Ending of TIF will also allow local Bismarck government to keep property tax break-even while other cities will be raising property taxes. June 29th, 2017 | With this week's decision by the Bismarck City Commission to end the 37 Year Old Tax Increment Financing District, here is a very short version of what it means for local government and local taxpayers: The Bismarck School District will receive over $1 million per year more than now without raising taxes with the end of the TIF. The Bismarck City General Fund will receive well over a half million dollars more per year because the TIF no longer exists. Burleigh County will receive almost a half-million more per year by TIF being over. The Bismarck Park District will get over $350,000 more per year with the end of the TIF. (See the chart below to see how much each level of government has been losing since 2005 because of the city's policies related to TIF.) | This new money will allow local government to hold the line on property tax a little bit longer than other cities, schools, parks, and counties. In fact, this will likely allow local government to avoid any increase all together (with the right local decisions). It's just too bad it did not happen sooner. | Dustin Gawrylow, Managing Director North Dakota Watchdog Network | Action taken in an attempt to show good will toward county commission in effort to convince the county commission to approve the renewal of the Renaissance Zone, which expires July 31st. June 28th, 2017 | In April 2015, the North Dakota Watchdog Network launched an effort to reform the way the City of Bismarck handles one of the corporate welfare tools the State of North Dakota grants it. The Bismarck Tribune reported it this way on April 18th, 2015: TIF opponents aim for reform: Tax Increment Financing District opponents are looking to organize and urge action against Bismarck's downtown district. Dustin Gawrylow, of North Dakota Watchdog Network, which calls itself a nonpartisan, nonprofit organization on its website, held a town hall meeting last week with the aim of encouraging community members to run for office on a property tax reform platform or to initiate a ballot measure to enact reforms with the TIF district in mind. TIF districts work by setting aside tax dollars paid by property owners within the district for use on special projects within the district. Gawrylow said this shortchanges the rest of the community because it takes up money that would normally go to the general fund. | Fast forward now to last night, June 27th, 2017 and the Bismarck City Commission has been forced to back out of the Five South project (because it was not going to happen the way it was intended), and in addition the city commission has voted to end the 37 year old tax increment financing district as well. From the Bismarck Tribune today: The Bismarck City Commission voted unanimously to end the city’s Tax Increment Financing District in an effort to get the support it needs to continue its Renaissance Zone program. The decision came on the heels of an announcement that Don Cardon has stepped down as lead developer of the proposed mixed-use FiveSouth Development in downtown Bismarck, for which the TIF District was helping fund public infrastructure. With Cardon’s exit came substantial changes to the scope of the project, which nullified the project’s development agreement with the city. | [...] The end of the district will be effective July 1. All tax revenue collected from the district from that day forward will be distributed among the various government entities. All funds from the district already committed will be distributed and any remaining revenue will be divided. | This has been a long time in the making. While the North Dakota Watchdog Network helped push the closure of the Bismarck TIF district, that process actually started in 2009-10 when a lawsuit was filed against the city by a resident regarding the usage of the program While that effort had mixed results, it set the stage for changes in state law and yesterday's decision to just end the controversy to save the Renaissance Zone. Today, the city's closure of the TIF district is a direct attempt to influence the Burleigh County Commission to approve the renewal of the Renaissance Zone program. This is a step toward better policy in Bismarck. We will have more about this development later this week, including the financial impact to taxpayers and the other levels of government in Bismarck. | Also, FiveSouth Developers Expected To Beg For More Time, And Less Investment On Their End June 27th, 2017 With very short notice, the Bismarck City Commission has amended its agenda for tonight to include both an update from developers of the FiveSouth project, and public input on the project and the TIF (Tax Increment Financing District) . There are rumors that the developers will be begging the city for more time, and to be allowed to reduce their investment obligation to get the city's $35 million TIF-funded subsidy. We encourage anyone in Bismarck to head down to the city commission building tonight at 5pm at 221 N. 5th St. in Bismarck. We will have a review of the meeting tomorrow for those who cannot attend. | May 19th, 2017 Yesterday, we alerted you to the fact that the writing on the wall is showing that the highly subsidized FiveSouth project is probably not going to happen. But when will the city and the people involved admit it? The city has let the strip-mall empty out to make the project happen, including the payment of $55,000 to Identity Salon to let them leave early. Empty spaces each month cost the city money since afterall, it was purchased as an investment. Meaning that, each month, all the other city taxpayers are footing the bill for those loses. It is clear that the private developers behind the FiveSouth project are stringing the city along - but why is the city letting that happen? Next Tuesday, the lease renewal for Tobacco Row is on the "consent agenda", which means they intend to approve it with no discussion and no public comment. They would not do this if they did not know FiveSouth was dead, because this puts the city in the position of either buying out that business, or paying for them to relocate or close. If the city commission is willing to pass a renewal of this lease, all while they have essentially push other businesses out of the building, then they are planning for the building to lose money and sit empty. Why would the city abandon an asset they spent $1.8 million to buy just 7 years ago? If they can't make money on the property while it sits, it is a stranded asset. The city should immediately nullify the FiveSouth agreement on the basis of non-performance. Then and only then will the city be able to properly market and rent spaces in the strip-mall. Either that, or the FiveSouth investors should buy the property and deal with it themselves. It is improper for them to use the city as their own private "holding company". The taxpayers of Bismarck should not be asked to sit and wait and subsidize this project any longer if it is not going to even happen! | May 18th, 2017 We likely know why the city has been discriminatory in treating some businesses in the city-own strip mall better than others. FiveSouth is dead. At least that is what the writing on the wall is showing by the fact that on the City Commission Agenda for May 23rd, 2017 there is a 3-year lease renewal for Tobacco Row - one of only two businesses remaining in the complex owned by the city. (The city paid $1.8 million for the strip-mall in 2010.) According to the lease renewal document there are no escape plans for the city to get out of the lease prior to February 2020 if FiveSouth were to actually get built. | This is an abrupt change, because as recently as April 12th, the public was being told that it was still "on track". But since the entire plan included tearing town the strip-mall to make way for the hotel and the city-subsidized parking garage (using TIF money - Tax Increment Financing), it is very apparent that this plan is falling apart. Which means the $55,000 that was paid to Identity Salon by the Bismarck City Commission was a waste of taxpayer dollars. The businesses that were driven out of the complex did not have to be. And that the city has been forgoing all those rent dollars for some time adds up to a lot of money. Without question, taxpayers have lost well over $100,000 so far, and the businesses who were forced to relocate and abandon the investment they made are out even more. What will the city do now? Sell the building at a loss? That isn't going to well for the Public Health Building. It is hard to believe that it is worth the $1.8 million the city spent to buy it just 7 years ago. This is a very costly lesson for taxpayers, but one that hopefully will be remembered in a year now that the mayoral recall effort has failed. The City of Bismarck needs to get out of the Venture Capital business of using taxpayer dollars to help private businesses. They are terrible at making these investment choices with your money. | May 16th, 2017 There is an update on a story we broke last year with regard to the way the Bismarck City Commission is treating business owners that had the misfortune to rent space from the city-owned strip mall next to the city's Event Center. | More recently a different business owner has attempted to get the same deal Identity Salon received in order to get out of their contract. The city's approach to her: get a lawyer and sue us. Something that could easily cost the taxpayers more than the $55,000 deal Identity Salon was given. | The City of Bismarck has continuously made mistakes on this whole situation. Mistake #1 was signing a new lease with the businesses when they knew there was a plan in the works that would involved tearing down the whole building. Mistake #2 was giving one business a $55,000 payoff to get them out of a lease. Mistake #3 is now treating the other businesses differently. Why would the city want this business owner to take legal action rather than just making the same deal that Identity Salon received? Is it because the city is not sure the project will actually happen? If that is the case, that makes the $55,000 payoff even worse! This whole situation is a prime example of why government should not be in the business of being a landlord to private businesses; and why the city of Bismarck needs to stop trying to find way to spend taxpayer dollars to subsidize development downtown. The owner of the bagel shop and clothing store (Ms. Wright)has moved her business to Williston, which means this whole Five South project so far has a net loss of businesses and jobs. Meanwhile, other businesses that moved out last year were told the building would be torn down in March of this year. Yet, two small businesses remain in the building. There will soon come a point where the city will likely have to tear down the building even if Five South does not happen, afterall, what business owner would locate in a building that might get demolished at some point? | In the local news yesterday, there was a big story about the FiveSouth Project in Bismarck. This is a project that has been in the works for over two years as open records obtained in the Spring of 2015 showed. It was approved in October 2015 with a $35 million subsidy from the City of Bismarck using Tax Increment Financing. These are funds diverted from their intended purposes into a slush fund that the city can use to subsidize projects it likes. Over the last weekend, an issue was brought to my attention about a situation regarding a tenant in the city owned strip mall next to the Event Center. In April, a story ran locally about a hair salon closing due to the FiveSouth development plans. There were rumors that the city had paid the salon to leave, but at the time those rumors were unsubstantiated. Until this last weekend when a source sent me photos of the secret agreement between the City of Bismarck and Identity Salon for the city to pay $55,000 to Identity Salon to leave their lease early. | Just over 6-weeks later, the City Commission approved the FiveSouth Project, which would require the strip mall that the salon is in to be torn down. At the same October 27th, 2015 meeting where FiveSouth was approved this agreement with Identity Salon was approved but not disclosed to the public. The city had been in discussions behind the scene for well over a year on this project as documents show - so why would the city approve this 5-year lease extension just to turn around a six-weeks later and way $55,000 to break the lease agreement? This was bad management, and another sign that mixing city business with private development is a bad mixture. An open records request to the city was placed on Monday June 27th, 2016 to find out how the city paid for this. Was it out of TIF funds? Was it part of the $35 million package, also out of TIF funds? Did the FiveSouth investors reimburse the city for making this happen, as they should? No response from the city has been received as of noon Wednesday, June 29th 2016. If Mayor Mike Seminary's desire to use public resources to "set the record straight" is going to do more than provide cover for the poor decisions made with taxpayer dollars, now is his chance to prove it. Otherwise, the public will be left to wonder whether the FiveSouth Project will just be one continuous money pit for the taxpayers. | |
