (a South Dakota company from Mitchell) is building a new facility at Flopdation Park. Did they get any deals? Did they ask for any? Not sure, but I liked this quote from them;

“We thought that Foundation Park location would be ideal for us as we do business in the places on the I-90 and I-29 corridor,” said Gopal Vyas, who recently retired and was board chairman when the deal was done.


“Also it is easily accessible for our team members from Mitchell to commute when needed. It also is very convenient for our team members flying from Minnesota or driving on I-90 coming west.”


That is what often puzzles me when they ask for these TIFs, are they even needed to bring business here?

UPDATE: How can NON-Elected City Employees Recommend Approval of a $94 million dollar TIF?

I’ve complained in the past about the ludicrous nature of city employees in the planning department recommending approval of projects. But a $94 million dollar TIF? Get Out!

Just look at the Planning Meeting agenda for Wednesday;

Notice that on the actual agenda page there is NO recommendation from staff, but if you look at the attached documents you get this, approval;

Situational factors are also evaluated in any TIF request with flexibility and discretion, and may include any factor important to elected and appointed officials. 
Staff recommends approval. 

I’m not sure who wrote the sentence above, but in my circles we call that poppycock, horse pucky or in Europe, Bullocks!

While I understand they have to evaluate re-zones and permits, what gives them any authority to simply recommend approval of a $94 million dollar tax rebate?

I have encouraged the city council in the past to either change the charter/ordinance or write a new one that doesn’t allow NON-ELECTED city employees in the Planning Department recommending approval. They should give the PROS and CONS of every agenda item and let the Commission and Council decide.

Oh, and another City Hall mole tells me that the City Attorney even dipped his toes in the water sending city councilors a recommendation of approval. The City Attorney! If this is true, WOW! Not sure what a JAG officer with little knowledge of 1st Amendment rights can contribute to a TIF argument . . . oh that’s right, he has the Mayor’s boot polish on his tongue, my bad, I forgot. He did learn one thing in the military, a good spit shine.

What makes it even more egregious in this case is that they have NO basis that this is a good plan, in fact all they do is quote state law;

Tax Increment Financing is an economic development financing tool established by Chapter 11-9 of South Dakota Codified Law. TIF’s allow property tax dollars from a specific geographic area to be applied towards eligible public and private capital improvements and to stimulate and develop the general economic welfare and prosperity of the state by utilizing the anticipated increase in property tax— known as positive increment— generated from a project to reimburse for improvements determined as eligible by the municipal governing body. Improvements are typically financed and paid off in future years through the tax increment proceeds. 

They also make this assumption without backing it up with data;

Project Details The property included in the district boundaries are part of Foundation Park, which is a development park owned by the Sioux Falls Development Foundation. In an effort to promote development of the property, the Sioux Falls Development Foundation has requested Tax Increment Financing to offset the costs associated with preparing the property for development and to stimulate and develop the general economic welfare and prosperity of the state. The request is substantiated by economic development that will be generated through growth in taxes by a development site of this scale.

As I have mentioned in the past they have never done a comprehensive study about TIFs to prove that they ‘stimulate and develop the general economic welfare and prosperity of the state’ and they never will because it will only prove what TIFs really are; corporate welfare and little else.

UPDATE: The simple video below from our friends up North explains quite simply how TIFs raise taxes on the rest of us while the receiver of the TIF gets a nice little treasure chest (It gets juicy at about 5:10) H/T MLZ.

Notice the mention of a ‘TIF Account’ this of course will be held in a private bank. I’m not sure which bank would be used, but it is highly likely that the city and development foundation will use the one the city uses for it’s accounts now, you can guess which one that is.

Also notice the mention of ‘Bonds’. The city and state almost exclusively use one bonding company. You see where this money trail is going . . .

She also does a fine job of explaining how the original intent of TIFs was to clean up slums but now has been changed. She doesn’t flat out call it a scam, but the half-way sarcastic grin and partial eye-roll gives it away.

The best part is when she essentially explains how the rest of us will have to make up for this $94 million dollar TIF by increasing our taxes on over a billion dollars in valuation. OUCH!

She also talks about the ‘buddy system’ that is alive and well in Sioux Falls between the developers, the planning department, the mayor’s office and the city council which why I have argued for years is ripe with corruption. Remember the city holding onto land for a certain developer, tax free for over a decade at Phillips to the Falls then giving a TIF to boot for luxury apartments?

The video shockingly ends with my argument about using mini-TIFs for everyone in the city.

Oh, and I love the ending where she pretty much blows a hole in ‘urban renewal’ stating what it really is, higher taxes for the rest of us.

I know a lot of people think I blow a lot of smoke about TIF’s but this video is from a leading policy agency in a neighboring state.

Breaking Down proposed Sioux Falls TIF 23

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

(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?

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.