Oil company moving downtown

[metro]

Parking deal keeps company in state

By Steve Lackmeyer
Business Writer
For the second time this year, Oklahoma City has agreed to reimburse parking costs for a local company to move to downtown digs and not leave the state.

Simons Petroleum, which employs 150 people at its headquarters at 1120 NW 63 and another 50 across the city, is set to move to downtown's Oklahoma Tower later this year as a result of an agreement approved Tuesday by the Oklahoma City Council that will reimburse Simons up to $100,000 in parking costs at city-owned garages.

The deal is similar to one approved in March that reimburses Tronox Inc. up to $250,000 for parking in exchange for the company agreeing not to follow the remnants of its one-time parent company, Kerr-McGee Corp., to Houston.

Assistant City Manager Cathy O'Connor said at least two more similar arrangements are under consideration as the city tries to retain employers with high-paid personnel and recruit other such companies from elsewhere.

"Brokers for Simons Petroleum came to us,” O'Connor said. "The situation was most of their board of directors live out of state, and Chesapeake Energy had previously bought their building. This was done as an incentive to prevent them from leaving the state.”

O'Connor said the deals with both companies addressed a second concern of the city: boosting office occupancy in a downtown that for the past two decades has seen vacancy hover at 30 percent.

"Business retention and expansion of existing businesses are really difficult for the city to provide incentives for,” O'Connor said. "We felt this was a way that also met other objectives of the city.”

The agreement requires Simons Petroleum to employ at least 150 people, with pay 20 percent greater than the average annual local wage, for at least two years at Oklahoma Tower.

Tronox made a similar agreement regarding its 260 employees.

Brad Simons, president of Simons Petroleum, said the agreement was important to his petroleum products company's staying in Oklahoma City and predicted the downtown work force will expand in the near future.

"We sold our building to Chesapeake several years ago,” Simons said. "We've been looking at space all over the city, and we were concerned that board members might decide to move part of the company away from Oklahoma City.”

Simons predicted his company will complete its move later this year — after renovations are complete in the 36,000 square feet formerly occupied by the administrative offices of the Hornets basketball team.

Debbie Schramm, spokeswoman for Tronox, said her company preferred to stay in Oklahoma City as it split from Kerr-McGee, later acquired by Anadarko Petroleum based in The Woodlands, Texas.

"However, as a publicly traded company, we had to evaluate various options and incentive packages and do what was best for our company, employees and investors in the long term,” Schramm said.

Brett Hamm, president of Downtown Oklahoma City Inc., welcomed the city's efforts, noting vacancy downtown topped 30 percent a decade ago. He estimates vacancy now at 25 percent.

"It's improved a bit, but it's still not great,” Hamm said

[Midtowner]

Wow.. terrible idea. I'm not sure the city is sending a good message by comping the parking for big oil companies. I think that kind of money is better spent making downtown OKC a place worth being rather than bribing people to stay.

[okclee]

I think the city should do more of this, with more companies. Offering incentives is nothing new to other states and other cities. Okc seems to always try and do things the "right way" and therefore gets left out in the cold, because other cities are offering incentives for companies to move there.

I would like for Okc to continue to recruit large companies into moving here and they can offer as much of an incentive as they like. At this point Okc is not in the position to be losing companies and jobs to other competing cities. If free parking is all that it takes to keep them here, so be it.

[metro]

You raise some good points okclee, OKC cannot afford another devastating blow of losing another downtown player such as Kerr McGee, if Devon or Tronox or otherwise were to move out of downtown, it would be a devastating blow and setback to the progress of downtown OKC.

[Midtowner]

What kind of incentive would it be if the city had a top notch network of parks connected by well-maintained bike trails?

What kind of incentive would it be if the city used some of that park land to build some truly top-notch municipal golf courses?

What kind of incentive would it be if the city had a top-notch public transportation system?

The city's first priority should be making Oklahoma City a place that sells itself. Free parking is not free to the city. I'm pretty sure that most of the downtown parking is either privately owned or owned by COTPA. COTPA is not in the business (except through its own contracts) of handing out free parking.

What could $250,000/year have done for our park system?

[jbrown84]

The city's first priority should be making Oklahoma City a place that sells itself.

I agree, but we have to compete in the short term, and this is what it takes. That stuff will come with MAPS 3.

[okclee]

Midtowner..........I do agree with you that Okc would attract companies if we had rail transportation, great parks, bike trails, public golf, better schools, etc, etc.

The fact is that we don't have any of the items that you listed above. The reality of the situation is no "free parking" no Simons Petro Co.

The 250K per year is nothing in comparison to the taxes that a billion dollar oil company will be paying to the city each year. Or the tax revenue that the city would lose out on if these companies were to leave Okc.

There is no doubt that Okc has made tremendous progress over the years but so have other cities that are competing with us and trying to lure our companies out of the Okc. Believe me that other cities are offering many financial incentives to get companies out of Okc.

We need to do everything possible, to keep companies here or to lure other companies to Okc, even if that means financial incentives. Once we have the companies here in Okc then we can keep them here with the type of incentives that you mentioned. Hopefully Okc makes good on all of the future promises and plans that have been layed out, and then Okc will sell itself.

[PUGalicious]

What kind of incentive would it be if the city had a top notch network of parks connected by well-maintained bike trails?

What kind of incentive would it be if the city used some of that park land to build some truly top-notch municipal golf courses?

What kind of incentive would it be if the city had a top-notch public transportation system?

The city's first priority should be making Oklahoma City a place that sells itself. Free parking is not free to the city. I'm pretty sure that most of the downtown parking is either privately owned or owned by COTPA. COTPA is not in the business (except through its own contracts) of handing out free parking.

What could $250,000/year have done for our park system?

Generally, I agree. But there is something to be said for stopping the hemorrhaging of major employers in the state with incentives that allow us to keep them while we work on those other issues. Once we start attracting many new employers, then we can start weaning companies off the incentives. There's no reason to cut our noses off to spite our faces. If that's what it takes to keep them, it's a necessary investment to maintain the jobs and tax base.

EDIT: okclee beat me to the punch... sorry for the duplicate-sounding response.

[BDP]

Does anyone know how much it costs to park in downtown Houston? Anyone know what the parking to office space ratio is in Houston?

You guys make some good points for a short term argument, but the reality is that no one is leaving because of parking. Sometimes we fail to read between the lines. We have tons of people who say that the parking situation is a big problem in getting companies to move to downtown Oklahoma City. But how can that be true when so many opt for other locales they have less parking that's more expensive? Sometimes these issues are really just nice ways for them to say "we really just don't want to live and work in Oklahoma, even if it is cheaper and more convenient".

So, sure, we can give away some parking to keep some small fish around, but I agree with Midtowner in that we will continue to be looked over until Oklahoma City is seen as a comparable or even favorable place to live and work. And not just in terms of costs, because any city can make it "worth their while" and few can compete now with OKC in terms of living costs. We need to be able to compete in living and, as far as a municipality’s role is concerned, that equates to services and attractions.

But I'm not complaining. I think Oklahoma City has realized that for maybe the first time in its history and is actively and progressively beginning to make changes that will broaden its appeal to prospective residents.

[Midtowner]

I have a really hard time believing that a "multibillion dollar company" (did someone call it that?) is going to choose not to relocate for $250K/year.

That's a drop in the bucket.

[jbrown84]

I never said that parking was an issue. It's just that in these cases, that incentive was enough.

[jbrown84]

I have a really hard time believing that a "multibillion dollar company" (did someone call it that?) is going to choose not to relocate for $250K/year.

That's a drop in the bucket.

Well, they did.

[BDP]

I never said that parking was an issue.

I don't think anyone said you said that.

I was just pointing out that lack of direct public incentives in not the underlying reason that companies pick markets like Houston over OKC. They may say that, but it doesn't hold up when you break it down.

[Midtowner]

Well, they did.

No they didn't. They're in downtown OKC now. I'm sure it was looked at from a business cost-benefit standpoint... i.e., the cost of locating to downtown OKC yielded them no real benefit in terms of profitability.

The bottom line is that if we don't make downtown OKC someplace a company will be more likely to earn $250K by simply locating there, if we don't foster a real business environment where simply locating downtown means companies will have at least the value of their parking cost returned to them, then we'll never have a competitive downtown.

Incentives might have been the stated reason for staying, but c'mon... it's just not believable all things considered.

[PUGalicious]

Well, unless you have some inside information that you've yet to reveal, you are making assumptions that hardly debunk with factual certainty any of jbrown's contentions. Just because you don't believe it doesn't mean that wasn't the reason.

[Midtowner]

jbrown's contentions are not exactly rife with factual certainty either. Businesses frequently issue public statements which are half truths or complete lies as do cities.

I don't think the agreement itself is a really bad thing. Clearly, it's a win-win. It's just that the city needs to focus more effort and money into making downtown a place that'll sell itself.

If parking remains an issue, light rail with satellite lots in suburbs might be a better answer than the city paying the county for the privilege of using their horribly managed parking garages.

[Doug Loudenback]

Maybe, but not necessarily, what all of you guys are talking "around" is the core issue of whether it's the "business" of government to be involved with helping private "business" stay and/or succeed. That's a major topic. That's a topic that, far far away in the misty northwest (e.g., Seattle), where guys like Chris Van Dyk, can cause lots of controversy and, apparently (and hopefully) have prevailed (to Okc's potential betterment vis a vis the Sonics, by the way).

In my view, and more than theoretically, Okc would almost certainly be up the proverbial s_t creek had Mayor Ron Norick not become adamantly proactive with MAPS, persuaded us to be the same, the result of which certainly greatly benefitted the city but also greatly benefitted business, as well as big time-cultural items. Perhaps more closely to the point, if the city had not essentially become a business partner with private enterprise vis a vis the Skirvin, what, if anything, would the Skirvin be today?

I'm much more in favor of a pro-active involvement of government with business in those areas that benefit the city generally (or, in the case of downtown, specifically) than I once was.

It's also true that a city's infrastructure needs to be cared for ... though I've not been to a park lately, and not because they are there and/or aren't nice. As an old fart, I'm just not much of a "parks" person ... though I do understand their value. But, given a choice of holding onto and/or attracting substantial business into the community, or improving parks (for example), if that's the choice that must be made (though I don't think it is), I guess that I'll opt for the business-end ... without it, growth would not occur and would very likely deteriorate.

I was alive when downtown "died" in the 50s-70s and I saw it happen, as did some of you. I recall the time that I had no pride in my city ... and it wasn't because of "parks" ... it was because of "downtown" ... a city is for good or ill measured in large part by its downtown. I am now busting my buttons with a gusto even though I had absolutely NOTHING to do with the turnaround that has occured. Who did? Government and business.

I do NOT EVER want to see what happened in the 50s-70s happen again, and I want my (our) chest of pride to get bigger and bigger.

If this is a "chicken or egg" discussion, I'd say that the "chicken" is that which produces the egg, and I'd say that the "chicken" is business.

[OU Adonis]

So why is Houston such a big deal? Why do they get a lot of business down there? I have only been a couple of times and I wasn’t impressed. To be completely honest though I didn’t go see the sights or hit the night life.

What I remember of Huston was extreme heat/humidity and how crowded it felt.

Why are they so “big time”? What can OKC do to capture some of that appeal?

[metro]

Midtowner..........I do agree with you that Okc would attract companies if we had rail transportation, great parks, bike trails, public golf, better schools, etc, etc.

The fact is that we don't have any of the items that you listed above. The reality of the situation is no "free parking" no Simons Petro Co.

The 250K per year is nothing in comparison to the taxes that a billion dollar oil company will be paying to the city each year. Or the tax revenue that the city would lose out on if these companies were to leave Okc.

There is no doubt that Okc has made tremendous progress over the years but so have other cities that are competing with us and trying to lure our companies out of the Okc. Believe me that other cities are offering many financial incentives to get companies out of Okc.

We need to do everything possible, to keep companies here or to lure other companies to Okc, even if that means financial incentives. Once we have the companies here in Okc then we can keep them here with the type of incentives that you mentioned. Hopefully Okc makes good on all of the future promises and plans that have been layed out, and then Okc will sell itself.

okclee, you make some good points. I agree and disagree with some of them.

The fact is that OKC DOES HAVE great parks, schools, bike trails and golf courses far more than many major cities far bigger than us. Can they be better and more of them? Sure, but so can everyone elses. Mass transit is a huge issue though! So to state we don't have any of the above is completely not factual.

I do agree heavily with you on the incentives. Whether I (we) agree with the ethical dilemma of incentives, the fact of the reality is that all the big boys are doing it and that is why they are big. It's obvious employers aren't choosing Houston over OKC because of the cost of doing business,etc. It's totally a quality of life issue. Unfortunately, OKC is still working on our quality of life to play catchup, so we have to offer the financial incentives, like our larger peers did and are still doing. They don't have to do it as much, because over the years they improved their economies enough to work on the quality of life issues. This is where we are still at right now.

As far as Midtowners statements regarding downtown. I have to disagree somewhat. I think the city and Downtown OKC Inc. has done a fine job of making downtown OKC a place to live, work, and play. Yes it can be better and it is getting better every day, but the statements basically made it seem as if downtown is not a place to be.

[adaniel]

So why is Houston such a big deal? Why do they get a lot of business down there? I have only been a couple of times and I wasn’t impressed. To be completely honest though I didn’t go see the sights or hit the night life.

What I remember of Huston was extreme heat/humidity and how crowded it felt.

Why are they so “big time”? What can OKC do to capture some of that appeal?

I think I'll chime in since I'm an OU student interning for an oil company in Houston right now...

It really isn't big time. It just had the advantage of being home to the early wheelers and dealers of the oil and gas industry. As time progressed a lot of the companies wanted to be near each other so that they could pool that knowledge with each other. This took on a whole new importance when the bottom fell out in the 80's, and being in Houston was a matter of survival. So today, alot of these companies, even those based out of OKC or Denver, have old, big wig Texas oilmen who can't fathom being anywhere besides Houston. The same thing happened in my hometown of Plano TX. Both Fina and ARCO were out of there, and they both moved to Houston in the late 1990's during that slump. And Plano didn't have a Devon or Chesapeake or Sandridge to rise and take their places.

Personally, I love the company I work for but I hate Houston. Traffic sucks, weather sucks, drivers are rude, basically this place has no good reason to exist. It sits on the Gulf Coast waiting for a hurricane to take it out of its misery. But as far as the oil industry goes, it is the undisputed capital of it. So if all OKC needs to do is give out free parking to keep the oil companies it has, than so be it. Considering a city of its size, for OKC to hold on to what it has in terms of an oil industry is laudable considering that Dallas Denver, and Tulsa couldn't do the same. Who knows? Maybe I can stay in OKC and avoid this place.

[CCOKC]

My husband met with a person Monday in Fort Worth who is in the Oil and Gas Business and does a lot of business with Devon. My husband asked him if he had heard the rumors about Devon's new tower. He had not but his reaction was that it would be great for OKC because it would show that there was major interest in OKC and that the people doing business with OKC companies were serious about staying here and not moving to Houston with the other big O&G's and more companies would know this is a legitimate place to set up a business and not just a stepping stone town. He thought it would mean that more of the ancillary businesses similar to his would soon follow.

[dismayed]

It really isn't big time. It just had the advantage of being home to the early wheelers and dealers of the oil and gas industry. As time progressed a lot of the companies wanted to be near each other so that they could pool that knowledge with each other. This took on a whole new importance when the bottom fell out in the 80's, and being in Houston was a matter of survival. So today, alot of these companies, even those based out of OKC or Denver, have old, big wig Texas oilmen who can't fathom being anywhere besides Houston.

That's a good point. I tend to think that it happens in all industries and is probably the chief driver of relocations. Companies want to either be near other similar companies that they can do business with or cannibalize a good workforce from, or they want to be close to their customer. It seems to me like when companies relocate it usually has something to do with this. Usually things like state taxes and other incentives are so far down on a company's priority list that such things would never influence them to stay anyway.

[metro]

adaniel brings up some good points that I've always pondered myself. We saw what hurricane Katrina can do to the oil industry. That storm could of easily have hit Houston. In today's day and age in a very volatile market, why in the heck would the world's major oil companies want to sit in a hotbed for disaster. Like adaniel said, one major hurricane could wipe them out for quite awhile, thus causing oil prices to skyrocket much more than hurricane Katrina levels. Move to OKC where we are more inland and safer, not to mention quality of life and cost of living.

[jbrown84]

What I've never really understood was how the concentration of oil companies shifted from Tulsa to Houston. What did Tulsa do wrong that it isn't like Houston?

[Oh GAWD the Smell!]

What did Tulsa do wrong that it isn't like Houston?

Sold it's oceanfront property and discontinued it's pier side service to tanker ships?