OG&E Energy Center

[ChrisHayes]

Is the TIF just for the north side of the block, or the entire project? I want this project to proceed, even if there is a TIF of some sort. There would still be tax revenue coming in from the project, but during and after construction. Especially from the office towers. I don't know how many people would work in both the office towers, but let's say it's 5,000, that would still be a lot of tax revenue coming to the city and state from those employees in the form of income taxes.

[Pete]

It's for both the north and south parcels; slightly more for the south.

[Just the facts]

Is the TIF just for the north side of the block, or the entire project? I want this project to proceed, even if there is a TIF of some sort. There would still be tax revenue coming in from the project, but during and after construction. Especially from the office towers. I don't know how many people would work in both the office towers, but let's say it's 5,000, that would still be a lot of tax revenue coming to the city and state from those employees in the form of income taxes.

OG&E employees already work in downtown OKC. They are just moving down the street. As for the second tower, if it is an out-of-town company OKC and the State both rebate payroll taxes for new/expanding companies.

[Spartan]

Well then you might want to start warming up.

I am. I believe in forging public-private partnerships if that is what it takes to produce development that meets the city's goals. This is a great opportunity for this city to look at the Plan OKC process and the overall vision for the post-MAPS3 downtown and make community goals that we are willing to incentivize. If you don't have a strategy, then it is corporate welfare. If you do this right, it can be a very good deal for the community.

[HOT ROD]

OKC is rapidly improving but hasn't arrived yet. Even compared to its peer cities there is still catching up to do. This is the time, while the national economy and the local economy are doing well, to push for as much development as possible. OKC is in a unique position to really do some great things over the next few years. The city needs to be smart but now is not the time to turn to rigid, development killing ideologies.

Plus, Kerry, I think you have your own objections to this development that aren't related to the TIF. I think because it's a tower and doesn't adhere to the urbanist standards of classic European cities, you don't want to see it built.

+1 Like

[HOT ROD]

Kerry, it's nice to play devil's advocate to ensure that we all stay grounded but I have to agree with Bchris that you seem to be quite against this project with or without a TIF. As has been noted, it would be ridiculous to expect an outside (or any) developer of a project of this magnitude NOT to request a TIF in an untested market such as OKC. The only question is what will OKC get in return?

As Urbanized stated so wonderfully, TIF just about guarantees the beneficiaries (OKC Public, OK County, Library) extreme benefit in the long run. There will be a huge winfall for them in 25 years when the TIF expires. TIF just about guarantees a development like this will happen as im sure a TIF has a requirement tied to the approved project (or hopefully could be rescinded). Again, there really is no downside here - beneficiaries already get the existing property tax (subject to the downtown TIF) and would still get that after the new TIF (so no loss). The increment would be realized by them after a 25 year stay - think of it as a seeding period to ensure the project is successful (and happens at all). Without TIF a project of this magnitude DOES NOT HAPPEN (and there's NO benefit for the beneficiaries, short nor long term).

I think your argument should migrate from TIF being unnecessary to how much TIF should go away from Public Improvement. That is what OKC should negotiate as that could be realized by the city immediately and likely could mitigate the delay of incremental revenue for the beneficiaries (for instance, if they bury power lines, build a mostly underground garage, reopen California as a pedestrian-only path (highly recommended), install wifi, go walk my dog every day for a year (lol) or whatever public improvement OKC could tie to this project). ... This is my argument even more than the TIF amount, what are we going to get in the short run in return that improves the area?

[soonerguru]

Let's not let this discussion be framed exclusively as "pro-TIF" and "anti-TIF." That undermines legitimate discussion about what is appropriate. I agree with Urbanized and Bchris in general, but I'm more with Pete on this: a 25-year handout (and a 26% subsidy) is extreme and even desperate. Hopefully Cathy O'Connor will negotiate this down to something acceptable. As much as I want to see these towers built, I'm susceptible to the argument that we should not be subsidizing fancy apartments for rich people while our public schools rot.

[Rover]

It would be interesting to see what we would get with purely market perception of risk/reward. I doubt it would include high rise apartments at this time. But who knows. There seems to be a belief on this board that developers are chomping at the bit to do high rise residential but all we seem to be getting is stick built four story residential apartment buildings disguised as urban projects.

[ljbab728]

As much as I want to see these towers built, I'm susceptible to the argument that we should not be subsidizing fancy apartments for rich people while our public schools rot.

Hyperbole much?

[Rover]

As much as I want to see these towers built, I'm susceptible to the argument that we should not be subsidizing fancy apartments for rich people while our public schools rot.

Didn't we just complete a quite large MAPS for kids? Don't think we are letting our schools rot. And ironic that the newest school is right across the street. Lol

[Just the facts]

My opposition to this project is based solely on the belief and reliance on the 'growth model' - which doesn't work and isn't a sustainable model for economic growth. I can fully understand why the City would kick in funds to develop land with environmental issues because the City dropped the ball in the past by making sure landowners weren't contaminating the land, and in cases where the City wants to preserve existing structures for historical or place-making reasons. These two lots just don't fit either of these cases. If a developer can't build something here that is profitable on their own then the whole growth of downtown OKC is one giant illusion (see growth model). I guess I also have to take issue with the 25 year time frame on this as well. There is zero chance the developer is going to own this project in 25 years and when they sell it they are going to do it for market value - they sure has heck aren't going to pass the balance of the $142 million in taxpayer funding onto the buyer. Maybe a clause should be added that if the building is sold the TIF rebate/exemption/whatever expires and the new owner start paying taxes.

[HOT ROD]

I don't totally disagree, Kerry. It's just that OKC 'very likely' isn't there yet. If we were then local developers would be building high rise residential and office. We had to get some 'help' from a very solid Chicago-based developer and they think OKC is an unrealized market with HUGE potential. I agree with this.

I think in 15-20 years of growth (via stimulus) then projects could become sustainable. We've only had 15-years of MAPS and TIF seeded growth and OKC is just now at a peer level in some respects. But we're still in the MAPS growth model, necessitating public investment to encourage private. Once there is no need for MAPS (for infrastructure anyway) then I'd say OKC has arrived. However, we likely will have Maps 4 and 5 with a continued focus on infrastructure, so I'd expect TIF based projects throughout this time as well (and hopefully more of them large such as ambitious speculative projects like this, since it is the first).

In all honesty, I hope there is a way we can negotiate the TIF regarding the speculation. If it is a success, then the city should share in the proceeds and/or the TIF be repaid. If it is not successful then Clayco can have the TIF as a guarantee. Something along these lines, along with SOME civic improvements to the site, will be more than acceptable in my book and should be the STANDARD from now on as OKC has moved beyond the days of Hogan and there being NOTHING in downtown OKC but we're hardly a boomtown with developers flocking to develop our city nor are we even sustainable YET.

[soonerguru]

Didn't we just complete a quite large MAPS for kids? Don't think we are letting our schools rot. And ironic that the newest school is right across the street. Lol

Yes, we did. And that's great. But it's not just the buildings and AC units we're paying for. Again, who will be the market for these apartments, which will cost about a half million each to build? If we hand the developers roughly a third of the cost, we are subsidizing apartments for rich people. Fact.

I still want these built, but if OKC agrees to these terms we are being played.

[Urbanized]

For the record, if the City declines to provide TIF assistance to this project it won't mean a single additional penny would somehow makes its way magically to the schools instead.

[Just the facts]

By "growth model" I mean that existing developed properties don't pay enough taxes to provide public services to them, so they borrow from future property taxes on undeveloped property with the hope that they will be developed in the future just in time to repay the previously borrowed debt. It's not a sustainable model because nothing grows forever and if you think it does you should read what OPEC wants to do to the US Shale Oil industry (which is a good argument for why residential and not office space should front MBG).

[Urbanized]

Kerry, you're not suggesting that they are borrowing from speculated growth on OTHER undeveloped properties are you? Because that isn't what is happening here. They are specifically tying to the future TIF revenues from the project in question. It's a pretty solid model.

That said, it's a fair point to not like borrowing against future earnings; for one thing the effectiveness is reduced by interest paid. When TIF was initially created my understanding was that incentive dollars would be paid out of a pool created by incremental dollars generated by previous projects. That is much closer to the MAPS model of save first, buy later. But obviously that is not the path we've chosen to take.

[hoya]

For the record, if the City declines to provide TIF assistance to this project it won't mean a single additional penny would somehow makes its way magically to the schools instead.

Unless someone else comes along and builds something on the site that the market can support, without TIF funds.

ClayCo is arguing that the city cover an enormous part of the cost, presumably because of the risk involved with this type of project in an unproven market. Now I understand that. I am not (and most people are not) jumping up and down saying we shouldn't provide any TIF funds here whatsoever. And no one would be happier than me if these buildings went up exactly as they are in the renderings. I love the design. But they're asking us to give up almost $150 million in taxes so they can build it.

If we said "no TIF funds at all" and so they put up a Continental Resources type building and said "that's all we are sure the market will support here" and they went home, yes I'd be disappointed. But we'd have a lot of land left over for other proposals, and we'd be getting 25 extra years worth of taxes on a $100 million or so development. That's an extra $25 million in the city's pockets with the potential for a lot more if the rest of the property develops.

[Laramie]

My opposition to this project is based solely on the belief and reliance on the 'growth model' - which doesn't work and isn't a sustainable model for economic growth. I can fully understand why the City would kick in funds to develop land with environmental issues because the City dropped the ball in the past by making sure landowners weren't contaminating the land, and in cases where the City wants to preserve existing structures for historical or place-making reasons. These two lots just don't fit either of these cases. If a developer can't build something here that is profitable on their own then the whole growth of downtown OKC is one giant illusion (see growth model). I guess I also have to take issue with the 25 year time frame on this as well. There is zero chance the developer is going to own this project in 25 years and when they sell it they are going to do it for market value - they sure has heck aren't going to pass the balance of the $142 million in taxpayer funding onto the buyer. Maybe a clause should be added that if the building is sold the TIF rebate/exemption/whatever expires and the new owner start paying taxes.

Agree with Kerry,

As much as I would love to see a development like Clayco's become reality; we need to think about what's ahead. What foundation precedent are we setting? Can't help but think we're setting ourselves up to be a developers' floozy.

[Urbanized]

That's not true, Hoya. If a project came along and built without requesting TIF funding - which is unlikely and certainly would be nothing of this scale or type if so - it would still generate incremental dollars that go into the TIF fund instead of to schools. They would just be spent on other TIF projects instead.

The only way to divert TIF district incremental money to schools/county would be to dismantle the TIF entirely.

[Just the facts]

...or, these tax dollars could be used to build downtown middle and high schools or even expand the Streetcar and pay for improvements at the Santa Fe hub (thus freeing up other dollars in the City budget to be spent elsewhere). The City estimates it will take $3 million to operate the streetcar annually, well here is $140 million. Heck, this money could even be used to help fund the Convention Hotel or even pay for cost overruns at the Convention Center.

[bchris02]

...or, these tax dollars could be used to build downtown middle and high schools or even expand the Streetcar and pay for improvements at the Santa Fe hub (thus freeing up other dollars in the City budget to be spent elsewhere). The City estimates it will take $3 million to operate the streetcar annually, well here is $140 million. Heck, this money could even be used to help fund the Convention Hotel or even pay for cost overruns at the Convention Center.

Who would go to these schools or use the streetcar expansion?

People in OKC tend to think downtown has arrived with all the new housing complexes that have been built recently but reality is this city still has a long way to go. There are still significantly less people living in downtown OKC even now than most cities this size. People underestimate how far OKC fell behind in the 1970s and 1980s. I meet people all the time who end up moving to Edmond because they can't find a place in the core. For OKC to have the urbanist amenities many want to see, downtown has to be a place where people, lots of people, LIVE, not just visit. High-rise residential towers of this scale are a great way to make that happen. Tourists won't make the streetcar a success but people living in all the different districts on a large scale definitely will. OKC is rapidly improving but isn't there yet and still needs the MAPS model.

Plus, Kerry, you are still stuck on this idea that a TIF subsidy is like a loan which is isn't. That money won't exist if the complex doesn't get built. I can understand the point of view that the amount they are asking for is too high and I think the city will try to talk them down, but its absurd to suggest there shouldn't be a TIF granted at all. Face it, you dislike this project because it doesn't conform to your standard of perfect urbanism.

[Just the facts]

I have never once said no TIF funding - I just want the TIF funding to be used how it was intended - for public facilities. When Clayco shows what public facilities they plan to construct/fund with $142 million I'll shut up about it.

Now I 100% agree with people need to live downtown and not just visit from 9 to 5 - which is exactly why residential should front the park and not the office space. For the life of me I don't understand the mentality that puts companies over people. Could you imagine any other city that claims to want to encourage walkability/downtown living and then would build an iconic park and surround it with non-residential uses? Not even suburban subdivision developers do that.

[hoya]

That's not true, Hoya. If a project came along and built without requesting TIF funding - which is unlikely and certainly would be nothing of this scale or type if so - it would still generate incremental dollars that go into the TIF fund instead of to schools. They would just be spent on other TIF projects instead.

The only way to divert TIF district incremental money to schools/county would be to dismantle the TIF entirely.

Well okay, you got me there. It won't go to schools, because the TIF isn't set up to finance schools anyway. But a different development without $147 million in TIF funding will absolutely add more to the city's coffers.

Who would go to these schools or use the streetcar expansion?

People in OKC tend to think downtown has arrived with all the new housing complexes that have been built recently but reality is this city still has a long way to go. There are still significantly less people living in downtown OKC even now than most cities this size. People underestimate how far OKC fell behind in the 1970s and 1980s. I meet people all the time who end up moving to Edmond because they can't find a place in the core. For OKC to have the urbanist amenities many want to see, downtown has to be a place where people, lots of people, LIVE, not just visit. High-rise residential towers of this scale are a great way to make that happen. Tourists won't make the streetcar a success but people living in all the different districts on a large scale definitely will. OKC is rapidly improving but isn't there yet and still needs the MAPS model.

Plus, Kerry, you are still stuck on this idea that a TIF subsidy is like a loan which is isn't. That money won't exist if the complex doesn't get built. I can understand the point of view that the amount they are asking for is too high and I think the city will try to talk them down, but its absurd to suggest there shouldn't be a TIF granted at all. Face it, you dislike this project because it doesn't conform to your standard of perfect urbanism.

I want there to be more downtown housing. I think this is a great location for it. I think this is a cool design. I hope the city does talk them down. But in all negotiations, there has to be a point at which you are willing to walk away.

When I was in law school I met a very attractive girl (for a law student anyway). We hung out a few times, we flirted a bit. Then I found out what it cost to date her. She made an off-hand comment about some guy who had invited her to go snow skiing with him, and he'd pay for everything else, but he expected her to buy her own plane ticket (shock! horror!). The nerve of that guy! Her tastes were way too expensive for a poor old Del City boy. Some things aren't worth their price tag.

[Just the facts]

But in all negotiations, there has to be a point at which you are willing to walk away.

There is no doubt Clayco has a dollar amount they would walk away from. We need to find out what that amount is.

[hoya]

There is no doubt Clayco has a dollar amount they would walk away from. We need to find out what that amount is.

And bid one dollar more.

I'm not against the proposed towers at all. I just don't want the city to get taken to the cleaners. This is the first time I know of where a developer has requested such a large amount of TIF help.