Mayor Huether considers doing business with potential criminals as the #1 Win of 2017

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Nope, you read the headline correct. Only Mike is capable of spinning this one;

1) The future $50 million mixed-use parking ramp captures even bigger dreams for downtown Sioux Falls, above and beyond the long awaited need for more public parking.

That’s right, the same developer that has a partner who is being criminally investigated by the Feds and dragged asbestos through our city without paying a fine is considered our Top Win of 2017. Talk about setting the bar. Surprised he didn’t bring up our rising drug problem as win #2.

But the list does have some more interesting tidbits;

4) Our finances are rock solid regardless of the challenge, and by the way, Sioux Falls saves $25 million in interest payments with prudent debt management.

Yes, continuing to overcharge and raise rates on water to pay off debt. Seems appropriate? Doesn’t it? Since play things like the indoor pool and Denty will never produce enough revenue to ever pay for themselves we have to take money from the water enterprise fund to pay debt off.

Which brings us to the building that was approved by ONE person only, Hizzoner himself;

8) Our new City Administration Building , a first since 1936, is being built on time, under budget, and will dramatically enhance service to our employees and residents for decades.

He couldn’t resist to peddle the 1936 lie, again. The city has built dozens of buildings since the 30’s that house administrative support. Besides that, it was not needed. We were getting a good deal on leasing space.

While I have rolled my eyes in the past over the mayor’s Top 10 Wins list, this one has to be the most ridiculous I have ever seen. Notice no mention of affordable housing, fighting crime, or livable wages and employment. Oh, because we are losing on all fronts with those items.

I also find it ironic that while in #4 he mentions our great finances we have yet to see the year end financial report. Why are you and Tracy sitting on this important information Mayor? Are you afraid your puppet candidate for mayor, Entenman, may have to answer some difficult questions about budgeting?

Posted in: Sioux Falls

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

Annexation Fairness

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As a longtime reader of DaCola pointed out a few days ago;

Warren Phear;

Speaking of foundation park. Something I would love to see the Argus follow up on. This I know. 820 acres were purchased by whoever for $24,000 an acre. The anchor tenant just bought 54 acres for $106,000 an acre. How did this land come to be worth so much? It came to be worth so much on the backs of SF water users. Getting the needed infrastructure to foundation is costing tens of millions of dollars. To pay for water and sewer to foundation the city raised those rates. Not once, but each year. The gift that keeps on giving. In the 2018 CIP the city allocated $29,000,000 to just get sewer to foundation. Stop and think about it. That is more than the admin building. 5 million more than the indoor pool. All for what? So somebody, don’t know who for sure, can make $80,000 an acre in profit. For 820 acres. Not a bad deal, once you consider who made that land worth that much.

I’ve been following the Annexation study group meetings lately, and one of the main points of the people that may be affected is, “How will this benefit me?”

As you can see from Warren’s comments, annexation was essential to launching Flopdation Park, and the benefits are numerous. The park is receiving millions in corporate welfare in the form of city infrastructure. Of course, the city ‘thinks’ they will recoup these costs in property tax revenue and platting fees. There is also the economic impact and job growth. I don’t think those costs will be recouped for decades, if ever.

So why would we charge annexation neighborhoods directly for these same kind of infrastructure upgrades? Shouldn’t the city just absorb these costs since they would essentially recoup some of this with new frontage fees and property taxes? While I am on the fence whether to NOT charge them nothing, I don’t think the current proposals are equitable, especially for properties that are older. I think maybe an additional fee of $500 a year for the next 20 years may be more palatable, or less.

But there is the bigger question here. If the city feels that they would have to charge homeowners directly for the annexation upgrades, is the annexation even worth it to the city coffers? I guess what I am trying to say is if the city can’t just absorb these costs equitably, is it really worth annexing them? Show to me that it will make our city stronger financially by annexing these islands than I would be all for it, if not, like Flopdation Park, it’s just a handout that benefits no one, and maybe that is why they think they should charge for the upgrades upfront. Now if we could only apply that philosophy to tax dodging Iowa ice cream makers.

Posted in: Annexation, Foundation Park, Sioux Falls

The Mayor ‘Hoodwinked’ the unions years ago

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When Dr. Staggers was running against Huether, my union friends would bust my balls about Kermit being a Republican against organized labor. While I can’t speak for Kermit’s opinion on labor, it stung a bit. While I have never been a part of a union, I supported them, and understand their power.

The Unions backed Huether, mostly because he called himself a Democrat. Which I never understood. Maybe he was pro-choice or had a homosexual friend? Not sure. But it seemed odd coming from a guy who marketed the WORST credit card to ever exist.

Fast Forward tonight, where our mayor, the newly crowned Trump supporter and Independent had to break a tie vote retro-paying the police and city employee unions until January 1st, which may have cost taxpayer’s under $100K.

But one of the most troubling pieces of the argument to not pay police more tonight came from councilor Erpenbach, who works for a well funded nursing home. She stated that pretty much times are tough, and raises don’t come easy.

I will agree with Erpenbach on that statement alone, but we are not talking about people who write newsletters, we are talking about people who are fighting crime, and guess what, it is increasing in Sioux Falls at a dramatic rate.

I will make this argument simple. While are city is seeing massive growth in development, we are NOT seeing that trickle down to the masses.

But let’s simply this. When the Fire Department shows up to put out a fire, and the flames are increasing, they don’t throw gasoline on the fire, they throw more water. So if we think we are going to get our crime rates to go down by not giving decent raises to our police force, we might as well just being buying guns for the criminals.

Posted in: SF City Council, SFPD, Sioux Falls

South DaCola 2016 year in review (Part II)

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Well let’s get a second helping;

• Water and Sewer rates are raised again, and again, and again.

• Stormland TV does several stories throughout the year about the late school start date, but fails to show any evidence that the late date has any ill affects on the students. I guess the new super has been known to tell people recently, “It doesn’t matter when school starts, we will work with any date.” And that’s coming from the top dog.

• The mayor continues to ignore the violent crime increase in town, eventually blaming mental illness without offering a plan.

• The city of Sioux Falls goes through two diversity directors within a couple of months. Still no word if a permanent person has been picked yet.

• The mayor gets out of taking the stand in an important hearing by getting an ’emergency’ colonoscopy. Yeah, I know, several jokes there.

• While mayor Mike has no problem cutting people off after 5 minutes, he goes on over a 9 minute rant at the Minnehaha County Commission meeting during public input about saving his Lake Home’s swamp.

• Mike gets mad at the media for asking him if he controls the thermostat at Carnegie, but has NEVER answered the question to this day.

• Cameraman Bruce and I get press access to Sanders, Bill Clinton and Chelsea Clinton rallies yet the city still refuses to treat us like press.

• Touchmark at All Saints finally gets approval from the city council to build their expansion (and it is quite beautiful) now hopefully the tears will stop flowing down Phillips Avenue.

• The Terrace Park Neighborhood association is successful in stopping the destruction of paver stones, the city turns around and punishing them by putting off improvements for several years.

• While city hall celebrates the $27 million dollar RR relocation project it still does nothing to stop rail traffic through DT, in fact it will make it more frequent.

• The Lacey Neighborhood successfully fights the first bout with city hall over a development. They break with tradition by testifying on the topic before a first reading to council.

• We lose the battle with stopping the $25 million dollar city administration building allowing ONE PERSON to decide on borrowing the money.

• Andra Day rocks JazzFest.

• Detroit Lewis celebrates 25 years in this fine city, August 2016.

• I predict back in August that Huether may switch to independent.

• The F-35 Lemon Noise machine doesn’t pick Sioux Falls as a base option, and we can all hear a little better.

• After councilor Stehly gets gaveled by Council chair Rolfing, she comes back stronger then ever.

• City of Sioux Falls Health Department, REMSA and Paramedics Plus decide to implement a secret strategy for ambulance service. We still have no idea what it is.

• After millions of state and city taxdollars are dedicated to foundation park, the proposed developments pull out with NO signed purchase agreements.

• The Jesus Plows return while the city makes a maternity clothing store paint over carictures of pregnant women. Nobody can see the plows anyway since they have been sitting in a parking lot so far this winter.

• Like a cheap whore, the city parks department sells Spellerberg Park signage to a cable company setting precendent.

• Trump wins the Electoral College becoming the 45th president of the United States and the bott0m falls out of the SD Democratic Party, then they pat themselves on the back.

• The Indoor Aquatic Center opens with a package of lies and low attendance numbers.

• The city’s only daily paper has huge shakeups. Hopefully they recover.

• A sleepy DT neighborhood tries to stop a modest church sign, until the council approves it.

• The wind haters continue to win in Lincoln County, but it may go to a public vote.

• The city council decides to visit a local watering hole for some fish bowl drinks. One councilor that did not attend was embarrassed she wasn’t invited.

Posted in: Sioux Falls