Last updated on 2013.06.18
The Madison Daily Leader reprints more paid propaganda from the woeful Lake Area Improvement Corporation, this time in defense of the crony capitalism that got taxpayers to foot part of the bill for developing Silver Creek Circle out back of Randy Schaefer's insurance office. Emmeline Elliott (whom the LAIC apparently hired to write Dwaine Chapel's columns for him to spare both him and us the burden of his by turns vague and unoriginal prose) writes to remind us why Schaefer asked the city for his tax increment finance (TIF) district:
The sparse selection of housing in Madison was primarily what prompted Schaefer to look into a TIF district. At the time, he said, there were only 12 homes on the market and most were valued on opposite ends of the spectrum.
"Madison needed some housing options," he said, particularly in a price range from $120,000 to $150,000 that were attractive to medium-income families.
The TIF district was approved by the Madison City Commission in 2007 for Schaefer's property behind the Washington Plaza. A new cul-de-sac was created off the southern end of Grant Ave. as part of the residential development. Silver Creek Circle now has two single-family units and one duplex that have been built and sold [Emmeline Elliott, "TIF District Helps Create New Tax Base," Madison Daily Leader, 2011.09.26].
Schaefer's justification for the TIF district has shifted up the income scale a little since he got the city commission to increase its loan for the TIF district in 2008:
Schaefer proposed a new housing development with homes in the $115,000 to $125,000 price range for low- and moderate-income owners. Hess told the commissioners that Madison already has housing available in the below-$100,000 price range. Schaefer said many of those homes are older houses [Chuck Clement, "City Moves Ahead with Tax Increment District," Madison Daily Leader, 2008.05.20].
Low-income homebuyers have dropped out of the class of citizens being served by this noble public investment. The price range has expanded significantly, and only upward.
Two of the three dwellings cited by Schafer haven't been posted to the online Lake County tax rolls yet. But Silver Creek Circle's first mover, Rita Duff, is paying $2300 a year in property taxes:
The original plan was to have three single family residences on the rolls by 2009. When it became clear Schaefer had overestimated demand for his housing, the city commission shifted the plan to include commercial development.
Also worth mentioning: At that May 2008 meeting, Mayor Gene Hexom told local rental mogul and TIF critic John Hess that "The same opportunity exists for you, John, if you want to do it," referring to the city's willingness to extend TIF favors to any other developer in town. So far, neither Hess, Williams, or any other local developer has taken the mayor up on that offer. Yet elsewhere around town and the county, building permits keep going out, roads and pipes keep getting laid, walls keep going up... hmm. Tell me again why the TIF was necessary?
Cory, have you looked at what's available in Madison for housing?
No you have not.
If you had, you would realize that the places available are not what prospective buyers want: a three bedroom house with closets for each bedroom (10x12), a nice kitchen, two bathrooms, a good size living/dining room and a laundry room all on one floor with an attached garage.
These houses are not for sale, regardless of price.
I've gone to open houses and have done my homework.
There is a need. There is a demand. There is no inventory of houses.
If there is a need, why is the free market not responding to it? Why is Silver Creek Circle not full?
Either we allow "free taxes" for all new construction in the area or better yet we just get rid of the program. I don't necessarily blame LAIC or Randy for taking advantage of the program. The problem is that it creates winners and losers. It's a welfare program that governments at all levels need to take a look at. If development in certain "affected" areas is needed, then perhaps the city and county should fund a grant program(through other people's taxes)to help finance such construction. But then the politics and stigma gets a little more touchy , doesn't it?
A contractor assured me 2 months ago he could build these houses for the same price without a TIF. Easy money was driving the housing market and Schafer saw a chance to improve his worthless land with our money. About the time the TIF project could start the housing market died, and now loan requirements (and our financial world) have changed substantially, so there's less demand. There's a ranch on south Harth for 94k and north Josephine for 114k. How about the foreclosure in the country at 136k (1578 sq. ft.). That one looks nice!
http://siouxempiremls.rapmls.com/scripts/mgrqispi.dll?APPNAME=siouxempire&PRGNAME=MLSPropertyDetail&ARGUMENTS=-N747389948,-N71682,-N,-A,-N5647296
Located the numbers: That contractor said the square footage price is $97 to $100 for homes without a basement, or $110 with a basement (approximately). But people are not calling him to build right now. They are remodeling and staying put. People are being more cautious, can't get the loans, and even in Madison we have people underwater who are stuck.
I am not going to argue the merits of this on either side, but I will say this. Of course Randy thinks this is a great thing! I am sure he has made a lot of money over the last few years by selling his land, renting space, etc. etc. Why would he say anything negative about the LAIC or the City?
This is a "scratch my back and I will scratch your back" situation. I am becoming more and more concerned that we have some cronyism and favors going on. I like to believe that local politics is not influenced by money and power... but this is just as bad as what is going on at the State and Federal levels... just on a smaller scale.
As for housing... have you looked at the paper? There are so many houses on the market that I think our population is in for another big dip in the next five years. I have never seen so many houses for sale in Madison. When we bought our current house in 2004, there were very few on the market and not much to choose from. Now days.... well, there is something for everyone, from low prices in the 50s all the way up to the 500s.
I know that some at the Madison Daily Leader read this blog. I appreciate their coverage of the issues. But all this one sided journalism lately is starting to make me want to cancel my subscription. When will the tough questions be asked and answered provided? I had multiple people tell me in the last week, "have you seen the latest economic propaganda in the paper?" These are everyday people. They also want to know where retail development is at.
Don't believe me... look at the discussions on this local facebook group. https://www.facebook.com/groups/158697277538022/
It is entitled "If you grew up in Madison, you remember..." Tons of current and former citizens are discussing the lack of stores and remember when Madison had a vibrant retail community.
Here is one of the discussions... names removed. Very interesting insight to what our CITIZENS think about the state of Madison's economy.
Thread Begins:
How about going downtown to actually shop for clothes..penneys, geyermans, gallowways, burgs shoes, the emporium, BenFranklin..those were the days!!!
Like · · Follow Post · August 31 at 8:01am via mobile
15 like this.
That's the Madison I remember and miss!
August 31 at 8:37am · Like · 1 person
I agree!!
August 31 at 11:46am · Like · 1 person
That's when a trip to sf was a treat, I miss those days
August 31 at 12:17pm · Like · 3 people
Betty's !
August 31 at 12:47pm · Like · 2 people
We all miss it. It's no longer here. If you really need something you probably can't get it here anymore. Another one Oiums was also here and had clothes for men, and women and shoes.Lots of shoes. Collignon's Gambles Coast to Coast. Lots of stores then, but no more.
August 31 at 7:59pm · Like · 2 people
Yes, I remember when you could actually shop for Christmas gifts in Madison & the stores would stay open late (9 PM). It was fun to just window shop, too.
August 31 at 9:05pm · Like · 3 people
Penney's also had a great fabric store in the basement. Lots of variety. That's where we had to go buy fabric for home ec class.
September 1 at 9:00am · Like · 2 people
Galloways had a downstairs too and they had fabric and batting and thread and all the notions you could imagine there. You can't buy fabric in Madison now. I don't know if you can even get thread and needles if you needed them.
September 1 at 7:35pm · Like
The stores stayed open on Thursday nights until 9:00!
September 1 at 8:10pm · Like
Chaffins!
September 1 at 8:11pm · Like · 1 person
I remember Bergs, Pennys and Ben Franklin......And the stores downtown being open till 9pm on Thurs. nights!
September 14 at 1:38pm · Like · 1 person
It used to be that the stores were open on Friday nights but with sports taking over they switched it to Thursday nights.
September 14 at 1:51pm · Like
Ben Franklin had popcorn and roasted nuts!!! What a treat!
September 14 at 1:54pm · Like · 2 people
Bought my first formal at Geyerman's :-)
Yesterday at 12:58am via mobile · Like · 1 person
They used to let you take clothing home "on approval". You could pick something out, get it on approval, take it home and see if your husband liked it. Then you would either bring it back or pay for it.
Yesterday at 8:06am · Like · 1 person
Don't forget Stan's Men shop...
23 hours ago · Like
luved Ben Franklin!!!!!
End of thread
Oh, Charlie, the problem with using a TIF for something unnecessary is the tax base can only support so many diverted dollars. If the community wants to offer an incentive for something (like a big box store), these dollars (330k) are unavailable. Not sure how many TIF dollars remain.
Ashley, that Facebook thread says a lot about our current economic situation. I particularly like the point about how Sioux Falls trips used to be a treat... as opposed to a neccessity. And funny to think sports didn't once dominate Friday nights. Could it be that sports have actually hindered retail activity? (Sorry: now I'm pulling together too many threads!)
The biggest issue people have with the TIF is that it only benefits one person, the developer. The initial TIF Grant was around $320,000 and was used for infrastructure like roads, water, sewer, acquisition of a house, legal fees and the first two year's of Schaefer's payments to the State. 100% of all new or increased property taxes on those properties within the TIF which includes the 2nd Street Diner, Randy's building and any other new construction go directly toward making Randy's TIF payments. For the first 20 years or so, there is no benefit to the County, school district or City. It only benefits the owner/developer.
Building a new building behind his current building simply allowed more new property tax dollars to flow to TIF payments, while taking tennants from DSU's tech center and placing them all in Randy's new building. The real question should be why a Board of Regent's member is gaining personally by taking tennants from Dakota State University and moving them into his building simply to build his property tax base within the TIF area?
Rod, it is amazing how the article in the paper didn't really discuss any of that. It is like I said, someone is scratching someone's back.
I could live with the situation if it was creating new businesses, increasing new jobs, and maybe increasing sales tax revenues. But like you said, MOST of the tenants were already somewhere else in town and just vacated to a nicer place. It is a SHIFT.. not GROWTH.
Shift not growth... that's right! Good point! Is there anyone on that ground who wasn't here before? If that dance studio hadn't gone to Schaefer Plaza, couldn't it have gone to a nice downtown location, or the Garfield building as some previous dance outfit did?
And Rod's on point, too: the press release from LAIC assiduously avoided acknowledging that the taxpayers aren't enjoying any direct revenue from the project yet.
Rod, do you know how many TIF dollars are still available?
Ashley, you're correct about the musical chairs approach to bringing businesses to the Washington Plaza. I'm all for progress, but "forward" progress would be better, not just a shell game to take people off mainstreet. Shuffling people from storefront to storefront isn't growth.
John, during the City's meetings on the TIF application, they had to either underwrite or guarantee the money Randy borrowed, which caused them to exhaust all their borrowing ability at that time. Hopefully, that borrowing amount has increased so the City is not strapped in that capacity.
In regards to Secure Banking Systems, in my opinion, they are a Premier Business for Madison. A shining star that LAIC should have displayed with a frontage location, signage and an example of what start-ups can become. Randy could have still been the developer and landlord in a different high-visability location. It shouldn't be hidden next to a creek in the back of a plaza simply to enrich the property tax revenue of a TIF District so the owner can make his payments. That was Dwaine and Randy's program. It brought another $7000 or more in commercial property taxes annually into the TIF coffers. Simply a good buddy deal. One of what appears to be many.