TIF’s (Tax Increment Financing) are getting some
attention recently because Councilor Jamison wants all investors disclosed on
future TIF applications because of the recent disclosure that Mayor Huether’s
wife was an investor on the Bancroft Place Apartment TIF approved by the City
Council in 2011.
City administrations generally used TIF’s in
areas of the city, namely in the downtown area, that was blighted or in need of
urban development and where private investment probably won’t happen without
government intervention. TIF’s can certainly be a good thing for a community.
They can revitalize an area and keep it from deteriorating into decay and bring
a whole area down into urban decay.
What is the definition of tax increment financing? Here's a definition: It is a financing procedure utilized by local governments for redevelopment and improvement projects located in the city's jurisdiction. The cost of improvements is assessed to future tax revenues by the taxing authorities that levies taxes against the property. The local level is responsible for determining how much the increase in property tax due to the improvements will be used to repay the construction costs.
What is the definition of tax increment financing? Here's a definition: It is a financing procedure utilized by local governments for redevelopment and improvement projects located in the city's jurisdiction. The cost of improvements is assessed to future tax revenues by the taxing authorities that levies taxes against the property. The local level is responsible for determining how much the increase in property tax due to the improvements will be used to repay the construction costs.
It would appear the Community Development Director and the City
Council has expanded the use of TIF outside the downtown area core area with the
approval of the Sanford Sports Complex and the Costco/Apartments TIF. What are the criteria for the creation of a TIF
in the city of Sioux Falls? If you look at Chapter 37 of Sioux Falls City Code of
Ordinances, you will not find any criteria for the creation of a TIF. All the
ordinance says is that the Community Development Department is responsible for
evaluating the application, provide a recommendation to the Planning Commission
and City Council for consideration, create a project plan and district boundary
maps and present the request at all public hearings. Pretty darn vague and open for interpretation.
Nobody knows who the investors are in a TIF. All
the public knows is who the owners are in the TIF application. Who knows if one of the elected officials is part of the deal? Hence, the proposal by City Councilor Greg Jamison to ask the City Council to consider changing the
ordinance to require all investors named in the TIF Application.
When asked about it, the Mayor inferred that former
Mayors Hanson and Munson probably did the same type of investment thing when they were in office which they both
denied publicly in an ARGUS LEADER article.
In a January 2, 2014 ARGUS LEADER article,
Councilors voiced their opinions regarding the news that the Mayor’s wife was
an investor in one of the active TIF’s:
Council seems divided on idea
Councilors are mixed on the idea.
Councilor Kermit Staggers sides with
Jamison. He said city officials should not be invested in local development
projects.
“We have to keep in mind when people are
involved in investing in a project that has a TIF, they’re getting a government
benefit, and the public should be aware of that,” he said during council
discussion this fall.
Councilor Kenny Anderson Jr. also voiced
his agreement. “I just feel if you’re asking for public money, we should know
who you are,” he said.
Councilor Dean Karsky said that when the
council decides whether to approve a TIF, it should be judged on its merits as
a worthwhile project regardless of who is invested.
He doesn’t see a problem in public
officials being among the investors and said there is enough oversight with
eight votes on the council and eight sets of eyes watching the process.
“If people have money to invest and they
want to invest in our community, I say more power to them,” Karsky said.
Councilor Jim Entenman agreed that the
council is watching the TIF program very closely and making sure it is not
abused, but he said it’s not necessary that developers disclose all of their
investors.
“I don’t think we’re trying to hide
anything,” he said.
She wouldn’t want to discourage investors
from signing on to TIF projects, Councilor Michelle Erpenbach. She also said
she wouldn’t want to discourage real estate investors from running for public
office.
“We always want a wide variety of people,”
she said. Councilors Rex Rolfing and Sue Aguilar did not immediately return
calls.
The fact is, the mayor and city councilors, per
the Conflict of Interest ordinance, specifically Chapter 35 of Sioux Falls City
Code of Ordinances says different:
35.028 CONFLICTS OF INTEREST;
ACTING IN AN OFFICIAL CAPACITY ON MATTERS IN WHICH AN OFFICIAL OR EMPLOYEE HAS
A PRIVATE FINANCIAL INTEREST CLEARLY SEPARATE FROM THAT OF THE GENERAL PUBLIC.
(a) No officer or employee of the city shall knowingly
have a financial interest clearly separate from that of the general public in
any contract, transaction, zoning decision or other matter which is subject to
an official act or services from the city. This provision shall not apply if
the interested officer or employee discloses by written communication to his or
her immediate supervisor, director and the appropriate elected official(s) and
they reply with unanimous consent to the financial interest or if the person
serves on a lay board and discloses to the city council the full nature and
extent of that interest and disqualifies and/or removes himself or herself from
consideration or future participation in the matter in any respect.
(b) The
foregoing conflict of interest prohibition shall not apply if an interested
officer or employee does not or will not act in the regular course of his or
her duties and responsibilities, directly or indirectly, for the city as to
inspection, any related performance issues or any operational oversight or work
with the matter in question. Also, this prohibition may not apply if the
interested officer or employee is an employee of a business involved in the
matter in question and the officer or employee has no ownership interest in the
matter and will not receive a fee or compensation related thereto.
Clearly, current TIF ordinance language
does not speak to criteria or investors. Ordinance language in Chapter 37 should address criteria. However, the conflict of interest
ordinance (Chapter 35.028) does speak to acting in an official capacity on matters where the
official might have a financial interest. It is mindboggling to read the councilors
responses to the disclosure about the mayor’s wife’s involvement in an approved
TIF. Do they not comprehend ethics or conflict of interest when they are elected officials?
Do I think all private investors should
be disclosed on a TIF application? Probably not. However, I do think if the
Mayor, City Councilors or any member of their immediate family is an investor
in a TIF application, it should be clearly identified in the TIF application when
it is evaluated by the Director of Community Development and considered by the
Planning Commission and approved by the City Council.
Even better, how about elected
officials just remember the conflicts of interest ordinance and follow it. Involving themselves in a financial matter where they must act in their official capacity as a Mayor or City Councilor is clearly a conflict of interest. Former Mayors Hanson and Munson knew it was a conflict of interest.
If the mayor and city councilors can't see that, then one has to wonder what they actually think ethics and conflict of interest means as an elected official. They are different than other private investors because they must act in their official capacity as elected officials to approve the financial deal with the city. If you want to be a deal maker and invest in real estate property and ask the city for a financial subsidy, then don't run for public office.
If the mayor and city councilors can't see that, then one has to wonder what they actually think ethics and conflict of interest means as an elected official. They are different than other private investors because they must act in their official capacity as elected officials to approve the financial deal with the city. If you want to be a deal maker and invest in real estate property and ask the city for a financial subsidy, then don't run for public office.
Active
TIF projects (Source: ARGUS LEADER)
Venue
|
Year
approved
|
Amount
|
Owner
|
Cherapa Place office building
|
2005
|
$4.4 million
|
Jeff Scherschligt
|
Minnesota Centre office
|
2007
|
$700,000
|
Jim Dunham
|
CNA office building
|
2010
|
$8.55 million
|
Al Schoenenman
|
Bancroft Place apartments
|
2011
|
$475,000
|
Michael Crane and Cary Shaw
|
Dekalb Lofts, Tri-state office and
Larson Square
|
2011
|
$2.86 million
|
Craig Lloyd, Tom Seuntjens, Norm
Drake, Paul Cink
|
Raven headquarters renovation
|
2011
|
$3.5 million
|
Raven Industries
|
Hilton Hotel/River Ramp
|
2010
|
$4.1 million
|
Craig Lloyd, Chris Thorkelson,
Paul Hegg, Kristin Hegg-Zueger, Steve Westra
|
Sanford Sports Complex
|
2012
|
$10.26 million
|
Sanford, Inc.
|
Whittier Heights Development
|
2012
|
$2.04 million
|
Dunham Company
|
Costco and apartments
|
2012
|
$5.9 million
|
Costco Wholesale Corp. and Dakota
Point Apartments LLC (John Archer, agent)
|
Phillips Avenue Lofts
|
2013
|
$4.09 million
|
Craig Lloyd, Tom Seuntjens, Norm
Drake, Paul Cink
|