While I can appreciate the Sept. 20 article by city Administrator Bill Reynolds named “TIF: Fact vs Fiction,” this topic requires a broader scope and explanation.
First let’s start with a refresher on property taxes; we (almost all) pay taxes. We pay for city, county, school services, and others whether we use them or not, the amount you pay is based on the valuation of your property, as your valuation goes up, the amount you pay goes up, 25 percent of a dollar is 25 cents, 25 percent of $2 is 50 cents.
Now, in a TIF district, the property tax paid to the general fund is frozen at pre-development valuation, even if the markets are increasing values on your property, the TIF property current tax for services will not change. Example, 10-acre field paying $100 in taxes receives a TIF for 1,000 apartments, the TIF property will continue to pay $100 in taxes for services for the duration of the TIF. When the 1,000 apartments are filled and all the new streets are built, somebody will need to plow, sweep, clean sewers, maintain the water lines, police and fire will respond to calls, city staff will respond to citizen concerns and service requests from the 1,000 people in the TIF project, the project may or may not add kids to our schools, and people will use city/county services.
Since the property tax for services is frozen and will not pay more than the $100 in taxes during the duration of the TIF, usually nine to 25 years, any increase in service costs will be paid by the remaining taxpayers. This can be verified watching city council TIF expert on March 6, item 7. 7 a. Typically city, county, and school staff receive wage increases yearly, operational costs, health care, pensions, and benefit increases add to the costs of the existing government staff yearly, these costs go up without adding additional staff.
The statement by Mr. Reynolds “your taxes do not go up because of TIF” is misleading and not supported by TIF experts. The field has no streets to plow or sweep, no sewers to clean, and no people for police/fire to respond too. This same cost of services example applies to the county, city, and school services. The statement by Reynolds that the west end/Jackson township development will have a larger impact than Canterbury is also misleading. The west end development is 100 percent infrastructure/roads funded by developers, all properties will pay full taxation to city, county, and school, and the property values are subject to market increases. In other words, the west end is growth paying for itself.
Reynolds comments “TIFs are especially helpful in redevelopment, which has more costs associated with it than the development of a clean and unbuilt parcel, including environmental cleanup costs, costs associated with assembling parcels, demolition expenses, and site prep work. In a public/private partnership, developers invest in the real estate while the city acquires and assists with cleanup and infrastructure. This in turn adds value to the community through increased employment, greater amenities, and more recreation, dining and shopping opportunities.”
Retail is not an allowable use of economic development TIF which would explain pushing the envelope of redevelopment TIF definitions. While I can certainly support, and have supported TIF for high-paying jobs as our citizens may benefit from such jobs, I am missing the high wage jobs and recreational benefits from high density or luxury/upscale apartments. The free markets have and will continue to drive our restaurant and retail options as they do not meet the high wage requirements. Manipulating the retail and restaurant markets gives an unfair competitive advantage over our current stock of great retail and restaurants created by the free market supply and demand model of capitalism without taxpayer subsidies.
Back to recreational opportunities — the city recently lowered the park dedication fee requirements for high density and increased these fees on single family development, I tend to think a single family home with a yard capable of a swing set, sand box, and other personal recreational opportunities on site as less impacting to our park systems than high density apartments without such opportunities, and if they do have these amenities, subsidizes by taxpayers, they are not open to general public use.
We as a city have seemed to move from TIF for high wage jobs to TIF for everything, restaurants, retail, high density apartments. If we look further, a pattern emerges, the 2040 comp plan clearly shows and talks about the future, one picture shows the area around Marshall road and 17th Avenue as a redevelopment district, this picture shows apartment buildings where Target and an adjoining commercial mall is located. It also shows apartment buildings on the west side where the current dealerships are located, some of these buildings are brand new, not a year old, most are under 15-20 years old.
As Reynolds stated, redevelopment is the most expensive. The rationale for this in the comp plan is because the bus station is located where it is and should be surrounded by apartments? Maybe moving one building, the transit station, would be much more cost effective than redeveloping the whole area to 3-5 story high density apartment buildings at taxpayers expense? If commercial is not to be located along primary roadways, as free markets have dictated, where might they locate?
January-April 2016 this council worked on high density housing. We compromised, built consensus, and unity. We agreed to decentralize high density to four or five locations, 5-10 acre sites. We capped densities at 28 units per acre except next to transportation hubs, downtown, and riverfront where we capped it at 40 units per acre. You can view this in city code 151.051.
We now see proposals for 160 plus units per acre downtown. Our comp plan talks specifically about 5-8 story apartment building, it talks about redevelopment incentives and shows a mixed use on the riverfront out to 41 river crossing, around Marshall and 17th Avenue, and many other locations. It talks about densities of 160 units per acre. What we have is a fundamental transformation of everything Shakopee has been and done in the past. Everything from development fees, zoning, and land uses are geared for extreme densities most likely with subsidies as we are currently seeing in a few recent proposals. We have moved away from high paying jobs to high density, all without policy discussions at council. There seems to be a push for hyper speed growth, higher densities, and subsidies.
We all know our river crossings capacity concerns and many other roadway capacity issues. We also know it only took 20 years for Highway 169 crossing the river to become a parking lot at peak times utilizing a density of 14 units per acre — what does 160 units per acre do? What’s the demand on services from such high densities? If redevelopment TIF is utilized (the most expensive kind as Reynolds stated), how will services be paid for? This council has released its comp plan for review by other government agencies without us as a council reviewing, commenting, and building consensus through compromise on the key required aspects publicly.