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Pete
02-15-2016, 09:45 AM
^

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
02-15-2016, 11:59 AM
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
02-16-2016, 11:46 AM
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
02-16-2016, 11:53 AM
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
02-16-2016, 12:26 PM
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.

Pete
02-16-2016, 12:32 PM
^

This is a very complex issue only brought to the forefront by a lot of questioning here, Ed Shadid and the schools themselves.

When I first asked about this, I was told that the schools get all the redirected tax dollars offset by the state somehow and that it wasn't something openly talked out of fear of that little loophole being closed.

What I can say for certain is that if that state is somehow offsetting the OKC Public schools for this redirected tax money, it is being carved out of another tax base which means all the other districts that share in that money are being affected.


Keep in mind that TIF and these offsets are not increasing taxes but are taking existing taxes and redirecting them. So, by that definition, the same pie is just being carved up differently meaning a gain in one place is offset by a loss elsewhere.

TexanOkie
02-16-2016, 12:55 PM
It may be a zero-sum game for available taxes amongst the various school districts in the state, as you mention, but if the state school aid formula tries to offset the amount of ad valorem revenue a school district receives, then I think it still makes sense to not include increment revenues in the formula offsets because school districts don't get the increment revenue (or at least not as operating revenue). In fact, that's probably why the TIF law requires the substitution of base assessed values for equalized assessed values in various things (debt limits, establishing mill levies, etc.), too. Although the indirect split used to get the schools to the table probably shakes this all up a bit.

TexanOkie
02-16-2016, 01:24 PM
Apparently this article was published by the Journal Record last Friday: Addition and subtraction: TIFs cut funding for outside school districts | The Journal Record (http://journalrecord.com/2016/02/12/addition-and-subtraction-tifs-cut-funding-for-outside-school-districts-finance/)


Addition and subtraction: TIFs cut funding for outside school districts
By: Brian Brus The Journal Record
February 12, 2016

OKLAHOMA CITY – School districts across the state that fall outside tax increment finance districts are receiving less funding than they would otherwise deserve because of how increases in property tax revenue are omitted from the state aid formula, officials confirmed.

In Oklahoma County alone for 2014, Oklahoma City’s TIF districts diverted ad valorem taxes of $25 million that was generated from $218 million in net assessed property values away from other jurisdictions such as the Independent District 89 – the Oklahoma City Public Schools, city economic development project manager Brent Bryant said. Although $3.5 million was given back to those jurisdictions while the balance went to city infrastructure and economic development projects, the $25 million figure was never included in the state appropriations equation for education, which takes counties’ property values into consideration for additional funding.

Oklahoma City Councilman Ed Shadid has frequently questioned other city officials about the impact of TIF accounting. He recently asked Alliance for Economic Development President Cathy O’Connor whether moving a valuable property like the Devon Energy tower, 499 Sheridan Ave., from one TIF into another would help I-89 at the expense of other schools.

“Yes,” O’Connor said, adding that Oklahoma City school officials suggested the Devon adjustment near the end of its first TIF’s life span. “They requested that, they did. They wanted 499 in for that very reason. They’ve done the math. We’ve helped them do the math. They get more money.”

“So they get more money, but could you make an argument that rural schools or schools outside I-89 get less?” Shadid said.

“I guess you could,” O’Connor said.

Oklahoma City isn’t the only municipality active in TIF revenue diversion, however. According to the Oklahoma Tax Commission’s ad valorem division, local governments across the state had more than $445 million in active TIF districts in 2015. That concerns Larry Stein, chief deputy for Oklahoma County Assessor Leonard Sullivan, who sees a parallel situation at the next level of government as taxpayers end up paying for projects elsewhere they didn’t agree to.

“All of the counties in Oklahoma have experienced a similar thing from the state of Oklahoma. An amount of money that was supposed to be returned every year to the county has disappeared because of legislative initiatives,” he said. “The result is that the Legislature is $1.3 billion in a hole now.”

A TIF district is based on the idea that investing taxpayer money in a problem property can turn it around and consequently attract more private development for the surrounding area. In Oklahoma, state law allows municipalities to access funds for such development by defining a region and locking property values within it at a base level over several years while setting aside ad valorem tax revenue as it increases over the base.

Historically, the increased ad valorem is funneled back into a project within the TIF district, leaving other taxing jurisdictions such as school districts at a loss until the TIF dies. Proponents argue that local schools wouldn’t have benefited from property tax revenue but for the TIF anyway, so it’s not a true negative impact on school funding.

Oklahoma City now has nine active TIFs, with plans to add up to seven more. The original nine cover 4,000 acres, overlapping nearly 4 percent of the I-89 school district. The largest TIF is generally defined as downtown. Other smaller TIFs can be found within the district.

The properties within the six new TIF districts paid $750,000 in ad valorem property taxes in 2014, O’Connor said. Under the plan to be voted on Feb. 23, if any such area is judged to be struggling with development, a review committee can ask the City Council to activate one of the new TIFs to provide a financial boost. Any additional ad valorem tax or sales tax revenue collected above the current base will be kept within the district.

The city’s TIFs are being designed now to share diverted ad valorem revenue with the schools, which Bryant referred to as an unprecedented step – “We’re trying to do the right thing,” he said.

In 2000 when the 499 Sheridan block was placed into a TIF, the property had a value of $1.85 million, Bryant said. In 2014, that had risen to $9.5 million, or an increment of $7.7 million that generated $96,000 in taxes. Of that, $48,000 goes to the TIF district and the other half is given back to the other taxing jurisdictions, primarily the I-89 school district.
“That money does not count against their funding formula,” Bryant said, referring to the 72-page Oklahoma School Finance Technical Assistance Document that outlines the state aid equation.

Officials at the state Department of Education confirmed that normally, when a school district realizes ad valorem increases from year to year, the state Legislature appropriates less aid, which has the result of freeing up funding for other districts or programs. By not reporting improvements in property tax collections within a TIF, that school district is sapping more from the pool, leaving less for everyone else than they would otherwise be due.

Ryan Owens, an attorney representing the Cooperative Council for Oklahoma School Administration, proposed that argument in an amicus curiae brief submitted to the Oklahoma Supreme Court in December. At the time, CCOSA was supporting a penny sales tax to increase funding for education. The argument spoke against concerns that revenue tied to retail purchases would somehow degrade other funding streams.

Owens said the topic was discussed with representatives from the Oklahoma State School Boards Association and the Oklahoma Education Association, who also contributed to the Supreme Court case brief. They agreed with the conclusion that the ripples from a local TIF could be far-reaching, he said.

Scott Randall, chief capital projects officer for I-89, said school district board members and Superintendent Robert Nue have met with city officials many times over the last few years and tried to consider a wide spectrum of potential impacts from municipal TIFs. The district has done nothing wrong, he said, and officials appreciate the City Council’s generosity in giving the schools some TIF revenue.

“We’re looking at it as, how do we benefit Oklahoma City public school students,” Randall said. “We do understand our responsibility to the state. Having said that, however, we are also the largest school district in the state, and we have some of the greatest challenges of being an urban district that go along with that.

“There are a great number of challenges with the state funding formula,” he said.

Owen said the state aid formula for schools is highly complex, taking into consideration such factors as teacher numbers, transportation area, student sparsity, special needs programs and grade levels. Each school should have a similar amount of funding per pupil statewide. The equation has been challenged twice before the state Supreme Court and has withstood judicial scrutiny both times, he said.

“The formula would not look so goofy if it had more money in it. The problem with the formula is that it’s starved,” he said. “If you add up the number of reductions we’ve experienced since the recession as a cumulative total, it comes to a loss of $1.2 billion in state appropriation. As those go down, the local revenue piece becomes more and important to school districts.”

Pete
02-16-2016, 01:26 PM
^

Thanks for posting that.

Pretty much confirms what I said in my last post.

TexanOkie
02-16-2016, 01:28 PM
Pay attention to this section of that article, though:


Officials at the state Department of Education confirmed that normally, when a school district realizes ad valorem increases from year to year, the state Legislature appropriates less aid, which has the result of freeing up funding for other districts or programs. By not reporting improvements in property tax collections within a TIF, that school district is sapping more from the pool, leaving less for everyone else than they would otherwise be due.

Perhaps you could make a case that the indirect split amounts given to OCPS should be included in the state aid reporting, but those sorts of provisions aren't in most TIF plans. It goes back to what I posted earlier--increment revenues customarily don't go to the school district. It's one of your main points against TIF in the first place. However, as long as TIF is still a thing, not including collections of increment in the state aid formula makes sense. If you include them, the affected school district both doesn't get that money AND is essentially penalized for it in the state aid calculation.

Pete
02-16-2016, 01:33 PM
^

OKC Public Schools get money from the TIF, too.

It's what they used to fund John Rex Elementary and the improvements at Emerson, for example.

TexanOkie
02-19-2016, 09:38 AM
The second hearings for the downtown TIF amendments and the Core to Shore TIF plan is on Tuesday next week (Feb. 23)--there's no listed course of action in the posted notices after this, so this might be the last time anyone has a say before Council adopts everything. If Pete and others are against these, you might want to make sure your research or arguments are in place in time. (Same goes for those of you who are in favor of these.)

Pete
02-19-2016, 09:55 AM
^

It goes to final vote on Tuesday.

I've been collecting and analyzing the detail but they haven't given anyone much time to look all these complex matters over.

TexanOkie
02-24-2016, 12:47 PM
Didn't see anything in the news about this yesterday. Did these pass?

RodH
02-24-2016, 01:03 PM
It passed with one no vote. The emergency failed.

Pete
02-24-2016, 01:06 PM
It's $395 million in tax dollars (will certainly end up being more) and the Oklahoman barely covered this.


Spending split: OKC Council creates six downtown TIF districts
By: Brian Brus The Journal Record February 23, 2016

OKLAHOMA CITY – Six new downtown tax increment finance districts are now queued to activate over the next decade.

City Council members on Tuesday approved a plan proposed by the Alliance for Economic Development of Oklahoma City to carve up the area just north of the Oklahoma River into economic development zones. The six districts fall between Western Avenue and the east side of Bricktown, bound by Sheridan Avenue to the north, in what officials are referring to collectively as the Core to Shore reinvestment area. Much of the area was originally identified as the larger TIF-2.

Once active, the six new TIFs will have a total budget of $395 million. Council members have up to 10 years to activate them.

Councilman Ed Shadid, the lone holdout in the 8-1 vote, questioned the need to define so many TIFs before they’re needed. Some are likely to never be triggered at all, he said, if other subsidies and free market forces are as successful as expected.

Oklahoma state law allows municipalities to access funds for economic development by defining a region and locking property values at a base level over several years while setting aside ad valorem tax revenue as it increases over the base. The additional revenue is then funneled into projects within the district, making the surrounding area more attractive as well.

“We have $63 million in TIF-2 that are not allocated … $63 million that we can now spend on economic development,” Shadid said. “It seems like we should finish our dinner before we go on to dessert.”

“There has to be a reason for rushing to do six TIFs that hasn’t been articulated publicly. I think that part of this is the convention center,” he said, referring to plans to build a larger center to replace the Cox Convention Center under the MAPS 3 temporary sales tax program. “We don’t have money for the parking garage. We don’t have money for the convention center hotel. And in my gut, I think that’s what this is all about.”

Shadid also noted the effect of TIFs on school district funding, as reported earlier by The Journal Record. The diversion of ad valorem taxes from the state school aid equation could mean less money for school districts elsewhere, officials confirmed.

Councilman Pete White said his vote had been swayed by more information about the TIF structure over several months and discussions between city, county and school district officials about funding implications. His concerns over the length of subsidies were mollified somewhat by an amendment requiring comprehensive reviews of active TIF districts every five years.

The properties within the six TIF districts paid $750,000 in ad valorem property taxes in 2014, officials said. Under the approved plan, if any of the areas is judged to be struggling with development momentum, a review committee can ask the City Council to activate the TIF. Any additional ad valorem tax or sales tax revenue collected above the current base in the TIF will be kept within the district instead of feeding into the city’s overall budget.

Council members also agreed to expand the original boundaries of TIF-2 to south of SW 30th Street, increase the budget for projects by more than $44 million and remove the First National Center at Park and Robinson avenues from the larger district. The historic bank building now sits in its own district with a $45 million project budget.

warreng88
02-26-2016, 07:47 AM
Putting this here and on the OCU Law School thread:

‘Necessarily complicated’: Ownership structure helped OCU get tax credits for downtown law school

By: Brian Brus The Journal Record February 25, 2016

OKLAHOMA CITY – The same federal tax credit program that served the historic Skirvin Hilton and Colcord hotels so well is proving a good investment for the Oklahoma City University School of Law.

After just a few more years of leasing, the private Methodist school will wholly own the former Central High School property, OCU law school Dean Valerie Couch said.

As the building’s ownership structure took shape over the last few years, its opaque complexity drew attention. However, Tom Loy, chairman of MetaFund in Oklahoma City, said it’s not uncommon for several parties to enter a major real estate deal to ensure the most efficient financing, particularly when it involves tax credits.

The university actually kept the arrangement as simple as possible by bringing in the Methodist Foundation as an affiliate investor. Couch said no other investors are involved, and in about seven more years the foundation will step away.

The building at 800 N. Harvey Ave. was built in 1910 and used as a public high school until the late 1960s. It was purchased by Southwestern Bell Corp., and then by Oklahoma Farmers Union Mutual Insurance Co., now known as American Farmers and Ranchers Mutual Insurance Co. The latter put the building up for sale in 2010, and the private university bought it for $10 million through OCU Law Building Associates LLC, according to county property records.

Over the next few years, other parties came to be involved in the ownership and leasing of the property, including NMTC Investment Fund LLC, MF OCU Law Building LLC and Master Tenant LLC, according to public record audit statements.

The MF in the fund name refers to MetaFund. NMTC refers to the New Markets Tax Credit Program, which was created by Congress in 2000 as part of the Community Renewal Tax Relief Act. The program helps revitalize economically troubled areas by providing tax credit incentives to investors in federally certified Community Development Entities. The credit is equal to 39 percent of the investment over slightly more than six years. Couch was unable to say how much the tax credit was worth to OCU, other than several million dollars.

The program is popular around the country. According to the U.S. Treasury Department, NMTC generated $8 of private investment for every $1 of federal funding as of the end of the 2014-2015 fiscal year, financing more than 4,800 businesses.

In addition to the Skirvin and Colcord hotels near downtown, the NMTC tax credit was figured into the development of the soon-to-open 21c Museum Hotel, formerly the Fred Jones Building in what is now the Film Row district west of downtown. MetaFund was involved in the Colcord deal; however, all three examples were structured similarly to the OCU law school deal.

“Unfortunately, for everyone who participates in them, the structures are necessarily complicated because of the requirements of the tax credit,” he said. “The OCU transaction was complicated, not because anybody wanted it that way, but because of the requirements of the tax credit.”

Typically, NMTC deals involve a bank loan and an investor who isn’t interested in the property as much as the tax credit. But even that gets messy under other federal laws and requires more parties, Loy said.

Regardless, OCU did nothing unusual, he said, nor is the ownership structure providing profit from students’ tuitions through the law school.

“The convoluted structure is not intended to hide any of the players,” he said. “In this case, it made an economic revitalization project very feasible. This deal without the New Market Tax Credits, I can say with a fair degree of certainty, would never have been able to convert that lovely old high school building, and it would be in an even further state of disrepair.”

TexanOkie
03-21-2016, 09:35 AM
The Chamber is hosting a forum on TIF this Thursday from 11:30 AM to 1:00 PM at the downtown Sheraton. The forum's panelists look to be a mix of inside and outside folks:

* Cathy O'Connor, Alliance for Economic Development of Oklahoma City
* Russell Evans, Economist, Oklahoma City University
* Carl E. Edwards, Price Edwards & Company
* Forrest "Butch" Freeman, Oklahoma County Treasurer

Link: Greater Oklahoma City Chamber - Learn about OKC developments related to Tax Increment Financing (TIF) districts at Chamber Forum (http://www.okcchamber.com/index.php?src=news&submenu=ChamberNewsUpdates&srctype=detail&category=Chamber%20News&refno=1062)

Teo9969
03-21-2016, 10:19 AM
…sigh...

Pete
03-21-2016, 12:00 PM
^

Very telling this is being sponsored by the Chamber.

TexanOkie
03-21-2016, 02:21 PM
^

Very telling this is being sponsored by the Chamber.

Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.

Also, discounting information presented just because you anticipate bias from the source is no worse than what TIF proponents do with the information from Good Jobs First, etc. I can imagine the truth about whether TIF is beneficial or not is somewhere in the middle of the two sides, but ignoring the other side's points or facts, even if presented in biased fashion, likely doesn't help settle the debate. It just further entrenches people.

Pete
03-21-2016, 02:26 PM
Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.

He's the consulting economist for the City, meaning he is on their payroll.

Teo9969
03-21-2016, 03:38 PM
Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.

Also, discounting information presented just because you anticipate bias from the source is no worse than what TIF proponents do with the information from Good Jobs First, etc. I can imagine the truth about whether TIF is beneficial or not is somewhere in the middle of the two sides, but ignoring the other side's points or facts, even if presented in biased fashion, likely doesn't help settle the debate. It just further entrenches people.

The problem with this line of thinking is that the "opposition" doesn't really have anything to gain or lose. The "opposition" is simply attempting to clarify what is going on so that the public can be aware and scrutinize the viability of the program.

Instead, the Chamber is hosting a $60 event so that movers and shakers can come and be persuaded about the positive qualities of TIF.

Look, if they present objective information that shows the positives of the program, but also highlight what the potential pitfalls are and to what failsafes they are implementing to prevent those pitfalls, then great. If this is a "everything's rosy, go on about your lives again" type of presentation, that's far more dangerous than anything the "opposition" can do.

Those in charge of TIF are going to be overseeing hundreds of millions of public dollars. Those who have put TIF under scrutiny aren't in charge of a dime.

To whom much is given, much is asked…the concerning thing is that the first public forum for those who are deeply involved in the process (i.e. Cathy O'Connor) is being held in a nice little bubble where those unaffected can come pretend like they care and those who are most affected can't afford to come.

Pete
03-21-2016, 03:57 PM
Perhaps. But there's going to be a Q&A session, and I've never really seen the OCU economist listed as a TIF resource by the City or Chamber before.

Also, discounting information presented just because you anticipate bias from the source is no worse than what TIF proponents do with the information from Good Jobs First, etc. I can imagine the truth about whether TIF is beneficial or not is somewhere in the middle of the two sides, but ignoring the other side's points or facts, even if presented in biased fashion, likely doesn't help settle the debate. It just further entrenches people.

I've never seen anyone at the city even mention Good Jobs First or any of the points they raise.

In fact, when Greg LeRoy from that organization spoke at the town hall on TIF sponsored by Ed Shadid, Cathy O'Connor and other city representatives were invited and all declined.

Since I am literally the only other person who understands how OKC implements TIF's, where that money comes from and where it goes, I spoke on those subjects at the same town hall meeting.

I assume you did not attend this?

Many local developers attended that meeting -- most of whom have received TIF money or were planning to apply -- and all complemented me on my objectivity and fairness.


There are not "two sides" here. There is the city (and specifically the Chamber working in tandem with the Alliance for Economic Development) and people only hear what they have to say, which I've demonstrated to be biased and often out-right misleading. And if I appear to be on a different side, it's only because the whole truth is not being communicated.

I've made this point many times: If there were only negative comments and misleading information to the negative side of TIF's, I would have presented the fuller picture on that as well.

I personally do not have anything to lose or gain from TIF one way or another. I merely started studying the subject years ago because it's hundreds of millions of tax dollars being administered by a handful of people and literally no one -- including city council -- understands how it works. And in fact, have been frequently misled.

I have spent hundreds of hours researching this, collecting records and interviewing city personnel, all on a purely volunteer basis. I did not start with "a side" I merely wanted to understand and as I investigated I found many inconsistencies which I have attempted to document and share, for absolutely no personal gain.

TexanOkie
03-22-2016, 09:00 AM
I've never seen anyone at the city even mention Good Jobs First or any of the points they raise.

In fact, when Greg LeRoy from that organization spoke at the town hall on TIF sponsored by Ed Shadid, Cathy O'Connor and other city representatives were invited and all declined.

Since I am literally the only other person who understands how OKC implements TIF's, where that money comes from and where it goes, I spoke on those subjects at the same town hall meeting.

I assume you did not attend this?

Many local developers attended that meeting -- most of whom have received TIF money or were planning to apply -- and all complemented me on my objectivity and fairness.


There are not "two sides" here. There is the city (and specifically the Chamber working in tandem with the Alliance for Economic Development) and people only hear what they have to say, which I've demonstrated to be biased and often out-right misleading. And if I appear to be on a different side, it's only because the whole truth is not being communicated.

I've made this point many times: If there were only negative comments and misleading information to the negative side of TIF's, I would have presented the fuller picture on that as well.

I personally do not have anything to lose or gain from TIF one way or another. I merely started studying the subject years ago because it's hundreds of millions of tax dollars being administered by a handful of people and literally no one -- including city council -- understands how it works. And in fact, have been frequently misled.

I have spent hundreds of hours researching this, collecting records and interviewing city personnel, all on a purely volunteer basis. I did not start with "a side" I merely wanted to understand and as I investigated I found many inconsistencies which I have attempted to document and share, for absolutely no personal gain.

I was at the Greg LeRoy town hall, and my point wasn't to question your objectivity. However, it's also fairly obvious from your posts on this thread that your initially objective analysis has led you to be very skeptical if not opposed to TIF as practiced by OKC. Granted, your skepticism/opposition is more nuanced than the rah-rahs coming from certain people at the City or Chamber. I guess I just have difficulty seeing how the program could be that poorly run or have such negative results when so many community leaders seem to be on board with it. That's all. Even the school district's on board now--and really, why wouldn't they be? With the state school aid formula being what it is, they effectively get $0.15 for every $1.00 in ad valorem revenue for operational use.

Pete
03-22-2016, 09:36 AM
^

Not at all opposed to TIF, as there are very good applications for it, like First National. You clearly are not paying close attention to what I've said on this matter.

I came to my skepticism honestly and as result of hundreds of hours and research, with absolutely no agenda or possible benefit. In fact, quite the opposite as my name has been smeared by people at City Hall.

You and everyone else are only going off the information being fed by the City, which is incomplete, biased and intentionally misleading.


Here are some simple, irrefutable facts that get completely lost in all the rhetoric:

1. Tax dollars are being redirected largely from public schools to mostly private developers.
2. There is no proof that these developments would not happen without TIF.
3. There is absolutely zero proof that TIF has increased property values and raised property taxes.

Teo9969
03-22-2016, 10:06 AM
TexanOkie,

Honestly, if the program were about to be over, I don't think anybody here would be saying anything.

Instead, we're talking about a program about which nearly the entire city is ignorant (and even if they wanted to know more is well above the average person's understanding of economics/tax-policy) that is about to double overnight. We're talking about MAPS amounts of money in a program that well under 500 people in the entire city have any real grasp of. This is why there's such a major push by Pete for complete and transparent information.

I'll reserve further judgement until after watching the video of their Panel discussion.

TexanOkie
03-22-2016, 11:49 AM
^

Not at all opposed to TIF, as there are very good applications for it, like First National. You clearly are not paying close attention to what I've said on this matter.

I came to my skepticism honestly and as result of hundreds of hours and research, with absolutely no agenda or possible benefit. In fact, quite the opposite as my name has been smeared by people at City Hall.

You and everyone else are only going off the information being fed by the City, which is incomplete, biased and intentionally misleading.


Here are some simple, irrefutable facts that get completely lost in all the rhetoric:

1. Tax dollars are being redirected largely from public schools to mostly private developers.
2. There is no proof that these developments would not happen without TIF.
3. There is absolutely zero proof that TIF has increased property values and raised property taxes.
I'm not trying to go off information fed by the City any more than you're trying to be skeptical. I've read your information, information on TIF from other sources (including Mr. LeRoy's organization), and the information provided by the City. I've also worked as a city planner (not in OK, and not dealing with TIF [or "TIRZ" in TX]). I want to learn where the City's information is "incomplete, biased, and intentionally misleading," since there is clearly not a meeting of the minds about what is going on. If there were, and it were as you claim, then there is a pretty large contingent of City staff and others who are deliberately lying to and acting in bad faith toward City Council or the general population, and the rhetoric that IS coming from those sources doesn't appear to reflect any ill will or deception. These people seem to honestly believe they are doing a good public service. The only thing I have gathered is that you (and others such as Councilman Shadid) oppose--from an purely policy angle--the extensive use of TIF as part of a large redevelopment program. From what I've been able to gather, the City is working well within the constructs of how TIF is designed to work in OK.

I also think your "simple, irrefutable facts" are falling prey to the same problems of being incomplete, biased, and misleading (even if not intentionally so) as the City's information. And the 3 points themselves are circular. #1 presumes #2 & #3. There is no way to tell what the scale of these developments would be--if they would even happen--without TIF. I guess it all comes back to whether you believe these projects getting TIF support have an actual financing gap or not, and if so, what type of development the private financing market could support independently and what other sources might be available to fill the gap. I understand correlation doesn't equal causation and that there are a myriad of other variables that muddy the waters on being able to tell whether OKC's use of TIF has increased property values or not. Given the circumstances and the academic field the City's use of TIF would fall under (economics), I sincerely doubt there is a way to prove the developments would happen anyway or that TIF hasn't increased property values, either. Even if all 3 are correct, the tax dollars being "redirected" is not near the scale as has been claimed due to the current state school aid offsets for ad valorem collections in the foundation aid and salary incentive aid calculations. Now THAT is an irrefutable fact, though not simple.

Teo9969
03-22-2016, 12:01 PM
...the tax dollars being "redirected" is not near the scale as has been claimed due to the current state school aid offsets for ad valorem collections in the foundation aid and salary incentive aid calculations. Now THAT is an irrefutable fact, though not simple.

Without getting into the rest of the post, this right here is just simply wrong. Redirected money is redirected money EVEN IF that redirected money is replaced with another stream. Because those streams that are now being redirected to the once vacant gap were at one point flowing to other areas.

Pete
03-22-2016, 12:02 PM
there is a pretty large contingent of City staff and others who are deliberately lying to and acting in bad faith toward City Council or the general population, and the rhetoric that IS coming from those sources doesn't appear to reflect any ill will or deception. These people seem to honestly believe they are doing a good public service

Doesn't make it any less manipulative or wrong.


There is no way to tell what the scale of these developments would be--if they would even happen--without TIF.

The burden of proof is on the group seeking to divert hundreds of millions (approaching a billion) from schools to private developers, not the other way around.



the tax dollars being "redirected" is not near the scale as has been claimed due to the current state school aid offsets for ad valorem collections in the foundation aid and salary incentive aid calculations. Now THAT is an irrefutable fact, though not simple.

That money simply comes from other public school districts, hence it IS being diverted from public schools.

Teo9969
03-22-2016, 12:19 PM
The burden of proof is on the group seeking to divert hundreds of millions (approaching a billion) from schools to private developers, not the other way around.



THIS right here is all that's being asked by Pete and others. If the city wants to divert tax dollars, fine. If the city wants to divert hundreds of millions of tax dollars, fine. Simply prove that it is the best use of public funds, do it in an open, transparent manner that the average citizen can understand and make sure that the ability to benefit from the program is easily understood and approachable for the average citizen.

We are now in the 17th year of the program and we are only now talking about TIF. Admittedly, the program started out with a budget of <$50M, which is hardly a number that merits major oversight and scrutiny. But in all the expansion that has taken place or is being planned, at some point, the numbers get large enough that it does merit major oversight and scrutiny, and to be perfectly fair, it merits those charged with administering the program to proactively approach the public which they are finally doing with this Chamber event. To be honest, they probably should have held this panel in 2008 BEFORE signing off on the Devon TIF for $177M.

And correct me if I'm wrong, Pete, but the whole reason you started digging into OKC TIF in the first place was because of the disaster that Project 180 ended up being in terms of delivering what was promised and realizing that the whole funding mechanism for the project was a TIF project.

Seriously, asking for transparency and scrutiny should not be anything other than WELCOMED by anyone, especially anybody working for a municipality and their constituents. Had they been forthright from the beginning, it would have never looked so bad in the first place.

Pete
03-22-2016, 12:23 PM
I'm not trying to go off information fed by the City any more than you're trying to be skeptical. I've read your information, information on TIF from other sources (including Mr. LeRoy's organization), and the information provided by the City. I've also worked as a city planner (not in OK, and not dealing with TIF [or "TIRZ" in TX]). I want to learn where the City's information is "incomplete, biased, and intentionally misleading,

If you are going to raise your own credentials while attempting to present yourself as objective, you should at least disclose who you work for and how your employer makes a lot of money from TIF.

TexanOkie
03-22-2016, 12:24 PM
Doesn't make it any less manipulative or wrong.

Actually, it does, legally speaking.


The burden of proof is on the group seeking to divert hundreds of millions (approaching a billion) from schools to private developers, not the other way around.

And the City staff seems to have met that burden by securing approvals for their actions from the City Council and by obtaining the other approvals the legislature requires through the Local Development Act. The standard here isn't "but/for," it's "difficult but possible with." That's a huge distinction.



That money simply comes from other public school districts, hence it IS being diverted from public schools.

The money is not being diverted from public schools if the entire scheme was designed to work this way. Both the Local Development Act and the state school aid statutes explicitly lay out that increment values are not counted against school districts in calculating the amount of aid a district receives. I've addressed previously why this makes sense, logically. The scheme addresses limits on increment values allowed, too, to prevent overuse of TIFs in an attempt to get more state aid than a district may be otherwise entitled to.

Teo9969
03-22-2016, 12:43 PM
Actually, it does, legally speaking.

And the City staff seems to have met that burden by securing approvals for their actions from the City Council and by obtaining the other approvals the legislature requires through the Local Development Act. The standard here isn't "but/for," it's "difficult but possible with." That's a huge distinction.

This is never the start of a good defense against scrutiny. It simply doesn't matter that what they're doing is legal. Right and Wrong are not beholden to legality and law is not ethics. Impropriety can and often is legal. Of course nobody has even arrived to the point of accusing city officials of impropriety in regards to TIF, so that's a moot point…but your argument is a TERRIBLE defense for the lack of transparency throughout the history of TIF.



The money is not being diverted from public schools if the entire scheme was designed to work this way. Both the Local Development Act and the state school aid statutes explicitly lay out that increment values are not counted against school districts in calculating the amount of aid a district receives. I've addressed previously why this makes sense, logically. The scheme addresses limits on increment values allowed, too, to prevent overuse of TIFs in an attempt to get more state aid than a district may be otherwise entitled to.

That's all well and good, but it doesn't address the heart of what some of us are concerned about:

Tax money that is earmarked for schools is not going to schools, regardless of whether or not the schools are getting money that they need to operate. This isn't in and of itself problematic. Public money is being turned into an incentive and distributed to the private sector. This isn't in and of itself problematic.

The problem is that it's not a very transparent process, and there has been very little attempt on the part of city officials to explain and defend their actions. Hopefully this Panel will be a good first step in the process.

TexanOkie
03-22-2016, 01:00 PM
This is never the start of a good defense against scrutiny. It simply doesn't matter that what they're doing is legal. Right and Wrong are not beholden to legality and law is not ethics. Impropriety can and often is legal. Of course nobody has even arrived to the point of accusing city officials of impropriety in regards to TIF, so that's a moot point…but your argument is a TERRIBLE defense for the lack of transparency throughout the history of TIF.

Right and wrong are not synonymous with legal wrongdoing, no. However, in defense of the legal system, liability (in tort) or culpability (in criminal law) for the most part does try to take into account the mental state a person is in when they commit some act. By "mental state" here, I am not talking about what's colloquially known as the "insanity" defense, but the state of mind someone is in and the awareness of what they are doing (whether it's the knowledge that a fact is wrong, the failure to realize what they are doing is wrong when they should be able to do so, or the just the knowledge that they are doing what they are doing). Anywho, that's kind of off topic. Apologies.



That's all well and good, but it doesn't address the heart of what some of us are concerned about:

Tax money that is earmarked for schools is not going to schools, regardless of whether or not the schools are getting money that they need to operate. This isn't in and of itself problematic. Public money is being turned into an incentive and distributed to the private sector. This isn't in and of itself problematic.

The problem is that it's not a very transparent process, and there has been very little attempt on the part of city officials to explain and defend their actions. Hopefully this Panel will be a good first step in the process.

Transparency can certainly always be better. No doubt about it, in just about anything dealing with public funds. However, my main point from the section you quoted was that the public money you claim is being "diverted" was never earmarked for schools. The state funding, ad valorem taxation, and TIF statutory schemes specifically provide as such. A small distinction, if you only consider where the levies come from that produce the increment, but that small distinction plays a huge role in the entire scheme for TIF and school funding and should frame the policy arguments surrounding TIF's use.

Pete
03-22-2016, 01:07 PM
^

Speaking of transparency, perhaps you didn't see my post calling for you to disclose that you work for a company which makes a ton of money from OKC's TIF programs.

TexanOkie
03-22-2016, 04:44 PM
^

Speaking of transparency, perhaps you didn't see my post calling for you to disclose that you work for a company which makes a ton of money from OKC's TIF programs.

The amount of money my employer makes from consulting with the City of Oklahoma City is public record. It's not a "ton."

David
03-22-2016, 04:47 PM
Might as well disclose the company too so everyone watching can judge for themselves.

Pete
03-22-2016, 04:54 PM
The amount of money my employer makes from consulting with the City of Oklahoma City is public record. It's not a "ton."

Isn't the City of OKC your biggest client?

Wouldn't the billings over the years -- including the Alliance -- be in the millions?

TexanOkie
03-22-2016, 05:42 PM
Isn't the City of OKC your biggest client?

Wouldn't the billings over the years -- including the Alliance -- be in the millions?
Frankly, I don't know. I'm just an associate. For those of you wondering, I work for the Center for Economic Development Law, a small, boutique public interest law firm specializing in representing public entities in economic development and public-private partnership projects. For the record, the Alliance is not one our clients. The City is only a minor client. We do serve as general counsel for OCURA and OCRA (again, matters of public record). But we also serve communities across the state on any manner of issues ranging from simple land use issues to federal grant and state redevelopment programs to, yes, local use of TIF and other state incentives.

While in most cases my professional experience would give me some extra credibility on issues like TIF, I anticipate here it is going to do the opposite. Hence the whole call for "disclosure," to begin with. Don't hold it against me. I joined OKC Talk before I entered this professional field, and enjoy participating these forums (as much as my professional responsibility will allow, anyway), and I genuinely want to see Oklahoma communities realize their development goals (and not just my clients, either).

Anyway, there it is. For whatever it's worth to this online community, I can guaranty 80% of the attorneys I work with would easily be considered "experts" in TIF, and certain of my employers probably are more knowledgeable on its ins and outs than anyone else in this state.

Pete
03-22-2016, 08:03 PM
^

It's not that small. 6 attorneys on staff, all specializing in helping municipalities develop economic programs, and a lot of that is TIF. Your annual payroll alone has to be over a million a year.

Also, just this year OCURA has $450,000 budgeted for legal work. Are they using anyone other than your firm?


There is a lot more business for you if TIF's are first considered, then passed, then administered especially since here in OKC, as all of them last the maximum of 25 years. OCURA, for those who don't know, administers TIF's and this law firm performs all the legal work around that.


If OKC is not your biggest client, who is? Are you saying a practice located in downtown OKC, founded by a former member of OCURA, in a city with far more TIF and other economic development incentive programs than anywhere else in the state, somehow does less business with your firm than Norman or Guymon or Guthrie?


If you'd like, I can find out exactly how much you are paid by the City and happen to know it's no small sum. Your firm has had a relationship with the City for decades.


And the only reason I bring any of this up is because 1) you characterized my position as 'skeptical' which is a nice way of saying biased; 2) I did my best to explain I have absolutely no financial interest in this issue; 3) you claim you have equally considered all sides thereby lay claim to the objectivity high ground; and 4) all the while failed to mention at all that your employer receives great financial benefit from TIF programs.


I appreciate your insight and participation but you can see why I have become 'skeptical' of this program and the information that continues to come from the people involved in it.

TexanOkie
03-22-2016, 09:24 PM
If you look at any of our fee schedules, I think you'll be hopefully pleasantly surprised at how low our rates are. We're not in this business for the sake of profit, believe it or not. While I can't speak directly for my colleagues, I do think it is a safe statement to say that we consider our work more in the manner of public interest law, but very specialized.

A couple of things for clarification--OCURA thus far does not administer TIFs. That falls on the OCEDT except for TIF 1/7, which is OCRA. OCEDT is not a client of ours. OCURA is a "public body corporate" independent of the City created by state law to implement and manage the City's urban renewal program. Most OCURA involvement with TIF has been when projects in a TIF are built on OCURA-owned land. We have worked with the City for the Dell TIF and recently in a consulting relationship only on the Downtown amendments and the Core to Shore TIF. These things should all be reflected in the public record.

Finally, while our firm might benefit from TIF's existence, that's really only because that seems to be the primary game in the state at the moment. The firm has been around far longer than TIF has been around in OK, and we are involved in many other areas of practice. Our goal isn't to make money off TIF, but to assist communities reach their development potential.

Pete
03-22-2016, 09:31 PM
^

I really do appreciate your participation in this discussion and the perspective you provide.

Thanks for keeping things civil.


I truly am not anti-TIF, just have felt compelled to research and make some points which are obviously not going to be made by the group making the pitch and our local press has been completely out to lunch on this.

Teo9969
03-23-2016, 07:58 AM
The disappointing thing, to me, about not talking about this more openly, debating some of the drawbacks, is that there are many things we could do to improve the process.

If we would actually address the drawbacks, we could more easily arrive at 10/15-year TIF instead of immediately going with a 25-year TIF. What if instead of going right for the 25 year because that's what we can do, we look at shorter terms. Maybe we tell Wheeler, we'll do a TIF for your entire development area (inclusive of some space around the development as well), but we're capping it at 15 years. The motivation then is for Wheeler to move quickly to capture as many future gains as is possible…instead of building out in 8-12 years, they build out in 6-9 years…and why? Because it's better for them economically. (I'm aware there're caps and all that and it's more complicated than I'm laying out but you get the point). And I would happily support giving the Humphreys tens of millions of tax dollars simply for finishing such an ambitious project in a rapid manner. It's a game changer for our city. But for goodness sake, use OUR leverage to get what WE want. The point isn't to incentivize developers to create projects that make them money, the goal is to incentives developers to create projects that make US money.

TexanOkie
03-23-2016, 09:22 AM
The disappointing thing, to me, about not talking about this more openly, debating some of the drawbacks, is that there are many things we could do to improve the process.

If we would actually address the drawbacks, we could more easily arrive at 10/15-year TIF instead of immediately going with a 25-year TIF. What if instead of going right for the 25 year because that's what we can do, we look at shorter terms. Maybe we tell Wheeler, we'll do a TIF for your entire development area (inclusive of some space around the development as well), but we're capping it at 15 years. The motivation then is for Wheeler to move quickly to capture as many future gains as is possible…instead of building out in 8-12 years, they build out in 6-9 years…and why? Because it's better for them economically. (I'm aware there're caps and all that and it's more complicated than I'm laying out but you get the point). And I would happily support giving the Humphreys tens of millions of tax dollars simply for finishing such an ambitious project in a rapid manner. It's a game changer for our city. But for goodness sake, use OUR leverage to get what WE want. The point isn't to incentivize developers to create projects that make them money, the goal is to incentives developers to create projects that make US money.
I think that would work in certain contexts--especially where TIF is used as development financing assistance that is expressed as a percentage of new revenues a developer creates. However, in other circumstances it would not work as well. Particularly if the TIF is used for specific public projects like TIF 8, which has gone primarily into Project 180. At that point, you want to make sure you capture the amount of money needed to complete the projects, and would rely on project cost caps in the TIF plan instead of the shorter time period to act as the eventual cutoff.

As to your last statement, I can't speak for OKC, since they do their TIF agreements in house, but in my work in other communities, the point of using TIF as incentives usually isn't either of the things mentioned. Sure, you want to incentivize projects good for the community, but most of the time the incentives--and a specific amount at that, even if percentage-based using realistic projections--is necessary to get the private financier to agree to fund the project at all.

warreng88
08-29-2016, 07:10 AM
Think tank miffed about TIFs

By: Dale Denwalt The Journal Record August 26, 2016

OKLAHOMA CITY – Tax increment finance districts do little for the state’s economy yet benefit well-established corporations, according to a think tank’s analysis of the law.

Byron Schlomach from the right-leaning 1889 Institute said state policies that created TIF districts also let business shuffle from one area to another inside the state.

“Obviously the district itself benefits, but as far as the state’s economic development goes, it doesn’t do much for us,” said Schlomach, director of the institute. “It’s mostly an insider’s game. TIFs are a good way for people who know and understand the political system well to benefit from the system. But it’s not a way to grow the overall economy and benefit everyone in general.”

TIF districts are geographic areas within a city or county where newly generated sales or property taxes can be spent by the district. In some cases, retailers get to keep part of any new sales tax revenue they generate. Other TIF districts keep property taxes low so the company can instead reinvest the savings back into the business.

By letting businesses keep tax revenue, Schlomach said the districts actually hurt economic growth.

“Many TIFs, especially those that tap property taxes, cost everyone in the state of Oklahoma, though TIFs are locally constituted,” he wrote in the policy analysis. “(TIFs) redistribute resources to the wealthy and well-connected. They allow the bypass of taxpayer protection measures. And, TIFs often allow TIF-creating entities to steal away the revenues of other taxing entities.”

Those taxing entities include schools, cities and county governments.

Ponca City’s economic development officer, David Myers, agreed that TIF districts can be used poorly, but said that local governments can also be deliberate when establishing one.

“There is nothing inherently good or bad about a TIF district,” Myers said.

He suggested that officials should use an internal but-for test, asking “but for this TIF district, would the business still come?”

“In most of the times that we (asked), the but-for came back and said we didn’t need the TIF district,” Myers said.

The 1889 Institute recommended several changes to the law, including a restriction to how TIF district money can be used. Schlomach said he thinks infrastructure spending is a legitimate use.

“It is one thing for school tax money to be diverted to fund publicly owned infrastructure like water, sewer, streets and public parks,” he wrote in the analysis. “It is quite another to hand $500,000 over to a restaurant owner.”

He also recommended a limit on which taxes a TIF district can avoid paying, and a limit on the life of a district. Elected state officials should also have oversight to approve or deny a district, Schlomach wrote.

The state could also repeal TIF laws, thereby prohibiting their use.

“It’s really throwing the baby out with the bathwater,” Myers said about a repeal. “It’s a tool for communities to use to address blight when there’s a willing private partner.”

He also criticized Schlomach’s suggestion that top government officials could approve or deny TIFs. Myers said entrepreneurs would get skittish about coming to Oklahoma if the governor or attorney general had to give final approval.

“Any time that the public wants to take a look at a tool like TIF, those are legitimate public conversations,” he said. “But what has to be considered are the consequences.”

Teo9969
08-29-2016, 07:40 AM
I don't know about other cities but in OKC the business doesn't get to keep the taxes. They pay the taxes regardless and then instead of the county receiving the increase, the city does and then doles out that money under a more complicated guise.

So nobody downtown is paying less property taxes than they otherwise would be. How you get ahold of TIF money in the first place is a different issue altogether. There are good reasons to be critical of TIF, but at least in OKC's case, a failure to understand the system is not one of those reasons.

Pete
08-29-2016, 07:43 AM
^

There are instances where property tax and sales tax are merely refunded directly to the business.

Such as the Skirvin and soon to be FNC and Wheeler District.

Teo9969
08-29-2016, 08:11 AM
^

There are instances where property tax and sales tax are merely refunded directly to the business.

Such as the Skirvin and soon to be FNC and Wheeler District.

I understand that is accurate, but especially for the Skirvin and FNC, it should really be viewed differently. Having a TIF "district" for one building goes to show the importance of the building in OKC as a whole, and TIF just happens to be the best mechanism for the city to contribute to the cause. They're also the 2 most "Duh!" instances of when to use TIF.

Wheeler is obviously in a different category because we're not preserving a building and we don't really know what we're going to have with the district. In these instances (which will probably also happen in the CO-OP), I feel like the legitimate complaint is not how it happens (money going back into developers pockets), but the length of time it is in effect. If we limit the Wheeler TIF to 15-20 years, that incentivizes the district coming together a bit quicker in order to capture those gains, and doesn't leave the future area without a large tax-source. And if you want to keep it at 25 years, tie the amounts to building certain public amenities etc.

On a completely different note, do receivers of TIF have to pay Federal/State income taxes on those amounts?

warreng88
09-02-2016, 01:29 PM
Cathy O'Connor was on Steve chat today, which pulled in a lot of TIF questions. Full chat here:

http://newsok.com/article/5516329

Pete
09-02-2016, 05:15 PM
The basic premise of tax increment financing is the investment would not occur without the assistance from TIF. Therefore, there are no revenues to take away from the school district.

I challenge this basic premise and many of the assumptions the Alliance uses when marketing and presenting on TIF.

Midtowner
09-12-2016, 06:31 AM
^ I agree. The Alliance is great at spending the public's money with no accountability whatsoever to the public. TIF has been a great tool for things like the Skirvin, but for every Skirvin, there are several of these:

http://www.koco.com/news/Blanchard-business-owners-furious-over-big-box-proposal/30989666
(TIF being used to help build a Wal Mart store)

TIF has become just one piece of this incentives game used to spawn development. It and other options have been very good to large corporations which every few years can extort the public for free money with the not-so-veiled threat of picking up their toys and going elsewhere.

Project 180 and the OG&E tower really stand out to me as abuses. OG&E is getting what.. $69 million just 'cuz? They weren't going to move out of state and they weren't going to move to Edmond, that tower would have been built without that money. The Devon tower was getting built anyhow. It would have been a far more efficient use of city resources to simply keep up with our infrastructure investments downtown rather than to borrow all of that money, robbing public education and county services for however many years... and the finance charges on those bonds can just be written off as inefficient spending. If it could ever be argued that the city doesn't have enough revenue to address ongoing infrastructure concerns, a discussion needs to be had about revenue and things like the extension of our city's infrastructure in, for example, the Deer Creek area?

The argument that these take no money away from schools is just disingenuous. If these projects went through without TIF, the schools and county services would see significant bumps in revenue. This stuff matters and is part of why Oklahoma's schools are near dead-last in the United States in terms of funding.

Teo9969
09-12-2016, 08:26 AM
^ I agree. The Alliance is great at spending the public's money with no accountability whatsoever to the public. TIF has been a great tool for things like the Skirvin, but for every Skirvin, there are several of these:

http://www.koco.com/news/Blanchard-business-owners-furious-over-big-box-proposal/30989666
(TIF being used to help build a Wal Mart store)

TIF has become just one piece of this incentives game used to spawn development. It and other options have been very good to large corporations which every few years can extort the public for free money with the not-so-veiled threat of picking up their toys and going elsewhere.

Project 180 and the OG&E tower really stand out to me as abuses. OG&E is getting what.. $69 million just 'cuz? They weren't going to move out of state and they weren't going to move to Edmond, that tower would have been built without that money. The Devon tower was getting built anyhow. It would have been a far more efficient use of city resources to simply keep up with our infrastructure investments downtown rather than to borrow all of that money, robbing public education and county services for however many years... and the finance charges on those bonds can just be written off as inefficient spending. If it could ever be argued that the city doesn't have enough revenue to address ongoing infrastructure concerns, a discussion needs to be had about revenue and things like the extension of our city's infrastructure in, for example, the Deer Creek area?

The argument that these take no money away from schools is just disingenuous. If these projects went through without TIF, the schools and county services would see significant bumps in revenue. This stuff matters and is part of why Oklahoma's schools are near dead-last in the United States in terms of funding.

You know that that project died due in large part to OKC saying absolutely not to that number for TIF, right?

Also, I'm not 100% sure, so please someone correct me if I'm wrong, but the money used from TIF I don't believe is bonded. I think most of the time, developers just use their own money to develop whatever is being TIFed and then they either don't pay an increased tax rate, or they get reimbursement from the city each year for the tax increment, until the initial amount has been reached.

In the case of the TIF that we used for projects like 21c hotel, I believe that money was already in the city's account from the years of improved numbers from when the TIF District actually began like 15 years ago.

Pete
09-12-2016, 08:42 AM
Also, I'm not 100% sure, so please someone correct me if I'm wrong, but the money used from TIF I don't believe is bonded. I think most of the time, developers just use their own money to develop whatever is being TIFed and then they either don't pay an increased tax rate, or they get reimbursement from the city each year for the tax increment, until the initial amount has been reached.

The TIF grants are paid in various ways but most often it is just paid as a lump sum.

Teo9969
09-12-2016, 09:47 AM
The TIF grants are paid in various ways but most often it is just paid as a lump sum.

This makes sense for most projects that have used TIF#2 Money, because most of the projects came way later than launch date of the TIF in 2000, so the money was ostensibly already in the city's pocket.

But in cases like TIF#8/Devon TIF/Project 180, where did we get the $177.7M ($125M being from the Devon TIF) to do all that work in the present considering the actual capture date won't end until 2033. Did we bond out the $125M or did Devon pay it up front to be reimbursed at a later date?

Same thing with the upcoming Wheeler TIF. The way I understand it, the Wheeler organization is going to front the costs of all the construction in the area and only later receive reimbursement of the increment over the ensuing two decades.

Pete
09-12-2016, 09:55 AM
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.

TexanOkie
09-12-2016, 03:29 PM
This stuff matters and is part of why Oklahoma's schools are near dead-last in the United States in terms of funding.

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.

Midtowner
09-12-2016, 09:32 PM
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.

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.

Teo9969
09-13-2016, 07:03 AM
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.

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.

Pete
09-13-2016, 08:32 AM
I think Wheeler and FNC are good uses of TIF, but that's a tiny part of what we are using TIF funds for.