OG&E Energy Center

[Pete]

^

Yes, very bold considering a good chunk of this development is for a public utility.

Also, keep in mind that to date the largest tax dollar allocation (which is what TIF funds are) promised to any developer to date is the $5.1 million for 21c. And that would come from an existing TIF, not a newly created one for their project. Ultimately, 21c will pay a ton of tax dollars back into the coffers. ($52 million x 1% per annum x 20 years = $10.4 million; plus sales tax).

We'd be jumping from $5.1 million to $142.6 million.

So, this is completely new territory, not only in the amount but in redirecting their own tax dollars (rather than that from the broader district) back into the pockets of the developers.


If approved, you can bet everyone else is going to start ratcheting up their incentive demands. And why not? Does hurt to ask and the City will have set a precedent.

[Pete]

BTW, the Skirvin used some sort of TIF that I believe followed the model Clayco is proposing.

I'll have to research it further but I believe it was the same concept: Redirected all their own property taxes back to the owners.



If this goes through for Clayco, you can bet that the new owners of First National Center will be asking for a ton as well. But in their case, like the Skirvin, there are some federal funding sources and other possibilities given the historic nature of the structure.

[BoulderSooner]

21c got 5 mil for a 50 mil project. 10%. Plus a 6.9 mil low interest loan.

% matter much more IMHO than the actual dollar amount.


I would bet that this project ends up around the 10% number as well. And that part of the tif of it goes over that is directed to the city for other uses.

[Pete]

10% on this project would be $55 million and they are asking for almost 3X that.

[Just the facts]

Good thing that this is not the "failed suburban sprawl model". And Okc is one of the most fiscally conservative cities in America. See our credit rating.

Then we have a serious disagreement on 'conservative'.

[BoulderSooner]

I guess I am confused. The OCURA agenda packet said they wanted 38 mil for the south site on a 286 mil investment

13%.

[sooner88]

I guess I am confused. The OCURA agenda packet said they wanted 38 mil for the south site on a 286 mil investment

13%.

North Parcel: $62.1mm / $267.5mm = 23.2%
South Parcel: $80.5mm / $286mm = 28.1%

Total = $142.6mm / $553.5mm = 25.8%

[Pete]

Yeah, something changed between the OCURA agenda and what was actually discussed at their meeting:

Here's the way this breaks down (in millions):

North parcel (OG&E):
Officer Tower $200
Apartments $67.5
Total: $267.5
TIF request: $62.1

South Parcel:
Office Tower $216
Apartments $70
Total: $286
TIF Request $80.5


Total Investment: $553.5
Total TIF Request: $142.6

[hoya]

That's too much.

[Just the facts]

For $142 million OKC could build their own housing and sell it off after it is done - and just pocket the profit. Clayco has to think we are a bunch of rubes.

[BoulderSooner]

Yeah, something changed between the OCURA agenda and what was actually discussed at their meeting:

Here's the way this breaks down (in millions):

North parcel (OG&E):
Officer Tower $200
Apartments $67.5
Total: $267.5
TIF request: $62.1

South Parcel:
Office Tower $216
Apartments $70
Total: $286
TIF Request $80.5


Total Investment: $553.5
Total TIF Request: $142.6

Something is up. Because based on the numbers Steve quotes your % is correct.

However there is also this quote. That the developer uses the 13% number

Larry Chapman, president of Clayco Realty, said that while the dollar request is higher than any TIF request made to date in Oklahoma City, the percentage of increment being sought is 13 percent — within the standard range of requests made by other downtown developers over the past dozen years.

[BoulderSooner]

Yeah, something changed between the OCURA agenda and what was actually discussed at their meeting:

Here's the way this breaks down (in millions):

North parcel (OG&E):
Officer Tower $200
Apartments $67.5
Total: $267.5
TIF request: $62.1

South Parcel:
Office Tower $216
Apartments $70
Total: $286
TIF Request $80.5


Total Investment: $553.5
Total TIF Request: $142.6

Something is up. Because based on the numbers Steve quotes your % is correct.

However there is also this quote. That the developer uses the 13% number

Larry Chapman, president of Clayco Realty, said that while the dollar request is higher than any TIF request made to date in Oklahoma City, the percentage of increment being sought is 13 percent — within the standard range of requests made by other downtown developers over the past dozen years.

[BoulderSooner]

For $142 million OKC could build their own housing and sell it off after it is done - and just pocket the profit. Clayco has to think we are a bunch of rubes.

And where is that money coming from?

[warreng88]

Pete, what has Clayco gotten historically from other cities it develops in?

[Just the facts]

And where is that money coming from?

The same place Clayco is going to get the money from - a bank (or institutional investors) with repayment based on future revenue projections.

[HOT ROD]

I thought Clayco was asking for $38M in TIF for the South Parcel (which would be 13%) and nothing (yet) for the OGE Parcel.

How do we get from $38M ask on Monday to now $142M?

[Paseofreak]

So, simplifying enormously, and consolidating all the middlemen, does this not amount to a rent subsidy for a segment of the population least in need of it? At least for the residential portions? I'm very excited for pretty buildings, and potential ancillary benefits, but just playing Devils advocate in my head...

[soonerguru]

Now I know why Steve stopped rah-rahing this deal in his chats.

[Just the facts]

So, simplifying enormously, and consolidating all the middlemen, does this not amount to a rent subsidy for a segment of the population least in need of it? At least for the residential portions? I'm very excited for pretty buildings, and potential ancillary benefits, but just playing Devils advocate in my head...

That assumes Clayco passes the subsidy onto the renter - which I doubt because I am sure these units will all go for premium prices way above the localized norm. Also, the role of the "Devil's Advocate" has already been cast in this production.

[Pete]

Yes, I don't understand why the numbers are so different than what were in the OCURA agenda and advance board packet.

Also, this is the first mention I can find of them wanting a ton of TIF for the north parcel as well.

I may be mistaken but I don't recall Rainey Willaims ever bringing that up at all.

[HOT ROD]

Here is one more thought I have and it goes back to my question earlier for, what do they use these TIF funds for.

I believe it might have been answered, that TIF money goes into activity the city would likely invest in anyway - such as improved sewer/utility connections. If this is the case, then I honestly don't have a problem with it since you'd have to upgrade utilities for a much bigger use than the parcel currently has. While it would be great for the developer to pay for all of that out of his pocket, OKC isn't yet in the club of cities to demand such action without public/city assistance even for its most prime real estate.

However, if TIF is just offsetting construction costs then I'd be more concerned. If the development is $280 and a $38M TIF brings the ACTUAL development to what? $242M then is that really fair for the city to provide a 13% discount? Again, here I'm assuming the TIF would not go to utility/city improvements but instead to the developer as Pete I believe mentioned in a post. That doesn't seem too fair if the city still has to upgrade and give them $$ to build. BUT, it is a mega development and overall and in the long run; I'd still approve it WITH CONDITIONS and oversight.

[Pete]

The City has already invested hundreds of millions in infrastructure all around this parcel, including very recently spending $42 million to upgrade the Myriad Gardens.

That was Devon TIF money, but tax dollars nonetheless.

I think what Devon did made a lot of sense: If we are going to invest three-quarters of a billion dollars in a new HQ, we want the downtown streets and amenities improved. And thus, their TIF dollars all went back into improvement common elements for everyone's benefit, including future developers. They didn't take back a dime to cover their development costs.

But just taking a hundred million or more and giving it directly to a developer for a property that has no major challenges -- flat lot, no Brownfields issues or historical buildings to preserve -- that's unchartered territory. As I mentioned, heretofore the largest grant had been $5.1 million. And that was for a very historically significant building in what has been a completely neglected area on the outskirts of downtown (talking about 21c here).

You could argue Clayco has already received the direct benefit of hundreds of millions in taxpayer dollars.

If they give them anywhere near what they are asking, every single developer that comes later will not only ask for at least the same amount, they'll also have to compete with this heavily subsidized private development.


I want this built as much as anyone but there are lots of precedents and repercussions that could flow from this.

And ironically, Cathy O'Connor was just quoted as saying she wants to move much more towards low-interest loans rather than just hand-outs.

[HOT ROD]

that could be a good thing actually, instead of grants make TIF so there could be some sort of return for the taxpayers.

And Pete, you probably answered my question that this TIF would likely go to offset cost of construction. Again, it is a shame BUT it could be what OKC needs in order to get this type of development. Assuming its just the $38M im sure most would probably be ok with that. Im not sure the Stage Center should be offset at all since OGE is the tenant customer and should have ready cash to guarantee a lengthy lease or purchase after construction and those rental units will likely lease at premium dollar not seen before in OKC. ...

Surely Cathy will cover all of these bases. But I do hope Clayco has some intention for the TIF funds other than discounting the construction costs (like utility burial, street interface, or even subterranean caisson shoring for the garages that would expedite the development and benefit the city as a whole).

[Pete]

In this case, the TIF dollars would just go back to the developers to use as they see fit.

Really doesn't matter if they earmark it for the garage or anything else, it's still money back to them and their investment won't change.

[Motley]

If the Clayco development ends up not getting approved due to the TIF issue, I guess we'll see what kind of development will be done with little or no governmental support. Could it be that big developers are not ready to invest fully at this level in OKC? If so, then everyone needs to settle down and realize we just aren't at the Clayco level of projects. Aside from Devon, I don't see any projects that are as ambitious as Clayco that have been done or have been announced in the CBD. Maybe the project that will make Big D jealous will prove otherwise, but it has not been announced and we don't know if they expect TIF either.