TIF Districts

[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.

“It’s when you start trying to adjust along the way that you run into issues,” he said.

Tax increment finance districts are allowed under Oklahoma’s Local Development Act to enable municipal governments to use local taxes and fees to finance certain public costs of development. Projects financed by TIFs must serve a public purpose such as creating employment or turning around blighted areas – Oklahoma City’s first TIF, for example, was dedicated to promote development near the Oklahoma Health Center, spurring private investment by the healthcare, bioscience and technology industries.

Once a TIF district is created, the current assessed values of properties or sales tax revenue in that zone are set as a base. Until the TIF’s deadline, which cannot be more than 25 years, tax revenue collected above the base are dedicated to the project.

Brent Bryant, Oklahoma City’s economic development program manager, agreed with Bottom that establishing goal benchmarks is important to the process. Oklahoma City’s eight TIFs have been successful overall, he said, although at least one, the Las Rosas residential development south of the Oklahoma River and west of Interstate 35, has fallen short in generating extra taxes.

Other cities have found success as well. In Elgin, for example, Mayor Larry Thoma said the $3.35 million TIF established in 2008 has helped develop the city’s enterprise zone and attract two new companies. The TIF is scheduled to expire in 2033. Likewise in nearby Lawton, where a $50 million TIF established in 2006 is supporting business development while eliminating a blighted area.

Norman Finance Director Anthony Francisco would only speak to the administration of his city’s second TIF, which he called the most complicated in the state. The city’s first TIF was a much smaller project at $125,000 for improvements to Campus Corner, originally envisioned as a parking garage but ultimately ended up being used for streetscraping improvements.

In Norman’s case, the current $54 million University North Park TIF bounded by Interstate 35 and Westheimer Airport was designed with safety measures against luring existing businesses from other parts of the city, he said. That requires a lot of calculations for Francisco’s staff because the previous sales tax bases of those companies are subtracted from TIF district calculations, reducing the benefit of moving.

Aside from that bookkeeping challenge, however, Francisco said he felt that the TIF has already met its original goals of business development and is providing enough new revenue to consider additional projects.

“It’s done great things for the Norman area,” Norman Councilman Kyle Allison said. “It’s produced retailers that we didn’t have before and the Embassy Suites conference center is bringing visitors to Norman.”

But as city leaders developed the Norman Forward initiative this year, the nature of the TIF was brought into question: Could a $7 million expo center within the $143 million package of capital improvements under Norman Forward be combined with TIF funds? Councilman Greg Jungman has been opposed to the TIF for not meeting its goals, but he supports the thrust of Norman Forward.

Bottom said his city’s first TIF, just one year old now, is progressing so well that the city is planning to launch a second TIF within a few months. The initial $37 million sales tax TIF is ahead of budget to support commercial real estate development just west of Integris Canadian Valley Hospital. The next TIF will be focused on developing public gathering space on Main Street around a new City Hall.

[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.

[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.