Heartland HQ

[ABCOKC]

BTW, the original developers received $2.3 million in free TIF funds, then turned around and sold the property a couple of years later.

I wonder if the city had a claw-back clause?

Please explain why the city would need or want to claw back the TIF dollars? The goal is to get a project built that is a benefit to the city and the neighborhood. The developers delivered. Who cares if they then hold it for cash flow or sell it to someone else? What difference does that make?

[Pete]

Please explain why the city would need or want to claw back the TIF dollars? The goal is to get a project built that is a benefit to the city and the neighborhood. The developers delivered. Who cares if they then hold it for cash flow or sell it to someone else? What difference does that make?

Because they started to implement claw-backs to specifically discourage developers from taking free money from taxpayers, then quickly flipping the property for a big profit.

Your questions as to why should be directed to the Alliance and the public bodies that decided to include claw-backs in most TIF awards.

[ABCOKC]

And yes, I’m aware that tax incentives may or may not be transferable depending on the circumstance. I just don’t understand why. Either the project is worthy of public dollars or it isn’t. It shouldn’t matter to the city who owns the property as long as it is delivered as promised. Developers typically aren’t in the business of holding stabilized assets long-term anyway, so hamstringing yourself by implementing an arbitrary hold requirement when you’re trying to entice them to build seems odd.

[Pete]

^

I'm sure the reasoning is that if a developer makes a big profit in a short period of time, they can afford to reimburse the city for funds given to them to complete their project.

And I know that some developers specifically will not seek TIF because they want to be able to sell and not have an obligation to the city.

The Metropolitan apartment project in Auto Alley is one such example.

[catch22]

Because it seems some projects are presented as infeasible without TIF assistance. So it turns into assistance with something that was feasible all along, evidenced by the quick profits from a sale.

[ABCOKC]

Because they started to implement claw-backs to specifically discourage developers from taking free money from taxpayers, then quickly flipping the property for a big profit.

Your questions as to why should be directed to the Alliance and the public bodies that decided to include claw-backs in most TIF awards.

Because they started to implement claw-backs to specifically discourage developers from taking free money from taxpayers, then quickly flipping the property for a big profit.

Your questions as to why should be directed to the Alliance and the public bodies that decided to include claw-backs in most TIF awards.

How do you know this development was hugely profitable? Seems very presumptive.

If a project is *that* profitable, it will work without public incentives. Which is the real question here — did this need TIF dollars to work? If it did, there’s still a question as to whether it was worth it. I haven’t offered an opinion on either of those fronts. My point is that whether the developers took their “extra” TIF profit now via a sale or left it in the building as equity for an arbitrary length of time doesn’t have a whole lot to do with the answers to those questions.

[ABCOKC]

Because it seems some projects are presented as infeasible without TIF assistance. So it turns into assistance with something that was feasible all along, evidenced by the quick profits from a sale.

How is the fact that someone bought it evidence that it would have been profitable without TIF? How is it evidence that it was profitable with TIF?

[Teo9969]

ABCOKC,

Because when you apply for TIF you provide very clear details as to your costs. If you tell the City "This is going to cost me $24,000,000 to build. I have $11,000,000. The bank is willing to provide $11,000,000. Can you please give us $2,000,000 to cover the gap." then the city knows you paid a bit over $22,000,000. If you then sell the property for $30,000,000 within a few years, it's pretty clear you didn't need the additional $2,000,000 (whether or not you lost money from operations once the development was in service is probably outside the scope of these discussions). I would also guess that claw-back provisions also stipulate details around a sale as well, so if someone had to fire-sale the development for a loss a claw-back may not occur, or its provisions may transfer in the sale but if it turns around and sells for a profit that greatly exceeds the TIF, it may initiate the claw-back.

[onthestrip]

Keep in mind TIF money is paid out incrementally over a set time, 10-15-20 years or so. You would assume that the current owner is receiving those payments and not the original developer but obviously those future TIF payments would have factored in the sales price. Seems highly questionable IMO to give developers TIF money AND let them sell the same asset very quickly. Just doesnt pass the smell test.

[Pete]

Keep in mind TIF money is paid out incrementally over a set time, 10-15-20 years or so. You would assume that the current owner is receiving those payments and not the original developer but obviously those future TIF payments would have factored in the sales price. Seems highly questionable IMO to give developers TIF money AND let them sell the same asset very quickly. Just doesnt pass the smell test.

More often than not, TIF is given upfront.

Not sure of the exact details with the original developers of this building.

[onthestrip]

More often than not, TIF is given upfront.

Not sure of the exact details with the original developers of this building.

Guess they all are different, some are up front, some are over the years as ad valorem payments are made.

What also smells is some of the same developers here were also behind the century center which has been given all kinds of TIF money. Which is why I usually scrutinize many OKC TIF deals because it appears to be for those who are closely tied into the city. Basically a good ol boy type of thing.