# OKCpedia > Summary & Reference Articles >  TIF Districts

## Pete

*What is a Tax Increment Financing (TIF) district?*In Oklahoma City, TIF is used as an economic development tool whereby future property and/or sales tax dollars generated in a specific district are redirected from the budgets of Oklahoma City and Oklahoma County to private and public projects in the same district.According to the Oklahoma Tax Commission, as of 1/25/18 there are more than 90 TIF districts in the state.The term of a TIF typically runs 25 years, the maximum allowed by the state constitution.TIF's are used in other cities in Oklahoma and the U.S., although there is great variation in how this tool is used in terms of redirecting taxes, approval / management process and how the taxes are allocated.


*Existing TIF districts in Oklahoma City*There are 12 Tax Increment Funding (TIF) districts that are currently active in Oklahoma City and 6 more approved and soon to be activated:																			
	TIF #
	District
	Budget*
	Type of Taxes
	Start
	End

	1
	Health Sciences Center
	$47.00




	2
	Central Business District
	$195.00
	Ad Valorem
	03/07/00
	03/06/25

	3
	Skirvin Hotel
	$5.00
	Sales
	06/07/04
	06/06/29

	4
	Dell
	$28.20
	Ad Valorem
	03/29/05
	03/28/30

	5
	Dell
	$0.00
	Sales
	03/29/05
	03/28/30

	6
	Los Rosas
	$3.10
	Ad Valorem



	7
	Health Sciences Center
	$21.00
	Ad Valorem
	08/01/06
	07/31/31

	8
	Devon / Project 180
	$157.00
	Ad Valorem, Sales
	12/16/08
	12/15/33

	9
	Northeast Renaissance
	$45.00
	Ad Valorem, Sales
	2015
	2040

	10
	First National Center
	$45.00
	Ad Valorem, Sales
	2016
	2041

	11
	Innovation
	$52.00
	Ad Valorem
	2016
	2041

	12
	Western Gateway / Wheeler
	$120.00
	Ad Valorem
	2017
	2042

	13-18
	Core to Shore
	$395.00
	Ad Valorem
	TBD
	+25









	Total:
	$1,113.30






* In millions.  In most cases, the original budget is far exceeded by actual receipts.																		




*New TIF District to fund OG&E Headquarters, convention garage and hotel*


*From where are TIF tax dollars redirected?**Property (ad valorem) tax*
Every privately owned property in Oklahoma County (apart from nonprofits, which are exempt) is taxed annually at a rate of approximately 1% of assessed property value.  Each year, property values -- and thus property taxes -- are adjusted (almost always upwards) according to the latest market conditions.  In normal circumstances, all property tax goes to the County and they in turn distribute to the public schools, library system, City/County Heath Departmnet and CareerTech.



At the start of a TIF a role of properties within the district is created and the base assessed value (AV) is established according to the current County value.  The amount currently paid to the County continues to go them; but any increase in taxes based in increased assessed values is redirected into the TIF.  Thus, any increase in property tax over the first year gets paid each of the next 25 years into the TIF account rather than being sent to the County.






*Sales tax* 
In Oklahoma, all sales are taxed by the state at a rate of 4.5% and that money goes into their general budget.

Oklahoma City adds 3.875% (for a total of 8.375%) but only the 2% that goes to the City General Fund (operating budget) is redirected to the TIF:


Partial Listing of City Services
Police, Municipal Court, Fire & Emergency Medical Services, Parks & Recreation Centers, Street Maintenance, Code Enforcement, Public Transportation, Civic Center Music Hall, Arena & Convention Center, Water & Wastewater, Utilities, Solid Waste Collection, Airports.


*How are TIF's approved and who manages them?*In Oklahoma City, City staff drafts potential new TIF Districts to address specific challenges or opportunities, presents to the City Council in informal sessions, meets with the affected tax jurisdictions, then the City Council ultimately votes as a part of one their regular public meetings.

Part of setting up any new TIF District is a project plan that includes the boundaries of where the money is captured and where it can be spent.  In addition, a general outline is established as to how the money will be used, but usually presented in terms of a few broad categories.  To date, the City has not chosen to establish specific criteria for allocating the captured tax dollars.


After the TIF District is established, City staff alone decides which projects are worthy of further consideration.  If staff decides a project application isn't worthy of TIF funds, the process stops there.  Where an application has been brought for council vote, 100% have been approved.

Most requests from TIF funds come from private developers.  But other requests actually originate from City staff themselves, such as public improvements, parking and school projects.  

In most cases the allocation is only paid to the developer / entity once the project is complete and certified.  In a small number of projects (21c, Plow, Steelyard and 123 Garage) the City loaned the money up front at low interest rates.



*Example: OKC TIF District #2*The best way to understand how a TIF operates is to look at a specific example, in this case TIF #2 for downtown OKC.

In 2000, the City decided to create a TIF for the downtown area in order to concentrate spending in the area and spur development.

As the TIF was to be funded by property tax (no sales tax was included) a base Assessed Value (AV) was set for all properties within the boundaries shown below (roughly 13th to the north, the old I-40 to the south, Western to the west and I-235 to the east) when the district was formed in 2000.  Any INCREASE (called the increment) in property taxes (generally 1% of AV) over that base in 2000 went into the TIF fund.

Also, although the taxes collected are within the boundaries described, they can be spent in a larger area, shown as the Project Area below.

The amount that goes into the TIF is separated into two categories:
Indirect:  50% of the tax increase since 2000.  Indirect properties are defined as those not receiving TIF funds.  Currently accounts for about 40% of the TIF 2 amount.Direct:  100% of the tax increase since 2000.  Direct properties are those that receive TIF funds.  Currently accounts for 60% of the TIF 2 amount.
The original budget for TIF #2 was $47.5 million.  However, it is now estimated that $126 million will be collected before the TIF expires in 2025.  Of that amount, almost $90 million has been allocated.



*Where TIF #2 dollars have been spent*





*Key TIF #2 awards as a percentage of total investment*Follow links for wiki articles on each project.

 *Project*
 *Type*
 *Investment*
 *TIF Award*
 *TIF as % of Inv.*

	Level Apartments
	Apartments
	$24.0
	$1.3
	5.2%

	Maywood Apartments
	Apartments
	$16.0
	$1.0
	6.3%

	Edge @ Midtown
	Apartments
	$34.0
	$2.3
	6.8%

	Mosaic
	Apartments
	$24.0
	$1.1
	4.6%

	Maywood Apartments Phase II
	Apartments
	$20.0
	$1.0
	5.0%

 21c Museum Hotel
	Hotel
	$53.0
	$5.3
	10.0%

	LIFT
	Apartments
	$42.5
	$3.0
	7.1%

	Mideke Building
	Office
	$17.0
	$1.0
	5.9%

	Civic Center Flats
	Condos
	$6.0
	$0.4
	5.8%

 Steelyard
	Apartments
	$75.0
	$4.1
	5.4%

	Avana
	Apartments
	$33.0
	$2.5
	7.6%

	Block 42
	Condos
	$12.0
	$1.0
	8.3%







	Totals:

	$356.5
	$23.9
	6.7%

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## Pete

Also wanted to point out that not all increases in assessed values are due to development.

Over the 25 year TIF term, properties will naturally appreciate which raises the assessed value and the resulting property taxes (1% of assessed value).

Also, when properties are sold the assessed value is generally adjusted to reflect the most recent sales price, as a recent transaction is always the best estimate of true value.

So in the case of TIF #2, a big part of the reason the budget went from the original $47.5 million to the current $126 million is the natural appreciation.

As an example: Cotter Ranch Tower is currently generating about twice the property tax it did in 2000.  Since this is considered an "indirect" property (one that hasn't received TIF funding) 50% of that property tax increase since 2000 goes into TIF #2 and the other half goes to the County as usual.  Property taxes have doubled since 2000 at Leadership Square as well.

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## Richard at Remax

Not to be Johnny come lately but did Clayco hint at the amount of TIF they were seeking when they were presenting thier proposal?

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## Pete

Yes, Clayco put a specific amount in their proposal (see below).

Below is a quick analysis of most the commercial projects that have received TIF funds.  You can see the typical amount is around 6%.  21c is a bit of an outlier due to the unique nature of the building and the area of investment.  Without 21c the average TIF percentage of total investment is 5.8%.

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## Midtowner

$142 million give or take.

That is absurd OG&E is going to build this thing with or without free money from the taxpayers.  I was fine with the Devon TIF because of the way it was used to improve all of downtown. In this case, the money is apparently being spent to benefit only this property.

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## DoctorTaco

> Yes, Clayco put a specific amount in their proposal (see below).
> 
> Below is a quick analysis of most the commercial projects that have received TIF funds.  You can see the typical amount is around 6%.  21c is a bit of an outlier due to the unique nature of the building and the area of investment.  Without 21c the average TIF percentage of total investment is 5.8%.


Another overwhelming sense of dishonesty when folks seem to be making the claim that 10% is the accepted, du jour, way of allocating TIF money.

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## Pete

Also note that of the TIF awards they are either for public projects, commercial, residential, and hotels.

Very little allocated for office and in fact, that wasn't even a category in the TIF #2 budget.

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## Urbanized

> ...I was fine with the Devon TIF because of the way it was used to improve all of downtown. In this case, the money is apparently being spent to benefit only this property.


And yet that is not at all an unusual use and in fact an (THE?) intended way for TIF dollars to be utilized. They are designed as a lure. Devon's use of TIF dollars spoiled us and skewed our perception of how these things normally happen. Devon was an extreme (and often unappreciated) outlier.

Again, I am not rah-rahing this particular project nor defending the massive request (which I too believe is excessive); I'm only trying to dispel some incorrect notions about what TIF actually is and how it is typically used.

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## Pete

> And yet that is not at all an unusual use and in fact an (THE?) intended way for TIF dollars to be utilized. They are designed as a lure. Devon's use of TIF dollars spoiled us and skewed our perception of how these things normally happen. Devon was an extreme (and often unappreciated) outlier.
> 
> Again, I am not rah-rahing this particular project nor defending the massive request (which I too believe is excessive); I'm only trying to dispel some incorrect notions about what TIF actually is and how it is typically used.


Right, and even in TIF #2, over 28% of the funds allocated thus far have been for public schools, parking and other public improvements.

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## Pete

BTW -- and I added this to the article at the top -- currently TIF #2 is collecting a little over $7 million per year.

Of that amount about 60% comes from direct assessments and the remaining 40% comes from indirect (reminder that indirect means only 50% of the increase since 2000 goes into the TIF and the other half goes to the County as per usual).

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## Just the facts

So let's say the $142 million gets approved.  Where does the City get the $142 million to give to Clayco?

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## Pete

> So let's say the $142 million gets approved.  Where does the City get the $142 million to give to Clayco?


The City doesn't give them anything.

Clayco would merely have their property taxes reduced every year.

However, their pro forma shows they would take that future income stream and borrow against it so they get the money up front, then pay it back to the bank with interest.


They are also asking for a sales tax rebate, ala Devon.  Basically, instead of paying local/City sales tax on materials used in their project, that would be returned to them by the City.  Probably about $10 million or so and they'll likely seek State matching funds, which is also what Devon did.

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## Just the facts

> The City doesn't give them anything.
> 
> Clayco would merely have their property taxes reduced every year.
> 
> However, their pro forma shows they would take that future income stream and borrow against it so they get the money up front, then pay it back to the bank with interest.


So they don't get a lump sum payment but if they sell the building within 25 years does the new owner get to claim the property tax exemption?  I really see the City getting the shaft when TIF building are sold because they sell for market value, not market value minus remaining TIF balance.  In other words, if Clayco sells this building after 5 years they walk away with 20 years of property taxes scot-free, on top of whatever profit they sell the building for.  That's good work if you can get it.

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## Pete

> So they don't get a lump sum payment but if they sell the building within 25 years does the new owner get to claim the property tax exemption?  I really see the City getting the shaft when TIF building are sold because they sell for market value, not market value minus remaining TIF balance.  In other words, if Clayco sells this building after 5 years they walk away with 20 years of property taxes scot-free, on top of whatever profit they sell the building for.  That's good work if you can get it.


Not necessarily.

There is usually a claw-back provision in the TIF agreement.

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## Pete

From the Journal Record:

O’Connor: Not a tax increase
By: Cathy O'Connor  Guest Columnist	December 9, 2014	0

Tax increment financing has been a hot topic since the designation of Clayco as the redeveloper for new development adjacent to the Myriad Botanical Gardens. Clayco has requested financial assistance to build a level of density higher than typically found in Oklahoma City. The city is also in the process of considering a new TIF district for the northeast side that will be essential in the revitalization of this area.

Cities use TIFs to revitalize and redevelop an area or create other types of economic development. Oklahoma City has eight TIF districts. There’s some discussion on whether the creation of a new one would be beneficial for development between Sheridan and Reno, and Hudson to Walker avenues.

TIFs don’t raise taxes on a property. As the value of property goes up, so does the total amount of property taxes paid – not the percentage or tax rate.

Creating a TIF district isn’t easy. A review committee is made up of all governmental entities that receive property taxes, representatives from the council and planning commission and three at-large members. Following reviews by the review committee and planning commission, the council must adopt an ordinance establishing a base-assessed value for a specific geographic area. Each request for assistance to individual projects goes through the TIF review committee.

Since the creation of the downtown TIF district in 2001, the market value of the district has risen by more than $800 million. This doesn’t include the Devon headquarters, which is in its own TIF district.

There are two ways downtown TIF money is allotted. Direct increment financing is generated from property that the city directly assists in the redevelopment of through an allocation of TIF funds.

Indirect increment applies to property within a TIF district, but hasn’t directly benefited from city assistance. In cases where there’s indirect increment, only half of the additional taxes brought in by the rising property value goes back into the TIF. The other half is provided to the various entities that rely on property taxes, such as the school district. Since the creation of the downtown TIF, these other government entities have received about $22 million from the downtown TIF district.

TIFs are a vital tool for the future of development in Oklahoma City.

Cathy O’Connor is president of The Alliance for Economic Development of Oklahoma City.


Read more: O?Connor: Not a tax increase | The Journal Record

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## Pete

The timing of this is no coincidence.

I'm sure it won't be long before O'Connor presents the negotiated TIF agreement with Clayco to the City Council.

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## gopokes88

> The timing of this is no coincidence.
> 
> I'm sure it won't be long before O'Connor presents the negotiated TIF agreement with Clayco to the City Council.


I wonder what the agreed TIF will be. I highly doubt its 25%, that just reeks of start way higher then the real number, and negotiate back down towards it. My guess is it will be 15% or so. Given the scope and the drastic changes to the skyline it will provide, it might be worth it.

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## Pete

OKCTalk - New TIF district would fund OG&E HQ, convention garage and hotel Edit Page

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## Pete

This was written by Cathy O'Connor and published in the Journal Record:

O’Connor: Density, design and parking
By: cathy.oconnor January 6, 2015

Last week, staff members from the city of Oklahoma City and the Alliance discussed future parking requirements for the new convention center, its accompanying hotel and other development planned around these projects.

Structured parking is expensive. Our debate centered on building enough parking to meet future needs at the expense of finances that might be used elsewhere. A member of our group reminded us we are in the business of city building. This part of my job is the most fun – when we can dream and try to develop a vision of what Oklahoma City can be.

These new projects focus on adding spaces that respond well to the pedestrian experience and create an active and interesting street. Oklahoma City needs new Class A office space. Projects are in the works to help fill that need. Building plans are set for more essential residential units, as well.

These developments help change the nature of downtown from an employment center to a place where people live, work and play. Other significant new projects include structured parking garages. While we may not always want to cater so heavily to automobiles, parking is a necessity.

One important consideration is making sure the street level consists of interesting, active spaces available for use as offices, shops or restaurants. By creating and filling those spaces, we can add density to downtown. We measure that density using a floor-to-area ratio, or FAR. A one-block development that covers an entire block with a one-story building (not including parking) has a FAR of 1 and a two-story building over a block has a FAR of 2. For example, the Edge Apartments at NW 13th Street and Walker Avenue have a FAR of 2.5; the SandRidge center is a 6.

The current density of the area adjacent to the MAPS 3 Park has a FAR of 0.5. The goal, which will be rolled out as a part of the Downtown Development Framework, will be a FAR of 3. The framework was prepared by the city planning department to supplement current downtown development design guidelines and provide additional information to developers and property owners.

With this new tool and the goals of city building in mind, density, design and parking can be more easily planned for and accommodated.

Cathy O’Connor is president of The Alliance for Economic Development of Oklahoma City

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## Just the facts

For the love of Pete.  If your calculation for measuring density puts Sandridge at 6 and The Edge at 2.5, you have a seriously flawed formula.

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## Bellaboo

> For the love of Pete.  If your calculation for measuring density puts Sandridge at 6 and The Edge at 2.5, you have a seriously flawed formula.


Not at all, if you read it slowly, she says 'for an entire block'. The footprint taken for the buildings referenced do not take the complete block.

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## Just the facts

It isn't based on the footprint of the building, it is based on the size of the lot the footprint is on.  A one-story building covering an entire block gets a 1.  A 2-story building covering an entire block gets a 2.  A 4-story building covering half a block get also gets a 2 - for the whole block.  A 2-story building covering a whole block is more dense that a 4 story building covering half a block, but using the City's method they get ranked the same.  The best way to measure urban density is lot coverage and can be easily visualized using a black plan.  Central Paris is one of the most dense built environments on Earth, and with rare exception, every building is less than 6 stories.  If we want density (and I am not sure we actually do) we need to take height out of the equation.

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## Spartan

> It isn't based on the footprint of the building, it is based on the size of the lot the footprint is on.  A one-story building covering an entire block gets a 1.  A 2-story building covering an entire block gets a 2.  A 4-story building covering half a block get also gets a 2 - for the whole block.  A 2-story building covering a whole block is more dense that a 4 story building covering half a block, but using the City's method they get ranked the same.  The best way to measure urban density is lot coverage and can be easily visualized using a black plan.


I think you're referring to adjusted FAR.

I really appreciate O'Connor's perspective on this. I'm pleasantly impressed - I hope that her planning perspective helps in negotiations to better align these developments with the community's best interest.

If you're part of the pro-planning contingent on here, I don't understand how her columns can set you off. This is like Jim Couch on OKC Central, except better because it's much more agreeable..

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## Just the facts

> For example, the Edge Apartments at NW 13th Street and Walker Avenue have a FAR of 2.5; the SandRidge center is a 6


If we were just talking about footprint Sandridge center would be a 30.

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## Bellaboo

> If we were just talking about footprint Sandridge center would be a 30.


Not in relation to the 'entire block'..... it's about a 6 like she says.

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## Just the facts

Not the 'entire block'; the size of the parcel the building is on.  The tower has 6X more floor area than the size of the lot it is on, and since it is 30 stories, it would take six 5-story buildings (each with the same floor plate size) to cover the whole lot - and it would still just warrant a ranking of 6.  So what to you would be more dense - a lot 100% filled with six 5-story buildings or the same lot with a single 30 story building taking up 1/6 of the block's area (with 5/6 being grass)?

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## pickles

> For the love of Pete.  If your calculation for measuring density puts Sandridge at 6 and The Edge at 2.5, you have a seriously flawed formula.


Clearly you ought be in charge of determining what might be an appropriate calculation.

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## Just the facts

> Clearly you ought be in charge of determining what might be an appropriate calculation.


I wish.  Of course, I wouldn't care what the lot coverage area is since I would require the building to be built all the way to the sidewalk.  They can do whatever they want on the interior (see the interior courtyards at The Steelyard).  Alas, this is the very reason why OKC should adopt a simple form-based code and get rid of all the ridiculous calculations.

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## hoya

> Not the 'entire block'; the size of the parcel the building is on.  The tower has 6X more floor area than the size of the lot it is on, and since it is 30 stories, it would take six 5-story buildings (each with the same floor plate size) to cover the whole lot - and it would still just warrant a ranking of 6.  So what to you would be more dense - a lot 100% filled with six 5-story buildings or the same lot with a single 30 story building taking up 1/6 of the block's area (with 5/6 being grass)?


I'd prefer a 30 story building and then 5 more 5 story buildings, but that wasn't given as a choice.  :Wink: 

The city should focus on achieving both height and dense coverage of the lot.  The World Trade Center in the middle of 160 acre field would still have a pretty good FAR, but would make for a crappy city.  But a city with no height at all, especially in the US, is a city that gets overlooked.  It's not just the people driving by on the interstate that like tall buildings, it's people seeing the city on TV when the Thunder are playing.  More towers equals more exposure, and a higher profile for OKC.

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## ljbab728

http://www.oklahoman.com/article/538...klahoma%20City.




> Two new tax increment finance districts, one which could help finance a convention hotel and parking garage south of downtown, could become a reality later this year.
> 
> Cathy O’Connor, president of The Alliance for Economic Development of Oklahoma City, proposed the two districts as more than $1 billion in development is set to be built west and south of the Central Business District.
> 
> Tuesday, the city council approved moving forward with efforts to create a “South Central Downtown TIF,” which would be bordered by E.K. Gaylord and Western avenues, Main Street and the future Crosstown Boulevard, and a “Core to Shore TIF” south of the boulevard, north of the Oklahoma River, east of Western Avenue and west of Lincoln Boulevard.

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## warreng88

From the JR:

Two more TIFs: OKC Council votes to move forward on financing for Core to Shore, south downtown

By: Brian Brus The Journal Record January 27, 2015

OKLAHOMA CITY – The City Council took a big step Tuesday toward creating two new tax increment financing districts near downtown. They would provide funding for Core to Shore development and the southern part of the Central Business District.

Council members voted 8-1 on both issues Tuesday, with Councilman Ed Shadid in opposition. The resolutions authorized Mayor Mick Cornett to appoint review committees to look into the viability of tax increment financing, or TIF, districts to increase real estate ad valorem taxes in those areas so that City Hall can afford infrastructure improvements that will attract developers.

Cathy O’Connor, president and chief executive of the Alliance for Economic Development of Oklahoma City, said supplemental sales tax TIF districts will also be considered.

The TIF concept is based on the supposition that targeted areas will stagnate or grow much slower without a funding boost, a point that Councilman James Greiner expressed before casting his vote.

“I’m a skeptic on needing another TIF for this to develop,” he said. “So I really hope the committee is able to convince me that it’s needed, that this area will not develop without it … I would really like a ‘but-for’ test.”

The boundaries of the proposed TIF district for the Core to Shore area would generally follow the same lines set earlier by city leaders when Interstate 40 was relocated closer to the Oklahoma River. The area is bounded by the river on the south, Western and Shartel avenues on the west, Lincoln Boulevard on the east, and the new central boulevard on the north, where Interstate 40 used to be. The 77-acre central park now under construction as part of the MAPS 3 tax issue package of projects lies in the center of the area.

The second proposed TIF district is bounded by the new boulevard on the south, Western Avenue on the west, E.K. Gaylord on the east and Main Street on the north. The Myriad Botanical Gardens lie in the center; a new convention center, also part of the MAPS 3 program, is planned south of that park.

“This development anticipates a great deal of residential development in the area with the opportunity for a good amount of retail, especially adjacent to the park and supporting those residential uses,” O’Connor said of the southern business district TIF.

Downtown and the surrounding districts are expected to grow significantly in residential, office and business density in the next few years. O’Connor said Bricktown’s current average use density is expected to double by 2025, and Core to Shore space use will grow by almost seven times its current density. The latter is projected to build out to 1.5 million square feet of office space, 6,700 housing units, 157,000 square feet of retail and 152,000 square feet of adaptive reuse of existing buildings. O’Connor said the combined development value of Core to Shore alone is estimated at $930 million.

Shadid and Councilman Pete White expressed concern that establishing new TIF districts might disrupt tax revenue from other TIFs already flowing to schools.

“We’ve had very positive discussions with all of the taxing jurisdictions and especially with the school district,” O’Connor said. “They were very supportive when we met with them about a week ago.

“What we’ve talked about – and none of this has been finalized – is that we would establish a method of sharing the increment similarly to what we do in the downtown TIF district now,” she said.

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## Pete

This would be three new TIF districts (NE, South CBD and Core 2 Shore) in just this year, with more being planned.

I'll have a full break-down and analysis soon.

TIF"s are not free money.  They redirect tax dollars (primarily from public schools) to mostly private developers.

There is also no proven causation between spending money in this way and economic development.  In fact, some studies show that by robbing the schools you actually can do long-term harm to the future of a community.

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## TexanOkie

Robbing schools of what? Theoretically, TIF districts only redirect property taxes from the _new_ value added due to projects that wouldn't have happened otherwise--if there's a legitimate financing gap (whether for development costs or public improvements necessary to sustain the project), these projects won't occur without the public investment. If the projects don't occur, the schools get nothing anyway, now or in 25 years when the TIF district expires. If the projects do happen, the school districts get a windfall in 25 years (or less, if whatever project costs to be paid with TIF funds are paid off early).

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## Pete

> Robbing schools of what? Theoretically, TIF districts only redirect property taxes from the _new_ value added due to projects that wouldn't have happened otherwise--if there's a legitimate financing gap (whether for development costs or public improvements necessary to sustain the project), these projects won't occur without the public investment. If the projects don't occur, the schools get nothing anyway, now or in 25 years when the TIF district expires. If the projects do happen, the school districts get a windfall in 25 years (or less, if whatever project costs to be paid with TIF funds are paid off early).


This just shows how little people understand about how TIF's work (understandable given the constant mis-statements by the Alliance and the press).

I'll break this down with real numbers later, but TIF's take ALL increases in taxes over a 25-year period.  Property taxes increase as property values increase.  Every single property increases in value over time, and substantially so over a 25 year period.  Happens to your house and everything else.  Simple appreciation drives that.

Example:  Leadership Square (and several other downtown properties) have doubled in value in just the last 10 years, therefore the property tax they pay has doubled as well.  All of that increase goes into TIF #2 instead of going to the general OK County coffers, which in turn distributes 72% of that tax to schools.

Also, there is no way to establish causation with the "but for" argument that projects wouldn't have happened anyway.  I just posted in the Francis Apartments thread that the developer was denied a TIF request and they are still going forward with the project, just doing some value engineering.

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## BoulderSooner

I fully understand tif and I don't believe that it is "robbing" anything from schools.

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## Just the facts

OKC schools won't have a windfall in 25 years.  They will operate with flat revenue for 25 years while their costs go up.  In 25 years they will return to normal funding.  As a right-wing tea partier it bewilders the bejeezus out of me that my fellow right-wingers are falling for this baseline budgeting gimmick given the fact that Rush has railed against it for 25 years.  Are people so blinded that they can't see what is right in front of them?

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## Pete

Robbing is a strong term.

But the net effect of the TIF's in OKC -- present and planned -- is to redirect tax dollars from public schools (primarily) to private developers (primarily).

And there has been absolutely no causation established between spending tax dollars in this way and economic development.

----------


## Just the facts

> And there has been absolutely no causation established between spending tax dollars in this way and economic development.


Exactly.  Who is to say which projects would be completed as planned, which would be scaled back (and by how much), and which would never happen.

----------


## Pete

> Exactly.  Who is to say which projects would be completed as planned, which would be scaled back (and by how much), and which would never happen.


Or, that there wouldn't be at least an equal amount of benefit if those tax dollars were invested in the public schools, especially since Oklahoma is notorious for under-funding them in the first place.

I'm not against TIF's per se but we need to pump the brakes a bit before running off and establishing several more without looking at the fuller picture.

----------


## Just the facts

> I'm not against TIF's per se but we need to pump the brakes a bit before running off and establishing several more without looking at the fuller picture.


I have three basic problems with the TIF and here is what I would have done different.

1)  Time frame should only be 5 years out
2)  Should only apply to lots where the development is located
3)  Should freeze the current tax amount - not rebate, prebate, or credit the taxes.

----------


## Pete

BTW, a strong argument can be made that giving TIF funds to private developers is contrary to healthy economic development, because you are using public subsidies in a purely capitalistic market.

All these residential, hotel and office complexes compete against others in the open marketplace and most don't receive this sort of benefit.

So, it either creates an unfair competitive advantage, or causes everyone that comes afterward to ask for the same thing to "level the playing field".


When the idea of TIF districts was created decades ago, it was meant to jump-start severely blighted areas that had gone stagnant.  And/or, to clean-up problematic sites, help assemble properties, etc.

Pretty much all these TIF's are nowhere near that original concept.  The NE district is probably the only one exception.

----------


## hoya

It's absolutely taking money from schools.  I don't have a problem with the concept of TIF funding, but we should be judicious with it and ensure that we are getting our money's worth.  Environmental cleanup?  Okay.  Historical preservation?  Okay.  Extra expenses to ensure a higher use (like underground parking instead of a parking garage), okay.  But people are handing out TIF dollars like candy.  Most projects shouldn't get them.

Let's say you have an empty piece of land in a TIF district.  The property taxes on it are $1,000.  There are 3 development possibilities for this land.  It will either:
a) remain the exact same,
b) get a development that is purely market driven, or
c) get a development with TIF assistance.

If a) is the case, over the course of 25 years we'll say the taxes go from $1,000 a year to $2,500 a year.  (source: out of thin air)
If b) is the case, we'll say you get a 4 story apartment complex.  The taxes go from $1,000 a year to $25,000 a year.
If c) is the case, you get a 10 story tower.  The taxes go from $1,000 a year to $50,000 a year.  But you also miss 25 years of tax collections.

Now, _eventually_ option c) would arguably produce the most taxes.  But your public schools are experiencing a 25 year delay on funding.  Arguably you're much better off taking options a) or b) and having more education funding during that time frame.

Now, some properties will never develop at all if left alone.  I don't think that's the case with the Core 2 Shore area.  It probably is the case with the Cotton Mill.  Redevelopment of that land is going to require eminent domain proceedings and a lot of public assistance with environmental cleanup.

----------


## TexanOkie

I understand TIFs better than you think. Those misstatements you mention from the Alliance are from the people actually implementing these districts, so I think they should be given some degree of credibility. None of us know the aggregated specific issues with any given development, except for what is released to the public, so I would understand a call for greater transparency and due diligence regarding actual financial needs of proposed recipients of TIF money. As to the gradual increases in assessed value a property would have (which is not a fact, but a general trend--much like the general trend is for higher post-TIF-expiration tax revenues and/or financial situations for school districts), that is not attributable to the new development: that discrepancy can be (and oftentimes is, in other Oklahoma municipalities) addressed by only having a portion of the new increment be apportioned to a TIF fund. However, even that can get dicey, since a lot of the increment not attributed to the new development is indirectly affected by other new development within the TIF district--your downtown OKC TIF example is a prime example of this. Finally, as to the counter-"but for" argument--you make a good point; however, increasing the level and/or sophistication of the analysis conducted for new TIF projects can help ensure money is allocated to projects with the highest return for the public investment.

----------


## Pete

Just to be clear, I've had about a dozen conversations and dozens more emails with Brent Bryant who administers the TIF's for the City.

I have all the detailed budgets and payout schedules and know specifically why most TIF's were requested and how the entire process works.

I've spent the better part of the last couple of months getting all the numbers together and making sure I understand all the various nuances.  I've had a bunch of conversations with members of City Council on this subject.

I've also done quite a bit of research on how other cities have used TIF's and read several studies on them.


The bottom line is that in OKC (and most other cities), there is absolutely zero causation established between TIF awards and economic development.  It is assumed the TIF dollars have helped but there is no way to know that for sure.  Similarly, there has never been any causation between TIF's and increase in property values and taxes.

There are hundreds of factors as to why properties appreciate and at least in OKC, there is no data suggesting the TIF's have caused any increases whatsoever.


It's the classic "correlation does not imply causation" statistical argument.

There is also no way to know the economic impact if all that redirected tax money was invested in education (as 72% would normally be) instead of paying out to private developers.


As I said, much more to come on this.

We need to take a hard look at the pros and cons of TIF's before we redirect hundreds of millions of additional tax dollars. 

We are well into MAPS territory with no public input or vote.

----------


## soonerguru

Just to clarify, with TIF funding, the increment associated with the property is frozen at pre-TIF levels, and the amount of increment going to the schools is the same as before the property improvement. So, while it's true that the additional increment does not go to the schools, the current (or prior) increment does continue to go to the county. So, I can see both sides of the argument, but it's not true that the TIF is "robbing" the schools. 

I do agree TIF should be used extremely judiciously, and when used, the city should truly raise the bar on expectations for the TIF recipient.

----------


## Pete

Oklahoma City School Board Learns Of Tax Plan After Council Vote | Oklahoma Watch




> Oklahoma City Public Schools board members say they learned about a city plan to extend the period for redirecting downtown tax revenue away from schools and other purposes only after the City Council voted to go ahead with evaluating the plan.


Report says that Cathy O'Connor only met with the district's COO who resigned before the Council vote.

----------


## Plutonic Panda

OKCPS Concerned Over Change In Funding - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |

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## ljbab728

> OKCPS Concerned Over Change In Funding - News9.com - Oklahoma City, OK - News, Weather, Video and Sports |


It sounds like from the tone of that article that ES is much more worried about this than the school board members are.

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## krisb

How about letting the increase in property taxes actually go to schools every once in awhile?

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## krisb

How about letting the increase in property taxes actually go to schools every once in awhile? They could sure use it. Education is the biggest economic development driver of all.

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## DoctorTaco

There was some discussion at the last school board meeting of OKCPS cutting a deal with the city to use some of the TIF money from these newest TIF districts to construct a new downtown school (probably in the Core to Shore area). Seems like a savvy idea to me, especially with the overcrowding in south side schools and the widely-stated public desire for a middle school option in the area.

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## AP

^I saw that Ben Felder tweeted about that and I asked if it was a High School that was discussed. They were discussing a Middle School? I'm really on board with that.

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## DoctorTaco

> ^I saw that Ben Felder tweeted about that and I asked if it was a High School that was discussed. They were discussing a Middle School? I'm really on board with that.


I don't think they specified which type of school. I was just speculating.

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## Pete

> There was some discussion at the last school board meeting of OKCPS cutting a deal with the city to use some of the TIF money from these newest TIF districts to construct a new downtown school (probably in the Core to Shore area). Seems like a savvy idea to me, especially with the overcrowding in south side schools and the widely-stated public desire for a middle school option in the area.


In TIF #2 (the current district that covers all of downtown), $4 million of the $126 TIF budget goes to OK public schools.

Since the district would typically receive 59.22% of the property tax, that would be over $74 million of the $126 million taken by the TIF.  So they get $4 million vs. $74 million.

And that $4 million must be spent within the TIF district boundaries.

----------


## DoctorTaco

> In TIF #2 (the current district that covers all of downtown), $4 million of the $126 TIF budget goes to OK public schools.
> 
> Since the district would typically receive 59.22% of the property tax, that would be over $74 million of the $126 million taken by the TIF.  So they get $4 million vs. $74 million.
> 
> And that $4 million must be spent within the TIF district boundaries.


These details could still be negotiated, no?

----------


## Pete

> These details could still be negotiated, no?


Details could be negotiated in the proposed new TIF's, not the existing ones.

And, law requires that TIF money be spent within the boundaries defined when the district is established.

So, any urban TIF would force the school district to use the money downtown.

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## BoulderSooner

> In TIF #2 (the current district that covers all of downtown), $4 million of the $126 TIF budget goes to OK public schools.
> 
> Since the district would typically receive 59.22% of the property tax, that would be over $74 million of the $126 million taken by the TIF.  So they get $4 million vs. $74 million.
> 
> And that $4 million must be spent within the TIF district boundaries.



I am almost positive that they get 50% of the indirect incrament in TIF 2

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## Pete

> I am almost positive that they get 50% of the indirect incrament in TIF 2


The $126 million in the TIF represents the indirect element as well.

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## Pete

Citizen?s list of TIF questions raise serious issues about who benefits | Red Dirt Report




> But he and his neighbors have concerns that there is a power shift going on in Oklahoma City that is leaving many of its residents out of the discussion about the city’s future.
> 
> “Many of us are concerned that the power of the city is taking the approach of ‘trust us’, but we have an obligation to ask questions,” he said. “More public involvement should be there and I think that it’s being rushed through.”

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## Plutonic Panda

BIDs for south-side business: OKC Council approves funding to develop districts | The Journal Record

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## ljbab728

> BIDs for south-side business: OKC Council approves funding to develop districts | The Journal Record


That is a little different than a TIF.

City of Oklahoma City | Business Improvement Districts

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## Pete

BTW, the City Council will be asked on Tuesday to approve a $200,000 TIF award for new HVAC equipment for the Underground; the downtown tunnel system.

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## Plutonic Panda

OKC?s TIF trend provides grounds for debate | The Journal Record

----------


## Pete

OKC’s TIF trend provides grounds for debate
By: Brian Brus The Journal Record March 26, 20150

OKLAHOMA CITY – The tax increment financing concept has become trendy in Oklahoma City, with at least four new TIF districts in discussion by city leaders, raising concerns for some council members.

The First National Center on Robinson Avenue, for example, could benefit from some sort of financial boost to convert its street-level access and historic bank lobby space on the second floor to something more useful, Councilman James Greiner said. A temporary tax increment levied on stakeholders within the immediate vicinity and earmarked for redevelopment might work, with the assumption that improvements would attract more business and benefit everyone.

That’s the “but-for” premise Greiner can get behind, he said: Development is unlikely to occur but for TIF investment. He and Councilman Ed Shadid don’t always see eye to eye on weekly agenda items, but that is a point on which they both agree.

“TIFs have been an effective tool in increasing development interest in blighted areas,” Shadid said. “The state statutes are very clear on that. But there’s a huge risk of it being used outside of that stated purpose.”

He and Greiner said a TIF district seems inappropriate for the development of the recently razed Stage Center near the Devon Energy Center. Clayco, a Chicago developer with plans to build towers for OGE Energy Corp. on the property, approached City Hall in January with a request for $69 million in assistance.

“I want there to be an explanation for why a TIF is needed for something to be built there,” Greiner said. “That site is very valuable land that obviously someone wants to develop; they had a plan to begin with. So it’s hard to justify a TIF district.”

Brent Bryant, the city’s economic development program manager, said he couldn’t discuss details of ongoing negotiations with Clayco, but it’s possible the Stage Center area could be incorporated into a larger TIF district that would also support the development of parking space for a new MAPS 3 convention center. Bryant said that concept is being referred to as the South Central TIF; Shadid calls it a TIF within a TIF, because the City Council already approved a TIF district for the Devon Energy Center in 2007.

Another TIF district being discussed is the Core to Shore area between the planned downtown boulevard and the Oklahoma River, which could support new businesses and residential growth around the planned 77-acre central park. And Bryant confirmed that he’s heard mention of a potential TIF district on the south side of the river, although he has not been involved in any discussions about it.

Cathy O’Connor, president and CEO of the Alliance for Economic Development, said in an email to City Manager Jim Couch that other developers are pushing for districts of their own.

“I had a meeting with Kirk and Blair Humphreys last week that I need to talk to you about,” she wrote to Couch in September. “They want a TIF district and want it created now. My priority is Core to Shore first, but there is a bigger picture here that I need to talk to you about.”

O’Connor could not be reached for comment by deadline Thursday. Blair Humphreys is heading the development of the area around the former Downtown Airpark as a residential mixed-use concept known as the Wheeler District anchored by a social meeting space with a refurbished Ferris wheel.

“Everything that the city has planned for Core to Shore, they want to do for in the Downtown Airpark site,” Shadid said. “And the only reason I see is that (the Humphreys) own the land. So why should the city deviate from its 50-year plan of taxpayer-supported growth around the Core to Shore park to help someone else compete against that development? It’s very troubling, to say the least.”

Shadid said one of the aspects that concerns him most about TIF districts is that school districts will lose out on valuable property tax revenues. It’s the “but-for” clause gone awry, he said: Although schools wouldn’t normally benefit from increased taxes in a blighted area but for a TIF district causing economic development, they also miss out on standard market adjustments on those properties. Most TIF ordinance language simply earmarks the tax increment to development without yielding any percentage points to schools to compensate for inflation. Over the life of a 20-year TIF, that effect could be worth hundreds of thousands of dollars to a struggling inner-city school district, he said.

“We need to take a close look at what’s happening to the TIF concept and keep it true to the original intent,” Shadid said.

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## Pete

Ed Shadid is organizing a Town Hall meeting about TIF's:




> Greg LeRoy, Executive Director of Good Jobs First, has spent decades studying state and local economic development incentives. Dubbed “the leading national watchdog of state and local economic development subsidies”, Mr. LeRoy promotes corporate and government accountability in economic development and smart growth for working families.
> 
> With OKC moving towards the creation of a Tax Increment Financing Zone to finance a publicly subsidized convention center hotel and parking garage, it is critical that the public understand best practices in cities throughout the U.S. so as to understand the potential ramifications to the taxing jurisdictions from whom the funds would be diverted, such as OKC Public Schools, libraries and the City-County Health Department.
> 
> After a presentation by Mr. LeRoy there will be ample time for questions from the audience.


https://www.facebook.com/events/1382378602090337/

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## BoulderSooner

Yet another "town hall".  Where he brings in only 1 side of the story and a guy that already has a clear position. With out regard to our city or our situation.    

This should promote just the kind of discussion that Ed wants.   Ie one sided

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## Pete

But you could also say that this other side hasn't even been discussed by the City or local media.  All we hear about is why we need TIF's and various public incentives because the City employs a bunch of people whose entire job is develop these incentive programs then dispense the money.  There is zero discussion or information about the downside or even the particulars of these various programs, and no way of tracking and evaluating their effectiveness.

And in many ways the situation is even more extreme in OKC because we have almost no parameters on how money is dispensed.

All of this is why I took a lot of time to talk to the City about TIF Districts and to understand exactly how they work here.  And I'm completely convinced that the people making final approval -- the City Council -- do not understand these matters very well at all.  Several of them told me so.

Now, we are talking about vastly increasing the number of TIF Districts and the amount of money diverted from other taxing jurisdictions, primarily the public schools.  It's long past time to broaden the conversation.  The other side has been well-represented for a long time.

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## Jersey Boss

Stay on this Pete.  It appears that the city is under the same pressure by big money to provide TIFs as the state is in to provide more and more tax credits. I appreciate your attempts to shine a light where others relish the dark.

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## Pete

I posted this on the Convention Hotel thread as well, but I will be speaking on the 5/21 Town Hall meeting on TIF Districts:

https://www.facebook.com/events/1382378602090337/

Greg LeRoy, Executive Director of Good Jobs First, will be the main speaker.  While he will be talking about TIF's in general, I will focus on the particulars in Oklahoma City.  How they are structured, how decisions are made, what projects have benefitted, etc.

Cathy O'Connor was invited but declined due to conflict of interest.

The meeting will be at the Tower Hotel on Thursday 5/21 starting at 6:30PM.  Would love to see a lot of people from OKCTalk attend, learn and join in the conversation.

----------


## Teo9969

Another thing to consider about TIF:

A property can only increase 5% over time. If a whole area explodes in value, then anytime a sale occurs of a particular building, the taxable market can be reassessed and subsequently skyrocket.

A building recently sold on Western for $780k. The 2014 Market value was $476k and the taxable market value was $228k. The new assessment and taxable market value is now $779k. That's an increase of over 200% in taxes collected on that property.

So take First National of instance:

Assessed value in 2014: $3,250,000 and Taxable Market of $3,250,000.
Assessed value in 2015: $7,442,919 and Taxable Market of $3,412,499.

The sale is going to take place @ $23,000,000.
If the assessed value jumps to the sale price, then the Taxable Market will also jump to $23M. (I imagine the value jump will not be so substantial in this particular case)

That would make their ~$43k/year tax payment jump to ~$288k/year.

Of that extra aprpox $250k/year, $125k goes to TIF. $125k/year, 60% of which goes to a school means that in a very real way, TIF is taking away what amounts to 2 teacher salaries from OKC schools every single year, all off one building. (Absolutely no argument can be made that TIF is the reason FNC is selling for $23M even if TIF ends up being used to redevelop the building).

Any building within the TIF district that has sold in the last 5-10 years (and there have been a lot of them), especially if it was owned by an entity for longer than a period of 15 years, has seen an incredible increase in taxable market value. This is likely one of the many things that the original planners of TIF didn't take into account when planning for TIF, and why there is all of the sudden 3x+ the original amount planned for.

----------


## AP

Thank you for painting this picture. I don't understand how anyone could argue that TIFs are taking real money from OKCPS.

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## Pete

^

That is all absolutely correct.

And as a reminder, even a 5% annual increase in property value represents a 339% increase in property taxes over 25 years, the typical length of a TIF assessment.

----------


## Urbanized

CPI adjustments are generally around 3% pretty consistently. That is why I suggested that one way to fix the problem (at least partially) might be to apply a CPI adjustment each year, to be captured by original taxing entities.

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## TexanOkie

> Any building within the TIF district that has sold in the last 5-10 years (and there have been a lot of them), especially if it was owned by an entity for longer than a period of 15 years, has seen an incredible increase in taxable market value. This is likely one of the many things that the original planners of TIF didn't take into account when planning for TIF, and why there is all of the sudden 3x+ the original amount planned for.


They don't need to take that into account because there are other appropriate checks on this. Establishing a TIF district doesn't provide an endless pot of money for however long a city or county is able to keep the TIF district in place--the TIF district is tied to a specific project budget in a project plan and once that project budget has been expended, the TIF district ends even if it hasn't yet been 25 years. That budget is supposed to be based on the projected revenues the district will provide (though it can be less). Often governmental entities are optimistic with the projections, but the review committee and government body when adopting the project plan is supposed to assess the financial impact of the plan, including whether the budget and projected revenues are realistic.

Therefore, when buildings are sold and re-assessed resulting in higher taxes, the TIF budget should be met quicker and the TIF district should end sooner. Also, as an additional check on the administering government's ability to sneak around by gradually increasing the budget to account for above-expected performance of the district, any amendment to the project plan that increases the TIF budget by 5% (on a cumulative basis, not each individual amendment) or more requires the amendment to go back through the same review committee and approval process that the original project plan had to.

Any problems with TIF, if there are any, are not with TIF itself--TIF is only a tool--but instead with the political process and accountability of those making decisions with regard to how TIF money is to be used.

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## Pete

> They don't need to take that into account because there are other appropriate checks on this. Establishing a TIF district doesn't provide an endless pot of money for however long a city or county is able to keep the TIF district in place--the TIF district is tied to a specific project budget in a project plan and once that project budget has been expended, the TIF district ends even if it hasn't yet been 25 years.


Just so you know, that is not how TIF's work in OKC.

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## TexanOkie

> Just so you know, that is not how TIF's work in OKC.


That may not be how the nuts and bolts of how the City determines who is entitled to TIF (and how much) for development finance assistance (which is a project budget category in many--if not most--project plans), but that IS how the Oklahoma Local Development Act works, which is the statutory authorization for the use of TIF in Oklahoma to begin with, so if Oklahoma City's processes aren't following that framework they are violating the law.

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## Pete

All I can tell you is that for TIF #2, they originally budgeted for $47 million, 10 years in that was changed to $126 million and it will likely be much more than that by the end of the 25-year run.

All they did is change the original budget and keep collecting and spending.

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## TexanOkie

> All I can tell you is that for TIF #2, they originally budgeted for $47 million, 10 years in that was changed to $126 million and it will likely be much more than that by the end of the 25-year run.
> 
> All they did is change the original budget and keep collecting and spending.


I can guarantee you that the budget increases (5%+, cumulative) in the project plans went through the review committee(s) that have taxing jurisdiction representation (I think OKC uses multiple--the TIF 2/downtown and then separate ones for the Skirvin (TIF 3) and Devon (TIF 8) districts, at a minimum) and City Council for adoption. There's no way Dan Brummitt would have allowed it to go through otherwise, and the City would have lost the lawsuits it faced challenging the districts' validity through the years.

----------


## Pete

> I can guarantee you that the budget increases (5%+, cumulative) in the project plans went through the review committee(s) that have taxing jurisdiction representation (I think OKC uses multiple--the TIF 2/downtown and then separate ones for the Skirvin (TIF 3) and Devon (TIF 8) districts, at a minimum) and City Council for adoption. There's no way Dan Brummitt would have allowed it to go through otherwise, and the City would have lost the lawsuits it faced challenging the districts' validity through the years.


That's a completely separate issue from the one you originally raised.

You said the TIF's expire when the budget is reached; I'm merely pointing out that has never happened with OKC TIF districts.  They just keep collecting long after the initial budget is surpassed.

There are review committees but they are nothing more than rubber stamps. 100% approval across the board for all new TIF's, project allocations and budget adjustments.

----------


## TexanOkie

> That's a completely separate issue from the one you originally raised.
> 
> You said the TIF's expire when the budget is reached; I'm merely pointing out that has never happened with OKC TIF districts.  They just keep collecting long after the initial budget is surpassed.
> 
> There are review committees but they are nothing more than rubber stamps. 100% approval across the board for all new TIF's, project allocations and budget adjustments.


The initial budget is amended along the way, using the processes outline in the Local Development Act. The amended project plan budget thereafter is the budget for purposes of the possibility of project cost expenditures ending a TIF district early. These review committees do contain representatives of every taxing jurisdiction that might be affected by the TIF district. And while, under the Local Development Act, those representatives may occasionally be outvoted by the total makeup of the committee (which includes representatives of the city or county adopting the project plan, all taxing jurisdictions, and members of the public at large selected by the other review committee members), Oklahoma City has actually placed further restrictions on itself by requiring all ad valorem tax increment districts to have the approval of a majority of the ad valorem taxing entities affected (Oklahoma City Code section 52-261 (link)).  If the review committees are simply serving as rubber stamps, then it goes straight to my original point--the problems aren't with TIF itself but with the political processes and accountability of the decisionmakers.

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## Pete

> If the review committees are simply serving as rubber stamps, then it goes straight to my original point--the problems aren't with TIF itself but with the political processes and accountability of the decisionmakers.


Completely agree.

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## Teo9969

> They don't need to take that into account because there are other appropriate checks on this. Establishing a TIF district doesn't provide an endless pot of money for however long a city or county is able to keep the TIF district in place--the TIF district is tied to a specific project budget in a project plan and once that project budget has been expended, the TIF district ends even if it hasn't yet been 25 years. That budget is supposed to be based on the projected revenues the district will provide (though it can be less). Often governmental entities are optimistic with the projections, but the review committee and government body when adopting the project plan is supposed to assess the financial impact of the plan, including whether the budget and projected revenues are realistic.
> 
> Therefore, when buildings are sold and re-assessed resulting in higher taxes, the TIF budget should be met quicker and the TIF district should end sooner. Also, as an additional check on the administering government's ability to sneak around by gradually increasing the budget to account for above-expected performance of the district, any amendment to the project plan that increases the TIF budget by 5% (on a cumulative basis, not each individual amendment) or more requires the amendment to go back through the same review committee and approval process that the original project plan had to.
> 
> Any problems with TIF, if there are any, are not with TIF itself--TIF is only a tool--but instead with the political process and accountability of those making decisions with regard to how TIF money is to be used.


Well that's good to know. This point likely makes a better case for Shadid to just simply talk about it. If citizens are at least aware that TIF is a thing, then they can at least track it enough to know what was originally proposed and when an amendment for a higher budget is necessary. It would have been nice to know this however many years ago when they upped it some 250% to at least ask why? We could at that point maybe get some sort of voice in there.

Personally, I would have asked that we spend some of the $9,000,000 we plan on spending for Parking on other Public School projects, or further enhancements to street-scaping/walkability issues downtown (ex. Canopies like at Park Harvey on more buildings would awesome).

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## TexanOkie

> The meeting will be at the Tower Hotel on Thursday 5/21 starting at 6:30PM.  Would love to see a lot of people from OKCTalk attend, learn and join in the conversation.


Is this a ticketed/paid event, or is it free and open to the public? I assume it's the latter, but I don't want to show up and be turned away due to lack of planning on my part.

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## Pete

> Is this a ticketed/paid event, or is it free and open to the public? I assume it's the latter, but I don't want to show up and be turned away due to lack of planning on my part.


Completely free!  All are welcome.

----------


## David

Ed brought up this meeting and Pete and OKCTalk specifically in this morning's city council meeting, followed by an interesting discussion about TIFs and their use here and around the country.

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## Pete

Here's how I became involved in all of this...

In the course of many threads where TIF was discussed, I realized there were many aspects of the program I didn't completely understand.  So, I started researching and I found a bunch of conflicting information -- especially in how TIF's were defined -- and decided to investigate further.

I had many conversations and emails with Brent Bryant who basically administers all the TIF districts for the City.  Over a period of several weeks, Brent sent me spreadsheets and various data, which led to more questions.

Ultimately, I wrote the article that you see at the top of the page.  Shortly thereafter, Ed contacted me.  I had met Ed but had very little interaction with him other than the one time he came to an OKCTalk get-together.

Ed then started to ask me more questions, realizing there were many aspects of the program he didn't fully understand himself.  After that, he directly questioned both Cathy O'Connor and Brent Bryant in City Council meetings on the subject of TIF's.

In my conversations with Brent and also talking to many local developers, it became known there were a whole bunch of TIF's in the pipeline.

Now facing the shear scale of all this -- as in hundreds of millions of tax dollars -- Ed started asking more questions and we continued to talk about all this.

Ultimately, he arranged for this Town Hall and got Greg LeRoy be a guest speaker.  Mr. LeRoy runs a nonprofit that has done a ton of research on economic development programs, including TIF's.

Ed also asked Cathy O'Connor and Brent Bryant to speak, but my understanding is that they both declined for various reasons.

Needing an OKC perspective (TIF's are administered very differently all over the country) Ed asked me to present pretty much along the lines of the article you see here.  I was apprehensive but ultimately decided I'd like to help further the conversation, especially as the City is set to consider any number of new TIF Districts.


It should be a very interesting discussion.  There will also be a Q&A towards the end of the meeting.

I highly encourage people to attend, learn and form your own opinions rather than rely on what others may be saying about all this.

----------


## David

The council meeting has been posted to YouTube and the TIF discussion starts at  1h 26m in.

----------


## Pete

Thanks, David.  Here's that video:

----------


## David

Be sure to keep watching after Ed finishes, Pete White starts back in on the topic a few minutes later.

----------


## Pete

And to be clear, I don't think Shadid or anyone else is proposing that TIF's should no longer be used at all, but he did say in the council meeting today that 'comprehensive reform' is needed and that the taxing jurisdictions most directly affected -- most notably public education -- need to be better educated on this topic and brought to the table in a meaningful way.

As a reminder, only after persistent questioning by Shadid did it come out that the only person even aware of what was happening with TIF's for OKCPS was a non-board member who was actually no longer even working there.

Since the light has started to be shined on all of this, Cathy O'Connor has had several meetings with the school board and superintendent Neu.

Whatever your opinions may be on TIF's, that is a positive outcome and I strongly believe a better understanding of these programs will be very beneficial to the entire City.


Please come to the Town Hall and participate in this process.

----------


## Pete

The Town Hall meeting was last night and it was certainly an interesting experience.

Greg LeRoy spoke first and talked a great deal about economic development incentives and challenged many assumptions about them.  Then he gave some examples of TIF's that worked well and then a bunch that didn't.

My role was to summarize how the programs work in OKC, as each community tends to implement these programs much differently.  I basically presented the information included in the article on the top the page.

Because my info was more specific and included specific budget numbers, I was pretty bombarded with questions.  People were respectful but certainly some came to the meeting expecting to be outraged and there was a little of that.

I did my best to present the other side of things -- meaning explaining why TIF is used and where it has worked well in OKC -- because things seemed to be skewed a bit too much the other way.

I'd really like Teo to give his impressions, as he was in attendance and would have a more objective view.

There were about 200 people there, which I found very impressive given the completely non-sexy and obtuse nature of the subject.  We actually had to cut off the questions due to time constraints but many people stayed afterwards and I'm hoarse from all the talking.  Frankly, I was very impressed that so many people care about OKC.

The whole thing was video taped and I'll post it here when it has been uploaded.

----------


## bradh

It's fascinating to me how little so many people know about them (myself included).  Seems to me that maybe less than a handful (5 or less) with the city even understand them.  It is encouraging to hear that the city and OKCPS are having meetings about it.

----------


## David

Pete, do you know if anyone from OKCPS was at the meeting, or anyone else from the city proper besides Ed?

----------


## Pete

> Pete, do you know if anyone from OKCPS was at the meeting, or anyone else from the city proper besides Ed?


Before the Town Hall, Ed and Greg LeRoy had meetings with the school board and then another with Cathy O'Connor and I believe councilman White.  Others may have been present as well.

There were some teachers at the meeting last night, some developers and a ton of people I didn't know or recognize.

----------


## Teo9969

Here were my thoughts:

1. Incredibly impressed with Ed Shadid's ability to bring in 2 speakers who are clearly well informed on the subject and gave a bunch of insightful information to a group of people who knew nothing about the topic and you could tell by the questions that people really did begin to gain an understanding of the issue as the night moved forward.

2. I didn't know exactly what to expect when I got there, neither of the presentation nor the crowd. My assumption was that I would know most of what Pete talked about, no real expectations about Greg Leroy's presentation, and I expected Ed to put his stamp on the conversation. The crowd, I didn't know what to expect at all, but I assumed it would be a lot of Shadid followers. The crowd got riled up there for a little bit, as you can imagine when you start throwing out numbers north of $100M, and I don't think that's just Shadid's followers wanting to get riled up to get riled up (though there were some fanboys there for sure).

3. I was INCREDIBLY impressed by how objective all three speakers were. I had a small expectation that I was going to leave the meeting sort of annoyed that nobody really stood up for TIF and by the end of it, I think we saw that all three speakers, especially Ed and Pete, think there is a place for TIF in our city.

4. It's very apparent to me that this conversation was necessary. Greg LeRoy gave a ton of examples of TIF becoming an unconfined monster in other cities. TIF has been great in OKC, but we need to come in and refine our practices: place some safeguards and parameters that ensure that it functions exactly as we want it to and most importantly, in a way that opens up the availability to get ahold of it to people who have less resources. Everyone who has applied for TIF is a big-time player, and there's no reason that any of us average citizens shouldn't be able to get ahold of TIF to use on projects of a smaller scale.

Overall, I thought it was an excellent event for our city. I think it ended up being a classroom on TIF more so than a conversation because it was clear that over 95% of the audience was hearing these things for the first time. There was some talk about schools, but even more about the convention center hotel, but the majority of the meeting was just information, so I'm not sure it was labeled correctly title-wise.

----------


## bradh

How much of Leroy's negative experiences were influenced by his early career in the most corrupt and morally bankrupt city in the entire nation (Chicago)?

Thanks for that wrap up Teo

----------


## Teo9969

Pahdz, I'm sure quite a bit, but Chicago is not the only place TIF has been ridiculous…It has absolutely bending Missouri over. 

And for sure he gave some great examples of where it's worked beautifully, and which are far more compelling than it has ever functioned in OKC.

In my very very brief conversation with LeRoy afterward, he mentioned that one of the reasons TIF is such a big thing is because Federal money has and continues to dry up for cities leaving gaps in their ability to finance bigger projects.

The only thing that troubled me last night was that Ed revealed that we have recently started to borrow against future TIF collections in order to award certain allocations, but he didn't know how the money was borrowed and who it was borrowed from. I doubt any of his counterparts on the horseshoe know either, and that's another example of why this conversation needs to happen. I'm not at all against borrowing money. I am against our council people not being very explicitly informed on how these things function before city staff recommends them take action one way or another.

----------


## bradh

Oh I know, I was just making a general comment on Chicago in general, not really about TIF's there.  We won't even open a location there because of the known corruptness in city and local governments (so I've heard, probably not the only reason).

----------


## Midtowner

> Everyone who has applied for TIF is a big-time player, and there's no reason that any of us average citizens shouldn't be able to get ahold of TIF to use on projects of a smaller scale.


I want to remodel my house.  Should I be able to get TIF for that?

----------


## Urban Pioneer

Yes! Particularly if you are in a "blighted" neighborhood.

----------


## Pete

If you've got a crack in your sidewalk, you could probably meet the criteria for blight.

Remember, the Clayco project on the edge of Myriad Gardens is going to qualify.

----------


## TexanOkie

> If you've got a crack in your sidewalk, you could probably meet the criteria for blight.
> 
> Remember, the Clayco project on the edge of Myriad Gardens is going to qualify.


I think the way the Local Development Act is written does not require every parcel of land that will be receiving TIF money to individually qualify as a blighted area--only the overall project area as a whole, and even then only at the time the project plan is first adopted.

----------


## Pete

This is a write-up the Red Dirt Report did on the TIF Town Hall:

Transparency nonexistent with Oklahoma City's eight TIF projects, councilman says | Red Dirt Report

Doesn't mention yours truly but this is me at the podium:




Eventually, the video tape of the entire meeting will be made available.

----------


## TexanOkie

The Journal Record had a story about TIF yesterday:




> *Cities outline ABC’s of TIF process*
> By: Brian Brus  The Journal Record             August 26, 2015
> 
> OKLAHOMA CITY – Yukon’s approach to tax increment finance districts has helped it avoid some of the controversy dogging TIFs in other cities such as Norman, City Manager Grayson Bottom said.
> 
> The rule is simple, he said: Set goals at the beginning and let them stand; don’t change course in midstream if possible.
> 
> “Depending on their structure, TIFs are the single-most important economic development tool in Oklahoma,” Bottom said. “We sincerely tried to make an effort to not change anything once we went through an extensive planning process up front, and I think that has made all the difference.
> 
> ...

----------


## Pete

The Alliance for Economic Development is now proposing a huge TIF district that would include 7 or 8 sub-TIF's.

This would take the place of the proposed South CBD TIF and Core to Shore TIF, which had already been approved for initial study by City Council.

Cathy O'Connor presented the idea to council members in private meetings a couple of weeks ago.

The boundaries below are not exact but an approximation of what was proposed.  Within the boundary would be several TIF districts that would commence at different times but all starting within the next 15 years and running for 25 years each, meaning the total period would be about 40 years.

Note that 499 Sheridan has been specifically excluded, which means it along with everything outside this boundary in the CBD would only contribute to the existing TIF until it expires in 2025, at which time all the property tax would then go to the usual recipients.  I believe this change was due to pressure by the OKC Public Schools, as they are the entity most heavily impacted by TIF redirections.

Not sure when they plan to bring this to a public City Council meeting, but it will likely be soon.

----------


## hfry

Thanks for the great info Pete, I am curious how much land the city owns in this future TIF? For land they do own I assume they will issue RFP's as thing develope, which will let them control the type of developments but I feel with this TIF they need to set a design standard( on top of the new PLAN OKC because I am not quite sure when it starts) and or a design committee. They have a unique opportunity where they practically get to start from scratch to help build downtown neighborhood but they can't just let developers have free reign if we are allowing a TIF district here. 

They also need to be fairly consistent with how money is given out. Start from the beginning by not handing out money when things are done just over the bare minimum. I think it was JTF that has suggested a set building standard where just the insides change based off the type of set design they choose but I think something like that could go a long way in encouraging a consistent idea as well as making TIF a bridge gap if there are land problems, utilities, roads, etc instead. 

My last thought is the lack of the Wheeler district, I am sure they have been in talks to set one up for their district but I am curious what would be the difference of an additional one vs being in this giant one. Perhaps the Wheeler could be included in a new one with Capitol hill but the more districts they create, I think the more opposition they will create.

----------


## Teo9969

I can't wait to see what their budget is.

Really wish they would shorten these to 15 years.

----------


## TexanOkie

I think Title 62, Section 856 of the Oklahoma Statutes requires TIF districts to become effective no later than 10 years from the date the underlying project plan is approved. 35 vs. 40 years as a shelf life might not sound like it'd make that much of a difference, but considering that would be at the tail end of the TIF district (theoretically and most likely the period where the assessed values for the district are at their highest), those 5 years mean a lot if you're talking how much OKCPS will be getting in tax revenue and when.

----------


## DoctorTaco

Does anyone know the boundaries/have a map of the new First National TIF district?

----------


## Pete

> Does anyone know the boundaries/have a map of the new First National TIF district?


I believe it will just be the boundaries of the FNC itself.

----------


## TexanOkie

The City has posted the proposed Core to Shore TIF plan and the proposed amendments to the Downtown TIF plan on their website: http://www.okc.gov/economicdev/tif_project_plans.html

----------


## Pete

Thanks. Look forward to going over all this in detail.

----------


## David

There was a very interesting presentation about this topic at this morning city council meeting.

Presentation: http://www.okc.gov/councilnotes/2016...esentation.pdf
Video: https://youtu.be/vZ8CJU3erk0?t=1h8m12s

----------


## DoctorTaco

> There was a very interesting presentation about this topic at this morning city council meeting.
> 
> Presentation: http://www.okc.gov/councilnotes/2016...esentation.pdf
> Video: https://youtu.be/vZ8CJU3erk0?t=1h8m12s


This was fascinating level of detail. I get the sense that some of this presentation was "defense" against the accusations that TIFs are mis-used. I am very curious as to Pete's take on this since he has thought about TIFs a lot more than I have.

----------


## Pete

^

I've looked this over and have also put in an open records request for more detail.

Bottom line is that they are giving TIF investment lots of credit for causation they cannot and have not even tried to prove.

Classic violation of the statistical axiom, "Correlation does not imply causation".   In other words, they are saying that TIF money has caused all this private development and increased property value but cannont show any direct causation.  They have no way of knowing if all that would have happened with or without TIF, and it is disingenuous to claim otherwise, as they always do.

Also, they are carving out all these new TIF districts around Core to Shore...  How much public investment do went need to make in this area????:

- Convention Center
- Convention Hotel
- MAPS 4 Park
- Substation move
- Chesapeake Arena
- Skydance Bridge
- Have already spent TIF money here
- New boulevard
- New I-40 and off-ramps and surrounding roads

I'll have a complete list with the total amount of tax dollars already spent in the area.

And, we already have 4 major developers who have snapped up almost everything between the park and Farmer's Market.  They bought all of that with development plans in mind and zero TIF assurances.

----------


## Pete

BTW, TIF #2 ( the main downtown TIF) is now expanding it's budget to $165 million, where it was originally budgeted to collect $47 million.  They revised it just a year after extending to $160 million.  Still 9 years left to run as well.

We could and should use all this overage for Core 2 Shore (which TIF #2 already covers) rather than create yet another series of TIF's that will run 25 years and siphon off hundreds of millions or tax dollars beyond current estimates.

----------


## TexanOkie

> Bottom line is that they are giving TIF investment lots of credit for causation they cannot and have not even tried to prove.
> 
> Classic violation of the statistical axiom, "Correlation does not imply causation".   In other words, they are saying that TIF money has caused all this private development and increased property value but cannont show any direct causation.  They have no way of knowing if all that would have happened with or without TIF, and it is disingenuous to claim otherwise, as they always do.


It looks to me that the City is assuming that projects where it directly awards TIF money would not happen without the public assistance (I suppose whether you agree with that proposition depends on your thoughts about how rigorous the City's vetting process is for those applications), and that things that happen without direct TIF assistance are only partially due to public investment. Or at least that's how I interpret the 50/50 and 25/75 splits with taxing entities for what the two plans in the presentation calls "indirect" increment. In fact, one could argue that by reducing the split from 50/50 in downtown to 25/75 in Core to Shore, the City is admitting that public investment will not cause as much of the growth there as it believes it has in downtown.

----------


## Pete

The change in split is entirely due to this site documenting and explaining how TIF actually works (and councilmen Shadid and White then taking up the cause) and getting the schools and other affected jurisdictions at the table.

Before, they really had not idea how all this impacted them, just like almost everyone else, as TIF is incredibly complicated.

The City had to get their support in order to move this forward but at the same time they are doing it with things like the latest presentation which prevents a slanted and incomplete picture of how all this works.

I'm not accusing anyone of dishonesty, just full-time City staff with Economic Development in their titles doing everything they can to get hundreds of millions of tax dollars to forward their agenda.

----------


## Pete

One reason we can't make a good judgment about the TIF 'But For' argument (this would not have happened But For TIF dollars) is that the people involved do not document and/or share the requests they reject.

The process is this:  a developer goes to see Cathy O'Connor or Brent Bryant to have an informal conversation about possibly receiving TIF funds for their project.  I have been told by several developers they are often either told a flat 'no' or strongly discouraged from applying.

We also don't have a list of people who made formal application and were denied.

So, we have no way of assessing the projects that went forward even after being denied TIF.

I know of one for sure:  the Frank Apartments in Midtown.  They made formal application and were flat denied and are now nearing completion.


On the other side, we have a long list of projects which have received TIF funds but have absolutely no idea if they would have happened without gifted tax dollars.  Consider the average TIF award is 6 to 7% of construction costs (not including furniture fixtures and equipment) it's hard to believe these projects would have not been built anyway.


Remember, when TIF started in OKC 16 years ago, the City was a very different place.  No MAPS, not much going on.  TIF was seen as a necessary stimulus.

At what point do you stop pouring tax dollars (redirected mainly from the OKC public schools) into private investment?  We've now invested over a billion in public tax dollars in this area...  Isn't it time to let developers and market forces work on their own?

----------


## Urbanized

> ...Remember, when TIF started in OKC 16 years ago, the City was a very different place.  No MAPS, not much going on.  TIF was seen as a necessary stimulus...


It doesn't really change your points, but MAPS was actually passed 7 years before TIF, and a number of its projects were completed (ballpark, canal, fairgrounds improvements, Oklahoma Spirit trolley, Myriad convention center improvements) or WELL underway (Civic Center, MAPS arena, river improvements). The only MAPS project not completed or well under construction at the time of TIF 2's passage was the library.

www.okc.gov/maps/index.html

----------


## Pete

^

Fair enough!

I will be working all this up in detail which will include all the public investment downtown and directly benefiting these new TIF districts.

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## Teo9969

The largest complaint to be had about TIF to this point is the lack of transparency. Pete's post #118 really sums it up quite well. If there were more eyes on the process, and more concrete criteria, then there's a lot less to complain about.

There are already certain mechanisms in place to keep things from getting too out of hand, but if the only people that understand what those mechanisms are and how they function are the people in charge of the program, then those mechanisms may as well not exist at all, because there are always ways around the issue.

----------


## Eric

I'm interested to know how giving TIF financing affects the district in which the TIF is awarded. I understand it hurts, but the way school funding works is it is all sent in to the state and then re-apportioned. So if the TIF has zero direct impact on that district's funding, there is little incentive to hold back because the pain will be shared by all in the state. Just curious to know if anyone is familiar with this?

Also, it seems every discussion the applicants have in regards to TIF comes down to the project won't get done without these, NOT the project won't get done here with out TIF. Claiming it won't get done at all is the only leverage these developers have. Rarely are we discussing this as a way to entice someone to develop here as opposed to somewhere else.

I think land value alone ought to be the indicator as to whether a TIF is necessary. In the CBD the land prices are the highest in the city, not because people don't want to develop there but for just the opposite reason. That is obviously not the case in other parts of the city, even in the immediate vicinity of downtown.

----------


## Pete

> I'm interested to know how giving TIF financing affects the district in which the TIF is awarded. I understand it hurts, but the way school funding works is it is all sent in to the state and then re-apportioned. So if the TIF has zero direct impact on that district's funding, there is little incentive to hold back because the pain will be shared by all in the state. Just curious to know if anyone is familiar with this?
> 
> Also, it seems every discussion the applicants have in regards to TIF comes down to the project won't get done without these, NOT the project won't get done here with out TIF. Claiming it won't get done at all is the only leverage these developers have. Rarely are we discussing this as a way to entice someone to develop here as opposed to somewhere else.
> 
> I think land value alone ought to be the indicator as to whether a TIF is necessary. In the CBD the land prices are the highest in the city, not because people don't want to develop there but for just the opposite reason. That is obviously not the case in other parts of the city, even in the immediate vicinity of downtown.


Interesting points.

I can tell you with pretty solid confidence that TIF has never been used to lure new development, rather always as "gap funding" for developers who claim they need the help after they've already developed a budget and plan for a specific fully-formed project.  And of course, this creates a situation where almost every developer comes with their hand out-stretched, since the precedent has been set with so many similar projects.

Also, how on earth does the City determine if such requests are legitimate?  A developer comes in with a pro forma and there is no way of know if their numbers are legitimate.  ONE person at the City makes this determination and I've spoken to him about it and there is little science behind their decisions.  You would need a whole square of people skilled in development and quoting to make a fair judgment.  

And the point about land values is very interesting and valid.  Core to Shore values have risen so much the City now can't afford to buy all the land it needs for the MAPS 3 park.  That speaks volumes.

----------


## TexanOkie

Is the land value increasing due to actual demand for development projects or short-term speculation? I thought I read somewhere that the City was considering not taking land value into account in making decisions on projects (maybe it was TIF or one of the MAPS projects) because they didn't want to pay for high-cost land deals.

----------


## Pete

^

This is a very complex issue only brought to the forefront by a lot of questioning here, Ed Shadid and the schools themselves.

When I first asked about this, I was told that the schools get all the redirected tax dollars offset by the state somehow and that it wasn't something openly talked out of fear of that little loophole being closed.

What I can say for certain is that if that state is somehow offsetting the OKC Public schools for this redirected tax money, it is being carved out of another tax base which means all the other districts that share in that money are being affected.


Keep in mind that TIF and these offsets are not increasing taxes but are taking existing taxes and redirecting them.  So, by that definition, the same pie is just being carved up differently meaning a gain in one place is offset by a loss elsewhere.

----------


## TexanOkie

It may be a zero-sum game for available taxes amongst the various school districts in the state, as you mention, but if the state school aid formula tries to offset the amount of ad valorem revenue a school district receives, then I think it still makes sense to not include increment revenues in the formula offsets because school districts don't get the increment revenue (or at least not as operating revenue). In fact, that's probably why the TIF law requires the substitution of base assessed values for equalized assessed values in various things (debt limits, establishing mill levies, etc.), too. Although the indirect split used to get the schools to the table probably shakes this all up a bit.

----------


## TexanOkie

Apparently this article was published by the Journal Record last Friday:  Addition and subtraction: TIFs cut funding for outside school districts | The Journal Record




> *Addition and subtraction: TIFs cut funding for outside school districts*
> By: Brian Brus  The Journal Record
> February 12, 2016
> 
> OKLAHOMA CITY – School districts across the state that fall outside tax increment finance districts are receiving less funding than they would otherwise deserve because of how increases in property tax revenue are omitted from the state aid formula, officials confirmed.
> 
> In Oklahoma County alone for 2014, Oklahoma City’s TIF districts diverted ad valorem taxes of $25 million that was generated from $218 million in net assessed property values away from other jurisdictions such as the Independent District 89 – the Oklahoma City Public Schools, city economic development project manager Brent Bryant said. Although $3.5 million was given back to those jurisdictions while the balance went to city infrastructure and economic development projects, the $25 million figure was never included in the state appropriations equation for education, which takes counties’ property values into consideration for additional funding.
> 
> Oklahoma City Councilman Ed Shadid has frequently questioned other city officials about the impact of TIF accounting. He recently asked Alliance for Economic Development President Cathy O’Connor whether moving a valuable property like the Devon Energy tower, 499 Sheridan Ave., from one TIF into another would help I-89 at the expense of other schools.
> ...

----------


## Pete

^

Thanks for posting that.

Pretty much confirms what I said in my last post.

----------


## TexanOkie

Pay attention to this section of that article, though: 




> Officials at the state Department of Education confirmed that normally, when a school district realizes ad valorem increases from year to year, the state Legislature appropriates less aid, which has the result of freeing up funding for other districts or programs. By not reporting improvements in property tax collections within a TIF, that school district is sapping more from the pool, leaving less for everyone else than they would otherwise be due.


Perhaps you could make a case that the indirect split amounts given to OCPS should be included in the state aid reporting, but those sorts of provisions aren't in most TIF plans. It goes back to what I posted earlier--increment revenues customarily don't go to the school district. It's one of your main points against TIF in the first place. However, as long as TIF is still a thing, not including collections of increment in the state aid formula makes sense. If you include them, the affected school district both doesn't get that money AND is essentially penalized for it in the state aid calculation.

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## Pete

^

OKC Public Schools get money from the TIF, too.

It's what they used to fund John Rex Elementary and the improvements at Emerson, for example.

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## TexanOkie

The second hearings for the downtown TIF amendments and the Core to Shore TIF plan is on Tuesday next week (Feb. 23)--there's no listed course of action in the posted notices after this, so this might be the last time anyone has a say before Council adopts everything. If Pete and others are against these, you might want to make sure your research or arguments are in place in time. (Same goes for those of you who are in favor of these.)

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## Pete

^

It goes to final vote on Tuesday.

I've been collecting and analyzing the detail but they haven't given anyone much time to look all these complex matters over.

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## TexanOkie

Didn't see anything in the news about this yesterday. Did these pass?

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## RodH

It passed with one no vote.  The emergency failed.

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## Pete

It's $395 million in tax dollars (will certainly end up being more) and the Oklahoman barely covered this.


Spending split: OKC Council creates six downtown TIF districts
By: Brian Brus The Journal Record February 23, 2016 

OKLAHOMA CITY – Six new downtown tax increment finance districts are now queued to activate over the next decade.

City Council members on Tuesday approved a plan proposed by the Alliance for Economic Development of Oklahoma City to carve up the area just north of the Oklahoma River into economic development zones. The six districts fall between Western Avenue and the east side of Bricktown, bound by Sheridan Avenue to the north, in what officials are referring to collectively as the Core to Shore reinvestment area. Much of the area was originally identified as the larger TIF-2.

Once active, the six new TIFs will have a total budget of $395 million. Council members have up to 10 years to activate them.

Councilman Ed Shadid, the lone holdout in the 8-1 vote, questioned the need to define so many TIFs before they’re needed. Some are likely to never be triggered at all, he said, if other subsidies and free market forces are as successful as expected.

Oklahoma state law allows municipalities to access funds for economic development by defining a region and locking property values at a base level over several years while setting aside ad valorem tax revenue as it increases over the base. The additional revenue is then funneled into projects within the district, making the surrounding area more attractive as well.

“We have $63 million in TIF-2 that are not allocated … $63 million that we can now spend on economic development,” Shadid said. “It seems like we should finish our dinner before we go on to dessert.”

“There has to be a reason for rushing to do six TIFs that hasn’t been articulated publicly. I think that part of this is the convention center,” he said, referring to plans to build a larger center to replace the Cox Convention Center under the MAPS 3 temporary sales tax program. “We don’t have money for the parking garage. We don’t have money for the convention center hotel. And in my gut, I think that’s what this is all about.”

Shadid also noted the effect of TIFs on school district funding, as reported earlier by The Journal Record. The diversion of ad valorem taxes from the state school aid equation could mean less money for school districts elsewhere, officials confirmed.

Councilman Pete White said his vote had been swayed by more information about the TIF structure over several months and discussions between city, county and school district officials about funding implications. His concerns over the length of subsidies were mollified somewhat by an amendment requiring comprehensive reviews of active TIF districts every five years.

The properties within the six TIF districts paid $750,000 in ad valorem property taxes in 2014, officials said. Under the approved plan, if any of the areas is judged to be struggling with development momentum, a review committee can ask the City Council to activate the TIF. Any additional ad valorem tax or sales tax revenue collected above the current base in the TIF will be kept within the district instead of feeding into the city’s overall budget.

Council members also agreed to expand the original boundaries of TIF-2 to south of SW 30th Street, increase the budget for projects by more than $44 million and remove the First National Center at Park and Robinson avenues from the larger district. The historic bank building now sits in its own district with a $45 million project budget.

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## warreng88

Putting this here and on the OCU Law School thread:

‘Necessarily complicated’: Ownership structure helped OCU get tax credits for downtown law school

 By: Brian Brus The Journal Record February 25, 2016

 OKLAHOMA CITY – The same federal tax credit program that served the historic Skirvin Hilton and Colcord hotels so well is proving a good investment for the Oklahoma City University School of Law.

 After just a few more years of leasing, the private Methodist school will wholly own the former Central High School property, OCU law school Dean Valerie Couch said.

 As the building’s ownership structure took shape over the last few years, its opaque complexity drew attention. However, Tom Loy, chairman of MetaFund in Oklahoma City, said it’s not uncommon for several parties to enter a major real estate deal to ensure the most efficient financing, particularly when it involves tax credits.

 The university actually kept the arrangement as simple as possible by bringing in the Methodist Foundation as an affiliate investor. Couch said no other investors are involved, and in about seven more years the foundation will step away.

 The building at 800 N. Harvey Ave. was built in 1910 and used as a public high school until the late 1960s. It was purchased by Southwestern Bell Corp., and then by Oklahoma Farmers Union Mutual Insurance Co., now known as American Farmers and Ranchers Mutual Insurance Co. The latter put the building up for sale in 2010, and the private university bought it for $10 million through OCU Law Building Associates LLC, according to county property records.

 Over the next few years, other parties came to be involved in the ownership and leasing of the property, including NMTC Investment Fund LLC, MF OCU Law Building LLC and Master Tenant LLC, according to public record audit statements.

 The MF in the fund name refers to MetaFund. NMTC refers to the New Markets Tax Credit Program, which was created by Congress in 2000 as part of the Community Renewal Tax Relief Act. The program helps revitalize economically troubled areas by providing tax credit incentives to investors in federally certified Community Development Entities. The credit is equal to 39 percent of the investment over slightly more than six years. Couch was unable to say how much the tax credit was worth to OCU, other than several million dollars.

 The program is popular around the country. According to the U.S. Treasury Department, NMTC generated $8 of private investment for every $1 of federal funding as of the end of the 2014-2015 fiscal year, financing more than 4,800 businesses.

 In addition to the Skirvin and Colcord hotels near downtown, the NMTC tax credit was figured into the development of the soon-to-open 21c Museum Hotel, formerly the Fred Jones Building in what is now the Film Row district west of downtown. MetaFund was involved in the Colcord deal; however, all three examples were structured similarly to the OCU law school deal.

“Unfortunately, for everyone who participates in them, the structures are necessarily complicated because of the requirements of the tax credit,” he said. “The OCU transaction was complicated, not because anybody wanted it that way, but because of the requirements of the tax credit.”

Typically, NMTC deals involve a bank loan and an investor who isn’t interested in the property as much as the tax credit. But even that gets messy under other federal laws and requires more parties, Loy said.

 Regardless, OCU did nothing unusual, he said, nor is the ownership structure providing profit from students’ tuitions through the law school.

“The convoluted structure is not intended to hide any of the players,” he said. “In this case, it made an economic revitalization project very feasible. This deal without the New Market Tax Credits, I can say with a fair degree of certainty, would never have been able to convert that lovely old high school building, and it would be in an even further state of disrepair.”

----------


## TexanOkie

The Chamber is hosting a forum on TIF this Thursday from 11:30 AM to 1:00 PM at the downtown Sheraton. The forum's panelists look to be a mix of inside and outside folks:

* Cathy O'Connor, Alliance for Economic Development of Oklahoma City
* Russell Evans, Economist, Oklahoma City University
* Carl E. Edwards, Price Edwards & Company
* Forrest "Butch" Freeman, Oklahoma County Treasurer

Link:  Greater Oklahoma City Chamber - Learn about OKC developments related to Tax Increment Financing (TIF) districts at Chamber Forum

----------


## Teo9969

…sigh...

----------


## Pete

^

Very telling this is being sponsored by the Chamber.

----------


## TexanOkie

> ^
> 
> Very telling this is being sponsored by the Chamber.


Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.

Also, discounting information presented just because you anticipate bias from the source is no worse than what TIF proponents do with the information from Good Jobs First, etc.  I can imagine the truth about whether TIF is beneficial or not is somewhere in the middle of the two sides, but ignoring the other side's points or facts, even if presented in biased fashion, likely doesn't help settle the debate. It just further entrenches people.

----------


## Pete

> Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.


He's the consulting economist for the City, meaning he is on their payroll.

----------


## Teo9969

> Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.
> 
> Also, discounting information presented just because you anticipate bias from the source is no worse than what TIF proponents do with the information from Good Jobs First, etc.  I can imagine the truth about whether TIF is beneficial or not is somewhere in the middle of the two sides, but ignoring the other side's points or facts, even if presented in biased fashion, likely doesn't help settle the debate. It just further entrenches people.


The problem with this line of thinking is that the "opposition" doesn't really have anything to gain or lose. The "opposition" is simply attempting to clarify what is going on so that the public can be aware and scrutinize the viability of the program.

Instead, the Chamber is hosting a $60 event so that movers and shakers can come and be persuaded about the positive qualities of TIF.

Look, if they present objective information that shows the positives of the program, but also highlight what the potential pitfalls are and to what failsafes they are implementing to prevent those pitfalls, then great. If this is a "everything's rosy, go on about your lives again" type of presentation, that's far more dangerous than anything the "opposition" can do.

Those in charge of TIF are going to be overseeing hundreds of millions of public dollars. Those who have put TIF under scrutiny aren't in charge of a dime.

To whom much is given, much is asked…the concerning thing is that the first public forum for those who are deeply involved in the process (i.e. Cathy O'Connor) is being held in a nice little bubble where those unaffected can come pretend like they care and those who are most affected can't afford to come.

----------


## Pete

> Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.
> 
> Also, discounting information presented just because you anticipate bias from the source is no worse than what TIF proponents do with the information from Good Jobs First, etc.  I can imagine the truth about whether TIF is beneficial or not is somewhere in the middle of the two sides, but ignoring the other side's points or facts, even if presented in biased fashion, likely doesn't help settle the debate. It just further entrenches people.


I've never seen anyone at the city even mention Good Jobs First or any of the points they raise.

In fact, when Greg LeRoy from that organization spoke at the town hall on TIF sponsored by Ed Shadid, Cathy O'Connor and other city representatives were invited and all declined.

Since I am literally the only other person who understands how OKC implements TIF's, where that money comes from and where it goes, I spoke on those subjects at the same town hall meeting.

I assume you did not attend this?

Many local developers attended that meeting -- most of whom have received TIF money or were planning to apply -- and all complemented me on my objectivity and fairness.


There are not "two sides" here.  There is the city (and specifically the Chamber working in tandem with the Alliance for Economic Development) and people only hear what they have to say, which I've demonstrated to be biased and often out-right misleading.  And if I appear to be on a different side, it's only because the whole truth is not being communicated.

I've made this point many times: If there were only negative comments and misleading information to the negative side of TIF's, I would have presented the fuller picture on that as well.

I personally do not have anything to lose or gain from TIF one way or another.  I merely started studying the subject years ago because it's hundreds of millions of tax dollars being administered by a handful of people and literally no one -- including city council -- understands how it works.  And in fact, have been frequently misled.

I have spent hundreds of hours researching this, collecting records and interviewing city personnel, all on a purely volunteer basis.  I did not start with "a side" I merely wanted to understand and as I investigated I found many inconsistencies which I have attempted to document and share, for absolutely no personal gain.

----------


## TexanOkie

> I've never seen anyone at the city even mention Good Jobs First or any of the points they raise.
> 
> In fact, when Greg LeRoy from that organization spoke at the town hall on TIF sponsored by Ed Shadid, Cathy O'Connor and other city representatives were invited and all declined.
> 
> Since I am literally the only other person who understands how OKC implements TIF's, where that money comes from and where it goes, I spoke on those subjects at the same town hall meeting.
> 
> I assume you did not attend this?
> 
> Many local developers attended that meeting -- most of whom have received TIF money or were planning to apply -- and all complemented me on my objectivity and fairness.
> ...


I was at the Greg LeRoy town hall, and my point wasn't to question your objectivity. However, it's also fairly obvious from your posts on this thread that your initially objective analysis has led you to be very skeptical if not opposed to TIF as practiced by OKC. Granted, your skepticism/opposition is more nuanced than the rah-rahs coming from certain people at the City or Chamber. I guess I just have difficulty seeing how the program could be that poorly run or have such negative results when so many community leaders seem to be on board with it. That's all. Even the school district's on board now--and really, why wouldn't they be? With the state school aid formula being what it is, they effectively get $0.15 for every $1.00 in ad valorem revenue for operational use.

----------


## Pete

^

Not at all opposed to TIF, as there are very good applications for it, like First National.  You clearly are not paying close attention to what I've said on this matter.

I came to my skepticism honestly and as result of hundreds of hours and research, with absolutely no agenda or possible benefit.  In fact, quite the opposite as my name has been smeared by people at City Hall.

You and everyone else are only going off the information being fed by the City, which is incomplete, biased and intentionally misleading.


Here are some simple, irrefutable facts that get completely lost in all the rhetoric:

1. Tax dollars are being redirected largely from public schools to mostly private developers.
2. There is no proof that these developments would not happen without TIF. 
3. There is absolutely zero proof that TIF has increased property values and raised property taxes.

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## Teo9969

TexanOkie,

Honestly, if the program were about to be over, I don't think anybody here would be saying anything.

Instead, we're talking about a program about which nearly the entire city is ignorant (and even if they wanted to know more is well above the average person's understanding of economics/tax-policy) that is about to double overnight. We're talking about MAPS amounts of money in a program that well under 500 people in the entire city have any real grasp of. This is why there's such a major push by Pete for complete and transparent information.

I'll reserve further judgement until after watching the video of their Panel discussion.

----------


## TexanOkie

> ^
> 
> Not at all opposed to TIF, as there are very good applications for it, like First National.  You clearly are not paying close attention to what I've said on this matter.
> 
> I came to my skepticism honestly and as result of hundreds of hours and research, with absolutely no agenda or possible benefit.  In fact, quite the opposite as my name has been smeared by people at City Hall.
> 
> You and everyone else are only going off the information being fed by the City, which is incomplete, biased and intentionally misleading.
> 
> 
> ...


I'm not _trying_ to go off information fed by the City any more than you're _trying_ to be skeptical. I've read your information, information on TIF from other sources (including Mr. LeRoy's organization), and the information provided by the City. I've also worked as a city planner (not in OK, and not dealing with TIF [or "TIRZ" in TX]). I want to learn where the City's information is "incomplete, biased, and intentionally misleading," since there is clearly not a meeting of the minds about what is going on. If there were, and it were as you claim, then there is a pretty large contingent of City staff and others who are deliberately lying to and acting in bad faith toward City Council or the general population, and the rhetoric that IS coming from those sources doesn't appear to reflect any ill will or deception. These people seem to honestly believe they are doing a good public service. The only thing I have gathered is that you (and others such as Councilman Shadid) oppose--from an purely policy angle--the extensive use of TIF as part of a large redevelopment program. From what I've been able to gather, the City is working well within the constructs of how TIF is designed to work in OK.

I also think your "simple, irrefutable facts" are falling prey to the same problems of being incomplete, biased, and misleading (even if not intentionally so) as the City's information. And the 3 points themselves are circular. #1 presumes #2 & #3. There is no way to tell what the scale of these developments would be--if they would even happen--without TIF. I guess it all comes back to whether you believe these projects getting TIF support have an actual financing gap or not, and if so, what type of development the private financing market could support independently and what other sources might be available to fill the gap. I understand correlation doesn't equal causation and that there are a myriad of other variables that muddy the waters on being able to tell whether OKC's use of TIF has increased property values or not. Given the circumstances and the academic field the City's use of TIF would fall under (economics), I sincerely doubt there is a way to prove the developments would happen anyway or that TIF hasn't increased property values, either. Even if all 3 are correct, the tax dollars being "redirected" is not near the scale as has been claimed due to the current state school aid offsets for ad valorem collections in the foundation aid and salary incentive aid calculations. Now THAT is an irrefutable fact, though not simple.

----------


## Teo9969

> ...the tax dollars being "redirected" is not near the scale as has been claimed due to the current state school aid offsets for ad valorem collections in the foundation aid and salary incentive aid calculations. Now THAT is an irrefutable fact, though not simple.


Without getting into the rest of the post, this right here is just simply wrong. Redirected money is redirected money EVEN IF that redirected money is replaced with another stream. Because those streams that are now being redirected to the once vacant gap were at one point flowing to other areas.

----------


## Pete

> there is a pretty large contingent of City staff and others who are deliberately lying to and acting in bad faith toward City Council or the general population, and the rhetoric that IS coming from those sources doesn't appear to reflect any ill will or deception. These people seem to honestly believe they are doing a good public service


Doesn't make it any less manipulative or wrong.




> There is no way to tell what the scale of these developments would be--if they would even happen--without TIF.


The burden of proof is on the group seeking to divert hundreds of millions (approaching a billion) from schools to private developers, not the other way around.





> the tax dollars being "redirected" is not near the scale as has been claimed due to the current state school aid offsets for ad valorem collections in the foundation aid and salary incentive aid calculations. Now THAT is an irrefutable fact, though not simple.


That money simply comes from other public school districts, hence it IS being diverted from public schools.

----------


## Teo9969

> *The burden of proof is on the group seeking to divert hundreds of millions (approaching a billion) from schools to private developers, not the other way around.*


THIS right here is all that's being asked by Pete and others. If the city wants to divert tax dollars, fine. If the city wants to divert hundreds of millions of tax dollars, fine. Simply prove that it is the best use of public funds, do it in an open, transparent manner that the average citizen can understand and make sure that the ability to benefit from the program is easily understood and approachable for the average citizen.

We are now in the 17th year of the program and we are only now talking about TIF. Admittedly, the program started out with a budget of <$50M, which is hardly a number that merits major oversight and scrutiny. But in all the expansion that has taken place or is being planned, at some point, the numbers get large enough that it does merit major oversight and scrutiny, and to be perfectly fair, it merits those charged with administering the program to proactively approach the public which they are finally doing with this Chamber event. To be honest, they probably should have held this panel in 2008 BEFORE signing off on the Devon TIF for $177M. 

And correct me if I'm wrong, Pete, but the whole reason you started digging into OKC TIF in the first place was because of the disaster that Project 180 ended up being in terms of delivering what was promised and realizing that the whole funding mechanism for the project was a TIF project. 

Seriously, asking for transparency and scrutiny should not be anything other than WELCOMED by anyone, especially anybody working for a municipality and their constituents. Had they been forthright from the beginning, it would have never looked so bad in the first place.

----------


## Pete

> I'm not trying to go off information fed by the City any more than you're trying to be skeptical. I've read your information, information on TIF from other sources (including Mr. LeRoy's organization), and the information provided by the City. I've also worked as a city planner (not in OK, and not dealing with TIF [or "TIRZ" in TX]). I want to learn where the City's information is "incomplete, biased, and intentionally misleading,


If you are going to raise your own credentials while attempting to present yourself as objective, you should at least disclose who you work for and how your employer makes a lot of money from TIF.

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## TexanOkie

> Doesn't make it any less manipulative or wrong.


Actually, it does, legally speaking.




> The burden of proof is on the group seeking to divert hundreds of millions (approaching a billion) from schools to private developers, not the other way around.


And the City staff seems to have met that burden by securing approvals for their actions from the City Council and by obtaining the other approvals the legislature requires through the Local Development Act. The standard here isn't "but/for," it's "difficult but possible with." That's a huge distinction.





> That money simply comes from other public school districts, hence it IS being diverted from public schools.


The money is not being diverted from public schools if the entire scheme was designed to work this way. Both the Local Development Act and the state school aid statutes explicitly lay out that increment values are not counted against school districts in calculating the amount of aid a district receives. I've addressed previously why this makes sense, logically. The scheme addresses limits on increment values allowed, too, to prevent overuse of TIFs in an attempt to get more state aid than a district may be otherwise entitled to.

----------


## Teo9969

> *Actually, it does, legally speaking*.
> 
> And the City staff seems to have met that burden by securing approvals for their actions from the City Council and by obtaining the other approvals the legislature requires through the Local Development Act. The standard here isn't "but/for," it's "difficult but possible with." That's a huge distinction.


This is never the start of a good defense against scrutiny. It simply doesn't matter that what they're doing is legal. Right and Wrong are not beholden to legality and law is not ethics. Impropriety can and often is legal. Of course nobody has even arrived to the point of accusing city officials of impropriety in regards to TIF, so that's a moot point…but your argument is a TERRIBLE defense for the lack of transparency throughout the history of TIF.





> The money is not being diverted from public schools if the entire scheme was designed to work this way. Both the Local Development Act and the state school aid statutes explicitly lay out that increment values are not counted against school districts in calculating the amount of aid a district receives. I've addressed previously why this makes sense, logically. The scheme addresses limits on increment values allowed, too, to prevent overuse of TIFs in an attempt to get more state aid than a district may be otherwise entitled to.


That's all well and good, but it doesn't address the heart of what some of us are concerned about**:

Tax money that is earmarked for schools is not going to schools, regardless of whether or not the schools are getting money that they need to operate. This isn't in and of itself problematic. Public money is being turned into an incentive and distributed to the private sector. This isn't in and of itself problematic. 

The problem is that it's not a very transparent process, and there has been very little attempt on the part of city officials to explain and defend their actions. Hopefully this Panel will be a good first step in the process.

----------


## TexanOkie

> This is never the start of a good defense against scrutiny. It simply doesn't matter that what they're doing is legal. Right and Wrong are not beholden to legality and law is not ethics. Impropriety can and often is legal. Of course nobody has even arrived to the point of accusing city officials of impropriety in regards to TIF, so that's a moot point…but your argument is a TERRIBLE defense for the lack of transparency throughout the history of TIF.


Right and wrong are not synonymous with legal wrongdoing, no. However, in defense of the legal system, liability (in tort) or culpability (in criminal law) for the most part does try to take into account the mental state a person is in when they commit some act. By "mental state" here, I am not talking about what's colloquially known as the "insanity" defense, but the state of mind someone is in and the awareness of what they are doing (whether it's the knowledge that a fact is wrong, the failure to realize what they are doing is wrong when they should be able to do so, or the just the knowledge that they are doing what they are doing). Anywho, that's kind of off topic. Apologies.





> That's all well and good, but it doesn't address the heart of what some of us are concerned about**:
> 
> Tax money that is earmarked for schools is not going to schools, regardless of whether or not the schools are getting money that they need to operate. This isn't in and of itself problematic. Public money is being turned into an incentive and distributed to the private sector. This isn't in and of itself problematic. 
> 
> The problem is that it's not a very transparent process, and there has been very little attempt on the part of city officials to explain and defend their actions. Hopefully this Panel will be a good first step in the process.


Transparency can certainly always be better. No doubt about it, in just about anything dealing with public funds. However, my main point from the section you quoted was that the public money you claim is being "diverted" was never earmarked for schools. The state funding, ad valorem taxation, and TIF statutory schemes specifically provide as such. A small distinction, if you only consider where the levies come from that produce the increment, but that small distinction plays a huge role in the entire scheme for TIF and school funding and should frame the policy arguments surrounding TIF's use.

----------


## Pete

^

Speaking of transparency, perhaps you didn't see my post calling for you to disclose that you work for a company which makes a ton of money from OKC's TIF programs.

----------


## TexanOkie

> ^
> 
> Speaking of transparency, perhaps you didn't see my post calling for you to disclose that you work for a company which makes a ton of money from OKC's TIF programs.


The amount of money my employer makes from consulting with the City of Oklahoma City is public record. It's not a "ton."

----------


## David

Might as well disclose the company too so everyone watching can judge for themselves.

----------


## Pete

> The amount of money my employer makes from consulting with the City of Oklahoma City is public record. It's not a "ton."


Isn't the City of OKC your biggest client?

Wouldn't the billings over the years -- including the Alliance -- be in the millions?

----------


## TexanOkie

> Isn't the City of OKC your biggest client?
> 
> Wouldn't the billings over the years -- including the Alliance -- be in the millions?


Frankly, I don't know. I'm just an associate. For those of you wondering, I work for the Center for Economic Development Law, a small, boutique public interest law firm specializing in representing public entities in economic development and public-private partnership projects. For the record, the Alliance is not one our clients. The City is only a minor client. We do serve as general counsel for OCURA and OCRA (again, matters of public record). But we also serve communities across the state on any manner of issues ranging from simple land use issues to federal grant and state redevelopment programs to, yes, local use of TIF and other state incentives.

While in most cases my professional experience would give me some extra credibility on issues like TIF, I anticipate here it is going to do the opposite. Hence the whole call for "disclosure," to begin with. Don't hold it against me. I joined OKC Talk before I entered this professional  field, and enjoy participating these forums (as much as my professional responsibility will allow, anyway), and I genuinely want to see Oklahoma communities realize their development goals (and not just my clients, either).

Anyway, there it is. For whatever it's worth to this online community, I can guaranty 80% of the attorneys I work with would easily be considered "experts" in TIF, and certain of my employers probably are more knowledgeable on its ins and outs than anyone else in this state.

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## Pete

^

It's not that small.  6 attorneys on staff, all specializing in helping municipalities develop economic programs, and a lot of that is TIF.  Your annual payroll alone has to be over a million a year.

Also, just this year OCURA has $450,000 budgeted for legal work.  Are they using anyone other than your firm?


There is a lot more business for you if TIF's are first considered, then passed, then administered especially since here in OKC, as all of them last the maximum of 25 years.  OCURA, for those who don't know, administers TIF's and this law firm performs all the legal work around that.


If OKC is not your biggest client, who is?  Are you saying a practice located in downtown OKC, founded by a former member of OCURA, in a city with far more TIF and other economic development incentive programs than anywhere else in the state, somehow does less business with your firm than Norman or Guymon or Guthrie?


If you'd like, I can find out exactly how much you are paid by the City and happen to know it's no small sum.  Your firm has had a relationship with the City for decades.


And the only reason I bring any of this up is because 1) you characterized my position as 'skeptical' which is a nice way of saying biased; 2) I did my best to explain I have absolutely no financial interest in this issue; 3) you claim you have equally considered all sides thereby lay claim to the objectivity high ground; and 4) all the while failed to mention at all that your employer receives great financial benefit from TIF programs.


I appreciate your insight and participation but you can see why I have become 'skeptical' of this program and the information that continues to come from the people involved in it.

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## TexanOkie

If you look at any of our fee schedules, I think you'll be hopefully pleasantly surprised at how low our rates are. We're not in this business for the sake of profit, believe it or not. While I can't speak directly for my colleagues, I do think it is a safe statement to say that we consider our work more in the manner of public interest law, but very specialized.

A couple of things for clarification--OCURA thus far does not administer TIFs. That falls on the OCEDT except for TIF 1/7, which is OCRA. OCEDT is not a client of ours. OCURA is a "public body corporate" independent of the City created by state law to implement and manage the City's urban renewal program. Most OCURA involvement with TIF has been when projects in a TIF are built on OCURA-owned land. We have worked with the City for the Dell TIF and recently in a consulting relationship only on the Downtown amendments and the Core to Shore TIF. These things should all be reflected in the public record.

Finally, while our firm might benefit from TIF's existence, that's really only because that seems to be the primary game in the state at the moment. The firm has been around far longer than TIF has been around in OK, and we are involved in many other areas of practice. Our goal isn't to make money off TIF, but to assist communities reach their development potential.

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## Pete

^

I really do appreciate your participation in this discussion and the perspective you provide.

Thanks for keeping things civil.


I truly am not anti-TIF, just have felt compelled to research and make some points which are obviously not going to be made by the group making the pitch and our local press has been completely out to lunch on this.

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## Teo9969

The disappointing thing, to me, about not talking about this more openly, debating some of the drawbacks, is that there are many things we could do to improve the process.

If we would actually address the drawbacks, we could more easily arrive at 10/15-year TIF instead of immediately going with a 25-year TIF. What if instead of going right for the 25 year because that's what we can do, we look at shorter terms. Maybe we tell Wheeler, we'll do a TIF for your entire development area (inclusive of some space around the development as well), but we're capping it at 15 years. The motivation then is for Wheeler to move quickly to capture as many future gains as is possible…instead of building out in 8-12 years, they build out in 6-9 years…and why? Because it's better for them economically. (I'm aware there're caps and all that and it's more complicated than I'm laying out but you get the point). And I would happily support giving the Humphreys tens of millions of tax dollars simply for finishing such an ambitious project in a rapid manner. It's a game changer for our city. But for goodness sake, use OUR leverage to get what WE want. The point isn't to incentivize developers to create projects that make them money, the goal is to incentives developers to create projects that make US money.

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## TexanOkie

> The disappointing thing, to me, about not talking about this more openly, debating some of the drawbacks, is that there are many things we could do to improve the process.
> 
> If we would actually address the drawbacks, we could more easily arrive at 10/15-year TIF instead of immediately going with a 25-year TIF. What if instead of going right for the 25 year because that's what we can do, we look at shorter terms. Maybe we tell Wheeler, we'll do a TIF for your entire development area (inclusive of some space around the development as well), but we're capping it at 15 years. The motivation then is for Wheeler to move quickly to capture as many future gains as is possible…instead of building out in 8-12 years, they build out in 6-9 years…and why? Because it's better for them economically. (I'm aware there're caps and all that and it's more complicated than I'm laying out but you get the point). And I would happily support giving the Humphreys tens of millions of tax dollars simply for finishing such an ambitious project in a rapid manner. It's a game changer for our city. But for goodness sake, use OUR leverage to get what WE want. The point isn't to incentivize developers to create projects that make them money, the goal is to incentives developers to create projects that make US money.


I think that would work in certain contexts--especially where TIF is used as development financing assistance that is expressed as a percentage of new revenues a developer creates. However, in other circumstances it would not work as well. Particularly if the TIF is used for specific public projects like TIF 8, which has gone primarily into Project 180. At that point, you want to make sure you capture the amount of money needed to complete the projects, and would rely on project cost caps in the TIF plan instead of the shorter time period to act as the eventual cutoff.

As to your last statement, I can't speak for OKC, since they do their TIF agreements in house, but in my work in other communities, the point of using TIF as incentives usually isn't either of the things mentioned. Sure, you want to incentivize projects good for the community, but most of the time the incentives--and a specific amount at that, even if percentage-based using realistic projections--is necessary to get the private financier to agree to fund the project at all.

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## warreng88

Think tank miffed about TIFs

By: Dale Denwalt  The Journal Record	August 26, 2016

OKLAHOMA CITY – Tax increment finance districts do little for the state’s economy yet benefit well-established corporations, according to a think tank’s analysis of the law.

Byron Schlomach from the right-leaning 1889 Institute said state policies that created TIF districts also let business shuffle from one area to another inside the state.

“Obviously the district itself benefits, but as far as the state’s economic development goes, it doesn’t do much for us,” said Schlomach, director of the institute. “It’s mostly an insider’s game. TIFs are a good way for people who know and understand the political system well to benefit from the system. But it’s not a way to grow the overall economy and benefit everyone in general.”

TIF districts are geographic areas within a city or county where newly generated sales or property taxes can be spent by the district. In some cases, retailers get to keep part of any new sales tax revenue they generate. Other TIF districts keep property taxes low so the company can instead reinvest the savings back into the business.

By letting businesses keep tax revenue, Schlomach said the districts actually hurt economic growth.

“Many TIFs, especially those that tap property taxes, cost everyone in the state of Oklahoma, though TIFs are locally constituted,” he wrote in the policy analysis. “(TIFs) redistribute resources to the wealthy and well-connected. They allow the bypass of taxpayer protection measures. And, TIFs often allow TIF-creating entities to steal away the revenues of other taxing entities.”

Those taxing entities include schools, cities and county governments.

Ponca City’s economic development officer, David Myers, agreed that TIF districts can be used poorly, but said that local governments can also be deliberate when establishing one.

“There is nothing inherently good or bad about a TIF district,” Myers said.

He suggested that officials should use an internal but-for test, asking “but for this TIF district, would the business still come?”

“In most of the times that we (asked), the but-for came back and said we didn’t need the TIF district,” Myers said.

The 1889 Institute recommended several changes to the law, including a restriction to how TIF district money can be used. Schlomach said he thinks infrastructure spending is a legitimate use.

“It is one thing for school tax money to be diverted to fund publicly owned infrastructure like water, sewer, streets and public parks,” he wrote in the analysis. “It is quite another to hand $500,000 over to a restaurant owner.”

He also recommended a limit on which taxes a TIF district can avoid paying, and a limit on the life of a district. Elected state officials should also have oversight to approve or deny a district, Schlomach wrote.

The state could also repeal TIF laws, thereby prohibiting their use.

“It’s really throwing the baby out with the bathwater,” Myers said about a repeal. “It’s a tool for communities to use to address blight when there’s a willing private partner.”

He also criticized Schlomach’s suggestion that top government officials could approve or deny TIFs. Myers said entrepreneurs would get skittish about coming to Oklahoma if the governor or attorney general had to give final approval.

“Any time that the public wants to take a look at a tool like TIF, those are legitimate public conversations,” he said. “But what has to be considered are the consequences.”

----------


## Teo9969

I don't know about other cities but in OKC the business doesn't get to keep the taxes. They pay the taxes regardless and then instead of the county receiving the increase, the city does and then doles out that money under a more complicated guise. 

So nobody downtown is paying less property taxes than they otherwise would be. How you get ahold of TIF money in the first place is a different issue altogether. There are good reasons to be critical of TIF, but at least in OKC's case, a failure to understand the system is not one of those reasons.

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## Pete

^

There are instances where property tax and sales tax are merely refunded directly to the business.

Such as the Skirvin and soon to be FNC and Wheeler District.

----------


## Teo9969

> ^
> 
> There are instances where property tax and sales tax are merely refunded directly to the business.
> 
> Such as the Skirvin and soon to be FNC and Wheeler District.


I understand that is accurate, but especially for the Skirvin and FNC, it should really be viewed differently. Having a TIF "district" for one building goes to show the importance of the building in OKC as a whole, and TIF just happens to be the best mechanism for the city to contribute to the cause. They're also the 2 most "Duh!" instances of when to use TIF. 

Wheeler is obviously in a different category because we're not preserving a building and we don't really know what we're going to have with the district. In these instances (which will probably also happen in the CO-OP), I feel like the legitimate complaint is not how it happens (money going back into developers pockets), but the length of time it is in effect. If we limit the Wheeler TIF to 15-20 years, that incentivizes the district coming together a bit quicker in order to capture those gains, and doesn't leave the future area without a large tax-source. And if you want to keep it at 25 years, tie the amounts to building certain public amenities etc. 

On a completely different note, do receivers of TIF have to pay Federal/State income taxes on those amounts?

----------


## warreng88

Cathy O'Connor was on Steve chat today, which pulled in a lot of TIF questions. Full chat here:

http://newsok.com/article/5516329

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## Pete

> The basic premise of tax increment financing is the investment would not occur without the assistance from TIF. Therefore, there are no revenues to take away from the school district.


I challenge this basic premise and many of the assumptions the Alliance uses when marketing and presenting on TIF.

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## Midtowner

^ I agree. The Alliance is great at spending the public's money with no accountability whatsoever to the public.   TIF has been a great tool for things like the Skirvin, but for every Skirvin, there are several of these:

http://www.koco.com/news/Blanchard-b...posal/30989666
(TIF being used to help build a Wal Mart store)

TIF has become just one piece of this incentives game used to spawn development. It and other options have been very good to large corporations which every few years can extort the public for free money with the not-so-veiled threat of picking up their toys and going elsewhere.  

Project 180 and the OG&E tower really stand out to me as abuses.  OG&E is getting what.. $69 million just 'cuz?  They weren't going to move out of state and they weren't going to move to Edmond, that tower would have been built without that money. The Devon tower was getting built anyhow. It would have been a far more efficient use of city resources to simply keep up with our infrastructure investments downtown rather than to borrow all of that money, robbing public education and county services for however many years... and the finance charges on those bonds can just be written off as inefficient spending. If it could ever be argued that the city doesn't have enough revenue to address ongoing infrastructure concerns, a discussion needs to be had about revenue and things like the extension of our city's infrastructure in, for example, the Deer Creek area?

The argument that these take no money away from schools is just disingenuous. If these projects went through without TIF, the schools and county services would see significant bumps in revenue.  This stuff matters and is part of why Oklahoma's schools are near dead-last in the United States in terms of funding.

----------


## Teo9969

> ^ I agree. The Alliance is great at spending the public's money with no accountability whatsoever to the public.   TIF has been a great tool for things like the Skirvin, but for every Skirvin, there are several of these:
> 
> http://www.koco.com/news/Blanchard-b...posal/30989666
> (TIF being used to help build a Wal Mart store)
> 
> TIF has become just one piece of this incentives game used to spawn development. It and other options have been very good to large corporations which every few years can extort the public for free money with the not-so-veiled threat of picking up their toys and going elsewhere.  
> 
> Project 180 and the OG&E tower really stand out to me as abuses.  *OG&E is getting what.. $69 million just 'cuz?  They weren't going to move out of state and they weren't going to move to Edmond, that tower would have been built without that money.* The Devon tower was getting built anyhow. It would have been a far more efficient use of city resources to simply keep up with our infrastructure investments downtown rather than to borrow all of that money, robbing public education and county services for however many years... and the finance charges on those bonds can just be written off as inefficient spending. If it could ever be argued that the city doesn't have enough revenue to address ongoing infrastructure concerns, a discussion needs to be had about revenue and things like the extension of our city's infrastructure in, for example, the Deer Creek area?
> 
> The argument that these take no money away from schools is just disingenuous. If these projects went through without TIF, the schools and county services would see significant bumps in revenue.  This stuff matters and is part of why Oklahoma's schools are near dead-last in the United States in terms of funding.


You know that that project died due in large part to OKC saying absolutely not to that number for TIF, right?

Also, I'm not 100% sure, so please someone correct me if I'm wrong, but the money used from TIF I don't believe is bonded. I think most of the time, developers just use their own money to develop whatever is being TIFed and then they either don't pay an increased tax rate, or they get reimbursement from the city each year for the tax increment, until the initial amount has been reached. 

In the case of the TIF that we used for projects like 21c hotel, I believe that money was already in the city's account from the years of improved numbers from when the TIF District actually began like 15 years ago.

----------


## Pete

> Also, I'm not 100% sure, so please someone correct me if I'm wrong, but the money used from TIF I don't believe is bonded. I think most of the time, developers just use their own money to develop whatever is being TIFed and then they either don't pay an increased tax rate, or they get reimbursement from the city each year for the tax increment, until the initial amount has been reached.


The TIF grants are paid in various ways but most often it is just paid as a lump sum.

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## Teo9969

> The TIF grants are paid in various ways but most often it is just paid as a lump sum.


This makes sense for most projects that have used TIF#2 Money, because most of the projects came way later than launch date of the TIF in 2000, so the money was ostensibly already in the city's pocket.

But in cases like TIF#8/Devon TIF/Project 180, where did we get the $177.7M ($125M being from the Devon TIF) to do all that work in the present considering the actual capture date won't end until 2033. Did we bond out the $125M or did Devon pay it up front to be reimbursed at a later date? 

Same thing with the upcoming Wheeler TIF. The way I understand it, the Wheeler organization is going to front the costs of all the construction in the area and only later receive reimbursement of the increment over the ensuing two decades.

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## Pete

Devon loaned with interest the money for P180 because they wanted much of it done before their new HQ was complete.

And yes, the Wheeler proposal is different.

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## TexanOkie

> This stuff matters and is part of why Oklahoma's schools are near dead-last in the United States in terms of funding.


This is a little bit off-topic, but has become very apparent in the relatively short time I've worked in this state. Regardless of whether one loves or loathes TIFs, conceptually, it's important to remember that 47 other states authorize TIF--and most of those allow the use of school district levies as increment (Oklahoma's TIF statute is fairly representative of most)--and yet still manage to fund their schools at higher levels. Even if the state's TIF laws and constitutional amendment were repealed, the basic funding problem with Oklahoma schools would persist for several reasons, not the least of which include: (1) the political and legal difficulty of passing any revenue-increasing legislation in this state; (2) a tax code over-reliant (or over-lenient) on revenues from specific industries; and (3) a wildly inequitable tax structure between taxing jurisdictions.

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## Midtowner

> This is a little bit off-topic, but has become very apparent in the relatively short time I've worked in this state. Regardless of whether one loves or loathes TIFs, conceptually, it's important to remember that 47 other states authorize TIF--and most of those allow the use of school district levies as increment (Oklahoma's TIF statute is fairly representative of most)--and yet still manage to fund their schools at higher levels. Even if the state's TIF laws and constitutional amendment were repealed, the basic funding problem with Oklahoma schools would persist for several reasons, not the least of which include: (1) the political and legal difficulty of passing any revenue-increasing legislation in this state; (2) a tax code over-reliant (or over-lenient) on revenues from specific industries; and (3) a wildly inequitable tax structure between taxing jurisdictions.


I guess so long as it's not your ox being gored? We're a poor state to begin with. I'd love to see the tax code completely rewritten in an equitable manner such that basic government services were funded adequately.  That's not going to happen in our thoroughly corrupt state legislature though. 

Ideologically, I'm against policies which assist private industry in doing the things private industry should be able to pay for by itself.  As I said, there are some projects where TIF is 100% needed.  The Skirvin, for example--not feasible without TIF.  

Wheeler though?  Give me a break. If you can't afford to stack houses on top of each other on  and sell them for what will probably be 4x-5x the average per square foot price for new construction in OKC, there is something seriously wrong with your business model.

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## Teo9969

> I guess so long as it's not your ox being gored? We're a poor state to begin with. I'd love to see the tax code completely rewritten in an equitable manner such that basic government services were funded adequately.  That's not going to happen in our thoroughly corrupt state legislature though. 
> 
> Ideologically, I'm against policies which assist private industry in doing the things private industry should be able to pay for by itself.  As I said, there are some projects where TIF is 100% needed.  The Skirvin, for example--not feasible without TIF.  
> 
> Wheeler though?  Give me a break. If you can't afford to stack houses on top of each other on  and sell them for what will probably be 4x-5x the average per square foot price for new construction in OKC, there is something seriously wrong with your business model.


Everything is feasible without TIF, if you're fine waiting for the long haul for the money to come back.

Wheeler is a fine use of TIF because you are talking about a severely blighted area that is going to take a lot to bring together. Currently nothing sells between 4x-5x the average per square foot price of any home in OKC much less new construction. They are shooting to be at least somewhat affordable in parts, though maybe not in the first units they've talked about. That's not something that any developers downtown are doing with for sale housing.

Wheeler does have some site remediation issues not to mention a complete lack of utilities and services right in the middle of the city, and it is a very strategic place early in OKC's core development that it makes sense.

Furthermore, with TIF in OKC, limits can be set, both in time and amount. I don't think anybody wants to give Wheeler $200M in subsidies, but I doubt that's the amount they're asking for in the TIF. $20M seems pretty dang reasonable to literally turn over 50 acres from a nothing/brownfield site into a sustainably planned, full-scale urban neighborhood in the next 5-10 years.

I'm definitely on record saying we should shorten the capture period to incentivize quicker paced development, and choose a limit that is not guaranteed to be hit if the developers drag their asses but that, again, incentivizes quality construction and development of a place that truly adds value to our city.

Somebody could have just as easily bought this area to build a nice 250-unit gated subdivision the likes of which are built in suburbia. It would have come with a nice 12 foot wall on the west side so that it's completely walled off from the "dangerous" dwellers in the poor part of town, and probably have sold the homes for the same $225/sf as close as the area is to downtown, with much less invested.

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## Pete

I think Wheeler and FNC are good uses of TIF, but that's a tiny part of what we are using TIF funds for.

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## Midtowner

> Everything is feasible without TIF, if you're fine waiting for the long haul for the money to come back.
> 
> Wheeler is a fine use of TIF because you are talking about a severely blighted area that is going to take a lot to bring together. Currently nothing sells between 4x-5x the average per square foot price of any home in OKC much less new construction. They are shooting to be at least somewhat affordable in parts, though maybe not in the first units they've talked about. That's not something that any developers downtown are doing with for sale housing.
> 
> Wheeler does have some site remediation issues not to mention a complete lack of utilities and services right in the middle of the city, and it is a very strategic place early in OKC's core development that it makes sense.
> 
> Furthermore, with TIF in OKC, limits can be set, both in time and amount. I don't think anybody wants to give Wheeler $200M in subsidies, but I doubt that's the amount they're asking for in the TIF. $20M seems pretty dang reasonable to literally turn over 50 acres from a nothing/brownfield site into a sustainably planned, full-scale urban neighborhood in the next 5-10 years.
> 
> I'm definitely on record saying we should shorten the capture period to incentivize quicker paced development, and choose a limit that is not guaranteed to be hit if the developers drag their asses but that, again, incentivizes quality construction and development of a place that truly adds value to our city.
> ...


Sometimes I do work in the public's best interest. Maybe kick over $20MM to me as an attaboy too?  Developers are in business to make money. It's not as if developers will simply cease to function as an industry if they stop getting taxpayer funded kickbacks. I'm all for investment in what will be the crown jewels of the city.  I don't imagine Wheeler is going to be that.  

Also, mostly what TIF is involves financing Wal Marts and crappy industrial parks for the politically well-connected. 

I'd love to see the Alliance have nothing futher to do with TIF money and for OKC to fund maybe one project per year chosen after significant open consideration as well as input from citizens.

As for those ne'r do wells you'd build the wall to exclude, that might as well happen as development like this typically prices those people out of their homes.   That of course isn't bad for all of us as it increases the tax base overall, but let's not pretend we're doing those lower-income people any favors.

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## TexanOkie

> Sometimes I do work in the public's best interest. Maybe kick over $20MM to me as an attaboy too?  Developers are in business to make money. It's not as if developers will simply cease to function as an industry if they stop getting taxpayer funded kickbacks. I'm all for investment in what will be the crown jewels of the city.  I don't imagine Wheeler is going to be that.  
> 
> Also, mostly what TIF is involves financing Wal Marts and crappy industrial parks for the politically well-connected.


You clearly haven't looked at the plans for Wheeler, and Oklahoma City's use of TIF has been anything but for Walmarts and crappy industrial parks. Although, I have to say based on my professional experience that those "crappy industrial parks" in other places in the state that have used TIF are (1) more likely to use the TIF funding for public infrastructure rather than development financing assistance, and (2) are the most likely to bring in actual job/economic growth to the state (let alone the local community). Those are two things that most TIF opponents will concede could be valid uses of TIF, in addition to specific blight remediation.

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## Pete

Since all we get is one side of the story from the City when it comes to this subject, I continue to feel compelled to share other perspectives.

This is a detailed analysis and criticism by an Oklahoma policy group called the 1889 Institute:

nebula.wsimg.com/0dcfc8fd9a848b5a4d8d3d4f5301ed8f?AccessKeyId=CB55D  82B5028ABD8BF94&disposition=0&alloworigin=1




> Conclusion
> Tax Increment Financing Districts are sold as a way to increase economic development in the state at public expense without costing taxpayers anything whatsoever. The evidence that this is not true, however, is clear. There is no solid evidence that TIFs, on net, increase economic activity. They do, however, allow for wealthy businesses to access public funds to make private investments. They allow the diversion of tax funds that TIF creating entities would not normally be able to access. TIFs contribute to the creation of a crony economy that hurts, rather than enhances, economic growth. TIFs avoid the usual checks and balances that protect taxpayers from being fleeced and their TIF finances, in the vast majority of circumstances, are opaque.
> 
> Oklahomas TIF laws should ideally be repealed. In the absence of repeal, other critical reforms should be passed. TIFs should be far more financially transparent. They should only have access to the tax base of the entities that create them. They should be limited to spending on legitimate publicly-financed infrastructure and to protect the public health and safety in cases of true blight. There should be greater state monitoring, with state level final approval of new TIFs. In these ways, the public can be protected from abuse by an institutional structure that is not needed.

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## Urbanized

> ...Also, mostly what TIF is involves financing Wal Marts and crappy industrial parks for the politically well-connected...


You keep making this assertion as if that is what OKC's TIF districts and the Alliance are doing. Criticism and questioning of TIF is completely fair and appropriate, but it is intellectually dishonest to give the impression that our local TIF or the Alliance are funding Wal-Marts or industrial parks in the boonies; they aren't. Also as has been pointed out it is unfair to act like the Clayco TIF request was an example of local TIF gone awry; it was appropriately ignored by the Alliance.

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## onthestrip

> Everything is feasible without TIF, if you're fine waiting for the long haul for the money to come back.
> 
> Wheeler is a fine use of TIF because you are talking about a severely blighted area that is going to take a lot to bring together. Currently nothing sells between 4x-5x the average per square foot price of any home in OKC much less new construction. They are shooting to be at least somewhat affordable in parts, though maybe not in the first units they've talked about. That's not something that any developers downtown are doing with for sale housing.
> 
> *Wheeler does have some site remediation issues not to mention a complete lack of utilities and services right in the middle of the city, and it is a very strategic place early in OKC's core development that it makes sense.*
> 
> Furthermore, with TIF in OKC, limits can be set, both in time and amount. I don't think anybody wants to give Wheeler $200M in subsidies, but I doubt that's the amount they're asking for in the TIF. $20M seems pretty dang reasonable to literally turn over 50 acres from a nothing/brownfield site into a sustainably planned, full-scale urban neighborhood in the next 5-10 years.
> 
> I'm definitely on record saying we should shorten the capture period to incentivize quicker paced development, and choose a limit that is not guaranteed to be hit if the developers drag their asses but that, again, incentivizes quality construction and development of a place that truly adds value to our city.
> ...


Yes, but they knew this when they bought it a decade or so ago. Why does that have to play into their pleadings for TIF money now? So I can buy a polluted and utility-less property and then complain that I cant get anything developed without TIF help?

Thats another problem with TIFs, you are incentivized to show bad numbers and a bad pro forma, so that you can go to the Alliance with your hand out saying it wont happen unless you help.

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## TexanOkie

> Yes, but they knew this when they bought it a decade or so ago. Why does that have to play into their pleadings for TIF money now? So I can buy a polluted and utility-less property and then complain that I cant get anything developed without TIF help?


What's the alternative here? Let it sit vacant forever due to environmental contamination? If you buy property you know has environmental issues, and it takes you 10 years to ask for help, it sounds more like you've exhausted your other options first.




> Thats another problem with TIFs, you are incentivized to show bad numbers and a bad pro forma, so that you can go to the Alliance with your hand out saying it wont happen unless you help.


This is why the City has reasonably proficient staff review TIF requests before doling out money. If a developer hasn't done their due diligence on the private financing market before asking for help, it's usually pretty apparent and comes out quickly during the review.

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## DoctorTaco

I'm struggling to learn about how the state financed public education. Recently I just learned about the Board of Equalization, which normalizes property taxes across the various Oklahoma school districts. 

I was surprised to learn that increasing property values and ad valorem taxes from OKC do not linearly benefit OKCPS, due to the Equalization measures. Basically (my limited understanding is that) any increases in local ad valormen tax collection are offset by equivalent decrease in state allocations. Thus the benefit to public education of increasing property values in OKC proper are effectively distributed across the state of Oklahoma. There is nothing really wrong with this practice to my eyes as it prevents inequality to some degree. 

But, unless I am wrong (which I very likely am) this practice ensures that OKCPS proper has very little to lose from the creation of TIF districts in OKC. The impact of decreasedn ad volerem tax collection in a TIF district is distributed across the state and is thus muted for any particular school district. 

On the other hand the  unofficial practice of sending some TIF money back into OKCPS occurs. I can think of a few examples but there are probably more: Emerson HS renovation and renovation of the new school district headquarters, construction of John Rex charter school, etc. 

The net result of this might very well be an _increase_  in funding to OKCPS, no? The decrease in ad valorem revenue is distributed statewide, but the funding for construction projects is localized. Might this be an end-run around the statewide equalization process? Could this explain why OKCPS never really fights these TIFs, as the outcome is not really material to them either way, and may even net out to their benefit?

I am probably missing something fundamental here.

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## Pete

^

You are fundamentally correct but remember when money is taken from the school district for TIF, that money comes from the general education pool which is then shared across the state.  Education funding, of course, is a state-wide issue with the large percentage of funding coming at the state level.

Even if some TIF money is returned to OKCPS, it does not go into their general operating fund to pay teachers, buy textbooks, etc.  It has to be used for infrastructure which is something they normally would not be spending money on when they can barely keep schools open.

I want to find out more about because if the the broad strokes here are correct, basically OKC is robbing the state educational fund -- and that's all OK schools -- to give money to downtown developers.  In many ways, that's even worse.

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## DoctorTaco

> ^
> 
> You are fundamentally correct but remember when money is taken from the school district for TIF, that money comes from the general education pool which is then shared across the state.  Education funding, of course, is a state-wide issue with the large percentage of funding coming at the state level.
> 
> Even if some TIF money is returned to OKCPS, it does not go into their general operating fund to pay teachers, buy textbooks, etc.  It has to be used for infrastructure which is something they normally would not be spending money on when they can barely keep schools open.
> 
> I want to find out more about because if the the broad strokes here are correct, basically OKC is robbing the state educational fund -- and that's all OK schools -- to give money to downtown developers.  In many ways, that's even worse.


Just think of it as revenge for all the pre-emption legislation that comes out of the rural-dominated legislature.

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## Pete

I'm going to put this here because the GOLT funds are another economic development tool administered by the Alliance, and they are seeking to get more money in the next bond election.

Everyone should be concerned about the relationship between the Oklahoman and the Alliance.  Steve Lackmeyer recently made some very snarky and unprovable comments in defense of TIF in a recent chat and has consistently defended that program with incorrect information and half-truths.  Now this article from Jack Money.

This reads like an editorial from Cathy O'Connor and I'll let readers decide what prompted it, where the information came from and if there was any independent verification of facts.

The bold line below is a completely editorial comment by the reporter and absolutely, positively cannot be proven.  The fact is, they have no idea if the program is working or not. 

Like TIF, GOLT funds are given to companies but in this specific case for job creation.  And also like TIF there is no provable link whatsoever that the gifted funds are in any way tied to economic development.  In fact, there are many companies that are awarded funds conditional on achieving promised job growth, then don't meet those goals.

And, there are companies like Chesapeake that were given millions and then actually cut thousands of jobs down the line.

GOLT and TIF may have some good aspects, but the idea that these tax dollars directly cause development and jobs are assertions made by those directly benefiting, both those at the Alliance and the companies that receive the free money.

And the Oklahoma continues to promote these completely one-sided arguments as facts when that is not the case.



Voters asked to reauthorize economic development bonds in OKC election
by Jack Money  Published: September 5, 2017 5:00 AM CDT Updated: September 5, 2017 5:00 AM CDT

Oklahoma City voters supported a $75 million measure in a 2007 bond issue intended to bring quality jobs to town and to keep them here.

*That effort, which so far has expended about $64 million through the Oklahoma City Economic Development Trust's Strategic Investment Program, appears to have done what it proposed to accomplish.*

In June, the program had active agreements worth about $43.1 million with 16 employers that promise to create more than 6,600 jobs.

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## Pete

I'll leave this here for future reference and comment.

I'm not aware of anyone other than me (and Ed Shadid who has picked up my research) who have been raising the issue of how TIF impacts schools

I take strong issue with the tone, condescension and accusation that this argument lacks understanding and merit.

This seems to be turning into a personal feud rather than an objective discussion and analysis of facts.

I will once again reiterate my concern that the state's largest news agency is simply parroting Alliance talking points, as a direct counter to the light being shined on this program almost exclusively by OKCTalk.


8/25/17 Chat Transcript

Guest said:
What's your take on the potential lawsuit from the OKC schools and the State legislature? I find it kind of weird that the OKC school system would file a lawsuit for not adequately funding education when they fully support diverting millions of tax dollars to TIF projects. I bet they could give teachers in their district a $5,000 a year raise each & every year if they didn't give it away to TIFs. It's like my kids coming back and asking for more lunch money because they lost it or gave it away to someone else. Do you think other school districts will join their efforts?

Steve Lackmeyer replied:
We are living in an age where nuance is becoming a lost art. Those who argue TIF dollars represent money taken away from schools simply do not understand how tax increment financing works. When done correctly, TIF represents an increase in property taxes that would not occur without the possibility of the development using part of that increase for infrastructure like parking, streets, sidewalks, etc.
Most of the TIF districts allow for quite a bit of the increased property taxes to go to the schools. This is actually a better scenario for schools. Under normal circumstances, rising property taxes do not go directly to local schools. The money is allocated by the state board of equalization and is distributed statewide. This means Oklahoma City's success has essentially benefited some of the smaller, struggling rural schools.
Take the new Core to Shore TIF, in which 75 percent of the increment goes back to schools, libraries, the county, Career Tech and the health department. This may actually be a better deal for them.
I know this answer requires far more thought and doesn't roll off the tongue like "quit robbing schools to fund TIF projects." But alas, again, we live in an age where nuance is in short supply.
Now let's get to the other part of your question. Lawmakers are seen by many as having completely neglected schools for the past 20 years. And now they are at crisis stage. Let's say what nobody seems to want to say - there are political forces who are celebrating this breakdown. I know this because I've listened to them on many a morning at Kamp's 1910. And these folks do have like-minded friends who are state lawmakers.
But the frustration is building. And the lawsuit taps a nerve along with the initiative petition for a local income tax. 
I don't know whether either will success, and I know of sober, pro-education folks who have concerns about both. What I do know is education and public transit are among the biggest obstacles to Oklahoma City attracting new investment and businesses.

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## Urbanized

Where is evidence of a personal feud in that quote? I don't follow.

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## Pete

^

"Those who argue TIF dollars represent money taken away from schools simply do not understand how tax increment financing works. "

"I know this answer requires far more thought and doesn't roll off the tongue like "quit robbing schools to fund TIF projects."  "

Etc.

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## Midtowner

The thing about TIF which I find most upsetting is that many of these projects would still be built and still be profitable without TIF. I get TIF for a project like the Skirvin. I don't see why it's necessary to use TIF money to build Wal Marts. It absolutely takes money from education because there are developments which would be happening with or without TIF, but our municipal governments are pretty liberal at distributing that money.

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## gopokes88

> The thing about TIF which I find most upsetting is that many of these projects would still be built and still be profitable without TIF. I get TIF for a project like the Skirvin. I don't see why it's necessary to use TIF money to build Wal Marts. It absolutely takes money from education because there are developments which would be happening with or without TIF, but our municipal governments are pretty liberal at distributing that money.


We haven't given any TIF to walmarts....

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## checkthat

> We haven't given any TIF to walmarts....


http://www.koco.com/article/blanchar...5+News+-+koco5

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## gopokes88

> http://www.koco.com/article/blanchar...5+News+-+koco5


That's Blanchard

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## Midtowner

In OKC fairly recently, TIF was used to subsidize a development of drab suburban houses on the southeast side. They could have built something there without free money from the city.  But they were well connected, so free money was theirs.

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## Jersey Boss

Things like this should spur a discussion on TIF approval being granted at the ballot box. The sums of money being spent are to great without direct voter approval.

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## Urbanized

> Things like this should spur a discussion on TIF approval being granted at the ballot box. The sums of money being spent are to great without direct voter approval.


This is NOT to make a case for or against TIF in concept, but...

The City of Oklahoma City manages an annual (non-TIF-related) operating budget of more than a BILLION dollars. That is $2.7 million every day. This is done at the discretion of elected officials and their appointees. There is no way we want to put to a vote of the citizens a contract to purchase police cars, or whether or not to remodel City Hall, or which brand of paint to use, or which contractor, or approval of individual road paving contracts. It would be absolute chaos, and a lot of those things would not happen if they were line item votes of the people, the majority of whom could care less if there are potholes or cop cars in parts of town other than their own.

We elect officials to take care of the business of our city on our behalf. We entrust them with massively large amounts of money every day. We give them the discretion in how to spend it. If the City needs additional tax monies or bonding capacity (or the extension of expiring bonding capacity) we get to vote on it. Other than that, it is up to our representatives.

Under both federal and state law TIF exists as a legal instrument  for municipalities - including Oklahoma City - and under that law its use is at the discretion of elected officials. This is not unusual. All 50 states have some sort of TIF on the books. Simply put, if a citizen doesn't like TIF or how it is used in their city, they should contact their city councilperson and make them aware. It is possible that their councilperson is a firm believer in TIF for a variety of reasons, including a personal belief that it is in fact a valuable tool for their community and by extension their constituents. Be prepared for them to explain why they believe in it. Heck, they may even convince you to change YOUR mind.

But if you don't like the councilperson's position, you always have the option to support their opponent in the next election, support candidates in other wards who share your opinion - financially, through volunteering, whatever - or talk to your state representative about changing the way the law works. These are all appropriate and adequate ways for citizens to become involved in the process.

A line item referendum on individual TIF projects at the ballot box is not. It would be absolutely disastrous, as would pretty much any line item financial decision made by voters. There is a reason why our form of government is not direct democracy but rather a representative democracy.

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## stjohn

> Things like this should spur a discussion on TIF approval being granted at the ballot box. The sums of money being spent are to great without direct voter approval.


Or stipulations attached to the money. As far as the private events go, sure, that income is great for the operator and all, but small, private events are absolutely not the reason they received public dollars.

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## Urbanized

> ...small, private events are absolutely not the reason they received public dollars.


You're 100% right. They received public dollars because the numbers didn't work for the original design they pitched - which would not pass Bricktown Urban Design - and the City suggested TIF as a way to close the gap and make it a building that met the City's design ordinance. TIF funding had absolutely zero to do with how many or what type of shows would be booked into the venue.

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## stjohn

> You're 100% right. They received public dollars because the numbers didn't work for the original design they pitched - which would not pass Bricktown Urban Design - and the City suggested TIF as a way to close the gap and make it a building that met the City's design ordinance. TIF funding had absolutely zero to do with how many or what type of shows would be booked into the venue.


Source? That's not my understanding of TIF at all. If that's right, that's a horrible use of TIF, which creates all kinds of opportunities for this kind of abuse.

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## Pete

> You're 100% right. They received public dollars because the numbers didn't work for the original design they pitched - which would not pass Bricktown Urban Design - and the City suggested TIF as a way to close the gap and make it a building that met the City's design ordinance. TIF funding had absolutely zero to do with how many or what type of shows would be booked into the venue.


And IMO set a very, very dangerous precedent.

The idea that the City is now going to pay developers to build something correctly and that fits within our guidelines and desires is just a bad idea.

All anyone has to do is come up with a cheapo design then claim they can't afford to do it right.  No matter that there is nearly an identical facility almost directly next door that never needed a dime of public money.

We just need to stop with this altogether except for very rare circumstances like First National or the Skrivin.  We keep jacking with the free market to the point it has become completely bastardized.

BTW, pretty amazing that pretty much every single developer comes to the City with a 5-9% gap, which happens to be the exact range of virtually every TIF award.  Simple truth is they know the game, know how to write their pro formas and know what they can get.  And if that wasn't obvious enough, that has been told to me by more than one developer.

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## Jersey Boss

> This is NOT to make a case for or against TIF in concept, but...
> 
> There is a reason why our form of government is not direct democracy but rather a representative democracy.


Well acquainted with the way a democracy versus a representative democracy works.  However when Cathy O'Conner is pitching the TIF behind closed doors and it is "approved" before a formal vote, a meaningful discussion with citizen input then is just a moot point.  That is not the way a representative democracy works. That is closer to  the way a plutocracy operates. An intiative petition and a succesful vote could very easily take TIF approval out of the hands of those who are circumventing open meetings and put it in voters hands.

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## Urbanized

> Source? That's not my understanding of TIF at all. If that's right, that's a horrible use of TIF, which creates all kinds of opportunities for this kind of abuse.


http://newsok.com/article/5371940

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## Urbanized

> Well acquainted with the way a democracy versus a representative democracy works.  However when Cathy O'Conner is pitching the TIF behind closed doors and it is "approved" before a formal vote, a meaningful discussion with citizen input then is just a moot point.  That is not the way a representative democracy works. That is closer to  the way a plutocracy operates. An intiative petition and a succesful vote could very easily take TIF approval out of the hands of those who are circumventing open meetings and put it in voters hands.


City officials negotiate deals with third party companies all of the time before it is brought to City Council for formal approval. I listed in my post a few of several thousands of negotiations that happen on your behalf every year, assuming you are an OKC resident. Every Tuesday you are likely to see a contract approved that was previously negotiated by City staff or on the City's behalf by one of their partners with City staff input, before being put to Council. It is the way cities all over America work, by the way.

Again, if you want TIF (or other incentives) negotiated in the open, you are welcome to advocate this change with your elected officials. There are of course many reasons why that would be a terrible idea and put the City at an extreme disadvantage in all sorts of negotiations.

It is totally fair to question whether or not TIF is good policy for a city. That is open to debate. Also it is fair to look at refining how TIF is used, and such analysis should always be in the minds of public officials too. But there is nothing about the way OKC uses TIF that is especially unusual or violates any laws, ethics or standards as accepted in municipal governance nationally.

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## Urbanized

By the way this discussion is seriously off-topic.

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## Roger S

> By the way this discussion is seriously off-topic.


Was about to make the same point.

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## stjohn

> http://newsok.com/article/5371940


Yeah, that's a horrible use of TIF.

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## Pete

> By the way this discussion is seriously off-topic.


This is the debate equivalent of starting a personal argument then saying "I don't want to talk about it".   :Smile: 

I'll move some of this to the TIF thread because that Newsok article you posted is almost championing that TIF be used in this way (a horrible idea IMO) and the writer uses a definition of TIF that is completely and totally incorrect.

I restate: TIF (like most dedicated economic development dollars) is money that goes looking for a problem.

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## Urbanized

> This is the debate equivalent of starting a personal argument then saying "I don't want to talk about it".  
> ...


Haha, well, I'll cop to participating but will point out that Jersey Boss started it!

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## Pete

Petition drive seeks to overturn Stillwater TIF District:

http://www.stwnewspress.com/news/upd...e7c29cb57.html

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## Pete

Looks like Norman is ending the huge TIF for University North Park.

Anticipates the city will getting an extra $4.8 million per year as a result.

https://journalrecord.com/2019/03/27...o-end-unp-tif/

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## DoctorTaco

Maybe this belongs in the other thread, but which TIF is the "Thunder Alley" TIF request targeting? There are just so many TIF districts to keep track of.

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## Jersey Boss

> Looks like Norman is ending the huge TIF for University North Park.
> 
> Anticipates the city will getting an extra $4.8 million per year as a result.
> 
> https://journalrecord.com/2019/03/27...o-end-unp-tif/


My belief from living here is that the majority of citizens wanted TIF to just go away. UNP did not turn out the way the early supporters portrayed it using this funding mechanism.

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## DoctorTaco

Pete, it feels like the Downtown TIF hasn't spit out any money towards any projects for a while. Shouldn't it be in its greatest period of earnings right now towards the end of its lifesepan?

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## Pete

> Pete, it feels like the Downtown TIF hasn't spit out any money towards any projects for a while. Shouldn't it be in its greatest period of earnings right now towards the end of its lifesepan?


A lot was moved around and taken for the Omni and related garage.

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## DoctorTaco

> A lot was moved around and taken for the Omni and related garage.


ah thanks.

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## Pete

On other threads, there were questions about the total amount that OKC has spent on TIF thus far.

As of 6/30/22, that number is $1,149,336,498.

On top of that are several big awards that have been obligated but not paid, such as the $120,000,000 for the first phase of OKANA; not to mention there will almost certainly be similar sums for Phases II & III.

Wheeler District will get at least $120,000,000 in TIF which is yet to be paid.

And very recently, other awards have been given such as $3,888,000 for the Eastpoint Hotel and $2,700,000 for Channel 9's new studio in the Century Center.  There are millions more that are obligated (as in approved by city council, which is the last step)  but not yet paid out.

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## BoulderSooner

> On other threads, there were questions about the total amount that OKC has spent on TIF thus far.
> 
> As of 6/30/22, that number is $1,149,336,498.
> 
> On top of that are several big awards that have been obligated but not paid, such as the $120,000,000 for the first phase of OKANA; not to mention there will almost certainly be similar sums for Phases II & III.
> 
> And very recently, other awards have been given such as $3,888,000 for the Eastpoint Hotel and $2,700,000 for Channel 9's new studio in the Century Center.  There are millions more that are obligated (as in approved by city council, which is the last step)  but not yet paid out.


over what about of time??

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## Teo9969

> over what about of time??


The largest TIFs started in 2000 (CBD) and 2008 (Devon). Realistically, the majority of the TIF that has been spent was in the 2010s.

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## Pete

An article in the Oklahoman today stated that Cathy O'Connor is serving as a consultant on the Strawberry Fields project and helping to negotiate their TIF awards, including the one in the process of being approved for $16 million in infrastructure improvements.

I believe O'Connor is serving in the same capacity for OKANA which just received a $120 million TIF award; you can bet she's involved in other projects seeking public funds.  And OKANA and Strawberry Fields are just getting started and you can be sure much more TIF is still to come.


So, she runs the entire TIF program for years, then flips to being a consultant to maximize the TIF grants to her paying clients.

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## BoulderSooner

> An article in the Oklahoman today stated that Cathy O'Connor is serving as a consultant on the Strawberry Fields project and helping to negotiate their TIF awards, including the one in the process of being approved for $16 million in infrastructure improvements.
> 
> I believe O'Connor is serving in the same capacity for OKANA which just received a $120 million TIF award; you can bet she's involved in other projects seeking public funds.  And OKANA and Strawberry Fields are just getting started and you can be sure much more TIF is still to come.
> 
> 
> So, she runs the entire TIF program for years, then flips to being a consultant to maximize the TIF grants to her paying clients.


unfortunately that is pretty par for the course across all Gov ...

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## David

Conflicts of interest aside, Cathy O'Connor working for the Strawberry Fields people give me the first hope that the Strawberry Fields people might actually build something someday.

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## Teo9969

> Conflicts of interest aside, Cathy O'Connor working for the Strawberry Fields people give me the first hope that the Strawberry Fields people might actually build something someday.


Hahaha... you're not wrong per se. Ir does sound like she's just consulting. Wouldn't be surprised if she has earned over $500k already for those 2 services alone.

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