Public offers input on city TIF revisions

By Scott Aust, Journal staff | Friday, July 25, 2008

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About two dozen people showed up for a public meeting Thursday about a city committee's recently completed revisions to the city's tax increment financing policy, but only a few had comments.

Fred Weishaupl said many of the proposed changes were good, although he still has "heartburn" about some of the uses of TIF funds for various project costs. He also submitted a written statement that said the definition of blight is inadequate and needs to be more definitive.

Paul Evans whose property was included in a TIF without his knowledge, agreed with the panel's recommendation to require notifying property owners when land is included in a TIF.

Dale Jensen said he thinks the worst part of TIFs is that people don't understand them, and after attending a number of meetings, said he still doesn't understand them. He suggested the city might be better off bonding for some of the projects using TIFs.

"I just think Rapid City is like a college kid maxing out all his credit cards," Jensen said.

Steven Brendan said TIFs should be used for urban renewal and said the city's use of TIFs is damaging to the school district and the county. He also feels the city can bond more cheaply than it can use TIFs for developers who don't need the money.

The TIF policy review committee has been meeting regularly for nearly a year since Mayor Alan Hanks appointed it last August, shortly after being elected. Hanks made the city's use of the economic development tool one of his top campaign issues.

The added scrutiny caused some members of the public to question whether the city was being too loose in approving TIFs and not providing enough transparency about the approval process.

The committee's list of recommendations is diverse and covers points including application requirements, the definition of blighted areas and allowable interest rates.

A sampling of the recommendations include:

* Financial interest disclosure from anyone involved in applying for a TIF or with a financial interest in a TIF project.

* Property owners within and adjacent to a proposed TIF district must receive notification by certified mail about the proposed TIF.

* South Dakota's statutory definition of blight will be included in the city's guidelines instead of merely being paraphrased.

* A list of what project costs will -- and will not -- be paid through the TIF. The list of costs not allowed, unless authorized by the city council, is more restrictive than what is covered by state law. It includes such costs as buying equipment or fixtures; land acquisition, land clearing and grading, private development site improvements and professional service fees.

The committee will meet July 31 to discuss potential changes resulting from public comments, then will forward its proposal to the mayor. Eventually, it will be considered by the Rapid City Council.

Full text of the committee's recommendations can be viewed online on the city's Web site at rcgov.org/planning/committeeminutes/tif/tif_hearings.htm.

What's a TIF?

A tax increment financing district is allowed by state law and used to encourage private, economic development. The district's property-tax valuations remain frozen at a base value for a number of years. During that time, improvements are made that increase the property's value. Property owners continue to pay all of the taxes based on the higher value. Some taxing entities, such as the city, receive taxes based on the original value.

The difference between the two -- the increment -- pays off the cost of the improvements. After those costs are paid off, local governments receive all of the property-tax revenue.

Contact Scott Aust at 394-8415 or scott.aust@rapidcityjournal.com