Simplified: Were it not for a $90 million tax-increment financing proposal to offset construction costs, a Smithfield executive told councilors Tuesday the company would not be investing in a $1.3 billion pork processing plant in northwest Sioux Falls.

Why it matters

  • The City Council on Tuesday voted unanimously to advance an ordinance establishing a tax-increment financing district for Smithfield's proposed new site in Foundation Park.
    • That TIF would allow the company to use property taxes it pays in over the next 20 years to offset costs to build a new wastewater treatment plant on-site.
  • Tuesday's vote came after about a dozen local business leaders turned out to voice support and urge the council to approve the TIF and pave the way for a once-in-a-generation opportunity to redevelop a wide swath of downtown Sioux Falls.
  • Since the announcement of the move, city officials – as well as Smithfield execs and economic development professionals – have emphasized that Smithfield choosing to build new in Sioux Falls was never a guarantee. Smithfield Vice President for Corporate Affairs didn't mince words about it in front of the council.
"Were it not for the TIF economic incentive, we would not make this investment," Monroe said.

Tell me more

If approved, the TIF would allow for as much as $89.9 million in incremental tax revenue (i.e. property tax revenue that wouldn't have been there before the new building) to reimburse Smithfield developers for eligible costs incurred during construction.

  • Said another way, it's basically Smithfield paying (a portion of) property taxes to itself for the next 20 years.
  • But local governments will still get paid property tax based on the valuation of the land before Smithfield's new facility.

Find more context here:

What is a TIF? And how does it relate to the Smithfield move?
Tax-increment financing, or TIF, is going to come up a lot in the coming weeks as the city looks to approve a $90 million TIF district to offset Smithfield’s relocation costs. So, let’s unpack it.
Sioux Falls SimplifiedMegan Raposa

Several business leaders, including representation from Downtown Sioux Falls, Inc., the Chamber of Commerce, the Young Professionals Network and the Sioux Falls Development Foundation spoke in favor of the TIF.

Former City Councilor Alex Jensen also got up to share his support for the project, noting that TIFs in Sioux Falls "simply work."

"They don't ask for too much," Jensen said. "It's the right project at the right time, and the right details in that project to make this effective."

What happens next?

Tuesday's vote is just one step in the process. Councilors will still need to come back next week to take a final vote on the TIF.

  • They'll also be expected to vote on resolutions next week that would approve both the TIF plan and the TIF boundary.
  • Councilors will also have to take action on a conditional use permit that caused some consternation at the planning commission meeting last week.