TIF Districts

[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.

[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.

[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.

[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.

[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).

[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.

[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.

[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.