Record $ for Mega-TIFs in Minnesota and Texas
Q: What could be worse than a TIF costing $585 million?
A: A $585 million TIF fueled in part by the diversion of workers’ state personal income taxes—and those people work for the state’s largest private employer.
Q: What could be worse than a TIF costing $803 million?
A: An $803 million TIF created for one named employer—and that beneficiary is a big-box retailer owned by a mega-billionaire’s company.
Two TIFs proposed in the past three weeks would break the U.S. record for costliest TIF district (currently held by the $500 million TIDD in Albuquerque by Forest City Enterprise’s Mesa del Sol project).
In Minnesota, Land of 10,000 Lakes—and more than 2,000 TIF districts—Mayo Clinic Health System is now before the state legislature seeking a TIF deal on steroids surrounding its flagship headquarters complex in Rochester. The “Destination Medical Center” project refers to Mayo/Rochester being an international medical destination.
The legislation would create a state body to issue bonds backed by four, 20-year revenue streams. One of those streams comes from part of the rise in personal income taxes paid not only by Mayo employees in Rochester, but also by employees of other companies in the Rochester development district—and at Mayo Clinic’s 43 other facilities across the state! (See our “Paying Taxes to the Boss” study for why diverting personal income taxes is such bad policy.) The body would also apparently capture part of the incremental corporate franchise taxes, commercial-industrial property taxes, and sales taxes from Rochester and Mayor’s other facilities. Mayo, a non-profit, has assets of $11 billion and an endowment of $2.2 billion. It employs more than 32,000 people in Minnesota.
In Texas, where TIFs are called Tax Increment Reinvestment Zones (or TIRZs), a small, affluent Dallas suburb named The Colony is proposing a massive TIRZ with only one named occupant so far: Nebraska Furniture Mart. NFM Texas broke ground last September on 1.86 million square feet of retail and distribution space within what it calls Grandscape, a 433-acre mixed-use development it plans along the Sam Rayburn Tollway.
This will be NFM’s first store in Texas, and it claims the site will be “destination retail.” It plans a showroom of 560,000 square feet (for context, 200,000 square feet is a large Walmart Super Center). The Dallas Morning News reports that an adjoining warehouse of 1.3 million square feet will use methods learned from the fast food industry to have goods in a customer’s car within seven minutes.
NFM is owned by Berkshire Hathaway, the conglomerate headed by Warren Buffet, the nation’s second-richest person worth $46 billion, according to Forbes.
The proposed TIFs for Mayo Clinic and Nebraska Furniture Mart are evidence of the cruel reality in U.S. economic development today: the big dogs are hogging the trough. It’s the public-sector equivalent of banks lending only to the most credit-worthy borrowers.
Are you big, famous and profitable? Jump to the head of the line! What’s that about “incentives” for workers, communities and businesses that actually need help? Tut, tut. How passé.