Rapid City is having a special election today to vote on Tax Increment Financing district. To drastically oversimplify: A developer wants the TIF as collateral for a loan.
The concept is simple: The taxing authority locks in the current assessment. As property values increase, the tax difference between the locked-in assessment and the actual assessment is allocated to district for “public infrastructure”. It doesn’t change taxes paid or collected, just how they are spent.
Theoretically, this could be a good thing. However, I have zero trust in anyone involved. The developer flat out lied in their “prospectus” (whatever it’s actually called). There is no auditing system in place for these things – and none of the past ones have ever been audited – so I don’t trust the politicians to even pay attention to what’s “public infrastructure” versus embezzlement, let alone not be one of the embezzlers.
The numbers in that document are circular. It’s a total of $125 million, which just so happens to be both the project budget and the exact amount of the projected tax increment. Either the budget expanded to consume the projected revenue or the projected revenue is junk data created to match the needed budget. There’s no way that both numbers “just happen” to be the same. There’s also very little chance that either is accurate – another trust issue.
As for the flat-out lie:
Without the TIFD, there would be no mechanism for other parties to participate in the cost of these infrastructure improvements.
Um. You are a corporation. Last time I checked “corporate bonds” were a thing. Feel free to offer interest in order to get other parties to participate. Public subsidiaries are also a thing. Feel free to whip one up and offer shares to qualified investors. Are these “easy”, “cheap”, or “convenient”? No. However, they are mechanisms that exist.
Even more egregious than the lie, is the purpose:
The proposed development will facilitate a multi-faceted visitor-oriented destination which may include the following components:
Stripping out all the fluff: “[It] will facilitate a destination. ” What does that even mean? How does one facilitate a destination?
An interesting bit of Rapid City history. First, there was downtown. Then a mall was built. Then Rushmore Crossing (a giant strip mall) was created with a TIF. The mall cannibalized downtown business. The Rushmore Crossing TIF was (arguably) a success – and cannibalized the mall’s business. We don’t need another entertainment and dining development. Some individual things scattered around the city? Sure. Yet another attempt at concentration? Not so much.
Note that I would argue that the Rushmore Crossing TIF was a failure. It’s supposed to be for public infrastructure. That place is a _nightmare_ to get into and outof. The roads are dreadful. Not the surfacing or pot holes or other maintenance. They’re not laid out properly – and have the highest speed limit / traffic density ratio in the city. It’s only 35 mph, but the roads are curvy, have tons of mini-driveways branching off them, which require left turns, and a single suicide lane down the middle. With traffic jams on both ends where it joins the arterial roads around it.
Marked Up 