Commission hears of $21M TIF district request

SIOUX FALLS – Dustin Powers, urban planner for the city of Sioux Falls, reviewed information for a proposed Tax Increment Funding district with Minnehaha County Commissioners at their final meeting of 2019 on Tuesday, Dec. 31.

Powers was joined by Jake Quasney, executive vice president for development with Lloyd Companies, about plans for the Sioux Steel property near Fifth and Phillips in Sioux Falls.

Although Tuesday’s appearance was just a briefing and no action was taken, Lloyd Co. will eventually be requesting the area to become a TIF district to the tune of $21.5 million for that proposed development.

As Commissioner Dean Karsky explained, a TIF district “isn’t a hand-out.”

“TIF’s are broadly misunderstood,” he said. “These taxes are (still) going to be paid, and once that TIF is paid off, then the full community – county and city – get the full tax advantage.”

According to citylab.com and other sources, the way tax increment financing works, the amount of property taxes collected in the TIF district are earmarked specifically for improvements, infrastructure and the like, in that district, as opposed to being spread throughout the area governed.

This system is currently used for economic development in all states, except Arizona.

Karsky’a comments about the benefits of a TIF district, seem to be aimed at city government after the Sioux Falls City Council majority agreed to spend more than $20 million for a parking ramp with the now-defunct “Village on the River” project. Sioux Falls Council recently approved additional funding to complete the project.

The project, which was pushed for by former Mayor Mike Huether and approved by the city council in December 2017, was designed not as a TIF, but as joint public and private venture.

However, last spring, the city announced that the Village River Group was in default of their contract and the city’s involvement with the project would be terminated.

Lloyd Co.’s plans for the Sioux Steel property include many of the same amenities, but will be done without the use of public money.

Quasney’s presentation showed the plans for a retail shopping area surrounding their parking structure, and that the ramp would connect to a hotel, offices, apartments and a convention center via a skywalk.

He also said that the parking ramp, although privately owned, would follow city guidelines for the available parking spots to be free and open to the public during evenings and weekends, which he claimed would be especially desirable during summer Levitt at the Falls concerts.

Quasney estimated the overall project at more than $186 million.

In 2019, the property tax bill on that land – as is – amounted to just under $57,000, but by 2040, the estimated tax bill with the development on that same land would reach $2.5 million.

Commissioners expressed support for the future development, but because this was only an informational briefing, no action was taken.

The next step for the project is a public hearing at an upcoming Sioux Falls Planning Commission meeting.

Commissioners also voted to supplement and credit specific department budgets.

The major “sticking point” came from court services, which was asking for a supplement of $335,000 to their budget for additional costs during 2019.

Karl Thoennes with that department explained that their largest overrun came with court-appointed attorneys, but county commissioners asked Thoennes for more oversight during the year, and especially during the budgeting process.

As they pointed out, court services had asked for more money as a supplement every year since 2010.

While Thoennes said the department was always submitting “hopeful” budgets, Commission chair Jean Bender said, “I don’t understand ‘hopeful.’ Budgeting is budgeting.”

She pointed out that even while they were allocated a major increase in their budget in 2016, they still came in with a “shortfall” that year.

Commissioner Jeff Barth echoed the sentiments of increasing the budget to a higher amount, as it seems when court services gets more, they still find ways to use more. 

He likened that to a sailor going on shore leave knowing he had a lot of money in his pocket.

But in making a motion to supplement the request, Commissioner Gerald Benigna said, “I agree with all of the comments, but the bottom line is that we have no choice at this point in time. … This is why we strain during the budgeting process, and we need to remember this conversation when we do it in June.”

The motion passed 5-0.

The Minnehaha Commission has its regular meetings each Tuesday at 9 a.m. on the second floor of the county administration building at Sixth and Minnesota in Sioux Falls.

These meetings are open to the all, and public comment is always encouraged.