Dollars and Sense - The Chickasha TIF District

Written by: Jason Clarke

TIF district could provide significant retail growth

How far do you travel to shop at stores like Lowe’s, Home Depot, Kohl’s, or Walgreens?

If developer Steve LaForge has his way, it could be just down the street.

LaForge is asking the Chickasha City Council to consider distinguishing 85 acres of property south of Grand Avenue as a Tax Increment Financing District.

Under the current proposal, the city would reimburse LaForge for approximately $4 million in public improvements to the site to make the area suitable for development.

LaForge said he has already shown the property to several companies. With the area being in the floodplain with a number of drainage issues, as well as access, and public utility placement issues, however, the companies are not willing to spend the money to fix the problems on top of their own development costs when other cities have more suitable sites.

By designating the area as a TIF district and allowing the developer to make the improvements, LaForge would only be reimbursed if there is economic growth within the area.

The current proposal is calling for a 15-year TIF district. If accepted, a baseline of the current ad valorem and sales tax for the area would be established.

All of the funds below the baseline will continue to fund the government entities and programs that they do today.

For the ad valorem taxes, all of the incremental growth above the baseline will be applied toward reimbursement of the public improvements. Since LaForge owns the majority of the property in the proposed district, he or the companies he sells the property to will be paying those taxes.

The sales tax is a bit trickier. The proposal excludes all of the funds collected for the one-cent dedicated capital improvement tax, one-quarter cent county fairgrounds tax, and the proposed economic development tax. Those funds will continue to go to their intended purposes.

What is left is the city’s three percent sales tax. Of the three percent, half will go towards the TIF district and the other half will continue to go to the City of Chickasha.

With the TIF sales tax collections being restricted to within the district, the only taxpayers who would be paying for the improvements to the area are those that support the new businesses that spring up in the district.

At the end of the 15 years, even if the developer has not recouped all of his costs for the public improvements, the tax money will go back to funding the government entities and programs.

The current hope of the city council is the funding will be greatly increased, as well as the number of retail options available to the city.

A recently revised plan provided by LaForge expands the area from containing just retail to providing space for retail, commercial office and light industrial buildings.

LaForge said that he has added a 30,000 square foot call center to his development plan. Intended to be located behind Arby’s, the call center could employ an as many as 400 people.

With his revised plan, LaForge said he expects to develop 200,000 square feet of new retail and office space, which would employ a total of 850 people, and provide $10 million of added investment into the community.

LaForge estimates that the TIF, under the revised plan, would reimburse approximately $4.08 million over its lifetime. Under the provisions of the proposal, however, the developer would only be reimbursed for the public improvements. If paid off early, the district would be dissolved early as well.

The proposal is currently under the scrutiny of a group of Chickasha citizens who form the TIF Review Committee. The committee is set to meet this coming Thursday, Sept. 1, at 9 a.m. in the city council chambers to finish compiling a public draft of the proposal which will then be disseminated from City Hall. The meeting is open to the public and citizens are encouraged to attend.

The city council will then set two hearing dates, before the committee makes its recommendation and the council votes whether or not to approve the district.

If the district is established, LaForge said the majority of the public improvements would not be able to begin until January of 2008.

With a large amount of the district in the floodplain, ecological studies and engineering plans would need to be completed prior to the start of construction.

What is a TIF District?

A Tax Increment Financing District is an area that a governing body believes will not develop without the assistance of public improvements upon the site.

Once designated as a TIF District, the governing body may choose to use the growth of sales tax and/or ad valorem taxes in the area to finance or reimburse the public improvements, such as road construction, drainage improvements, utility relocation, etc.

TIF districts were first defined by the Local Development Act in 1992. In 2004, Oklahoma voters passed a measure allowing future TIF funding to be allocated to pay off bonds.


Opinions differ on proposed TIF district

Not all of the citizens are for the proposed Tax Increment Financing District south of Grand.

Prominent citizens like Mayor Jim Parker and Bill McDuff of Current Classics, as well as others, have taken a public stand against the issue.

McDuff said it is a matter of philosophy. He is opposed to the government subsidizing a private business.

While McDuff said he would be for encouraging industrial jobs in the Chickasha, he said encouraging retail will not provide economic development.

McDuff said the city would simply be paying for out of state businesses to come into town and compete with local business.

“It is a fairness issue,” said Mayor Parker.

Parker said while the proposal looks attractive, it would be taking away from local business.

A Home Depot, Parker said, would compete against Brandt’s, Ross Seed, and Chickasha Lumber.

“Our home grown businesses shouldn’t have to pay the cost,” Parker said, “... I don’t see why the city should pay development costs.”

Parker said the TIF legislation was originally intended to promote industry.

“I just don’t think its proper use,” Parker said on using the TIF for retail.

“This is self-serving and does not have the best interest of the public at heart,” McDuff said.

Both McDuff and Parker agree that the matter would be better taken to a vote of the people instead of allowing the council to decide.

A voice for the

TIF DIstrict

“I don’t want to loose our Mom and Pop shops,” said Councilor Guy Huggins Jr., Ward 4, “but I do want a dash of corporate retail in there.”

Huggins is chairing the committee reviewing the TIF District proposal, and has been a supporter of the issue.

Huggins said that a number of citizens already travel out of town to visit stores like those LaForge has entertained.

Bringing them to Chickasha, he said, would improve the quality of life for the community and make the area more attractive to prospective industry.

“My greatest fear is that we will become a bedroom community to Oklahoma City and we won’t have our own shops,” Huggins said.

With more stores in Chickasha, Huggins said the city could also hope to draw shoppers from surrounding communities like Verden, Alex, Rush Springs, and Minco, who would typically go to Oklahoma City, Lawton, or Duncan to shop.

“This is not a trust fund thing,” Huggins said addressing concerns that the council was simply helping out a developer, “This is LaForge getting out there and working hard.”

Huggins said since the reimbursement is based on growth, if there is no development on the site, LaForge will see no money.

“I don’t think the city can loose money from this,” Huggins said.

Avoiding confusion

The proposed TIF District is a separate issue from the economic development quarter-cent sales tax issue.

With the TIF District, the city council will decide whether or not to establish an area around Grand Ave. to encourage retail, office, and light industrial growth by subsidizing that area’s development.

In the sales tax issue, Chickasha voters will decide on Nov. 8 whether or not they will support a five-year quarter-cent dedicated sales tax to provide the city with funds to help lure jobs to the area.

TIF review committee members

Guy D. Huggins, Jr. - Chair - guy.huggins@doc.state.ok.us

Jim Allen - jim_allen@sbcglobal.net

Charlie Burruss - cburruss@jernigan.net

Earl Cowan - ecowan@cvtech.org

Greg Elliott - gelliot@standleys.com

Jim Glaze - jglaze@chickasha.k12.ok.us

Robert Hunter - rghunte@aol.com

Mike Lennier - melennier@yahoo.com

Bob Martin - lindamartin20@sbcglobal.net

Sharon Page - sharonp@health.state.ok.us

The committee is scheduled to meet next on

Thursday, Sept. 1, at 9 a.m. in the

City Council Chambers at Chickasha City Hall.