When addressing genuine issues of blight, using TIF to subsidize development might make sense. All too often, though, cities are choosing to use TIF to subsidize development that would otherwise occur naturally.
Did the Financial Center in Des Moines need this incentive? Were citizens given a chance to share their opinion?
A renovation proposal for the Financial Center in downtown Des Moines puts forth a $59.3 million plan that would convert 13 of the 25 floors into a hotel, as well as add other amenities like a restaurant, coffee shop, and market. Cities sometimes support projects like this through tax increment financing (TIF), and when they do, a portion of the new property tax money generated by the property is frequently given back to the developer to help subsidize the project.
On Monday, the City of Des Moines approved a preliminary TIF plan for this project to the tune of $7.5 million, or 12.7% of the total cost of the project. This building sold as recently as 2014 for $8.87 million (read more about the project and history of the building). The $7.5 million TIF amount is a substantial amount of money to be rebated back to the developer that could otherwise be available for use on other public projects or to reduce property tax burdens for Des Moines residents and businesses.
When addressing genuine issues of blight, using TIF to subsidize development might make sense. All too often, though, cities are choosing to use TIF to subsidize development that would otherwise occur naturally. In the situation of the Financial Center, was a TIF rebate to the developer, nearly totaling the amount the building sold for just five years ago, really needed to incent the building of another downtown hotel? There's not exactly a shortage of new development downtown and in the East Village.
Determining if this is the best use of tax dollars is up to residents of the City of Des Moines. Unfortunately, it’s unclear that Des Moines residents were truly able to weigh in on this proposal.
Under normal circumstances, meetings are held at Des Moines City Hall on Monday evenings. Due to the coronavirus outbreak, the public is no longer allowed in City Hall. Further, the Des Moines City Council members teleconferenced into this meeting, making the meeting essentially entirely virtual, with the exception of a few essential staff who were present in the council chambers. Information for the public to participate in this call via Zoom was made available on the agenda; however, not everyone has access to the internet or technology that would allow them to teleconference. Others may have access, but they may not have the technological understanding to participate. Further, participating in council meetings in person is much easier, as folks who are unfamiliar with the process can seek assistance that likely is not able to be offered via conference call.
While the times we’re living in are far from normal and adaptations must be made in order for government to function and respond to the present coronavirus crisis, local governments should be limiting their actions to essential items to continue basic city operations and respond to the crisis. Anything outside of this scope should be put on hold until normal council meetings are able to be held to ensure that the public is able to participate, and government is operating with the greatest transparency possible.
While the residents of Des Moines may fully support the Des Moines City Council’s actions to pass a preliminary plan that costs millions and pays for 12.7% of proposed renovations to the Financial Center, this decision could have been put on hold until the public had a better opportunity to participate in the process. The residents of Des Moines deserve the opportunity to engage on this use of TIF when conditions return to normal to ensure that their voices are truly heard.