We don’t know how many millions Fargo businessman Doug Burgum will have poured into his gubernatorial campaign this cycle, because he wont’t tell us and North Dakota’s too-lax campaign finance laws don’t require it, but we do know how many millions he and his partners will get in subsidies for their ambitious skyscraper project in downtown Fargo.
That number is $15.5 million. It was approved by a 3-2 vote of the Fargo City Commission last night. In addition to that, Burgum and his partners are also getting a loan to help build a facility they’ll ultimately own.
“The city will borrow $15 million” to help fund the project, which is called Block 9, reports Adrian Glass-Moore in the Fargo Forum today. The developers are then supposed to make the payments on that debt with Fargo Planning Director Jim Gilmour saying the city has “adequate security” in case Burgum and his partners fail to make their payments.
This sounds suspiciously like socialized risk and privatized profits. Burgum and his partners get to keep Block 9 and profit from it, if all goes according to plan. And if the project falls apart? This $15 million loan will be on the taxpayers to pay off.
[mks_pullquote align=”right” width=”300″ size=”24″ bg_color=”#ffffff” txt_color=”#000000″]This sounds suspiciously like socialized risk and privatized profits. Burgum and his partners get to keep Block 9 and profit from it, if all goes according to plan. And if the project falls apart? This $15 million loan will be on the taxpayers to pay off.[/mks_pullquote]
To be fair, Burgum and his partners are risking a lot more than the $15 million. This is a $98 million project over all. But you have to wonder why, if this is a sound project with a healthy expectation for success, the taxpayers need be involved at all.
And then there are the $15.5 million in tax exemptions. “Apart from $6 million through payment in lieu of taxes, Block 9 will get a tax break of $2 million through the downtown Renaissance Zone,” Glass-Moore reports. “The City Commission also approved $7.5 million in tax increment financing.”
This is usually were the mealy-mouthed explanations justifying these sweetheart, taxpayer-backed deals kick in. The developers like Burgum will act affronted that you would even suggest that they’re getting a deal. They’d rather you perceive them as doing the taxpayers a favor by taking these incentives.
How magnanimous of them to the taxpayers help pay for property they will own.
They’ll also talk about the property value they’re adding, which will increase city revenues in the long run and is supposedly the payback to the taxpayers for the incentives paid up front. Except, when was the last time taxes went down because one of these projects increased the tax base?
I’m not sure it’s ever happened. Like, ever.
I have nothing at all against the Block 9 project when it comes to its merits. “This is a great addition not just to the downtown but to our city,” Fargo City Commissioner Dave Piepkorn, who voted for the incentives, said of the project. “I think it’ll be a crown jewel.”
That sounds about right.
But I also think millionaire businessmen should pay to build their own skyscrapers.
UPDATE: Originally this post attributed the Forum article to reporter Tu Uyen Tran. It was actually written by Adrian Glass-Moore. I’ve corrected the post to reflect that.