It’s NO misconception we are getting hosed on the Downtown Parking Ramp

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God Bless Him! You can’t ever deny that Councilor Neitzert really digs in his heels when it comes to issues facing our city and does his research. He sent out this press release explaining the 12 misconceptions of the parking ramp debate. While I agree with him on some of these, the problem is that Greg gets so lost in the weeds on the finer details he misses the ‘Big Picture’ and doesn’t answer many key questions, mainly “Why are we subsidizing the building of the Hotel?” AND “Why are we signing a contract with Aaron Hultgren before his OSHA fines and legal problems are settled?”

But let’s take a finer look at what Mr. Neitzert came up with;

Misconception #1: The parking ramp cost has increased

Reality: This is the first time we have a specific project with a detailed design with a concrete number we can be confident in.  All previous estimates were just that – estimates based on theoretical assumptions and ballpark figures for planning purposes only, and many only included construction only costs.  Comparing this final project plan to previous conceptual projects is not appropriate.

While that is true, many want to know why some of these ‘ballpark’ figures were off by over 50%? That is either lazy or incompetent government at it’s worst.

Misconception #2: Tax dollars will be used to fund the project

Reality: The parking division, like our water, sewer, and landfill divisions, is an enterprise fund.  This means it gets 100% of its funding from user fees – in the case of the parking division parking meters, leases on ramps and parking lots, and fines.  Likewise, 100% of its expenditures come from user fees.  No general sales tax or property tax dollars can be used to fund the system.  Your property and sales tax dollars will NOT pay for this ramp.

True, the bonds will be paid for by user fees (and the 2nd penny if the enterprise fund runs low). But the real misconception here is that DT employers are going to be able to just float or eat those additional costs for parking for their employees. Those costs will be passed onto their consumers in higher prices for their products and services. All costs get passed on. It’s the left pocket, right pocket argument, is it a tax or a fee? IMO, any time government charges you for a service, that’s a tax.

Misconception #3: Rates for parking meters and leases of parking will have to be increased to pay for this ramp

Reality: Rates were already adjusted two years ago so that the parking enterprise collects enough revenue to fund operations, repair and maintenance, and capital cost to replace or add new parking ramps.

Greg must have missed the email from the council’s legislative and budget analyst showing that rates will be increased over the next 10 years. Maybe he needs to check his email box.

Misconception #4: The parking division cannot afford the debt service on this ramp

Reality: The parking division has no debt currently.  Stress testing scenarios and a detailed financial analysis have been performed on the system.  Even with a loss of major tenant’s downtown, the parking fund can make the debt service payment, maintain a cash reserve, fund operations, and continue repair and maintenance on existing ramps and parking lots.

If the parking division can handle the debt on their own, why are we using the 2nd Penny as collateral?

Misconception #5: The investors in this project are being kept secret

Reality: The public portion of the ramp is being financed with bonds that will be sold on the open market.  The private portion will be financed by investors and banking institutions that the developer must obtain.  When we enter partnerships with private firms, award bids for major road and sewer projects, or enter into contracts with private entities, we know who the winning firm is.  However, we do not know all of the investors, shareholders, or part-owners in those entities.  This is not something we obtain as a matter of course.  The city does not and will not know who the investors are in the private portion.  The city cannot keep something secret that it doesn’t know itself.

I can partially agree with Greg on this one and I understand his argument to an extent. The difference is 1) we are subsidizing this developer by at least $6 million on this project unlike a road project 2) Of the investors listed (4 guarantors) one of them is contesting $200K in fines from OSHA for the Copper Lounge collapse. I guess I’m more concerned about the liability of Mr. Hultgren than I am of the UNKNOWN investors.

Misconception #6: The City is paying for private development

Reality: The development agreement which runs over 100 pages stipulates in very specific detail who is responsible for what.  The city will construct the ramp, and the private entity will construct their private portion.  The developer is paying a portion of the storm drainage work, which both the ramp and private development will benefit from.  The developer is paying for the incremental share of the cost for the foundation which must be larger to support the hotel on top of the parking ramp.  The city is not paying or subsidizing the private development.

While it may be true that the developer is sharing ‘some’ costs, it is a very big stretch to say they are sharing all of the soft costs, because they are not (that has already been admitted by councilor Neitzert). It’s obvious in the price tag of this project and the number of spaces we are getting that we are paying a much bigger share of the ramp than what we should be. He can call it whatever he wants to, but I call that subsidizing the project.

Misconception #7: We are building a ramp for a private developer

Reality: All of the parking spaces will be publicly owned.  The developer will lease spaces like anyone else – at market rate.  The developer does not get any free or reduced price spaces.  The public will be able to lease or use spaces in this ramp, because they are owned by the city.

Not sure if this has ever been a misconception or even a concern. It’s a given. The concern is we are not getting enough (public) spaces for what we are paying.

Misconception #8: We are building a foundation for a private developer

Reality: The developer is paying for their share of the foundation, specifically the increased cost of the foundation to support the hotel on top of the ramp.

Can we see those numbers broken down? While I think they may be kicking in a portion, I don’t think they are truly sharing 50% of those costs. As I mentioned above, the high price tag for this ramp blatantly shows we are subsidizing either the developer or the construction company, and my money is on the developer.

Misconception #9: The developer is paying $1,041 dollars a month to lease our land

Reality: The development agreement is not a month to month lease and the developer is not obtaining exclusive use of the parcel.  It is a lump-sum payment based on current market value and appraisal for the rights to lease the air above the ramp and the portion of our city property in front of the ramp where the private commercial development will sit.  The appraisal takes several factors into account including the fact that the city is still able to use the parcel to its fullest potential for a parking ramp and the increased cost for the developer to build on top of a structure instead of bare ground.  The city will receive 1 million dollars in three portions before, during, and upon completion of the private development.  This lump sum payment takes into account the cost of the increased foundation that must be built to support the hotel and the fair market value of the air rights and partial use of the parcel in front of the parking ramp.

If you do the math, the lease payment does come to $1,041 per month. But that is neither here nor there when you look at the bigger deal. This is the first time the city has gone into a lease agreement like this of a one-time payment for 80 years. Not only is it unusual and poorly negotiated by the city, by allowing this kind of lease to be setup we are setting a precedent for other private businesses that want to lease from the city. I can here it already, “I want the Legacy lease deal.”

Misconception #10: We are only getting 390, 270, or X parking spaces

Reality: The ramp is projected to have 525 spaces.  All of the current spaces on the surface lot we are building on will be replaced with spaces in the ramp.  While the net increase in spaces will be about 390 (525 – 135 current surface parking spaces), the total number of spaces is 525.

So what was the misconception?

Misconception #11: We are not building enough spaces because we are allowing a developer to build on top of our ramp

Reality: We are building enough spaces to satisfy projected demand for the next decade.  Regardless of whether something is built on top of our ramp or not, we would not build any higher than we are building our ramp.  We also cannot go any farther horizontally.  Even if there was no private development, we would not build the ramp any larger or higher.

We are not building enough spaces for the value we are getting. But that has nothing to do with the size of the lot or the height of the ramp, it has to do with this NOT being the right plan. We should be getting 600 Public Parking spots for around $13-15 million. Instead we are getting 2/3rds that for $20 million. Having this partnership with a private developer is actually detrimental to our parking needs downtown. We would be better off and get more value and space building the ramp on our own. The city’s job, especially with an enterprise fund (sewer/water/parking) is to provide a service from a fee/tax. It is not the responsibility of an enterprise fund to subsidize private economic development. One of the reasons a partnership like this has probably never been done before, because it simply isn’t a good deal for the taxpayers.

Misconception #12: We are paying twice the national average for this parking ramp

Reality: The price for this ramp is approximately $26,000 per space using the standard construction cost only number.  The national median cost of a parking ramp per space is $20,000.  The standard median parking ramp for purposes of comparison is a basic bare bones ramp.  Our cost is slightly more because we are adding features and amenities either by code requirement (fire suppression systems) or for user comfort and increased service levels (example: wider drive aisles and parking spaces).  The newspaper article that stated this ramp would cost twice the national median price was based on an apples-oranges comparison of our total project cost (including construction, site prep, financing, debt reserve, architectural, engineering, and other costs) to the national median cost which includes ONLY the construction cost.

When San Franciso and LA can build EARTHQUAKE proof parking ramps for cheaper than we can, you have to question the price tag. As I said above, it isn’t a misconception, it’s pretty obvious with all these extra soft costs, etc., we are subsidizing the building of the hotel AND building them a Cadillac parking ramp. With the mention of the fire suppression system my guess is that the hotel’s portion of the ramp will be enclosed and heated. Still waiting for them to spring this on us, of course, after the contract is approved.

Like I said, many of the councilors, the mayor and his staff are missing the big picture on this project. It’s too damn expensive, it doesn’t provide enough public parking and we are signing the contract with a person who is a major legal liability. Argue about foundations and investors all you want. The simple fact is we are getting HOSED on this deal.

Posted in: Developers, Development, Downtown Sioux Falls, Greg Neitzert, SF City Council, Sioux Falls

The City of Sioux Falls should build a modern new skate park

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Sioux Falls Parks worker polishing a turd.

I can hear the hypocrisy calls already. I know, I know, I’m not a fan of spending tax dollars on special interest projects, but when you compare the popularity of skate boarding with the minimal cost it would be to build a new skate park, you will see my argument.

Skate boarding isn’t some ‘new’ trendy sport kids are getting into. In fact skate boarding has been popular since the 60’s (or earlier). My brother had a skate board in the late 70’s and one of my past work managers was featured in THRASHER magazine in the early 80’s. This isn’t something that is a trend, skate boarding is here to stay.

Also compare the millions we spend each year on Great Bear, swimming, bike trails, football, soccer, tennis and pickle ball (yes, pickle ball!).

Just take that last one for instance, did you know that since Huether has been mayor there have been several new outdoor tennis court complexes built throughout the city. I know it’s hard to tell when driving by them because besides McKennan Park YOU NEVER SEE ANYONE PLAYING AT THEM! Someone I know lives across the street from one of these new complexes and he has told me he doesn’t understand why it was built because he has NEVER seen anyone playing at it.

I live within blocks of the current crappy skate park, it is always busy. I even have seen kids skating there in November and February!

Another factor is that it wouldn’t cost much to build a new park. My guess is you could probably build a decent one for a million and really nice one for 2 million. Private donors are prepared to donate $500K to the project (you know, the same amount we gave to the mayor’s private indoor tennis complex).

One of the last arguments for the new skate park is that it should already be done. You can blame all the rat finks that still have sour grapes over the Drake Springs outdoor pool. It’s been over 10 years, and they still want to punish the entire neighborhood and city because Stehly did a petition drive. A little clarity for all the haters;

We are lucky we didn’t build an indoor pool at Nelson Park due to groundwater issues it would have been a maintenance nightmare, that’s not coming from me, that is coming from our consultant we hired to study pools in our city.

We were promised a much larger pool at Nelson Park than what we got (not sure where the money went? Maybe it was part of the secret siding settlement?), we were also promised a flower garden comparable to Mckennan Park in the old location of the pool which could be spectacular with all the natural springs in the area. And guess what else was promised? A new and improved skate park.

The skate park community also likes the Nelson Park site (Northeast corner) because of the natural slopes it would create a really cool skate park. Since the space is currently open, owned by the city, and has such great natural sloping it would also be the most economical area for the park. It is also truly ‘centrally located’ unlike Spellerberg Park, and much more accessible to kids. I think the city should just drop a cool $5 million, build a new skate park, floral garden and expanded parking in the old skate park location and turn Nelson Park into the city’s finest park. Drake Springs pool is already the most popular outdoor pool in the city (something the city doesn’t like to admit).

Though money is going to be tight over the next couple of years, a new skate park is one of the most economical upgrades to our parks system considering the millions we have spent on the river greenway which is just a landscaping handout to certain downtown businesses.

Besides the Bike Trail which is the true gem of our city and FREE, a new skate park would be the cherry on the top and used a lot more than all the empty tennis courts in this town.

I just suggest the skating community wait until after the Spring 2018 Municipal election before starting the REAL discussion. Besides Huether, many of his directors may be looking for new employment also. Might as well start fresh.

Posted in: Sioux Falls, Sioux Falls Parks and Rec

UPDATE: Belfrage’s studio turns into a septic tank this morning

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UPDATE II: You will have to watch the open discussion of the Sioux Falls city council today during the INFORMATIONAL meeting. They were all in agreement (Kiley & Rolfing were absent) that there needs to be a presentation about the settlement from the administration. Council Co-chair Erickson said that she already had one in the works. Councilor Starr requested to see the consultant’s report about the stability of the siding. He also requested that a forensic audit be done on the EC’s construction costs. Stehly talked about moving forward that all the RFP’s need to be shared with the council, even if that was in executive session. She felt the city was moving in the wrong direction by keeping RFPs secret from the public and legislative branch.

Mayor Huether was on Greg Belfrage this morning telling more lies (ARTICLE) (PODCAST) to cover up his already mountain of lies from the siding settlement. He takes the opportunity to rip the messengers to pieces, the Argus is liars, Bruce is a liar (doesn’t use his name), etc. etc. The same old typical game Mike plays when he gets caught lying, “Everyone else is lying besides me.”

UPDATE: City Councilors Pat Starr & Theresa Stehly are going to be on Belfrage, Wednesday at 8 AM.

He even tries to ignore the elephant in the room by doing this ‘Shut Up and Listen’ show a day after the settlement is revealed. He doesn’t realize this is about the ‘LIE’ not about the siding or the Events Center itself. The lie about the settlement has absolutely NOTHING to do with the 9 sold out Garth shows. It is about an elected official LYING to the public, doesn’t matter if this was about siding on a building or misappropriated funds for a snow plow. It is about the LIE.

Oh, but it gets better. Watch this city council informational meeting from July 22, 2014 (FF 25:30);

Notice that they promised to hire a private forensic consultant that got ‘highly recomended’ to them and is ‘independent’ from all the parties involved. In fact, that couldn’t be further from the truth, the consultant is an ex-employee of Mortenson, and probably recommended by Mortenson. Ironically, it doesn’t matter, because everything that was promised in this meeting was a LIE. No report was ever made public, in fact the council never even got to see it. We are not even sure if it was finished. No mockups were ever made, and ultimately the siding was never fixed or replaced. It all got swept under the rug to receive a secret settlement of about $444K.

Graphic from meeting.

Stormland-TV asked the city attorney some questions about the matter;

KELOLAND News reached out to the mayor to get some answers.  His office directed us to the City Attorney’s office.  You can read the responses below.

1)      How much money did the city actually clear in the PREMIER settlement once the bills were all paid?

“The city received $1 million. That amount consisted of cash, forgiveness of debt, and a transfer of contingency dollars contained within the Mortenson contract (established for the benefit of Mortenson and within the Mortenson contract price) back to the City, which in turn resulted in a reduction of the Guaranteed Maximum Price set forth in Mortenson’s contract.   Note that if the City had demanded replacement of the wall system, Mortenson would have had the right to expend the first $514,996 out of its construction manager’s contingency fund that was within its Guaranteed Maximum Price. Pursuant to this Settlement Agreement, that amount was released back to the City, and the city’s total financial obligation to Mortenson as set forth in the guaranteed maximum price was reduced by $514,996,”  Karen Leonard, Deputy City Attorney said.

“The city paid out no “new money” pursuant to the Settlement Agreement. The City previously withheld certain funds that were due and owing to Dalsin for the Premier Center and Convention Center projects pending resolution of the Metal Wall Panel Issues, and release of liens placed on those projects by Dalsin. With the resolution of this dispute, the city released those funds that were due and owing to Dalsin pursuant to its contracts on those two projects. The amounts paid out were actually less than the amounts claimed to be due and owing by Dalsin for those projects.”

2)      Why did the city not want to disclose the details of the settlement?

“There are times, during settlement negotiations, where a settlement can only be achieved through a confidentiality provision,” Leonard said.

3)      Will the siding ever get fixed?

“The exterior metal siding is functionally and structurally sound with no need of replacement. The exterior metal siding is doing what it was designed to do, act as the weather barrier. The water-tight materials are installed behind the siding.  Its appearance, while questioned, is not inconsistent with the features of other commercial buildings across the U.S.  The 20-year finish warranty on the siding remains in effect,” Leonard said.

4)      If the city actually cleared any money from the settlement, where will that be spent?

“As of August 31, 2017, the cash balance in the Events Center Construction Fund was $2,918,799.  This amount includes funds that remain from bond proceeds, interest earnings, other project contributions and cash received as part of the settlement.  Once deposited into the Events Center Construction Fund, the dollars that originated from these various sources are not individually tracked.  All dollars in the Events Center Construction Fund are considered project funds and are fungible.  Since September of 2015, many expenditures have been made from the Events Center Construction Fund on improvements to the Events Center.  Some of the improvements have been completed, some are in progress and others are just getting underway.  Some of the larger ticket items include the addition of a cooler and expanded storage space on the concourse level, kitchen expansion and improvements, security system improvements, parking lot lighting improvements, and the addition of more premium seating,” Leonard said.

“The 2018 City Budget adopted last week by the City Council provides for any unspent dollars remaining in the Events Center Construction Fund upon project close-out to be transferred to the City’s Sales Tax Fund to be used for the ensuing debt service payment on the Events Center sales tax bonds.”

Yet the mayor doesn’t think he has ‘mis-led’ anyone. What a loser.

Posted in: Denny Sanford Premier Center, Event Center, Mayor High Crimes, Mayor Hubris, Mayor Pants on Fire, Mayor Subprime Mike Huether, Mike Huether

Did we miss a BIGGER opportunity with Arc of Dreams?

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First off, I’m not one to tell rich peeps how to spend their money. If they want to give to charity, I think that is great. I’m also one to NOT discourage giving money towards public art projects.

It seems lately though that people are questioning the whole point of ‘Arc of Dreams’ and mainly it’s location.

No criticism towards the artist, he does large, beautiful pieces across our state, including Dignity in Chamberlain. It’s his life and living. Also, no criticism towards those willing to help pay for this large scale commission . . .  but . . . does it seem a bit shortsighted and lacking the vision of the whole picture of downtown’s artistic image?

Instead putting all of our eggs in one basket in one (overcrowded) area, why not spread the wealth around?

One of the main arguments made to put ‘Arc of Dreams’ downtown was for a needed tourist attraction Downtown. Nevermind SculptureWalk, a replica of David, oh and that little cute waterfall at Falls Park.

But if we really wanted to bring ‘tourism’ downtown, why not invest that cool million used for ONE public art project to fund several projects that would be a combination public art/infrastructure?

During the downtown design meeting I attended one of the concerns people had about downtown was the dead zones, areas along Phillips Avenue and various side streets that have areas that have really nothing to look at while walking around downtown.

So what could WE have done with that million besides just building one large project?

First of all, I would use only local contractors and artists for these projects. Economic development starts at home.

Here is a brief list of what we could have done;

At approximately $20K  a piece we could have erected 50 permanent sculptures downtown in these dead zones. We could have also spent approximately $50K a pop for  20 mini gardens/parks/benches in these areas. And if we really wanted to get a bang for our buck we could have commissioned 200 murals at $5K a piece to help beautify some of those drab building walls downtown.

There is probably a whole host of other things we could have spent the million on that would have really boosted visitors to our downtown.

Let me hear your ideas!

Posted in: Arc of Dreams, Art, Sioux Falls

Soccer Tournament Economic Impact? The Proof is in the Pudding.

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We will have to wait until the City of Sioux Falls June finance report comes out before we know the actual impact of the Soccer tournament to the sales tax rolls. The ‘CLAIM’ by the organizers and CVB is a $17 million dollar impact which boils down to about $480,000 for the city tax rolls (this is counting the 1st, 2nd and 3rd Penny entertainment tax BUT not the state’s 2 penny cut) which would be a $160K bump to each penny that we would not have normally seen the year before. Since the numbers have been running a little flat to under what it was last year, this bump should be noticeable.

As I have also argued the city probably kicked in about $20-40K in resources to help support the tournament in traffic control and park maintenance.

We’ll see if the $17 million dollar guestimate holds any water really soon.

Posted in: Sioux Falls, Taxes