Stage Set for Event Center Vote

The August 1st City Council meeting will be a big night for the Event Center. There are a two resolutions and a 1st reading of an ordinance on the agenda that affect the Event Center planning, construction and an advisory vote.

The first reading of the ordinance that calls for a special election on November 8, 2011 also stipulates what the ballot language shall be;


AN ORDINANCE OF THE CITY OF SIOUX FALLS, SD, CALLING A SPECIAL 
ELECTION ON THE ISSUE OF WHETHER THE CITY OF SIOUX FALLS, SD, SHOULD
BUILD A MULTIPURPOSE EVENTS CENTER AND ASSOCIATED SITE 
IMPROVEMENTS. 

BE IT ORDAINED BY THE CITY OF SIOUX FALLS, SD:
Section 1. Pursuant to the City’s Home Rule Charter, there is hereby called in the City of Sioux 
Falls, SD, on Tuesday, November 8, 2011, between the hours of 7 a.m. and 7 p.m., a Special 
Election for the purpose of submitting to the electors of the City of Sioux Falls, SD, the 
following question:


Whether the City of Sioux Falls should build a multi-purpose Events Center and associated 
site improvements (the “Project”) at a Project cost not to exceed one-hundred-fifteen
million dollars ($115,000,000.00). 


This ordinance will not be adopted on Monday night because it is just first reading which sets the stage for a public hearing. 2nd Reading (Public Hearing) and adoption of this ordinance will occur at a future meeting. There is a proposed resolution on the agenda Monday night that actually addresses the proposed ballot language.

Per State law,  the Notice of Special Election published by the City Clerk's office is to state the maximum amount of bonds to be issued and the purpose of the bonds to be issued. Why muddy up this ordinance with the ballot language at this point?  The ballot language in this ordinance sets out a dollar amount that is still not known. Isn't the purpose of this ordinance to set the date of the "advisory" election? Why not say "advisory" in the ordinance heading?

In addition, there are two resolutions on the agenda Monday night related to the election and the proposed ballot language:


A RESOLUTION PROVIDING THAT A PROPOSAL TO CONSTRUCT AN EVENTS 
CENTER AND ASSOCIATED SITE IMPROVEMENTS (THE “PROJECT”) WILL BE 
SUBJECT TO THE APPROVAL OF THE VOTERS AT A SPECIAL ELECTION TO BE 
HELD ON NOVEMBER 8, 2011.


WHEREAS, the City Council on this date approved Ordinance No. ________ authorizing 
a special election to be held on November 8, 2011, to determine whether the public supports a 
proposal to construct a multi-purpose events center in the City of Sioux Falls; and 


WHEREAS, the City Council has determined that construction and financing of the 
Project should not proceed without the support of the voters of this City, 


NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF SIOUX FALLS, SD:
1. If the public approves proceeding with the Project by a simple majority vote, the 
Council will consider the adoption of ordinances and resolutions, as appropriate, to approve (a) 
the expenditure of funds to construct the Project, and (b) the issuance of bonds payable solely out 
of second penny sales tax revenues to finance all or a portion of the costs of the Project. 


2. If the public does not approve the Project, the current City Council will not take the 
action described in paragraph 1. 


This resolution is important because the November vote before the public is advisory only. The public has expressed concern about this "advisory" vote and whether the Mayor and City Council would honor the simple majority of the people. This proposed resolution provides the safety net that if the public doesn't approve the Event Center Project, the current City Council will not move forward with the necessary ordinances and resolutions to authorize the expenditures and issuance of bonds to construction the Event Center.



A RESOLUTION APPROVING THE FORM OF BALLOT, INCLUDING THE CITY ATTORNEY’S EXPLANATION, IN CONNECTION WITH THE ELECTION TO DETERMINE WHETHER THE CITY SHOULD CONSTRUCT AN EVENTS CENTER.


WHEREAS, the Sioux Falls City Council finds it desirable to hold an election to determine whether the voters of the City of Sioux Falls (the “City”) support building an Events Center.


NOW, THEREFORE, BE IT RESOLVED BY THE CITY OF SIOUX FALLS, SD:
Section 1. That the Official Special Election Ballot shall be in a form substantially as follows:

Sioux Falls November 8, 2011 South Dakota

OFFICIAL MUNICIPAL SPECIAL ELECTION BALLOT

Instruction to the Voter:

To vote on a ballot question

fill in the oval (    ) next to

“Yes” or “No.”

Use only a pencil.

The Sioux Falls City Council is considering the construction of a multi-purpose events center (the 
“Project”) in the City of Sioux Falls.  If the proposition is approved by the majority of those voting, 
further action will be required by the City Council to issue sales tax revenue bonds to finance the 
Project.  No general obligation bonds will be issued. 

There will be no new taxes, no increase in property taxes, and no increase in sales tax rates 
authorized by the current City Council to pay for the Project. 

The question submitted to the legal voters of the City of Sioux Falls, South Dakota, is as follows:

PROPOSITION TO BUILD AN EVENTS CENTER

Whether the City of Sioux Falls should build a multipurpose Events Center and 
associated site improvements (the “Project”) at a Project cost not to exceed one-hundred fifteen million dollars ($115,000,000.00). 

CITY ATTORNEY’S EXPLANATION

This election will advise the City Council as to whether the public supports proceeding with the Project.  The City Council has selected the Sioux Falls Convention Center site as the site to build the Project.  The Council has also adopted a resolution stating that it will not proceed with the Project if the proposal is not approved by a majority of those voting in this election.  


The amount proposed to be spent refers to the cost of designing, constructing, equipping, and furnishing a multipurpose Events Center and associated site improvements (including architectural and engineering fees and expenses). Interest and other financing costs are additional costs that will be 
incurred and are not included in the Project cost of designing, constructing, equipping, and furnishing a multipurpose Events Center and associated site improvements.  Debt service reserves and other reserves are also not included in the Project costs.  Project costs also do not include additional capital 
improvements that may be incurred in future years.  

In order to construct the Project, further action will be required by the City Council to allow the City to issue revenue bonds to be repaid from and secured solely by revenues from the existing second penny sales tax to finance all or a portion of the costs of the Project.  

A vote “Yes” is for constructing the Project.
A vote “No” is against constructing the Project


This proposed resolution goes with the ordinance up for 1st reading on Monday night. Why would the City Council approve this resolution setting out the ballot language before the 2nd reading of the ordinance setting the date of the election and the ballot language?  Doesn't this resolution need to be postponed and adopted when the city council adopts the ordinance authorizing the special election?  The ordinance and this resolution seem to be out of sync with each other if both continue to contain the actual ballot language.

What exactly is the public voting on in November? If you read the "advisory" ballot language, both in the proposed ordinance and the resolution, the language asks the public if they support the construction of the Event Center at a cost not exceed $115M. Putting the $115M in the ballot means if the cost comes in more than that, then the City can't move forward with the construction of the Event Center? In other words, will the vote be binding on the $115M cost?

The city's construction manager has not submitted the actual "estimate" construction cost of the Event Center so who knows if the construction figure is $110M, $115M, or $120M or more for construction of the Event Center. Keep in mind, whatever the construction figure turns out to be, the total cost of the bond will be at least $10M or more to cover the reserve and cost to issue the bond.

Also, keep in mind that this vote scheduled in November is not binding, no matter what construction figure the city puts in the ballot language. Why put the cost in the ballot language to begin with? It is meaningless. Again, what is the purpose of the vote? What is it the city wants to know from the general public? It's simple isn't, it? Do you want to build an Event Center - yes or no?   Simple and to the point.

If the vote result is yes, then the city would move forward with the resolution authorizing the issuance of the bonds at whatever cost they (the city and the construction manager) comes up with based on their designs. This would  be the time when the construction amounts are important and necessary.

If the vote is no to build the event center, then it will all stop per the proposed resolution saying the construction of the event center is subject to the vote of the people and the process to build an Event Center will cease (for the time  being).

The stage is set Monday night.

What about those Pavilion/Convention Center Bonds?

When the Washington Pavilion and Convention Center bond is paid off in 2014 the plan is to use the freed up funds to support the capital costs of the Arena and  used as a fall back to cover the future capital and operating costs of the new Event Center.

Back on August 2, 1993, the City Commission adopted a resolution (Resolution No. 257-93) authorizing the issuance of the sales tax revenue bonds for the construction of the Washington Pavilion and the Convention Center. The resolution stipulated that the 3rd penny entertainment tax be used first against the debt and if the 3rd penny entertainment tax revenues were insufficient, the 2nd penny sales tax would be used as a loan to pay the principal, premium and interest of the project bonds. The resolution goes on to state that if the second penny sales tax is used to pay down the debt of  the bonds, it shall be considered a loan and must be repaid to the second cent sales tax fund.

This resolution (No. 257-93) was referred by petition of the public and went to a special election vote on October 19, 1993. The Notice of Special Election specifically stated that the bonds will be paid from the net proceeds of the 3rd penny entertainment tax.  The 2nd penny sales tax will be used to make payments on the Bonds only if the 3rd penny entertainment tax net revenues are not sufficient. If the 2nd penny sales tax is used for payment of the Bonds, it will be a loan and shall be repaid by the Entertainment Tax.  A yes vote meant the action of the City Commission was approved and the Bonds for a Convention Center and Washington Pavilion will be issued. The yes vote prevailed and the bonds were issued and the rest is history.

This now brings us to the present and the mayor's plan to use the freed up money after 2014. Was the 2nd penny sales tax used to repay the Pavilion/Convention Center bonds?

I have it on a very good source that the 2nd penny sales tax was used to pay off a portion of this Pavilion/Convention Center bond debt.  According to the 1993 adopted resolution and public vote, that money needs to be repaid  before it can be used for the purposes outlined in the mayor's financing plan for the Event Center.

I suppose the city council could pass legislation to forgive the debt but I wonder what the public would think of that, especially since the public voted on how their tax dollars were to be used to pay down the debt of the Washington Pavilion and the Convention Center.

Teapublicans Needs to be Sent to Time Out

You can't watch any news program on TV and not be bombarded with the debt ceiling talks. If what is happening in Washington DC doesn't move you to contact your representatives in Congress, then I think you must live in a closet.


It is disturbing to listen to the doomsday predictions and the shrill behavior of those Teapublicans who are hell bent on tying the deficit talks to the debt ceiling action to the detriment of the country's economy. I don't care where you work and who you work for, the common business approach to getting things done is listening, gathering facts, negotiate and establish a win/win environment. That means compromise has to be part of the agenda. When one has to negotiate in this kind of environment, no one wins and everyone is a loser.


When you hold one party hostage to your position, it means a breakdown in communication and a failure to succeed. No one is arguing that the deficit has to be dealt with. Nobody is saying that government spending must be controlled. Nobody is saying that cuts must be made. The fact is the debt ceiling is being used as a pawn for the Teapublicans agenda to reduce government spending and to the hell with anyone who hasn't signed Grover Norquist's pledge.

As the nonpartisan Government Accountability Office put it in a report in February: “The debt limit does not control or limit the ability of the federal government to run deficits or incur obligations. Rather, it is a limit on the ability to pay obligations already incurred.”


By the Treasury Department’s count, Congress has acted 78 times since 1960 to raise, extend or alter the definition of the debt limit — 49 times under Republican presidents, and 29 times under Democratic presidents. 


Hello, Teapublicans!!!! The debt ceiling is about paying for obligations already incurred. Tying government spending to raising the debt ceiling is a political ploy detrimental to the economic health of the country. This group needs to be sent to time out and be treated as the petulant little bullying brat that they are. Oh, and by the way, Speaker Boehner needs to grow a pair.

Event Center Funding Update

The city finance director gave an Event Center Bond Financing and Operating Budget presentation to the City Council on Monday, July 18th. The administration continues to assure the public that no new taxes will be required for the funding of the Event Center.

We now know that the construction of an event center will be financed through bonds obligating the 2nd penny sales tax for the next 20 to 25 years. The construction costs are estimated at $110M and with the cost for the debt service reserve and issuance of the bond bringing the bond cost to around $120M. The actual construction cost from Mortensen hasn't come in yet, so this is still a moving target.

The concern is not that taxes will go up. The concern is that the projected growth of the second penny sales tax will actually occur to meet the $7-$9 million annual bond payment over those 20-25 years and leave enough money to address the current and future infrastructure needs of the city.

Historical 25 year sales tax growth figures were used in sales tax growth projections. In the past that historical data was pretty much on target. Today's reality is much different, however.  Projections are not reality. Counting on the "horse power" of the 2nd penny sales tax is the foundation of the financing plan. The economy is in trouble and the federal deficit has a serious impact on local reality as well.  Where will funding come from if the construction costs exceed the projected $110 million in bond debt and the sales tax growth projections don't materialize?

The event center talk seems to be centered on construction, but we also need to focus on the operating costs of the event center once built. The administration assures the public again that taxes will not go up. There is assurance that property tax and first penny sales tax will not be used for construction, debt service or the operation costs of the event center. Private money, along with projected revenue, is to fund the operating costs of the new event center, along with the Entertainment Tax for capital needs.

The city intends to lump all three facilities (Event Center, Convention Center and Arena) together for financing purposes in the future. The projection is that after event costs and cost of operation, the operating income will be $1.1M to$2.6M. Repair and maintenance costs and capital needs were not in the expense projections. The Arena lost $123,000 net in 2010 and the Convention Center lost $560,000 in 2010. I guess that means that the Event Center revenues will subsidize the Arena and Convention Center operating expenses and still make a profit of $1.1M-$2.6M?

Uses for the 3rd penny Entertainment Tax Fund continue to expand. The Entertainment Tax brings in around $5M. Of that $5M, $2.25M goes to retire the debt service on the Pavilion and Convention Center and to assist in the operation, major repair and maintenance and capital needs of these two facilities. These bonds are projected to paid off by 2014.  The freed up funds are to support the capital costs of the Arena and will be used as a fall back to cover the capital and operating costs of the Event Center. In addition, the Entertainment Tax Fund will also now cover the operating costs, repair and maintenance and capital needs of the Orpheum and the Great Plains Zoo.  The question is, will there actually be enough money in this fund to go around. Which entity will have first priority for the Entertainment Tax Fund and which entity or entities will go wanting?

Will the public know how much private money has been raised for the operation of an event center before the proposed vote in November? The mayor sent out over 400 invitations to the business community to  hear his plan  last week.  I heard 150 actually showed up. I hope those private partnerships are coming in so we can hear how successful he is in "marketing" his financing plan to operate the Event Center and subsidize the costs of running the Convention Center and the Arena.

Before I vote on the event center, I want to know if there is actual private money committed to run the thing for the next 20 years and beyond. Can the City Council adopt an ordinance that specifically outlines the funds to be appropriated for the construction and operation of the Event Center?

The financial appropriation legacy of this event center will be laid at the feet of future city councils to fund. The repayment of the Event Center bond financing is based on 2nd penny sales tax growth and the operating costs of the Event Center are based on private funding and projected revenues, according to the Mayor's plan. Funding may be based on conservative assumptions, but it sounds more like a hope and prayer to me.

Show me the money!

Power Play in City Government

The City Council's Fiscal Committee wants to approve city contracts over $25,000. Councilor Anderson wants to bring transparency to the public. The city budget is over $300 million. It is not practical to expect the administration to seek approval on every contract over $25,000. Do you have any idea how many contracts over $25,000 there are each month? City staff is right when they say this will bog down the ability to do city business.

 City Charter clearly sets out the role of the Mayor and the City Council. The City Council is governing body and is not responsible for the day to day operation of the city. They are treading on territory that is not within the realm of their responsibility according to city charter.

Article II, City Council, Section 2.01. General powers and duties
All powers of the city shall be vested in the city council, except as otherwise provided by law or this charter, and the council shall provide for the exercise thereof and for the performance of all duties and obligations imposed on the city by law. The council shall act as a part-time, policy making and legislative body, avoiding management and administrative issues.

Article III, Mayor, Section 3.01. Executive power.
The executive and administrative power of the city shall be vested in a mayor.


City Charter, Article V, Financial Procedures clearly spell out appropriation and revenue requirements for conducting business. The City Council approves the budget. Each October, the council approves an appropriation ordinance that sets appropriations by fund and by department for the ensuing fiscal year. City Charter spells out procedures for amendments to the appropriation ordinance after adoption for such things as supplemental appropriations or transfer of appropriations.

Clearly, contracts are an an administrative function. If the City Council wants to know more about a project or a budget appropriation they approved by ordinance, then they should ask the administration for a report at an Information Meeting. To pass an ordinance that requires the administration to bring every contract over $25,000 to the City Council for adoption is pure minutiae and inefficient government.

The City Council has more important things to worry about than this administrative issue. The finance department puts out mountains of financial information. It is all there, you just have to read it and review it. Ask questions of the administration regarding contracts if you want to know something specific. To just throw all this information on an agenda for approval is not good government. This is not big picture thinking and should not be adopted by the full City Council.

2012-2016 Mayor's Recommended CIP Observations Series #2

The Mayor presented the 2012-2016 Recommended Capital Improvement Plan. I decided to take a look at this recommended plan versus the current 2011-2015 CIP to see where priorities have shifted and where the programmed sales tax funding is going to be spent in the future. Here are some of my observations:

• The 49th Street Extension Project is a new project in the recommended plan. The summary says this project was top priority identified in the 41st Street Corridor Study to assist with the traffic flow on 41st Street. This street will be a major east/west arterial alternate route. $500,000 for engineering is programmed for 2016. Top priority when only engineering costs programmed in the 2016? No relief for the 41st Street Corridor traffic seems to be on the horizon.

• The Major Street Reconstruction Program total increased by $6.5 million. However, program year to program year over the previous plan tells an interesting story. Program years 2012 and 2016 sales tax money for reconstruction was increased over the previous plan, but program years 2012, 2014 and 2015 all were decreased in funding over the previous plan. Maybe to free up money to pay those annual event center bond payments?

• McCart Field and parking lot Project is not in the plan. Why not? What will be the cost associated with this project? The mayor stated this project would move forward whether the Event Center did or not.

• Event Center project does not show programmed construction costs for each year of the plan. A major project driven by the administration and it's not even in the recommended plan. Why not?

• The River Greenway Improvements Project had $1.8 million programmed in the 2011-2015 CIP to construct improvements on the east bank of the Big Sioux River using other financing (Big Sioux Environmental fund). The plan showed $25,560 programmed for 2014. The 2012-2016 Mayor's Recommended CIP shows $1.06 million programmed in 2012 for this project using sales tax. Was this project money not spent in 2011 and moved out to 2012 or is this new programmed sales tax money for the project? The recommended plan before the council says a Downtown TIF will be evaluated and may be used to supplement funding of this project. If TIF becomes available, the CIP will be amended. It seems funding for this project is all over the place. Is this project still being worked or is it in limbo?

2012-2016 Mayor's Recommended CIP Observations Series #1

The Mayor presented the 2012-2016 Recommended Capital Improvement Plan. I decided to take a look at this recommended plan versus the current 2011-2015 CIP to see where priorities have shifted and where the programmed sales tax funding is going to be spent in the future. Here are some of my observations:

• The Indoor Aquatics Development project to be located at the Spellerberg Park location received a funding boost in the recommended plan. It went from $814,000 programmed in 2015 to $5.8 million in total funding in the recommended 2016 CIP. Construction is programmed to begin in 2014. It went from a priority ranking of 43 to project priority #2. This project will replace the current Spellerberg Pool with either an indoor or outdoor family aquatic facility. An indoor facility is a high priority for the Park Board. The City of Sioux Falls Recreation Needs Assessment completed in April 2011 showed that 60% of the respondents felt a need for an indoor aquatics facility. The project justification states the Park department will gauge public demand through neighborhood meetings and feedback coming at large.

• The Indoor Ice Facility Project had $500,000 programmed in 2014. This project has increased to $1.5 million, programmed in plan year 2013 in the mayor's new recommended plan. This project went from priority ranking #38 to priority ranking #7. The Ice Sports Association will obtain a 99 year lease from Sanford Health to build a facility within the Sanford Sports Complex. The programmed sales tax money will be used to purchase equipment with the city maintaining control of the assets. In return, the public will have use of the facility. Does this arrangement mean the city will be on the hook for future equipment needs of this facility? Will this be an ongoing expense for taxpayers? What exactly does public use of the facility mean to the general public?

• The $500,000 programmed in plan year 2014 in the current CIP for the Indoor Tennis facility has been moved up to program year 2013 in the mayor's recommended CIP. The SF Tennis Association is expected to obtain a 99 year land lease from Sanford Health to build a facility within the Sanford Sports Complex to be built in northeast Sioux Falls.  The $500,000 sales tax money will be used to buy equipment and construct improvements within the facility. The project description says the city will retain ownership of the equipment and improvements constructed in the facility and in return the public can use the facility year round by agreement between the city and the SF Tennis Association. This is kind of a cozy relationship, considering the "first lady" of Sioux Falls is the executive director of the SF Tennis Association. Does this also mean that the city will be on the hook for all equipment, now and in the future? What about those construction improvements? What kind of improvements are we talking about here? What exactly does public use mean? Is that free use by the public. I doubt it. I doubt this will be a one time cost to the city but more likely an ongoing expense. Questions should abound regarding this use of sales tax dollars from the city council regarding this project.  This project was ranked priority #37 in the current plan and is priority #6 in the recommended plan.

The Indoor Aquatics Development CIP project is very different from the Indoor Ice Facility CIP project and the Indoor Tennis Facility CIP project in that the Indoor Aquatics project is directly in line with the parks and recreation aquatics plans throughout the city. Spellerberg Pool is the oldest pool in the city and is in need of replacement. It is appropriate to look at both indoor and outdoor development possibilities. Aquatics is a program service funded by sales tax to the general public as evidenced by Laurel Oaks Pool, Terrace Park, Drakes Springs, Frank Olson, Pioneer Spray Park, etc.

The ice faclility project and the indoor tennis facility project are very different, however. Both of these projects are spearheaded by associations. I understand public/private partnerships. However, these two associations provide sports activities to a very specific group of people, not to the general public as a whole. A one time public support of taxpayer funds is one thing, but should the taxpayers be on the hook for equipment needs and construction improvements to their facilities indefinitely into the future to support these two facilities? There should be serious questions asked and answers given regarding these two projects before the city council approves any public/private partnership money for this two private endeavors.