Local governments use tax increment financing to jump start projects that market forces alone won’t support. The idea behind a TIF district is that, without providing tax dollars to cover the cost of building the public infrastructure associated with the project, the project would not happen.
Canadian milk corporation Agropur is asking Hamlin County for tax increment financing to support an expansion of its cheese plant in Lake Norden. Yet, even without the TIF designation, Agropur appears to have already begun its expansion:
The City of Lake Norden—whose slogan is “Cheese Is Our Whey“—approved on November 17 a whole whack of variance requests to accommodate the expansion on the south side of their town—eight-foot-high fence instead of seven-foot; 54-foot-high warehouse, 90-foot-high silos, and 110-foot-high whey evaporator and dryer building instead of the usual 45-foot limit; 5.5-foot setback for its raw milk silos and 2.25-foot setback for its construction truck scale instead of 50-foot setbacks. On December 4, the city also extended Agropur’s building permits from one year to two.
The Hamlin County Commission got information about the TIF request at its December 5 meeting from Toby Morris of Dougherty and Company in Pierre, which is designing the TIF for Agropur. The commission met Tuesday to discuss the TIF further; according to a report by Jenna Aderhold in the December 13 Hamlin County Herald Enterprise, the TIF proposal goes to the Hamlin County Board of Adjustment next month, then back to the full county commission for final approval.
Governor Dennis Daugaard is asking the 2018 Legislature to review the use of tax increment financing. The Legislature’s Executive Board has already received a draft report from the Legislative Research Council on apparent misuse of TIF districts in Madison and Rapid City.
The Hamlin County Commission should take a look at the construction already underway at the Agropur site in Lake Norden and ask if they aren’t cruising toward giving Governor Daugaard example of bad tax increment financing.
Related Reading: The Department of Revenue posted a guide to tax increment financing in September. The department says it will post its first annual TIF district report, listing all TIF districts in the state, on Open.SD.gov by January 1.
TIFs were designed to be a way to redevelop areas that were run down, not as a welfare handout to developers. Rapid City has long used TIF districts as welfare for the elite. When I was on the school board, we had long standing policy to refuse to participate in TIFS because it amounted to stealing money of children to give it to the fat cats.
Where I live now is little different, so it’s a nationwide problem. Sometimes TIF money goes to worthwhile projects, but mostly it’s just a handout to the well-connected developers. Wisconsin cheese doesn’t require TIF districts to be profitable. Something is really wrong out there.
The TIF process needs to be reformed or scrapped.
Instead of a tif, for reasons that D Pay is correct, instead offer them a road that will fully satisfy their needs and build another park for the employees kids to play. That is governments job. It is not governments job to promote one business over another. It is very tempting and if a business is the only one in town, they can put on a lot of pressure. That is why we need more specific laws so they do not bully small town governments. Those small towns have some good workers especially when the farm economy is down and some good workers are available.
Be careful, Agropur. The “Big Papa” at Papa Johns (John Schnatter) has stepped down amid controversy over his decision to disrespect the African American community, black NFL players and right thinking Americans. Schnatter sided with President Trump in insulting players, calling for owners to fire them and season ticket holders to tear up their tickets. GO VIKINGS!!
(As and aside) In the city I live and cities across USA , the “second level”, low grade take out pizza business is tumbling like a weed blowing across Oklahoma. Consumers are returning in droves to the old fashioned pizza parlors we grew up with, for a family friendly, community supporting and entirely better tasting pizza experience.
The Agropur product, while in high demand before, is no longer king. Low milk fat mozzarella, as bland as it tastes may well be a product of the past.
The bad SD economic environment gives small towns 2 choices – join the race to the bottom selling out to corporate interests, or die. Good luck controlling corporate corruption. The track record at doing so is mixed, at best.
But in this case, John, could Agropur really back out the expansion when they’ve already done so much groundwork?
Cory, yes Agropur could back out of the expansion. I don’t know if they would if they don’t get the TIF, but they certainly could IMO. What they have invested so far looks like a small percentage of the project.
Cheese plant expansion is good. Cheese is good. Cheese fixes things.
Who knows. Maybe they’re planning to start a gourmet cheese division. Cheese is a highly liberal product and would fix a lot of things.
TIF’s are wrong headed and can bankrupt a city https://www.kshb.com/news/local-news/investigations/potential-raytown-financial-crisis-looming