POSTED ON JULY 18, 2007:
Believe in The Cube
Or a Magic Beanstalk. Council approves City Hall Move
After listening to Mayor Kathy Taylor's sales pitch for One Technology Center (OTC) last Thursday night, I can confidently predict that she has a bright future selling Fort Lauderdale vacation condo timeshares.
I also predict that City Councilor Cason Carter will be her first customer.
Prior to the 8-1 vote to allow the Tulsa Public Facilities Authority (TPFA) to incur $79 million in debt to buy the shiny symbol of Tulsa's fall from high-tech glory, Taylor read a speech that appealed to anything but hard financial facts. Councilor John Eagleton was the only one able to resist the Mayor's siren song.
I'm not so disappointed that the eight councilors voted for the purchase (it may turn out to be a good deal) as I am in the reasons they gave for their decision. They switched off their B. S. detectors, set aside logic and any concern about cost, and set the City up for a repeat of the Great Plains Airlines debacle.
Although the Council made a show of reducing the risk involved in finding tenants to fill the Borg Cube's excess space, they proceeded to a vote without using the best available information to determine whether the move would leave the city with more money or less money for police, streets, and parks over the near term.
Taylor's over-the-top speech should have been greeted with howls of derision. Some councilor should have told her, "Madame Mayor, come back to talk to us when you can do so without insulting our intelligence."
Taylor claimed that the consolidation of city government offices at OTC would be the "key that will unlock the revitalization of downtown."
Haven't We Heard This Before?
Four years ago, we were told that the new downtown sports arena was going to be the key to revitalizing downtown. Before that, we were told that the key was the Inner Dispersal Loop, the Williams Center, the Civic Center, putting the pedestrian mall in, and taking the pedestrian mall out.
It's as if we have a junk drawer full of house keys, skeleton keys, car keys, diary keys, piano keys, and plastic baby toy keys, and our civic leaders are trying them at random until they find one that works.
Taylor also told the Council that the OTC purchase would accomplish "transformation for our souls." I kid you not -- she really said that. Maybe it's because OTC looks like a crystal. Or perhaps Taylor has been reading The Secret.
Our current City Hall is ugly, and moving to OTC would give a boost to the Blue Dome District, but the deal isn't all that. Only the very gullible would buy the fake-it-'til-you-make-it hucksterism in Taylor's claim that going into debt to buy OTC would "change the trajectory" of our city.
And speaking of Cason Carter, he too professed faith in the transformational power of One Technology Center. I'm not sure whether he said that because he truly believes it or because he was trying to please Mayor Mommy by echoing her words.
Carter plans to run for State Senate District 35 next year, but anyone who spouts such nonsense doesn't have any business handling taxpayer dollars at City Hall, much less the bigger bucks at the State Capitol.
Next to Carter, east Tulsa Councilor Dennis Troyer sent out the strongest "I don't have any business being a councilor" vibe, telling the assembled audience, caveman-like, that a building is like a woman -- "high maintenance."
The meeting also saw south Tulsa Councilor Bill "Cave-In" Christiansen back off once again from an adamant publicly declared position. The only announced "no" vote the day before, he fell into line after the leaders of Tulsa's political, financial, and social establishment paraded before the council chamber's microphone.
Many of the 20 or so who spoke in support of going into debt to buy OTC talked about how the move would improve Tulsa's image.
As I told the Council, most Tulsans and most visitors to Tulsa will never see City Hall. For most people, the image of Tulsa is not formed by what our City Hall looks like, unless we were Toronto, but by our crime statistics, the condition of our streets, whether our parks and rights-of-way have been mowed, and whether our pools are working and open for business.
The money the City needs to improve our true image is found in only one place--the two-percent sales tax that feeds our general fund. It's been a long time since city officials have been able to stretch our general fund dollars far enough to keep our city from looking shabby and feeling unsafe.
The decision to go into debt to buy OTC for a new City Hall should have come down to this question: Will this deal leave us with more money or less money to spend on government basics?
One would hope that that question would be uppermost in the minds of our city councilors, who had just been through a grueling budget process, unable to open more pools, unable to fund enough new police officers to outpace attrition.
Finding the answer isn't rocket science. There are a handful of variables, and all but one of them could have been determined with a high degree of certainty: The payments on the new building, the operating costs for the new building and for our existing buildings, the major repairs and improvements that would be needed if we stayed in the existing buildings (aka "deferred maintenance"), and the amount of lease income the city would get from third-party tenants in the new building.
Taken together, these numbers would have provided a very clear picture of whether or not moving to OTC would be a good financial move. Without these numbers, the Council couldn't know whether the move would mean millions more or millions less to spend on the basics each year.
But the Council knew weeks ago that they didn't have accurate and specific numbers for the cost of operations and the cost, likelihood, and timing for repairs and improvements to the buildings the City government now occupies.
Instead of demanding to know to the penny what the city actually spent on building operation and maintenance in recent fiscal years -- e.g., what we paid AEP-PSO and ONG to light, heat, and cool the buildings--then using that as a basis for estimating future years, the Council relied on a per-square-foot estimate for utilities, security, maintenance, and other broad categories.
That estimate was created by the Staubach Company, a consulting firm that stood to make more money if the OTC deal was consummated and therefore had a vested interest in making the deal look as good as possible.
Buried in Staubach's estimate was a $24 million fudge factor--the claimed amount of deferred maintenance on the existing buildings. There should have been an itemized list of needed repairs, with an estimated cost of each and some notion of how soon each needed to happen. And the Council asked for it at their special Saturday session on June 23. But they never got it, and they didn't insist on having it before they voted.
They were too busy congratulating themselves on finding an apparent solution for another variable--whether third-party tenants at OTC would provide enough lease income to cover the debt payments. Some private company would execute a master lease with the City, effectively leasing all the excess space at OTC. The master lessee would take on the financial risk that the current tenants (Deloitte Touche and Level 3) may be replaced by less lucrative rent-payers, but would also keep any overage if the space sublets for more than they would be paying the City.
The amendment passed by the Council makes the authorization of indebtedness contingent on one of two "safeguards" being put in place. Or so we're told--the actual text of the amendment wasn't made available to the public, and a request to give the amendment a full airing in committee fell on deaf ears.
Safeguard #1 was the master lease. We weren't told whether the lease has to be for a minimum number of years or for a minimum dollar amount in order to fulfill the condition.
Safeguard #2 involves assigning to the TPFA the property that the city will vacate. The proceeds from selling the properties would be used to cover the debt payments if lease income falls short.
If safeguard #2 sounds just like the Great Plains Airlines deal, where we also pledged a city asset to guarantee a debt incurred by a city trust authority, you're right.
And, as with Great Plains, there's some doubt about the value of the property being pledged. The last time the City tried to sell land to a hotel developer, the developer wanted the land for free, plus a public subsidy.
And the City Public Works site at 23rd & Jackson is downwind from the refinery, sandwiched between railroad tracks and low-income housing. It has NO river frontage. (And note: The Public Works yard between the tracks and River Parks was moving to north Tulsa regardless of the OTC vote.)
Eagleton noted that the master lease involved a promise by a third party to pay our debt, and that some promises are enforceable and some are not. If the holder of the master lease declared bankruptcy, the "safeguard" would evaporate.
To cover our bases, Eagleton proposed an amendment to the amendment, changing the "or" to an "and," requiring both safeguards to be in place before the debt could be incurred. He called it a "belt and suspenders" approach -- two different ways to make sure the city keeps its financial bloomers from showing.
You'd have thought there was a snake infestation in the room the way the yea-sayers reacted. Developer Sharon King Davis wagged her finger and scolded, "That's double dipping!" (No, Sharon, it's protecting the taxpayers' interests.) Taylor went to the microphone with Economic Development director Don Himelfarb to claim that the City's negotiating position on the master lease would be weaker if we had a fallback option.
It became immediately apparent that these "safeguards" were there in order to give the City Councilors political cover for a "yes" vote, not to protect the financial interests of the taxpayers. Eagleton's motion failed, and the amendment and debt resolution passed, with Eagleton as the lone dissenter.
The way the eight councilors bought into the Mayor's sales pitch reminds me of the story of Jack and the Beanstalk. Mother sent little Jack went to town to sell the family cow so they could pay for mundane things like food, clothing, and shelter.
Along the way, Jack met a man who told Jack that his plan reflected "scarcity thinking," and that Jack's family needed a "paradigm shift," which, in a happy coincidence, could be accomplished by trading the cow for a sack of beans he just happened to have.
It may turn out that the councilors were right to believe that this purchase will produce the civic equivalent of a magic beanstalk and a hen laying golden eggs.
Then again, they may just be full of beans.
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