Tulsa's first crack at tax increment financing (TIF) didn't go as expected, but city officials aren't giving up on the project yet.
The TIF district, established in 1993, aimed to foster the arts and entertainment atmosphere in Brady Village, site of the historic Brady Theater and Cain's Ballroom, by improving parking, lighting, sidewalks, landscaping and drainage.
Governments that implement TIF districts often issue bonds or use other funding mechanisms to complete improvements soon after the TIF district is established. The improvements drive up property values and spur investment in the community, which increase property taxes and sales taxes in the area. Those increased taxes -- the increment -- are then used to repay the bonds.
Tulsa went a different route: pay as you go. The city established a TIF district in Brady Village, then waited for taxes to increase so it could use the increment to pay for streetscaping. But with a slow local economy and no investment in the infrastructure, Brady Village's tax base was slow to expand, a problem City Councilor Bill Martinson called a "chicken-or-egg deal."
"If you don't do the improvements, you're not going to get the development, so you have to do the improvements in order to get the development, and how do you fund it if you've got an uncertain revenue stream?" he asked.
As a result, the 15-year TIF district expected to generate $4.5 million by the end of 2008 has only produced $1.3 million. About $1 million has been spent on infrastructure. The city's planning department, however, told the City Council on Nov. 18 that if it extends the TIF for 10 years, the district will generate another $5 million for Brady Village improvements.
"It just has been very slow coming online," city planner Julie Miner said. "However, in the past two to three years there has been a lot of private investment and development in that area."
For example, a 60,000-square-foot warehouse has been converted to an office building for Wallace Engineering, a 35,000-square-foot ice house has become an office and data center for Perimeter Technology, and KOTV is planning to invest more than $25 million to develop a 1-block area, Miner said.
TIF revenue totaled $190,493 in 2007 and $249,235 in 2008. Including the projected KOTV development, revenue is expected to grow to $391,939 in 2009 and $509,434 in 2018, the last year of the proposed extension. By state law, a TIF cannot extend beyond 25 years.
Total TIF money collected from 1993 through 2018 would slightly exceed $6 million, Miner projected. If the expected impact of the Drillers stadium development is included in the calculations, 2018 revenue is expected to be $554,366, and total revenue for the life of the TIF would be $6.3 million.
City Councilor Bill Christiansen, who chaired the Brady TIF committee, said he is "very confident," total revenue will reach $6 million by 2018.
"I know we have a downturn in the economy, but over the next 10 years ... with the ballpark going in and with the BOK Center, it just seems like the place is really ready to expand," he said. "The whole area's really on the cusp of blossoming."
Brady Village Owners Association President Steve Ganzkaw agreed the area is ready to flourish, and he said the situation in Brady Village is vastly different from when the TIF was established. The owners association, which has about 75 members, sets the priority list for the infrastructure improvements.
"The TIF was created in one of the worst times economically, 15 years ago," Ganzkaw said. "Businesses were not really expanding, so you couldn't capture the incremental taxes because there was not that much activity."
"If that was a bad time," he continued, "this is probably the best of times, because there's so much activity being discussed with the ballpark and the things around it."
Some property owners have contributed money to specific TIF projects near their properties, and Ganzkaw said the association is devising an "equitable formula" to guide those contributions. Owners' contributions could also move projects up the priority list.
"If you went down and bought a building and were going to spend $1 million on acquiring and fixing up the building and were going to put some employees in it, you could also come to the [association] and say, 'How about doing something to the sidewalks or trees at my building?" he said. "What we're trying to do is if you are willing to come in and invest in the district, then we could allocate some TIF money for beautifying and completing the streetscape."
If the TIF district revenue and the owners' contributions don't add up to $6 million, the city may not complete all the projects it has planned for Brady Village. But Miner said that is no reason to end the TIF now.
"We just won't do as many blocks if we don't realize all those [revenues]," she said.
The public will have a chance to weigh in on the Brady Village TIF during the City Council meeting Thursday, Dec. 4, 6pm, in the new City Hall, 175 E. 2nd St.
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