Informational Meeting

MINUTES Informational Meeting Tuesday, March 9, 2021 at 4:00 PM Carnegie Town Hall, 235 West 10th St., Sioux Falls, SD 57104 1. Call To Order Council Members Present: Janet Brekke (Via telecom), Christine M. Erickson, Alex Jensen (Via telecom), Rick Kiley (Via telecom), Greg Neitzert, Curt Soehl, Pat Starr Council Members Absent: Marshall Selberg Council Chair Greg Neitzert called the meeting to order at 4 p.m. 2. Councilor Remarks Council Member Pat Starr spoke about a virtual conference he and Council Member Brekke are attending through the National League of Cities. He indicated he'll provide a full report to the Council at a future meeting, but wanted to share highlights from the program. 3. Presentations A. The AFSCME Free College Benefit by Council Member Pat Starr Presentation: Approximately 15 minutes followed by discussion The benefit helps qualified applicants earn an Associate Degree online through Eastern Gateway Community College. It applies to not only the AFSCME member, but also to his or her family members. There are no out-of-pocket costs as the benefit covers the difference between any federal grants and tuition, fees, and e- books. There are several degree programs available and an easy, online application process. Because it's an accretited program, students are allowed to transfer credits to state schools. It provides employees with a chance to advance in their fields. B. Discretionary Formula Ordinance Revisions by Jeff Eckhoff, Director of Planning and Development Services; and Dustin Powers, Community Development Coordinator Presentation: Approximately 15 minutes followed by discussion The purpose of the presentation is to provide an overview of existing programs, including information on the application process, eligibility, and history of the programs. Planning and Development Services has been looking at these programs and have held several discussions with partners and stakeholders on proposed changes that would better align these programs to reflect the goals and objectives of the City. Property tax reduction is a very important tool at the City as it is one of the few programs the City has to offer as an incentive to attract desired development or redevelopment to specific areas, desired industries/businesses, and jobs to Sioux Falls. Authority to grant property tax reduction is outlined in South Dakota Codified Law Chapter 10-6. Over the course of several decades, the City has adopted and amended three programs: Industrial (1987); Downtown (1987); and Neighborhood (2007). Under SDCL 10-6-35.2 property may be classified specifically for the use of property tax reduction. Under this section there are 8 subcategories, five of which the City uses and will be addressed in the recommendations: Industrial, Commercial, Commercial Residential, and Renovation of Commercial or Industrial. The industrial program was originally adopted in 1987 to support job growth and tax base growth for Sioux Falls. The program outlines a number of uses that have been supported over the years, but it also allows flexibility as it is not entirely limited to the listed uses. The increase in valuation required for a project to be eligible for reduction is $300,000 in added valuation. If a project doesn’t meet both requirements of use and valuation, then they won’t receive the reduction. The downtown program was originally adopted in 1987 to support the revitalization of the Downtown area. The Downtown program is simplified in terms of uses allowed. All new industrial or commercial structures that have an added valuation of $50,000 or more are eligible. The neighborhood program was originally adopted in 2007 and targeted to support housing growth in core neighborhoods. Commercial Residential Structures qualify in any of seven specified neighborhoods. While these programs have been successful in recent years, PDS is taking a step back to see if the allowable uses and criteria are reflective of the City’s goals and objectives. These programs were designed to be evaluated and amended through the years. PDS would like to modify the industrial program into more of an economic development program that looks at criteria related to types of jobs, wages, benefits, etc. The Downtown program will remain essentially unchanged, but there is a recommendation to raise the valuation requirement and also target development and growth downtown. PDS proposes to transition away from the neighborhood program and more into an accessible housing program that will target getting units of Fair Market Rent or lower for individuals. For each of the discretionary programs, PDS is proposing to provide two levels of benefit or tax savings for each program. Each level of benefit will have it’s own criteria that must be met to receive the discretionary formula. The proposed base formula for each program is slightly different from the current formula. The proposed formula over the 5 year period will save the qualifying project 58% of the property taxes per the improvements where the current program  saves 60%. The difference is that the proposal front loads the benefit, which will help businesses with start-up costs and timing to assist with the lease of space. The second level of benefit that each program would have is 100% savings over the five-year program as long as certain criteria is met. Factors used to determine applicability include business operations of the new or expanded structure, expansion of the tax base, quality job creation, development of targeted geographic areas, business retention and/or recruitment, blight mitigation, and environmental/infrastructure improvements, which, collectively, enhance the City’s economic vibrancy, livability, and quality of life. A new or expanded structure for economic development purpose includes manufacturing facilities, laboratory and research facilities, logistics and warehousing facilities, data centers, agricultural processing facilities, insurance carriers (underwriting), technology-based companies, and facilities identified by the local economic development corporation as targeted industries. Purposes do not include any structure engaged primarily in retailing products, goods, merchandise or services and establishments engaged in providing services or entertainment to the general public including restaurants, hotels, motels, repair shops, indoor amusement, copying services, credit intermediation, health, professional, educational, and social services and other miscellaneous services. If a governing board chooses to pass a discretionary formula that gives a larger tax break than the baseline, then the school district must be made whole in terms of the state aid to education funding. The county auditor must impose an additional levy on all properties within that school district for both the general and special education funds. The levy is based on the difference between tax generated from the baseline formula and the actual formula passed. The Department of Revenue provides the county auditor with the amount of taxes that would have been generated because of the additional tax break for both the school general and special education funds. The county auditor will calculate the additional levy for that amount of taxes. The above process will be completed annually for the remaining four years, based upon the county’s adopted discretionary formula. Discussion followed about: how our programs compare with other cities; the AMI for Sioux Falls; targeted industries; subjectivity of the process; and communication with other stakeholders. 4. Public Comment 5. Adjournment Council Chair Greg Neitzert adjourned the meeting at 4:48 p.m. Thomas M. Greco, City Clerk