80/20 is pretty common for home loans now.

There are a lot of 80/20, I know a lot of people who have them but they are 80% first and 20% seconds so they don't have to pay PMI. One of my good friends runs a mortgage brokerage and he said people that fall in the normal section of borrowers can borrow 95% LTV plus closing costs. The 80% figure might be low for the condos, I am not sure exactly what that figure is. The bank that I work at doesn't do them.

I was thinking about this project some more and the thing that bothers me most about this huge ask is the office space.

What special circumstances exist where a developer can't build a new office building downtown without massive assistance?

Vacancy rates are at historical lows, they have an anchor tenant in OG&E who was ready to pay market rents... Why is this such a difficult project to make work?

Remember that in the 80's there were four large completely speculative office buildings constructed: Oklahoma Tower, Corporate Tower, Mid-America Tower (now Continental) and Leadership Square. The office market at the time was tight but not as tight as now and I know all received some incentives it was no where near what is being asked by Clayco.

Also, we've had tons of new office construction for Devon, Continental and SandRidge plus lots of expensive renovation projects that involved spec office space.

So why exactly can't Clayco build office space and find market-rent paying tenants without a huge taxpayer subsidy? They are not dumping a massive amount of space on the market. Just the south tower which isn't that big.


The high-rise housing is a different discussion.

I was thinking about this project some more and the thing that bothers me most about this huge ask is the office space.

What special circumstances exist where a developer can't build a new office building downtown without massive assistance?

Vacancy rates are at historical lows, they have an anchor tenant in OG&E who was ready to pay market rents... Why is this such a difficult project to make work?

Remember that in the 80's there were four large completely speculative office buildings constructed: Oklahoma Tower, Corporate Tower, Mid-America Tower (now Continental) and Leadership Square. The office market at the time was tight but not as tight as now and I know all received some incentives it was no where near what is being asked by Clayco.

Also, we've had tons of new office construction for Devon, Continental and SandRidge plus lots of expensive renovation projects that involved spec office space.

So why exactly can't Clayco build office space and find market-rent paying tenants without a huge taxpayer subsidy? They are not dumping a massive amount of space on the market. Just the south tower which isn't that big.


The high-rise housing is a different discussion.

I know. I'm starting to sour on this for the same reason. I'm only in favor of taxpayer subsidies for very specific cases, and never to make it cheaper for relatively wealthy people to buy condos or for class A office space. If it's not economically viable without buckets of free money, there are problems with the business's model.

Perhaps more will come to justify it, or maybe they just threw out an artificially high number to see what they can get.

And has been pointed out, both these towers already front a park that was funded by millions and millions of tax payer dollars.

If they can't get enough rent for office space in these circumstances (fronting the park, big anchor tenant, easy plot to develop, record low office vacancy, only 25 stories each) why have other projects worked and how would future projects ever work?

Perhaps more will come to justify it, or maybe they just threw out an artificially high number to see what they can get.

Perhaps.

I also think national developers still underestimate the OKC market for whatever reason. They think developing something fit for the big leagues here is riskier than it really is.

There is a definite perception about OKC, even from people in Tulsa and clearly from people unfamiliar with OKC. I just read a ranking of the cities with the most beautiful people, and it was noted that OKC was the most underserved city for high end retail. For whatever reason, this blog site consistently demostrates that OKC lacks great shopping, great supermarkets, great buildings, and, unfortunately, a diverse economic base.

Whatever happens with Clayco, it would be great to have a real autopsy from Clayco and from the city as to why TIF was necessary and why OKC cannot attract the same level of almost anything compared to other cities.

Whatever happens with Clayco, it would be great to have a real autopsy from Clayco and from the city as to why TIF was necessary and why OKC cannot attract the same level of almost anything compared to other cities.

This is a great question. Does it all go back to an outdated stereotype/image issue or is there really something in the numbers that scares national developers about OKC?

Something else has been lost in all of this..

The RFP for the south parcel absolutely did not yield the maximum number of proposals because of the way it transpired.

Remember, Clayco approached the City about buying that land and only then was an RFP issued, with a 60 day response deadline.

I talked to two different developers who were very interested in making a run, but both said there was absolutely not enough time to make a meaningful application.

So, we are left with the Clayco proposal which had the massive advantage of pretty much being done before the RFP was even issued, and Milhaus who clearly did a rush job and was one of only a couple of non-local developers to know the market somewhat because they already have a project in OKC.


All of this was rushed out of courtesy to Clayco and at the very end they drop this huge incentive bomb having never mentioned assistance for the north parcel prior?

If the Clayco development collapses, it is unfortunate that the uncertainty in the oil market will make the likelihood of a better proposal unlikely. I even wonder if the Preftakes and FNC projects are more unlikely now or at least pushed back a year or so if the price of oil plateaus at 50.

If the Clayco development collapses, it is unfortunate that the uncertainty in the oil market will make the likelihood of a better proposal unlikely. I even wonder if the Preftakes and FNC projects are more unlikely now or at least pushed back a year or so if the price of oil plateaus at 50.

This is definitely something to consider. If the Clayco deal falls apart and oil stays low for the long haul, there could be an empty lot at the Stage Center site for the foreseeable future. That would be extremely disappointing.

While I'm sure everything about how this entire set of deals will pass procedural muster, things don't seem to be getting carried out with crystal clear transparency. If I were a developer presented with the RFP and it's short fuse for a proposal of this magnitude, I'd turn and run, especially with the head start Clayco had. The outcome certainly has to send ripples throughout the development world leaving the impression that competition isn't exactly fair and open in OKC. Not good for the city's image.

Moreover, Rainey was awarded the SC site at an arguably cheap price with no public mention of a big TIF. Now the whole thing seems to be linked together with a huge TIF request that will result in either rent subsidies to commercial interests (at least one of which will relocate from within the city) in a tight office space market and residential rent subsidies for a select few hundred that are at the high end of the socio-economic spectrum; or will generate a handsome profit for the developer. That all assumes the economy doesn't suddenly tank, of course.

What really is bothering me aside from all of the specifics to these projects I've mentioned is that this stuff is evolving apparently under civic knowlege/complicity to the surprise of the public, some of whom are very astute. Just look at all the questions being asked here spawned by the selection of Clayco with little more explanation than a brief project description, some renderings and a per building cost and TIF request. This whole process seems linked from the get go, yet the last opportunity for public comment was when the only question was demolition of the SC. I know there's a lot of conjecture in this last paragraph, but really, the process is not very out in the open.

Duplicate post... Sorry

I try to avoid conspiracy theories and do not believe in jumping to negative ulterior motives. At the same time, Clayco is in it for their self-interest, as they should be, but until shown otherwise, I trust the city and OCURA to have the best intentions for the city and its future. The deal is not done and that is why we have the ongoing negotiations to resolve the TIF and other design issues.

I do like transparency, so there should be a system to ask OCURA questions, and we all (at least citizens of OKC) have the ability to discuss it with our representatives, who should have insight in the deal (and not just a politically motivated position).

I was discouraged when the committee approved the Chase building without a full explanation of their decision. I hope this doesn't happen here, no matter the conclusion.

Trust but verify.

^

Just to be clear, OCURA had nothing to do with Chase. That was completely on the Downtown Design Review Committee.

The Downtown Design Review Committee was also the body that gave final approval for the the demolition of Stage Center, and they would have to approve any final designs for this project, but that should be a technicality.

I forget the names of the various committees, but any government or quasi-governmental agency should be willing to explain decisions with patience and in detail. From the conversations on this site, it seems that the transportation group that planned the boulevard and the design review committee that approved Chase felt that explaining and justifying their decisions too bothersome

I try to avoid conspiracy theories and do not believe in jumping to negative ulterior motives. At the same time, Clayco is in it for their self-interest, as they should be, but until shown otherwise, I trust the city and OCURA to have the best intentions for the city and its future. The deal is not done and that is why we have the ongoing negotiations to resolve the TIF and other design issues.

I do like transparency, so there should be a system to ask OCURA questions, and we all (at least citizens of OKC) have the ability to discuss it with our representatives, who should have insight in the deal (and not just a politically motivated position).

I was discouraged when the committee approved the Chase building without a full explanation of their decision. I hope this doesn't happen here, no matter the conclusion.

Trust but verify.

To be certain, conspiracy theory is not what I feel or intend to convey. Instead, my impression is "Hey, this is complicated and we're the professionals. We got this. You really wouldn't understand anyway." Informing the public just doesn't seem to be a priority.

I would have liked to understand early on from OCURA that this specific set of properties have these qualities, and we are targeting this type of development, which we expect to have these benefits. We think taking these steps now is important because________. Agree? Here's how we're gonna approach it. We're gonna take the site spec's and a list of benefits and amenities and shop it to every developer in the country that could meet our expectations. We'll take about six months to do that and then issue an RFP that gives every developer with an interest six months to determine the best way that they can invest about a half billion dollars and get OKC the type of interest and devlopment that we've been aiming for for the last 20 years.

All those folk who belly ache on and on on how able bodied people are gaming disability by the thousands, or peeps who could get off govt/assistance but hide funds so they appear to need the assistance?

Is this maybe a wee bit like that .... albeit with more zeros staged prior to the decimal point?

All those folk who belly ache on and on on how able bodied people are gaming disability by the thousands, or peeps who could get off govt/assistance but hide funds so they appear to need the assistance?

Is this maybe a wee bit like that .... albeit with more zeros staged prior to the decimal point?

Sure looks that way to me. Be terribly glad to have someone dissuade me.

I fully agree with the idea of them laying out the process, the goals they want to promote and the rationale they will use in forming a decision. At this time, I would say we have to trust they are doing this and then expect a thoughtful and detailed review afterwards. I say this because they are already in negotiations and I doubt they can be transparent until negotiations close. People should demand transparency and require agencies to open up their decision making processes. I only hope the agencies want to create a process wherein these questions are addressed in advance on future projects.

I only bring up the Design committee from a few months back because their answer as to why they approved the design struck me as conclusory and flippant. I hope OCURA does better, far better since there is so much sincere concern in this development.

To be certain, conspiracy theory is not what I feel or intend to convey. Instead, my impression is "Hey, this is complicated and we're the professionals. We got this. You really wouldn't understand anyway." Informing the public just doesn't seem to be a priority.

Or, even doing a good job of presenting objective reports and various alternative scenarios to the City Council, who have to vote on all this.

I absolutely don't believe in conspiracy theory but came to the conclusion some time ago too much power is concentrated in too few hands, and those people all have their own biases and vision for how they want things to go. Many examples of this happening of late with virtually no watchdog component.

Makes me very uncomfortable, especially when you are dealing with hundreds of millions of public funds.

And if these are all great decisions then the naked, full truth should only help to underscore that.

Are the agencies/committees as setup for all this in OKC consistent with the systems in other cities? Is there another process, in say Austin or KC, that makes these types of reviews better?

^^^^ As usual, with laser sharp precision.

I still get the impression that there is a lack of trust in the city officials and agencies. I've never really taken an interest in civic matters in the cities I have lived, as I consider OK my home and all the places I have lived as not really my place. So I am not sure if this is typical curiosity in the process shared in any project of this magnitude, or is it suspicion of mismanagement by the city.

I have a lack of trust because:

1. I've followed Project 180 very closely and it is way, way over budget and way, way under delivering what was promised. It's also taking about twice as long to do half what was promised.

2. The way #1 has been reported to the public and the City Council has been incredibly deceiving.

3. Larry Nichols has an incredible amount of influence (Chair of OCURA, the Alliance for Economic Development, Chamber board, many other committees) and the Alliance now has a lot of power and operates outside open meeting and open record laws.

4. Nichols, the Chamber and the Oklahoman all seem very tightly aligned with their ultra big business agenda.

5. Virtually everyone involved in these processes has no experience outside of Oklahoma and we have been in unchartered territory for a while.

6. We have no watchdog press in OKC.


I think everyone involved is well-intentioned but they don't own OKC and in most cases, they are making decisions about hundreds of millions of public dollars. I simply don't think the information is flowing freely enough and there is no one to challenge in case things get way out of kilter.

For me, it is suspicion of mismanagement or lack of due diligence. For instance, OKDOT told us that the only way to build the boulevard was with a 1600 feet long bridge. It wasn't malicious, I don't think. Just what was right from their personal perspective. I think in the case of the OGE tower and the site to the south, things evolved, Clayco wants this and somebody thinks they'll get credit for a home run if they make it happen. That is not in the best interest of me or the city.

I see, both your answers explain a lot.

OKC will get better leadership as it grows, but the concentration of so many overlapping agencies in a few people is disconcerting. Also sounds like the city needs to purposely seek out new blood and diversity of experience. There are growing pains as any institution strives to the next level, the old guard has to ultimately grow or move on, and learnings have to be applied to improve the system, not just dismissed by the old guard. If not, any city or company will fall behind and become irrelevant. Too often the people in power are too narrowly focused on maintaining power and believing only they have the right answer. They get paternalistic and defensive and don't feel they need to explain their actions to anyone. Sadly we see it in the federal government and at the city level and in old companies trying to hang on in a changing environment.

Keep in mind that our City Manager has held his job for over 14 years now.

Know what the longest term was prior for this position? 7 years.

Know what the average term has been for the 34 prior City Managers? 2.5 years.


So, at a time where we are experiencing the biggest growth in the history of the City and where we are undertaking billions in civic improvements and urban enhancements, we've chosen to stick with the same guy for 14 years where he's either worked for the City of OKC (for the last 27 years) or much smaller cities in much smaller roles.

And in turn, he tends to only promote people from within, so you have a situation where every person in position of leadership is holding down their biggest responsibility ever, and only have the perspective of what used to happen in OKC, which we've already established has one of the most abysmal track records of urban development anywhere.


All good, hard-working and no doubt well-meaning people but not exactly the recipe for innovation, perspective and progressiveness.

Comparison to peer cities is definitely a healthy thing. Too often in OKC it seems like the measuring stick is either Tulsa or pre-MAPS early 1990s OKC. When that is your measuring stick it doesn't result in, as Pete posted, innovation, perspective, and progressiveness. For a big league comparison people usually look to Dallas but they are so much larger and have so much more at their disposal they aren't really a good comparison. I think OKC needs to look at how things are done in its peers (Memphis, Louisville, Jax, Richmond) and also one tier up (Nashville, Indy, Charlotte) to get a better perspective.

Doing a very quick search, I see OKC's budget is around a billion dollars compared to around $3b for Portland OR, a city of about the same population. Nashville's is $1.9b. If OKC's budget is that much smaller than similar cities, maybe that explains the lack of better leadership. If my job was city manager, I would want a position that has a sizable budget compared to one that is starved.

OKC isn't really comparable with either of those cities, and probably won't be for quite some time due to our annexation to the county limits and beyond before growing there. Nashville has a huge consolidated metro government with many smaller governments participating in a combined effort for many government functions. We're a city of almost 600K operating over the area of a much, much larger municipality.

They had a very good Planning Director they chased off, along with most of his department.

it's not all budget. They employ 4,000 people; plenty of money for a handful of experienced leaders.

So it comes down to leaders that don't have the internal tools to do a superior job and city officials that have an agenda of mediocrity or lack the skills to develop and keep talent. Depressing.

We are long overdue to hire a new City Manager. It's really that simple.

Of course, absolutely no one talks about this or points our he's already held the job twice as long as anyone else. Just a bunch of "they are so overworked and understafed" rhetoric.

There is too much power concentrated in too few hands and all these people seem to have the same point of view, which means we don't have nearly the proper checks and balances in place.

We are long overdue to hire a new City Manager. It's really that simple.

Of course, absolutely no one talks about this or points our he's already held the job twice as long as anyone else. Just a bunch of "they are so overworked and understafed" rhetoric.

There is too much power concentrated in too few hands and all these people seem to have the same point of view and limited perspective, which means we don't have nearly the proper checks and balances in place.

I grew up and continue to work in the engineering world. Engineers dominate city government and have for years. Engineers love to rely on data from the past and "proven" methods for solving problems to the ninth decimal place. They have little room for creative, soft thinking. Heck, geologists rank among the lower primates in the world I work in. A planner? Right there with anenomes or starfish. They only deal in vague feelings that can't be readily quantified. I exaggerate a bit, but not much. Engineers do not readily synthesize human feelings. They are about getting the job done with maximum efficiency and lifespan.

The pendulum is creeping the other way in OKC, but very slowly. Years before I arrive here the long time DPW was an iron fisted King of Concrete that instituted the notion that more concrete was the solution to every problem. Except for sidewalks. From his loins the current set of administrators and relations with City Council were born, and change is very slow in coming. We need a remix in staffing top to bottom that includes a healthy dose of young and non-local hires. We also need a paradigm shift in City Council and top level city administrators.

So it comes down to leaders that don't have the internal tools to do a superior job and city officials that have an agenda of mediocrity or lack the skills to develop and keep talent. Depressing.

I don't think they have an agenda of mediocrity as they are doing what THEY think is best. Intent and results can be two different things. We can doubt the outcome without questioning the intent. ir As Pete points out, they need new blood for new ideas and to not get so many things rubber stamped.

In the end is it the city council and mayor that needs to refresh the talent, starting with the city manager? Are there any discussions going on about that? I understand the Mayor is forward thinking, any movement by him to get new leadership?

Funnily enough, someone raised this issue on Steve's chat the other day:


Guest -
11:27 a.m.
I heard that a leading authority on downtown development said that during the original MAPS the biggest threat to the city was not municipal corruption [thank goodness] but rather the arrogance of City staff who felt they were “doing God’s work.” That’s not meant in a religious sense but that they were absolutely convinced they were right, knew exactly what they were doing and would accept no questioning. Do you think that is still the case today?

Steve Lackmeyer -
11:28 a.m.
Opportunities for humility are always good ways to keep people in check - that's certainly true for me.

Our Mayor is a great guy and a fantastic spokesman and advocate for our city (see landing NOKC Bobcats and Thunder), but I don't think Mick and City Council, which is full of old school thinkers are ready to re-arrange what has seemed to keep getting them re-elected and is completely defensible to the general public. The fact that we're going through the excercize that is PlanOKC is a bit of a miracle to me. I'll wait to see if it sits on the shelf or not.

This is definitely something to consider. If the Clayco deal falls apart and oil stays low for the long haul, there could be an empty lot at the Stage Center site for the foreseeable future. That would be extremely disappointing.

No more disappointing than $140 million in taxpayers dollar sunk into a vacant office building.

No more disappointing than $140 million in taxpayers dollar sunk into a vacant office building.

How do you know it will be vacant? Why would Clayco spend hundreds of millions of dollars building a development if they didn't know it would have tenants? With how much they've already sunk into this project I would imagine they can be talked into a smaller TIF.

What's the history of TIFs or other public/private partnerships being used for large scale developments in other up and coming cities? I'm sure there's been countless TIFs or P/Ps over the years. Again, if the project doesn't happen the money doesn't exist, so it's not like we have the money laying around and can spend it elsewhere.

If they know it will have tenants why do they need a TIF? Just a guess, but a good bet it's because they think they can get it.

How do you know it will be vacant? Why would Clayco spend hundreds of millions of dollars building a development if they didn't know it would have tenants? With how much they've already sunk into this project I would imagine they can be talked into a smaller TIF.

My comment was based on bchris's assumption that a declining oil market will leave this lot empty for the foreseeable future. It only stands to reason that if there isn't a tenant needing office space then if the building exist there still isn't anyone to occupy it. Personally, I think these lot can be developed with zero TIF funding. As Pete pointed out - if it can't be done now when could it ever be done? At some point we need to jump out of the nest and see if we can fly.

I would agree with you there. But at the same time, we might not be exposed to the world enough like Austin and Dallas are. I don't know. When it comes to oil prices, I don't think it's time to go into panic mode. There's no way of knowing how long these prices will last. A month from now they might be back up into the 80s. I'm enjoying the cheaper gas, but I wish oil would go up just enough to keep all the drilling going.

If exposure is the issue, take that show on the road and talk to developers. We could do some background research (if it isn't already credibly done) and send a team on the road for six months for two percent of the TIF request and probably interest ten times more developers than responded to the RFP that would have us on the radar for future work. No, this deal fell in their lap and they are make it happen with the least effort possible. You know, one in the hand...

I'm not buying this whole exposure theory - Clayco came to us on the south lot. I say re-bid it with a 180 days deadline and see if we can get any more responses.

Kinda what I think, but only after aggressively promoting it/us for six months.

Now the whole thing seems to be linked together with a huge TIF request that will result in either rent subsidies to commercial interests (at least one of which will relocate from within the city) in a tight office space market and residential rent subsidies for a select few hundred that are at the high end of the socio-economic spectrum; or will generate a handsome profit for the developer.

Maybe I missed something. What discussion has there been about rent subsidies?

None. That is a potential net effect of the TIF, if approved.

None. That is a potential net effect of the TIF, if approved.

OK, if that's the case it's certainly not anything I'm going to worry about.

My comment was based on bchris's assumption that a declining oil market will leave this lot empty for the foreseeable future. It only stands to reason that if there isn't a tenant needing office space then if the building exist there still isn't anyone to occupy it. Personally, I think these lot can be developed with zero TIF funding. As Pete pointed out - if it can't be done now when could it ever be done? At some point we need to jump out of the nest and see if we can fly.

If declining oil prices leads to a collapse of the local economy ala 1983, then yes the Stage Center lot could remain empty. I don't think we need to worry about that quite yet but I am just saying that it could happen. Real-estate deals take a long time to come together and if this Clayco deal falls apart it could be 2-3 years before something else is announced. Who knows what the economy will look like then.

Also, I don't believe OKC is at a point yet where this kind of development could happen with zero TIF. For some reason national developers still underestimate this market, something I think goes back to what ChrisHayes was saying about perception and exposure. By the numbers OKC looks really good but for one reason or another this city doesn't seem to be able to attract the level of developments other cities do without subsidy. Austin on the otherhand is a media darling and I am sure the hype factors in to some of the developments they are getting. OKC needs more positive exposure. Some people fear that if this development gets the TIF and is a failure it could be catastrophic but what if it is a success? It could set a new standard for the quality of future developments here.

I want the development to be a success. I want the towers exactly as pictured. Before the TIF amount Clayco was seeking was revealed, I was one of the biggest cheerleaders for this project on this thread.

I still want Clayco to build these. I just don't want to overpay. Right now the public funding they want is waaay too high.

are there really no for sale units? thats a shame

They are basically asking for all their tax dollars to be returned in the form of TIF, so over then next 25 years that would be about $140 million.

You know, that sort of negates the idea that this is a higher or better use. What would make it a higher or better use (than the now-obliterated Stage Center)? The fact that whatever is there would now be paying taxes. Now it will only be a better use of the land if you were one of those who thought that Stage Center was aesthetic blight.

Unfortunately, many people outside Oklahoma don't know what Oklahoma City is all about. Many view it as a cattle town. We know it's not. That's why we need more advertising. I talk about the city all the time on Facebook. If we have a big development go up that will only help the perception

Unfortunately, many people outside Oklahoma don't know what Oklahoma City is all about. Many view it as a cattle town. We know it's not. That's why we need more advertising. I talk about the city all the time on Facebook. If we have a big development go up that will only help the perception

+1

This is getting off topic but it's another reason the convention center is so important. It will help get OKC more national exposure especially in the business world, which is what is needed for better quality developments.

The Chamber does a fantastic job of promoting OKC and showcasing all the best articles and recent developments.

I don't think too many people who know anything about real estate (like developers and retailers) regard OKC as a cowtown.

Also, I don't believe OKC is at a point yet where this kind of development could happen with zero TIF. For some reason national developers still underestimate this market, something I think goes back to what ChrisHayes was saying about perception and exposure.


Unfortunately, many people outside Oklahoma don't know what Oklahoma City is all about. Many view it as a cattle town. We know it's not. That's why we need more advertising. I talk about the city all the time on Facebook. If we have a big development go up that will only help the perception

How do you guys explain all the office buildings built on Memorial with nary a TIF dollar in sight.

Artificially cheap-to-develop land and other sprawl subsidy. The incentives just come in a different form. Come on, JTF. That is DIRECTLY in your own wheelhouse.