How much does The Denty contribute to it’s mortgage payment? Very Little.

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Did you know that the mortgage payment on The Denty is around $10 million a year? Did you also know we pay that debt service out of one of our 3 pennies our city takes in for revenue? We pay debt service on all of our bonds out of the 2nd penny, money originally set aside a long time ago by city commissioner Loila Hunking for ROADS and other infrastructure.

Of course, if The Denty is contributing to that 2nd penny, it does with help with the mortgage payment – we will get to that contribution shortly.

We heard it just about a month ago, Garth Brooks sucked $7 million in ticket sales out of our town straight into his pocket. The news today, the Foo Fighters (which I contributed to) had record ticket sales, guess where? At The Denty where they sucked a record $1,018,273 out of town, FROM ONE CONCERT! That is an average $93 per person. Guess how much we garnered for the 2nd penny on the Foo Fighters show from ticket sales? $10,182. Woot! Woot!

While I have been asking for numbers from the city for awhile about how much money we are making from The Denty (that could contribute to the mortgage payment) I haven’t gotten very far, but I did get a small breakthrough today.

According to the City’s Finance Director The Denty collected $1,824,710.19 in tax revenue for 2016. If you break out the 3 pennies we get (The state gets 4.5 pennies) we took in $729,884 and if you break it down to single pennies, since the 2nd penny is the only one we use to pay debt, it comes to $243,295, hardly a ‘dent’ (excuse the pun) in the mortgage payment.

Yes it is true besides the taxes that The Denty collects, their is an economic impact. My guess is at the highest it would probably be about 3x what The Denty brings in. You have to figure that half already live in Sioux Falls and the other half probably spends a majority of their money at The Denty since we built the facility along the interstate and not in the center of an entertainment district, visitors drive straight there, spend there money there, then drive straight home.

But the almighty Finance Director also fills us in on some other interesting information. Doesn’t the city get a share of the profits SMG makes off of the The Denty?

Ah, not really. Here is how he explained it in a recent email to council;

Revenues generated for SMG as a private sector company are limited to the fees paid to SMG as set out in their contract with the City: a base fee and, if earned, an incentive fee.  These fees are how SMG makes its money as a business.

Revenues generated from the operation of the City’s facilities (DSPC, Convention Center, Arena, Orpheum Theater) are revenues to the Operating Account managed on the City’s behalf by SMG.  Revenues to the Operating Account include rental fees, charges for additional services provided to guests that rent the facilities, ancillary revenues (food & beverage commissions, novelty sales, parking charges, suite cleaning, facility fees, etc.) and marketing & sponsorships (advertising, naming rights, suite leases, loge box leases, club seat fees).  All revenues generated from these sources are deposited into the Operating Account and are used to pay the costs of running the facilities (payroll, utilities, cleaning & maintaining the facilities, SMG’s management fees, internet/telephone, office supplies, insurance, etc.)

In small man’s word’s, any money The Denty makes that isn’t collected tax revenue goes straight back into a fund to support the building. In other words, while SMG and it’s management make money and are able to pay the light and garbage bill, they are contributing NOTHING to the mortgage payment. Zilch. SMG is essentially making a profit and paying rent.

I’ve said all along, The Denty wasn’t built for you and me, it was built to make a bunch of bond investors and construction company owners a lot of money. You have to realize out of the $180 million dollar payoff $65 million is interest payments. That’s $65 million that won’t be spent on our roads and handed directly over to private bond investors.

I still think we could have built The Denty with a combination of private investors and money from the state’s investment funds (that we would pay back in no interest or very low interest payments). Instead we decided to go it alone, built it in the wrong location, an don’t require the profits from the facility to pay off the debt.

The f’cked up siding is one thing, but the finances of this place are a total disaster. And the mayor calls himself a ‘banker’. LMFAO!

Councilor Neitzert misses the mark on the Lloyd TIF

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Sioux Falls city councilor Greg Neitzert was doing the 2nd half of his SE Podcast stint this Sunday.

He was asked about TIFs and specifically the Lloyd TIF. He did a fantastic job of explaining how TIF’s work (it is essentially a property tax rebate). He also made great arguments as to why the TIF for UPTOWN II was for good reasons. On the face he is correct. We are using the TIF money to clean up soil, old buildings, asbestos and constructing some minimal public parking. Like I said, on it’s face it sounds like a great use.

But let’s look at reality. First off, we have NOT collected a penny in property taxes on the land for over 11 years. Nothing. Zilch. ZERO.

The TIF (Tax rebate) will last for 13-14 years. We will essentially be getting little to no tax revenue from the property for almost 25 years.

But what makes this TIF controversial is the fact that Lloyd promised to buy this property in 2006 and for some strange reason we let it sit for 11 years, and the only real reason I can come up with is that we were HOLDING it for the developer (with no major retainer of down payment). One developer in a city that has dozens of high profile, successful developers that would have loved to get their hands on that land, some of said that.

I guess I will never know the reason why we held the land for Lloyd Companies (I was looking for it in the Siding Settlement, but couldn’t find it).

I do know this though. Within those 11 years the city did NOTHING to either sell the land, clean up the land (with EPA grants) or even send out any RFPs. Why? Doesn’t it seem strange that while we were getting $27 million in Federal Dollars for a plot of dirty RR land we didn’t set aside a few bucks to clean up this property, put in curb and gutter and parking and sell it?

While Neitzert makes some good points about the usage of TIFs, the deal with Lloyd stinks.

*Also an important note. All of the councilors who voted for the TIF (besides Neitzert) received campaign donations from Craig Lloyd and councilor Selberg earns his living as a broker for the Lloyd Companies (he did not excuse himself). Councilors Starr and Stehly (who have never gotten campaign donations from Lloyd) voted against the TIF.

UPTOWN II Tax Increment Financing (TIF) DOES NOT benefit the public

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You can watch the whole Sioux Falls Planning Meeting,

notice how there is almost ZERO discussion before approving the Lloyd TIF. How ironic, our planning commission will horse trade for 45 minutes over the timing of a church’s electronic billboard but spend only a few seconds on giving away a $4.1 million dollar tax rebate to a wealthy developer.

Heck, even after George Hahn came and pointed out their tax valuations were incorrect and the TIF should be deferred until those numbers can be corrected, they still marched forward.

Hey, what’s a few million here and few million there when we are short changing public education? They will just raise taxes on the worker bees to make up for it.

Lloyd Companies asks for TIF next week

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They will request the TIF during the Planning Meeting, next week (Wed, Sept 6 – 6 PM).

If you read the attached documents you will see that the Lloyd Companies was probably seeking $5.1 million to begin with, the ‘proposed’ cost of the soil cleanup (still am struggling with the fact that cleanup is this much).

I could say many things about my opposition to this TIF, but you have probably already heard it. I will say this though, we need as many people from the public at this meeting in opposition to get it on public record. I’m not naive, the planning department recommends approval and the commission will probably approve it, I would be shocked if they did not.

My main opposition is that it takes money from the public schools and county. And with all the opt-outs lately, this is NO time to give tax discounts to wealthy developers on prime downtown property.