Devon loaned with interest the money for P180 because they wanted much of it done before their new HQ was complete.
And yes, the Wheeler proposal is different.
Owner / Administrator
Re: TIF Districts
Devon loaned with interest the money for P180 because they wanted much of it done before their new HQ was complete.
And yes, the Wheeler proposal is different.
Participating Member
Re: TIF Districts
This is a little bit off-topic, but has become very apparent in the relatively short time I've worked in this state. Regardless of whether one loves or loathes TIFs, conceptually, it's important to remember that 47 other states authorize TIF--and most of those allow the use of school district levies as increment (Oklahoma's TIF statute is fairly representative of most)--and yet still manage to fund their schools at higher levels. Even if the state's TIF laws and constitutional amendment were repealed, the basic funding problem with Oklahoma schools would persist for several reasons, not the least of which include: (1) the political and legal difficulty of passing any revenue-increasing legislation in this state; (2) a tax code over-reliant (or over-lenient) on revenues from specific industries; and (3) a wildly inequitable tax structure between taxing jurisdictions.Originally Posted by Midtowner
Re: TIF Districts
I guess so long as it's not your ox being gored? We're a poor state to begin with. I'd love to see the tax code completely rewritten in an equitable manner such that basic government services were funded adequately. That's not going to happen in our thoroughly corrupt state legislature though.
Ideologically, I'm against policies which assist private industry in doing the things private industry should be able to pay for by itself. As I said, there are some projects where TIF is 100% needed. The Skirvin, for example--not feasible without TIF.
Wheeler though? Give me a break. If you can't afford to stack houses on top of each other on and sell them for what will probably be 4x-5x the average per square foot price for new construction in OKC, there is something seriously wrong with your business model.
Platinum Member
Re: TIF Districts
Everything is feasible without TIF, if you're fine waiting for the long haul for the money to come back.
Wheeler is a fine use of TIF because you are talking about a severely blighted area that is going to take a lot to bring together. Currently nothing sells between 4x-5x the average per square foot price of any home in OKC much less new construction. They are shooting to be at least somewhat affordable in parts, though maybe not in the first units they've talked about. That's not something that any developers downtown are doing with for sale housing.
Wheeler does have some site remediation issues not to mention a complete lack of utilities and services right in the middle of the city, and it is a very strategic place early in OKC's core development that it makes sense.
Furthermore, with TIF in OKC, limits can be set, both in time and amount. I don't think anybody wants to give Wheeler $200M in subsidies, but I doubt that's the amount they're asking for in the TIF. $20M seems pretty dang reasonable to literally turn over 50 acres from a nothing/brownfield site into a sustainably planned, full-scale urban neighborhood in the next 5-10 years.
I'm definitely on record saying we should shorten the capture period to incentivize quicker paced development, and choose a limit that is not guaranteed to be hit if the developers drag their asses but that, again, incentivizes quality construction and development of a place that truly adds value to our city.
Somebody could have just as easily bought this area to build a nice 250-unit gated subdivision the likes of which are built in suburbia. It would have come with a nice 12 foot wall on the west side so that it's completely walled off from the "dangerous" dwellers in the poor part of town, and probably have sold the homes for the same $225/sf as close as the area is to downtown, with much less invested.
Owner / Administrator
Re: TIF Districts
I think Wheeler and FNC are good uses of TIF, but that's a tiny part of what we are using TIF funds for.
Re: TIF Districts
Sometimes I do work in the public's best interest. Maybe kick over $20MM to me as an attaboy too? Developers are in business to make money. It's not as if developers will simply cease to function as an industry if they stop getting taxpayer funded kickbacks. I'm all for investment in what will be the crown jewels of the city. I don't imagine Wheeler is going to be that.
Also, mostly what TIF is involves financing Wal Marts and crappy industrial parks for the politically well-connected.
I'd love to see the Alliance have nothing futher to do with TIF money and for OKC to fund maybe one project per year chosen after significant open consideration as well as input from citizens.
As for those ne'r do wells you'd build the wall to exclude, that might as well happen as development like this typically prices those people out of their homes. That of course isn't bad for all of us as it increases the tax base overall, but let's not pretend we're doing those lower-income people any favors.
Participating Member
Re: TIF Districts
You clearly haven't looked at the plans for Wheeler, and Oklahoma City's use of TIF has been anything but for Walmarts and crappy industrial parks. Although, I have to say based on my professional experience that those "crappy industrial parks" in other places in the state that have used TIF are (1) more likely to use the TIF funding for public infrastructure rather than development financing assistance, and (2) are the most likely to bring in actual job/economic growth to the state (let alone the local community). Those are two things that most TIF opponents will concede could be valid uses of TIF, in addition to specific blight remediation.
Owner / Administrator
Re: TIF Districts
Since all we get is one side of the story from the City when it comes to this subject, I continue to feel compelled to share other perspectives.
This is a detailed analysis and criticism by an Oklahoma policy group called the 1889 Institute:
nebula.wsimg.com/0dcfc8fd9a848b5a4d8d3d4f5301ed8f?AccessKeyId=CB55D 82B5028ABD8BF94&disposition=0&alloworigin=1
Conclusion
Tax Increment Financing Districts are sold as a way to increase economic development in the state at public expense without costing taxpayers anything whatsoever. The evidence that this is not true, however, is clear. There is no solid evidence that TIFs, on net, increase economic activity. They do, however, allow for wealthy businesses to access public funds to make private investments. They allow the diversion of tax funds that TIF creating entities would not normally be able to access. TIFs contribute to the creation of a crony economy that hurts, rather than enhances, economic growth. TIFs avoid the usual checks and balances that protect taxpayers from being fleeced and their TIF finances, in the vast majority of circumstances, are opaque.
Oklahoma’s TIF laws should ideally be repealed. In the absence of repeal, other critical reforms should be passed. TIFs should be far more financially transparent. They should only have access to the tax base of the entities that create them. They should be limited to spending on legitimate publicly-financed infrastructure and to protect the public health and safety in cases of true blight. There should be greater state monitoring, with state level final approval of new TIFs. In these ways, the public can be protected from abuse by an institutional structure that is not needed.
Gold Member
Re: TIF Districts
You keep making this assertion as if that is what OKC's TIF districts and the Alliance are doing. Criticism and questioning of TIF is completely fair and appropriate, but it is intellectually dishonest to give the impression that our local TIF or the Alliance are funding Wal-Marts or industrial parks in the boonies; they aren't. Also as has been pointed out it is unfair to act like the Clayco TIF request was an example of local TIF gone awry; it was appropriately ignored by the Alliance.
Participating Member
Re: TIF Districts
Yes, but they knew this when they bought it a decade or so ago. Why does that have to play into their pleadings for TIF money now? So I can buy a polluted and utility-less property and then complain that I cant get anything developed without TIF help?
Thats another problem with TIFs, you are incentivized to show bad numbers and a bad pro forma, so that you can go to the Alliance with your hand out saying it wont happen unless you help.
Participating Member
Re: TIF Districts
What's the alternative here? Let it sit vacant forever due to environmental contamination? If you buy property you know has environmental issues, and it takes you 10 years to ask for help, it sounds more like you've exhausted your other options first.
This is why the City has reasonably proficient staff review TIF requests before doling out money. If a developer hasn't done their due diligence on the private financing market before asking for help, it's usually pretty apparent and comes out quickly during the review.
Platinum Member
Re: TIF Districts
I'm struggling to learn about how the state financed public education. Recently I just learned about the Board of Equalization, which normalizes property taxes across the various Oklahoma school districts.
I was surprised to learn that increasing property values and ad valorem taxes from OKC do not linearly benefit OKCPS, due to the Equalization measures. Basically (my limited understanding is that) any increases in local ad valormen tax collection are offset by equivalent decrease in state allocations. Thus the benefit to public education of increasing property values in OKC proper are effectively distributed across the state of Oklahoma. There is nothing really wrong with this practice to my eyes as it prevents inequality to some degree.
But, unless I am wrong (which I very likely am) this practice ensures that OKCPS proper has very little to lose from the creation of TIF districts in OKC. The impact of decreasedn ad volerem tax collection in a TIF district is distributed across the state and is thus muted for any particular school district.
On the other hand the unofficial practice of sending some TIF money back into OKCPS occurs. I can think of a few examples but there are probably more: Emerson HS renovation and renovation of the new school district headquarters, construction of John Rex charter school, etc.
The net result of this might very well be an increase in funding to OKCPS, no? The decrease in ad valorem revenue is distributed statewide, but the funding for construction projects is localized. Might this be an end-run around the statewide equalization process? Could this explain why OKCPS never really fights these TIFs, as the outcome is not really material to them either way, and may even net out to their benefit?
I am probably missing something fundamental here.
Owner / Administrator
Re: TIF Districts
^
You are fundamentally correct but remember when money is taken from the school district for TIF, that money comes from the general education pool which is then shared across the state. Education funding, of course, is a state-wide issue with the large percentage of funding coming at the state level.
Even if some TIF money is returned to OKCPS, it does not go into their general operating fund to pay teachers, buy textbooks, etc. It has to be used for infrastructure which is something they normally would not be spending money on when they can barely keep schools open.
I want to find out more about because if the the broad strokes here are correct, basically OKC is robbing the state educational fund -- and that's all OK schools -- to give money to downtown developers. In many ways, that's even worse.
Platinum Member
Re: TIF Districts
Just think of it as revenge for all the pre-emption legislation that comes out of the rural-dominated legislature.
Owner / Administrator
Re: TIF Districts
I'm going to put this here because the GOLT funds are another economic development tool administered by the Alliance, and they are seeking to get more money in the next bond election.
Everyone should be concerned about the relationship between the Oklahoman and the Alliance. Steve Lackmeyer recently made some very snarky and unprovable comments in defense of TIF in a recent chat and has consistently defended that program with incorrect information and half-truths. Now this article from Jack Money.
This reads like an editorial from Cathy O'Connor and I'll let readers decide what prompted it, where the information came from and if there was any independent verification of facts.
The bold line below is a completely editorial comment by the reporter and absolutely, positively cannot be proven. The fact is, they have no idea if the program is working or not.
Like TIF, GOLT funds are given to companies but in this specific case for job creation. And also like TIF there is no provable link whatsoever that the gifted funds are in any way tied to economic development. In fact, there are many companies that are awarded funds conditional on achieving promised job growth, then don't meet those goals.
And, there are companies like Chesapeake that were given millions and then actually cut thousands of jobs down the line.
GOLT and TIF may have some good aspects, but the idea that these tax dollars directly cause development and jobs are assertions made by those directly benefiting, both those at the Alliance and the companies that receive the free money.
And the Oklahoma continues to promote these completely one-sided arguments as facts when that is not the case.
Voters asked to reauthorize economic development bonds in OKC election
by Jack Money Published: September 5, 2017 5:00 AM CDT Updated: September 5, 2017 5:00 AM CDT
Oklahoma City voters supported a $75 million measure in a 2007 bond issue intended to bring quality jobs to town and to keep them here.
That effort, which so far has expended about $64 million through the Oklahoma City Economic Development Trust's Strategic Investment Program, appears to have done what it proposed to accomplish.
In June, the program had active agreements worth about $43.1 million with 16 employers that promise to create more than 6,600 jobs.
Owner / Administrator
Re: TIF Districts
I'll leave this here for future reference and comment.
I'm not aware of anyone other than me (and Ed Shadid who has picked up my research) who have been raising the issue of how TIF impacts schools
I take strong issue with the tone, condescension and accusation that this argument lacks understanding and merit.
This seems to be turning into a personal feud rather than an objective discussion and analysis of facts.
I will once again reiterate my concern that the state's largest news agency is simply parroting Alliance talking points, as a direct counter to the light being shined on this program almost exclusively by OKCTalk.
8/25/17 Chat Transcript
Guest said:
What's your take on the potential lawsuit from the OKC schools and the State legislature? I find it kind of weird that the OKC school system would file a lawsuit for not adequately funding education when they fully support diverting millions of tax dollars to TIF projects. I bet they could give teachers in their district a $5,000 a year raise each & every year if they didn't give it away to TIFs. It's like my kids coming back and asking for more lunch money because they lost it or gave it away to someone else. Do you think other school districts will join their efforts?
Steve Lackmeyer replied:
We are living in an age where nuance is becoming a lost art. Those who argue TIF dollars represent money taken away from schools simply do not understand how tax increment financing works. When done correctly, TIF represents an increase in property taxes that would not occur without the possibility of the development using part of that increase for infrastructure like parking, streets, sidewalks, etc.
Most of the TIF districts allow for quite a bit of the increased property taxes to go to the schools. This is actually a better scenario for schools. Under normal circumstances, rising property taxes do not go directly to local schools. The money is allocated by the state board of equalization and is distributed statewide. This means Oklahoma City's success has essentially benefited some of the smaller, struggling rural schools.
Take the new Core to Shore TIF, in which 75 percent of the increment goes back to schools, libraries, the county, Career Tech and the health department. This may actually be a better deal for them.
I know this answer requires far more thought and doesn't roll off the tongue like "quit robbing schools to fund TIF projects." But alas, again, we live in an age where nuance is in short supply.
Now let's get to the other part of your question. Lawmakers are seen by many as having completely neglected schools for the past 20 years. And now they are at crisis stage. Let's say what nobody seems to want to say - there are political forces who are celebrating this breakdown. I know this because I've listened to them on many a morning at Kamp's 1910. And these folks do have like-minded friends who are state lawmakers.
But the frustration is building. And the lawsuit taps a nerve along with the initiative petition for a local income tax.
I don't know whether either will success, and I know of sober, pro-education folks who have concerns about both. What I do know is education and public transit are among the biggest obstacles to Oklahoma City attracting new investment and businesses.
Gold Member
Re: TIF Districts
Where is evidence of a personal feud in that quote? I don't follow.
Owner / Administrator
Re: TIF Districts
^
"Those who argue TIF dollars represent money taken away from schools simply do not understand how tax increment financing works. "
"I know this answer requires far more thought and doesn't roll off the tongue like "quit robbing schools to fund TIF projects." "
Etc.
Re: TIF Districts
The thing about TIF which I find most upsetting is that many of these projects would still be built and still be profitable without TIF. I get TIF for a project like the Skirvin. I don't see why it's necessary to use TIF money to build Wal Marts. It absolutely takes money from education because there are developments which would be happening with or without TIF, but our municipal governments are pretty liberal at distributing that money.
Participating Member
Re: TIF Districts
We haven't given any TIF to walmarts....
Participating Member
Re: TIF Districts
http://www.koco.com/article/blanchar...5+News+-+koco5
Participating Member
Re: TIF Districts
That's Blanchard
Re: TIF Districts
In OKC fairly recently, TIF was used to subsidize a development of drab suburban houses on the southeast side. They could have built something there without free money from the city. But they were well connected, so free money was theirs.
Participating Member
Re: Tower Theater
Things like this should spur a discussion on TIF approval being granted at the ballot box. The sums of money being spent are to great without direct voter approval.
Gold Member
Re: Tower Theater
This is NOT to make a case for or against TIF in concept, but...
The City of Oklahoma City manages an annual (non-TIF-related) operating budget of more than a BILLION dollars. That is $2.7 million every day. This is done at the discretion of elected officials and their appointees. There is no way we want to put to a vote of the citizens a contract to purchase police cars, or whether or not to remodel City Hall, or which brand of paint to use, or which contractor, or approval of individual road paving contracts. It would be absolute chaos, and a lot of those things would not happen if they were line item votes of the people, the majority of whom could care less if there are potholes or cop cars in parts of town other than their own.
We elect officials to take care of the business of our city on our behalf. We entrust them with massively large amounts of money every day. We give them the discretion in how to spend it. If the City needs additional tax monies or bonding capacity (or the extension of expiring bonding capacity) we get to vote on it. Other than that, it is up to our representatives.
Under both federal and state law TIF exists as a legal instrument for municipalities - including Oklahoma City - and under that law its use is at the discretion of elected officials. This is not unusual. All 50 states have some sort of TIF on the books. Simply put, if a citizen doesn't like TIF or how it is used in their city, they should contact their city councilperson and make them aware. It is possible that their councilperson is a firm believer in TIF for a variety of reasons, including a personal belief that it is in fact a valuable tool for their community and by extension their constituents. Be prepared for them to explain why they believe in it. Heck, they may even convince you to change YOUR mind.
But if you don't like the councilperson's position, you always have the option to support their opponent in the next election, support candidates in other wards who share your opinion - financially, through volunteering, whatever - or talk to your state representative about changing the way the law works. These are all appropriate and adequate ways for citizens to become involved in the process.
A line item referendum on individual TIF projects at the ballot box is not. It would be absolutely disastrous, as would pretty much any line item financial decision made by voters. There is a reason why our form of government is not direct democracy but rather a representative democracy.
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