What is a Tax Increment Financing (TIF) district?

In Oklahoma City, TIF is used as an economic development tool whereby future property and/or sales tax dollars generated in a specific district are redirected from the budgets of Oklahoma City and Oklahoma County to private and public projects in the same district.
According to the Oklahoma Tax Commission, as of 1/25/18 there are more than 90 TIF districts in the state.
The term of a TIF typically runs 25 years, the maximum allowed by the state constitution.
TIF's are used in other cities in Oklahoma and the U.S., although there is great variation in how this tool is used in terms of redirecting taxes, approval / management process and how the taxes are allocated.


http://www.okctalk.com/images/pete/tifgraphic1.jpg


Existing TIF districts in Oklahoma City
There are 12 Tax Increment Funding (TIF) districts that are currently active in Oklahoma City and 6 more approved and soon to be activated:

TIF # District Budget* Type of Taxes Start End
1 Health Sciences Center $47.00
2 Central Business District $195.00 Ad Valorem 03/07/00 03/06/25
3 Skirvin Hotel $5.00 Sales 06/07/04 06/06/29
4 Dell $28.20 Ad Valorem 03/29/05 03/28/30
5 Dell $0.00 Sales 03/29/05 03/28/30
6 Los Rosas $3.10 Ad Valorem
7 Health Sciences Center $21.00 Ad Valorem 08/01/06 07/31/31
8 Devon / Project 180 $157.00 Ad Valorem, Sales 12/16/08 12/15/33
9 Northeast Renaissance $45.00 Ad Valorem, Sales 2015 2040
10 First National Center $45.00 Ad Valorem, Sales 2016 2041
11 Innovation $52.00 Ad Valorem 2016 2041
12 Western Gateway / Wheeler $120.00 Ad Valorem 2017 2042
13-18 Core to Shore $395.00 Ad Valorem TBD +25

Total: $1,113.30


* In millions. In most cases, the original budget is far exceeded by actual receipts.




New TIF District to fund OG&E Headquarters, convention garage and hotel (http://www.okctalk.com/content/94-new-tif-district-would-fund-og-e-hq-convention-garage-hotel.html)


From where are TIF tax dollars redirected?
Property (ad valorem) tax
Every privately owned property in Oklahoma County (apart from nonprofits, which are exempt) is taxed annually at a rate of approximately 1% of assessed property value. Each year, property values -- and thus property taxes -- are adjusted (almost always upwards) according to the latest market conditions. In normal circumstances, all property tax goes to the County and they in turn distribute to the public schools, library system, City/County Heath Departmnet and CareerTech.


http://www.okctalk.com/images/pete/tifadvalorem.jpg


At the start of a TIF a role of properties within the district is created and the base assessed value (AV) is established according to the current County value. The amount currently paid to the County continues to go them; but any increase in taxes based in increased assessed values is redirected into the TIF. Thus, any increase in property tax over the first year gets paid each of the next 25 years into the TIF account rather than being sent to the County.


http://www.okctalk.com/images/pete/tiftif.jpg

http://www.okctalk.com/images/pete/tiftif2.jpg



Sales tax
In Oklahoma, all sales are taxed by the state at a rate of 4.5% and that money goes into their general budget.

Oklahoma City adds 3.875% (for a total of 8.375%) but only the 2% that goes to the City General Fund (operating budget) is redirected to the TIF:


http://www.okctalk.com/images/pete/tifpiecharts2.jpg

Partial Listing of City Services
Police, Municipal Court, Fire & Emergency Medical Services, Parks & Recreation Centers, Street Maintenance, Code Enforcement, Public Transportation, Civic Center Music Hall, Arena & Convention Center, Water & Wastewater, Utilities, Solid Waste Collection, Airports.


How are TIF's approved and who manages them?
In Oklahoma City, City staff drafts potential new TIF Districts to address specific challenges or opportunities, presents to the City Council in informal sessions, meets with the affected tax jurisdictions, then the City Council ultimately votes as a part of one their regular public meetings.

Part of setting up any new TIF District is a project plan that includes the boundaries of where the money is captured and where it can be spent. In addition, a general outline is established as to how the money will be used, but usually presented in terms of a few broad categories. To date, the City has not chosen to establish specific criteria for allocating the captured tax dollars.


After the TIF District is established, City staff alone decides which projects are worthy of further consideration. If staff decides a project application isn't worthy of TIF funds, the process stops there. Where an application has been brought for council vote, 100% have been approved.

Most requests from TIF funds come from private developers. But other requests actually originate from City staff themselves, such as public improvements, parking and school projects.

In most cases the allocation is only paid to the developer / entity once the project is complete and certified. In a small number of projects (21c, Plow, Steelyard and 123 Garage) the City loaned the money up front at low interest rates.


http://www.okctalk.com/images/pete/tifreview.jpg


Example: OKC TIF District #2
The best way to understand how a TIF operates is to look at a specific example, in this case TIF #2 for downtown OKC.

In 2000, the City decided to create a TIF for the downtown area in order to concentrate spending in the area and spur development.

As the TIF was to be funded by property tax (no sales tax was included) a base Assessed Value (AV) was set for all properties within the boundaries shown below (roughly 13th to the north, the old I-40 to the south, Western to the west and I-235 to the east) when the district was formed in 2000. Any INCREASE (called the increment) in property taxes (generally 1% of AV) over that base in 2000 went into the TIF fund.

Also, although the taxes collected are within the boundaries described, they can be spent in a larger area, shown as the Project Area below.

The amount that goes into the TIF is separated into two categories:

Indirect: 50% of the tax increase since 2000. Indirect properties are defined as those not receiving TIF funds. Currently accounts for about 40% of the TIF 2 amount.
Direct: 100% of the tax increase since 2000. Direct properties are those that receive TIF funds. Currently accounts for 60% of the TIF 2 amount.
The original budget for TIF #2 was $47.5 million. However, it is now estimated that $126 million will be collected before the TIF expires in 2025. Of that amount, almost $90 million has been allocated.


http://www.okctalk.com/images/pete/tif2e.jpg


Where TIF #2 dollars have been spent


http://www.okctalk.com/images/pete/tif2a.jpg

http://www.okctalk.com/images/pete/tif2b.jpg



Key TIF #2 awards as a percentage of total investment
Follow links for wiki articles on each project.


Project Type Investment TIF Award TIF as % of Inv.
Level Apartments Apartments $24.0 $1.3 5.2%
Maywood Apartments Apartments $16.0 $1.0 6.3%
Edge @ Midtown Apartments $34.0 $2.3 6.8%
Mosaic Apartments $24.0 $1.1 4.6%
Maywood Apartments Phase II Apartments $20.0 $1.0 5.0%
21c Museum Hotel (http://www.okctalk.com/showwiki.php?title=21c+Museum+Hotel) Hotel $53.0 $5.3 10.0%
LIFT Apartments $42.5 $3.0 7.1%
Mideke Building Office $17.0 $1.0 5.9%
Civic Center Flats Condos $6.0 $0.4 5.8%
Steelyard (http://www.okctalk.com/showwiki.php?title=Steelyard) Apartments $75.0 $4.1 5.4%
Avana Apartments $33.0 $2.5 7.6%
Block 42 Condos $12.0 $1.0 8.3%

Totals: $356.5 $23.9 6.7%

Also wanted to point out that not all increases in assessed values are due to development.

Over the 25 year TIF term, properties will naturally appreciate which raises the assessed value and the resulting property taxes (1% of assessed value).

Also, when properties are sold the assessed value is generally adjusted to reflect the most recent sales price, as a recent transaction is always the best estimate of true value.

So in the case of TIF #2, a big part of the reason the budget went from the original $47.5 million to the current $126 million is the natural appreciation.

As an example: Cotter Ranch Tower is currently generating about twice the property tax it did in 2000. Since this is considered an "indirect" property (one that hasn't received TIF funding) 50% of that property tax increase since 2000 goes into TIF #2 and the other half goes to the County as usual. Property taxes have doubled since 2000 at Leadership Square as well.

Not to be Johnny come lately but did Clayco hint at the amount of TIF they were seeking when they were presenting thier proposal?

Yes, Clayco put a specific amount in their proposal (see below).

Below is a quick analysis of most the commercial projects that have received TIF funds. You can see the typical amount is around 6%. 21c is a bit of an outlier due to the unique nature of the building and the area of investment. Without 21c the average TIF percentage of total investment is 5.8%.


http://www.okctalk.com/images/pete/tif2g.jpg

$142 million give or take.

That is absurd OG&E is going to build this thing with or without free money from the taxpayers. I was fine with the Devon TIF because of the way it was used to improve all of downtown. In this case, the money is apparently being spent to benefit only this property.

Yes, Clayco put a specific amount in their proposal (see below).

Below is a quick analysis of most the commercial projects that have received TIF funds. You can see the typical amount is around 6%. 21c is a bit of an outlier due to the unique nature of the building and the area of investment. Without 21c the average TIF percentage of total investment is 5.8%.


http://www.okctalk.com/images/pete/tif2g.jpg

Another overwhelming sense of dishonesty when folks seem to be making the claim that 10% is the accepted, du jour, way of allocating TIF money.

Also note that of the TIF awards they are either for public projects, commercial, residential, and hotels.

Very little allocated for office and in fact, that wasn't even a category in the TIF #2 budget.

...I was fine with the Devon TIF because of the way it was used to improve all of downtown. In this case, the money is apparently being spent to benefit only this property.

And yet that is not at all an unusual use and in fact an (THE?) intended way for TIF dollars to be utilized. They are designed as a lure. Devon's use of TIF dollars spoiled us and skewed our perception of how these things normally happen. Devon was an extreme (and often unappreciated) outlier.

Again, I am not rah-rahing this particular project nor defending the massive request (which I too believe is excessive); I'm only trying to dispel some incorrect notions about what TIF actually is and how it is typically used.

And yet that is not at all an unusual use and in fact an (THE?) intended way for TIF dollars to be utilized. They are designed as a lure. Devon's use of TIF dollars spoiled us and skewed our perception of how these things normally happen. Devon was an extreme (and often unappreciated) outlier.

Again, I am not rah-rahing this particular project nor defending the massive request (which I too believe is excessive); I'm only trying to dispel some incorrect notions about what TIF actually is and how it is typically used.

Right, and even in TIF #2, over 28% of the funds allocated thus far have been for public schools, parking and other public improvements.

BTW -- and I added this to the article at the top -- currently TIF #2 is collecting a little over $7 million per year.

Of that amount about 60% comes from direct assessments and the remaining 40% comes from indirect (reminder that indirect means only 50% of the increase since 2000 goes into the TIF and the other half goes to the County as per usual).

So let's say the $142 million gets approved. Where does the City get the $142 million to give to Clayco?

So let's say the $142 million gets approved. Where does the City get the $142 million to give to Clayco?

The City doesn't give them anything.

Clayco would merely have their property taxes reduced every year.

However, their pro forma shows they would take that future income stream and borrow against it so they get the money up front, then pay it back to the bank with interest.


They are also asking for a sales tax rebate, ala Devon. Basically, instead of paying local/City sales tax on materials used in their project, that would be returned to them by the City. Probably about $10 million or so and they'll likely seek State matching funds, which is also what Devon did.

The City doesn't give them anything.

Clayco would merely have their property taxes reduced every year.

However, their pro forma shows they would take that future income stream and borrow against it so they get the money up front, then pay it back to the bank with interest.


So they don't get a lump sum payment but if they sell the building within 25 years does the new owner get to claim the property tax exemption? I really see the City getting the shaft when TIF building are sold because they sell for market value, not market value minus remaining TIF balance. In other words, if Clayco sells this building after 5 years they walk away with 20 years of property taxes scot-free, on top of whatever profit they sell the building for. That's good work if you can get it.

So they don't get a lump sum payment but if they sell the building within 25 years does the new owner get to claim the property tax exemption? I really see the City getting the shaft when TIF building are sold because they sell for market value, not market value minus remaining TIF balance. In other words, if Clayco sells this building after 5 years they walk away with 20 years of property taxes scot-free, on top of whatever profit they sell the building for. That's good work if you can get it.

Not necessarily.

There is usually a claw-back provision in the TIF agreement.

From the Journal Record:

O’Connor: Not a tax increase
By: Cathy O'Connor Guest Columnist December 9, 2014 0

Tax increment financing has been a hot topic since the designation of Clayco as the redeveloper for new development adjacent to the Myriad Botanical Gardens. Clayco has requested financial assistance to build a level of density higher than typically found in Oklahoma City. The city is also in the process of considering a new TIF district for the northeast side that will be essential in the revitalization of this area.

Cities use TIFs to revitalize and redevelop an area or create other types of economic development. Oklahoma City has eight TIF districts. There’s some discussion on whether the creation of a new one would be beneficial for development between Sheridan and Reno, and Hudson to Walker avenues.

TIFs don’t raise taxes on a property. As the value of property goes up, so does the total amount of property taxes paid – not the percentage or tax rate.

Creating a TIF district isn’t easy. A review committee is made up of all governmental entities that receive property taxes, representatives from the council and planning commission and three at-large members. Following reviews by the review committee and planning commission, the council must adopt an ordinance establishing a base-assessed value for a specific geographic area. Each request for assistance to individual projects goes through the TIF review committee.

Since the creation of the downtown TIF district in 2001, the market value of the district has risen by more than $800 million. This doesn’t include the Devon headquarters, which is in its own TIF district.

There are two ways downtown TIF money is allotted. Direct increment financing is generated from property that the city directly assists in the redevelopment of through an allocation of TIF funds.

Indirect increment applies to property within a TIF district, but hasn’t directly benefited from city assistance. In cases where there’s indirect increment, only half of the additional taxes brought in by the rising property value goes back into the TIF. The other half is provided to the various entities that rely on property taxes, such as the school district. Since the creation of the downtown TIF, these other government entities have received about $22 million from the downtown TIF district.

TIFs are a vital tool for the future of development in Oklahoma City.

Cathy O’Connor is president of The Alliance for Economic Development of Oklahoma City.


Read more: O?Connor: Not a tax increase | The Journal Record (http://journalrecord.com/2014/12/09/oconnor-not-a-tax-increase-opinion/#ixzz3LW7UmAmA)

The timing of this is no coincidence.

I'm sure it won't be long before O'Connor presents the negotiated TIF agreement with Clayco to the City Council.

The timing of this is no coincidence.

I'm sure it won't be long before O'Connor presents the negotiated TIF agreement with Clayco to the City Council.

I wonder what the agreed TIF will be. I highly doubt its 25%, that just reeks of start way higher then the real number, and negotiate back down towards it. My guess is it will be 15% or so. Given the scope and the drastic changes to the skyline it will provide, it might be worth it.

OKCTalk - New TIF district would fund OG&E HQ, convention garage and hotel Edit Page (http://www.okctalk.com/content/94-new-tif-district-would-fund-og-e-hq-convention-garage-hotel.html)

This was written by Cathy O'Connor and published in the Journal Record:

O’Connor: Density, design and parking
By: cathy.oconnor January 6, 2015

Last week, staff members from the city of Oklahoma City and the Alliance discussed future parking requirements for the new convention center, its accompanying hotel and other development planned around these projects.

Structured parking is expensive. Our debate centered on building enough parking to meet future needs at the expense of finances that might be used elsewhere. A member of our group reminded us we are in the business of city building. This part of my job is the most fun – when we can dream and try to develop a vision of what Oklahoma City can be.

These new projects focus on adding spaces that respond well to the pedestrian experience and create an active and interesting street. Oklahoma City needs new Class A office space. Projects are in the works to help fill that need. Building plans are set for more essential residential units, as well.

These developments help change the nature of downtown from an employment center to a place where people live, work and play. Other significant new projects include structured parking garages. While we may not always want to cater so heavily to automobiles, parking is a necessity.

One important consideration is making sure the street level consists of interesting, active spaces available for use as offices, shops or restaurants. By creating and filling those spaces, we can add density to downtown. We measure that density using a floor-to-area ratio, or FAR. A one-block development that covers an entire block with a one-story building (not including parking) has a FAR of 1 and a two-story building over a block has a FAR of 2. For example, the Edge Apartments at NW 13th Street and Walker Avenue have a FAR of 2.5; the SandRidge center is a 6.

The current density of the area adjacent to the MAPS 3 Park has a FAR of 0.5. The goal, which will be rolled out as a part of the Downtown Development Framework, will be a FAR of 3. The framework was prepared by the city planning department to supplement current downtown development design guidelines and provide additional information to developers and property owners.

With this new tool and the goals of city building in mind, density, design and parking can be more easily planned for and accommodated.

Cathy O’Connor is president of The Alliance for Economic Development of Oklahoma City

For the love of Pete. If your calculation for measuring density puts Sandridge at 6 and The Edge at 2.5, you have a seriously flawed formula.

For the love of Pete. If your calculation for measuring density puts Sandridge at 6 and The Edge at 2.5, you have a seriously flawed formula.

Not at all, if you read it slowly, she says 'for an entire block'. The footprint taken for the buildings referenced do not take the complete block.

It isn't based on the footprint of the building, it is based on the size of the lot the footprint is on. A one-story building covering an entire block gets a 1. A 2-story building covering an entire block gets a 2. A 4-story building covering half a block get also gets a 2 - for the whole block. A 2-story building covering a whole block is more dense that a 4 story building covering half a block, but using the City's method they get ranked the same. The best way to measure urban density is lot coverage and can be easily visualized using a black plan. Central Paris is one of the most dense built environments on Earth, and with rare exception, every building is less than 6 stories. If we want density (and I am not sure we actually do) we need to take height out of the equation.

It isn't based on the footprint of the building, it is based on the size of the lot the footprint is on. A one-story building covering an entire block gets a 1. A 2-story building covering an entire block gets a 2. A 4-story building covering half a block get also gets a 2 - for the whole block. A 2-story building covering a whole block is more dense that a 4 story building covering half a block, but using the City's method they get ranked the same. The best way to measure urban density is lot coverage and can be easily visualized using a black plan.

I think you're referring to adjusted FAR.

I really appreciate O'Connor's perspective on this. I'm pleasantly impressed - I hope that her planning perspective helps in negotiations to better align these developments with the community's best interest.

If you're part of the pro-planning contingent on here, I don't understand how her columns can set you off. This is like Jim Couch on OKC Central, except better because it's much more agreeable..

For example, the Edge Apartments at NW 13th Street and Walker Avenue have a FAR of 2.5; the SandRidge center is a 6

If we were just talking about footprint Sandridge center would be a 30.

If we were just talking about footprint Sandridge center would be a 30.

Not in relation to the 'entire block'..... it's about a 6 like she says.

Not the 'entire block'; the size of the parcel the building is on. The tower has 6X more floor area than the size of the lot it is on, and since it is 30 stories, it would take six 5-story buildings (each with the same floor plate size) to cover the whole lot - and it would still just warrant a ranking of 6. So what to you would be more dense - a lot 100% filled with six 5-story buildings or the same lot with a single 30 story building taking up 1/6 of the block's area (with 5/6 being grass)?

For the love of Pete. If your calculation for measuring density puts Sandridge at 6 and The Edge at 2.5, you have a seriously flawed formula.

Clearly you ought be in charge of determining what might be an appropriate calculation.

Clearly you ought be in charge of determining what might be an appropriate calculation.

I wish. Of course, I wouldn't care what the lot coverage area is since I would require the building to be built all the way to the sidewalk. They can do whatever they want on the interior (see the interior courtyards at The Steelyard). Alas, this is the very reason why OKC should adopt a simple form-based code and get rid of all the ridiculous calculations.

http://cdn2.newsok.biz/cache/r620-72eccb3daf323989f39bfe8d86d6ef4a.jpg

Not the 'entire block'; the size of the parcel the building is on. The tower has 6X more floor area than the size of the lot it is on, and since it is 30 stories, it would take six 5-story buildings (each with the same floor plate size) to cover the whole lot - and it would still just warrant a ranking of 6. So what to you would be more dense - a lot 100% filled with six 5-story buildings or the same lot with a single 30 story building taking up 1/6 of the block's area (with 5/6 being grass)?

I'd prefer a 30 story building and then 5 more 5 story buildings, but that wasn't given as a choice. ;)

The city should focus on achieving both height and dense coverage of the lot. The World Trade Center in the middle of 160 acre field would still have a pretty good FAR, but would make for a crappy city. But a city with no height at all, especially in the US, is a city that gets overlooked. It's not just the people driving by on the interstate that like tall buildings, it's people seeing the city on TV when the Thunder are playing. More towers equals more exposure, and a higher profile for OKC.

http://www.oklahoman.com/article/5388316&headline=New%20tax%20increment%20finance%20distric ts%20proposed%20to%20fund%20convention%20hotel%2C% 20parking%2C%20development%20in%20Core%20to%20Shor e%20in%20Oklahoma%20City.


Two new tax increment finance districts, one which could help finance a convention hotel and parking garage south of downtown, could become a reality later this year.

Cathy O’Connor, president of The Alliance for Economic Development of Oklahoma City, proposed the two districts as more than $1 billion in development is set to be built west and south of the Central Business District.

Tuesday, the city council approved moving forward with efforts to create a “South Central Downtown TIF,” which would be bordered by E.K. Gaylord and Western avenues, Main Street and the future Crosstown Boulevard, and a “Core to Shore TIF” south of the boulevard, north of the Oklahoma River, east of Western Avenue and west of Lincoln Boulevard.

From the JR:

Two more TIFs: OKC Council votes to move forward on financing for Core to Shore, south downtown

By: Brian Brus The Journal Record January 27, 2015

OKLAHOMA CITY – The City Council took a big step Tuesday toward creating two new tax increment financing districts near downtown. They would provide funding for Core to Shore development and the southern part of the Central Business District.

Council members voted 8-1 on both issues Tuesday, with Councilman Ed Shadid in opposition. The resolutions authorized Mayor Mick Cornett to appoint review committees to look into the viability of tax increment financing, or TIF, districts to increase real estate ad valorem taxes in those areas so that City Hall can afford infrastructure improvements that will attract developers.

Cathy O’Connor, president and chief executive of the Alliance for Economic Development of Oklahoma City, said supplemental sales tax TIF districts will also be considered.

The TIF concept is based on the supposition that targeted areas will stagnate or grow much slower without a funding boost, a point that Councilman James Greiner expressed before casting his vote.

“I’m a skeptic on needing another TIF for this to develop,” he said. “So I really hope the committee is able to convince me that it’s needed, that this area will not develop without it … I would really like a ‘but-for’ test.”

The boundaries of the proposed TIF district for the Core to Shore area would generally follow the same lines set earlier by city leaders when Interstate 40 was relocated closer to the Oklahoma River. The area is bounded by the river on the south, Western and Shartel avenues on the west, Lincoln Boulevard on the east, and the new central boulevard on the north, where Interstate 40 used to be. The 77-acre central park now under construction as part of the MAPS 3 tax issue package of projects lies in the center of the area.

The second proposed TIF district is bounded by the new boulevard on the south, Western Avenue on the west, E.K. Gaylord on the east and Main Street on the north. The Myriad Botanical Gardens lie in the center; a new convention center, also part of the MAPS 3 program, is planned south of that park.

“This development anticipates a great deal of residential development in the area with the opportunity for a good amount of retail, especially adjacent to the park and supporting those residential uses,” O’Connor said of the southern business district TIF.

Downtown and the surrounding districts are expected to grow significantly in residential, office and business density in the next few years. O’Connor said Bricktown’s current average use density is expected to double by 2025, and Core to Shore space use will grow by almost seven times its current density. The latter is projected to build out to 1.5 million square feet of office space, 6,700 housing units, 157,000 square feet of retail and 152,000 square feet of adaptive reuse of existing buildings. O’Connor said the combined development value of Core to Shore alone is estimated at $930 million.

Shadid and Councilman Pete White expressed concern that establishing new TIF districts might disrupt tax revenue from other TIFs already flowing to schools.

“We’ve had very positive discussions with all of the taxing jurisdictions and especially with the school district,” O’Connor said. “They were very supportive when we met with them about a week ago.

“What we’ve talked about – and none of this has been finalized – is that we would establish a method of sharing the increment similarly to what we do in the downtown TIF district now,” she said.

This would be three new TIF districts (NE, South CBD and Core 2 Shore) in just this year, with more being planned.

I'll have a full break-down and analysis soon.

TIF"s are not free money. They redirect tax dollars (primarily from public schools) to mostly private developers.

There is also no proven causation between spending money in this way and economic development. In fact, some studies show that by robbing the schools you actually can do long-term harm to the future of a community.

Robbing schools of what? Theoretically, TIF districts only redirect property taxes from the new value added due to projects that wouldn't have happened otherwise--if there's a legitimate financing gap (whether for development costs or public improvements necessary to sustain the project), these projects won't occur without the public investment. If the projects don't occur, the schools get nothing anyway, now or in 25 years when the TIF district expires. If the projects do happen, the school districts get a windfall in 25 years (or less, if whatever project costs to be paid with TIF funds are paid off early).

Robbing schools of what? Theoretically, TIF districts only redirect property taxes from the new value added due to projects that wouldn't have happened otherwise--if there's a legitimate financing gap (whether for development costs or public improvements necessary to sustain the project), these projects won't occur without the public investment. If the projects don't occur, the schools get nothing anyway, now or in 25 years when the TIF district expires. If the projects do happen, the school districts get a windfall in 25 years (or less, if whatever project costs to be paid with TIF funds are paid off early).

This just shows how little people understand about how TIF's work (understandable given the constant mis-statements by the Alliance and the press).

I'll break this down with real numbers later, but TIF's take ALL increases in taxes over a 25-year period. Property taxes increase as property values increase. Every single property increases in value over time, and substantially so over a 25 year period. Happens to your house and everything else. Simple appreciation drives that.

Example: Leadership Square (and several other downtown properties) have doubled in value in just the last 10 years, therefore the property tax they pay has doubled as well. All of that increase goes into TIF #2 instead of going to the general OK County coffers, which in turn distributes 72% of that tax to schools.

Also, there is no way to establish causation with the "but for" argument that projects wouldn't have happened anyway. I just posted in the Francis Apartments thread that the developer was denied a TIF request and they are still going forward with the project, just doing some value engineering.

I fully understand tif and I don't believe that it is "robbing" anything from schools.

OKC schools won't have a windfall in 25 years. They will operate with flat revenue for 25 years while their costs go up. In 25 years they will return to normal funding. As a right-wing tea partier it bewilders the bejeezus out of me that my fellow right-wingers are falling for this baseline budgeting gimmick given the fact that Rush has railed against it for 25 years. Are people so blinded that they can't see what is right in front of them?

Robbing is a strong term.

But the net effect of the TIF's in OKC -- present and planned -- is to redirect tax dollars from public schools (primarily) to private developers (primarily).

And there has been absolutely no causation established between spending tax dollars in this way and economic development.

And there has been absolutely no causation established between spending tax dollars in this way and economic development.

Exactly. Who is to say which projects would be completed as planned, which would be scaled back (and by how much), and which would never happen.

Exactly. Who is to say which projects would be completed as planned, which would be scaled back (and by how much), and which would never happen.

Or, that there wouldn't be at least an equal amount of benefit if those tax dollars were invested in the public schools, especially since Oklahoma is notorious for under-funding them in the first place.

I'm not against TIF's per se but we need to pump the brakes a bit before running off and establishing several more without looking at the fuller picture.

I'm not against TIF's per se but we need to pump the brakes a bit before running off and establishing several more without looking at the fuller picture.

I have three basic problems with the TIF and here is what I would have done different.

1) Time frame should only be 5 years out
2) Should only apply to lots where the development is located
3) Should freeze the current tax amount - not rebate, prebate, or credit the taxes.

BTW, a strong argument can be made that giving TIF funds to private developers is contrary to healthy economic development, because you are using public subsidies in a purely capitalistic market.

All these residential, hotel and office complexes compete against others in the open marketplace and most don't receive this sort of benefit.

So, it either creates an unfair competitive advantage, or causes everyone that comes afterward to ask for the same thing to "level the playing field".


When the idea of TIF districts was created decades ago, it was meant to jump-start severely blighted areas that had gone stagnant. And/or, to clean-up problematic sites, help assemble properties, etc.

Pretty much all these TIF's are nowhere near that original concept. The NE district is probably the only one exception.

It's absolutely taking money from schools. I don't have a problem with the concept of TIF funding, but we should be judicious with it and ensure that we are getting our money's worth. Environmental cleanup? Okay. Historical preservation? Okay. Extra expenses to ensure a higher use (like underground parking instead of a parking garage), okay. But people are handing out TIF dollars like candy. Most projects shouldn't get them.

Let's say you have an empty piece of land in a TIF district. The property taxes on it are $1,000. There are 3 development possibilities for this land. It will either:
a) remain the exact same,
b) get a development that is purely market driven, or
c) get a development with TIF assistance.

If a) is the case, over the course of 25 years we'll say the taxes go from $1,000 a year to $2,500 a year. (source: out of thin air)
If b) is the case, we'll say you get a 4 story apartment complex. The taxes go from $1,000 a year to $25,000 a year.
If c) is the case, you get a 10 story tower. The taxes go from $1,000 a year to $50,000 a year. But you also miss 25 years of tax collections.

Now, eventually option c) would arguably produce the most taxes. But your public schools are experiencing a 25 year delay on funding. Arguably you're much better off taking options a) or b) and having more education funding during that time frame.

Now, some properties will never develop at all if left alone. I don't think that's the case with the Core 2 Shore area. It probably is the case with the Cotton Mill. Redevelopment of that land is going to require eminent domain proceedings and a lot of public assistance with environmental cleanup.

I understand TIFs better than you think. Those misstatements you mention from the Alliance are from the people actually implementing these districts, so I think they should be given some degree of credibility. None of us know the aggregated specific issues with any given development, except for what is released to the public, so I would understand a call for greater transparency and due diligence regarding actual financial needs of proposed recipients of TIF money. As to the gradual increases in assessed value a property would have (which is not a fact, but a general trend--much like the general trend is for higher post-TIF-expiration tax revenues and/or financial situations for school districts), that is not attributable to the new development: that discrepancy can be (and oftentimes is, in other Oklahoma municipalities) addressed by only having a portion of the new increment be apportioned to a TIF fund. However, even that can get dicey, since a lot of the increment not attributed to the new development is indirectly affected by other new development within the TIF district--your downtown OKC TIF example is a prime example of this. Finally, as to the counter-"but for" argument--you make a good point; however, increasing the level and/or sophistication of the analysis conducted for new TIF projects can help ensure money is allocated to projects with the highest return for the public investment.

Just to be clear, I've had about a dozen conversations and dozens more emails with Brent Bryant who administers the TIF's for the City.

I have all the detailed budgets and payout schedules and know specifically why most TIF's were requested and how the entire process works.

I've spent the better part of the last couple of months getting all the numbers together and making sure I understand all the various nuances. I've had a bunch of conversations with members of City Council on this subject.

I've also done quite a bit of research on how other cities have used TIF's and read several studies on them.


The bottom line is that in OKC (and most other cities), there is absolutely zero causation established between TIF awards and economic development. It is assumed the TIF dollars have helped but there is no way to know that for sure. Similarly, there has never been any causation between TIF's and increase in property values and taxes.

There are hundreds of factors as to why properties appreciate and at least in OKC, there is no data suggesting the TIF's have caused any increases whatsoever.


It's the classic "correlation does not imply causation" statistical argument.

There is also no way to know the economic impact if all that redirected tax money was invested in education (as 72% would normally be) instead of paying out to private developers.


As I said, much more to come on this.

We need to take a hard look at the pros and cons of TIF's before we redirect hundreds of millions of additional tax dollars.

We are well into MAPS territory with no public input or vote.

Just to clarify, with TIF funding, the increment associated with the property is frozen at pre-TIF levels, and the amount of increment going to the schools is the same as before the property improvement. So, while it's true that the additional increment does not go to the schools, the current (or prior) increment does continue to go to the county. So, I can see both sides of the argument, but it's not true that the TIF is "robbing" the schools.

I do agree TIF should be used extremely judiciously, and when used, the city should truly raise the bar on expectations for the TIF recipient.

Oklahoma City School Board Learns Of Tax Plan After Council Vote | Oklahoma Watch (http://oklahomawatch.org/2015/02/09/oklahoma-city-school-board-learns-of-tax-plan-after-council-vote/)


Oklahoma City Public Schools board members say they learned about a city plan to extend the period for redirecting downtown tax revenue away from schools and other purposes only after the City Council voted to go ahead with evaluating the plan.

Report says that Cathy O'Connor only met with the district's COO who resigned before the Council vote.

OKCPS Concerned Over Change In Funding - News9.com - Oklahoma City, OK - News, Weather, Video and Sports | (http://www.news9.com/story/28088868/okcps-concerned-over-change-in-funding)

OKCPS Concerned Over Change In Funding - News9.com - Oklahoma City, OK - News, Weather, Video and Sports | (http://www.news9.com/story/28088868/okcps-concerned-over-change-in-funding)

It sounds like from the tone of that article that ES is much more worried about this than the school board members are.

How about letting the increase in property taxes actually go to schools every once in awhile?

How about letting the increase in property taxes actually go to schools every once in awhile? They could sure use it. Education is the biggest economic development driver of all.

There was some discussion at the last school board meeting of OKCPS cutting a deal with the city to use some of the TIF money from these newest TIF districts to construct a new downtown school (probably in the Core to Shore area). Seems like a savvy idea to me, especially with the overcrowding in south side schools and the widely-stated public desire for a middle school option in the area.

^I saw that Ben Felder tweeted about that and I asked if it was a High School that was discussed. They were discussing a Middle School? I'm really on board with that.

^I saw that Ben Felder tweeted about that and I asked if it was a High School that was discussed. They were discussing a Middle School? I'm really on board with that.

I don't think they specified which type of school. I was just speculating.

There was some discussion at the last school board meeting of OKCPS cutting a deal with the city to use some of the TIF money from these newest TIF districts to construct a new downtown school (probably in the Core to Shore area). Seems like a savvy idea to me, especially with the overcrowding in south side schools and the widely-stated public desire for a middle school option in the area.

In TIF #2 (the current district that covers all of downtown), $4 million of the $126 TIF budget goes to OK public schools.

Since the district would typically receive 59.22% of the property tax, that would be over $74 million of the $126 million taken by the TIF. So they get $4 million vs. $74 million.

And that $4 million must be spent within the TIF district boundaries.

In TIF #2 (the current district that covers all of downtown), $4 million of the $126 TIF budget goes to OK public schools.

Since the district would typically receive 59.22% of the property tax, that would be over $74 million of the $126 million taken by the TIF. So they get $4 million vs. $74 million.

And that $4 million must be spent within the TIF district boundaries.

These details could still be negotiated, no?

These details could still be negotiated, no?

Details could be negotiated in the proposed new TIF's, not the existing ones.

And, law requires that TIF money be spent within the boundaries defined when the district is established.

So, any urban TIF would force the school district to use the money downtown.

In TIF #2 (the current district that covers all of downtown), $4 million of the $126 TIF budget goes to OK public schools.

Since the district would typically receive 59.22% of the property tax, that would be over $74 million of the $126 million taken by the TIF. So they get $4 million vs. $74 million.

And that $4 million must be spent within the TIF district boundaries.


I am almost positive that they get 50% of the indirect incrament in TIF 2

I am almost positive that they get 50% of the indirect incrament in TIF 2

The $126 million in the TIF represents the indirect element as well.

Citizen?s list of TIF questions raise serious issues about who benefits | Red Dirt Report (http://www.reddirtreport.com/red-dirt-news/citizen%E2%80%99s-list-tif-questions-raise-serious-issues-about-who-benefits)


But he and his neighbors have concerns that there is a power shift going on in Oklahoma City that is leaving many of its residents out of the discussion about the city’s future.

“Many of us are concerned that the power of the city is taking the approach of ‘trust us’, but we have an obligation to ask questions,” he said. “More public involvement should be there and I think that it’s being rushed through.”

BIDs for south-side business: OKC Council approves funding to develop districts | The Journal Record (http://journalrecord.com/2015/02/24/bids-for-south-side-business-city-council-approves-funding-to-develop-districts-general-news/)