OU Arena Entertainment District is NOT $1 Billion Proposal

 Wow, wouldn't a $1 billion entertainment district be great for Norman?  Imagine the private investment, the new entertainment opportunities, the money rolling into Norman.  Overblown marketing plans are a far cry from the reality of the Arena TIF agreement.

The TIF district landowner (OU Foundation, UNP North, LLC), Texas development partners (Rainier), Norman Economic Development Coalition (Lawrence McKinney), the Norman Chamber of Commerce (Scott Martin), and Visit Norman (Dan Schemm) have been promoting a $1 billion district. 

The contractual agreement falls well short of this.  The development agreement outlines the legal obligation of taxpayers:  up to $600 million paid out for as long as 25 years to finance $230 million in costs for the anchor project (arena, parking structure and public infrastructure).  

The TIF district would take 100% of sales taxes and property taxes paid in the larger increment area for improvements made on land owned by OU Foundation.  Instead of tax revenues flowing to City, County and school budgets, they would go toward the costs of an arena and parking structure. 

What are OU Foundation and their development partners proposing to do?  Not a $1 billion project that has been presented as the maximum potential cost of a larger project in the area. 

OU Foundation proposes to facilitate" the construction of $650 million project on land that it owns.  The $650 million includes $230 million for the arena, parking structure, and public infrastructure paid for by TAXPAYERS. 

The private investment portion is only $420 million!

The entertainment district includes a boutique 8,000 seat arena (the smallest in the SEC), a 1,200-spot parking garage, a plaza, and 140,000 square feet of bars, restaurants, and retail. We are talking about a block and a half of downtown Norman or Campus Corner adjacent to an area. 

The proposed project plan adds up to $650 million, not $1 billion. 

Here's a graphic that Dan Munson created to illustrate. 

Debunking Myths: Arena TIF WILL Negatively Impact Norman Schools

 In this article, I will explain how the Arena Tax Increment Finance (TIF) plan will take revenue growth from Norman Schools.  Imagine you plan for 4.25% tax revenue growth but some of that will go to a build an arena instead of flowing to your budget.  This is the situation with the Arena TIF.   

I will dispute some misleading/incorrect assertions made to make it seem that the Arena TIF does not harm public education.  We want the project to leave school funding harmless. This, however, is not going to happen for a project that could grab $389 million in property taxes. 

Myth #1 - The Arena TIF does not impact current budgets so it won't harm schools.

Discussion: Whereas it is true that current budgets are not impacted this is a silly statement. The TIF plan impact budgets going forward.  Future school revenues will be impacted. (see details below)

Myth #2 - Norman School District will not benefit from revenue collected in the TIF district because the school aid formula will offset new school revenues.  

Discussion: This is clearly false.  Not all school taxes are factored in the school aid formula. As properties come onto tax rolls, Norman Schools get more revenues.  TIF grabs school taxes that would otherwise go to schools. 

Myth #3- Nothing would happen in the Arena TIF district without spending $600 million on the arena, parking garage and public infrastructure.

Discussion: This is a far-fetched claim.  (1) The Arena project mostly involves moving (OU sports) and replicating entertainment opportunities (bars and restaurant) already happening in Norman. (2) The tax diversion district includes properties that have no commercial retail restrictions, are adjacent to operating businesses and the Young Family Athletic Center which attracts a lot of foot traffic. These will go on the tax rolls without an arena. (see details below)

Here are some slides with details:

Guest Post: Is there an 8,000 seat arena opportunity gap?

In this Facebook Post, Norman Resident Dan Munson provides interesting details which challenge the claim that an 8,000 seat arena in Norman would fill an "opportunity gap."  According to Munson, there does not seem to be a gap in the OKC metro area.  

Here's what Munson wrote:


The proposed arena in the University North Park (UNP) is projected to seat 8,000 people.  The current arena (Lloyd Noble Center) seats 11,528 people.

The University of Oklahoma foundation, Team Norman, and the developer claim that there is a gap for arenas in the midsize range.  I don’t agree with that assessment because 22 miles away there is the Jim Norick arena (10,944 capacity) and the new OG&E coliseum that is projected to open in April 2025 that will hold between 7,000 to 8,500 depending on the event.  Other Oklahoma arenas include Fire Lake arena (5,000 seats), Mabee Center (10,094 seats) and the Lucas Oil arena (6,500 seats). The Lucas Oil arena completely dominates the concert market in Oklahoma.  During public comments, I asked why Lucas Oil arena wasn’t considered in the market analysis for the Hunden report or the HVS report and received no response.

Booking concerts, large family events, and comedy shows will be the key to financial wellness for the proposed arena. The other arenas listed above have established relationships with the large concert promoters like Live Nation. These concert promoters are key to getting dates booked at an arena. I believe the University of Oklahoma has been woefully unsuccessful utilizing the Lloyd Noble arena for concerts.  The Lloyd Noble center has no established “muscle memory” as it pertains to concerts. This will increase the difficulty to attract future concert dates.  I believe the only way to win in a situation like this is to offer additional revenue sharing to the concert promoter which isn’t good for the longer term financial wellness of the arena because they will not likely have the funding to properly maintain the arena.  

The SEC had conference-wide average attendance for men’s basketball games of over 11,000 in 2023, with the sole arena that is off campus being Kentucky basketball’s Rupp Arena having an average attendance of 19,928 for men’s basketball this season. Rupp is only 0.7 miles off campus.  Building an arena that seats 3,000 less than the average attendance of the SEC that is about 5 miles away from campus, doesn’t seem like a good long-term plan unless the University of Oklahoma is planning to be uncompetitive in basketball.

During the Q&A’s someone asked if the Lloyd Noble Center would be torn down after the new arena was built.  The answer was “No”.  If the LNC isn’t torn down, did someone get a non-compete letter signed by the University of Oklahoma for the Lloyd Noble Center?

Does UNP warrant $600 million more public spending? (Guest Blog)

Norman Resident Dan Munson posted this article on Facebook (see link below). It discusses how much public funding has already been spent in the University North Park District. It also points out the large ownership that the Arena TIF development partner, Rainier, has in the UNP TIF district south of Rock Creek Road.  The original TIF was launched in 2006 and now has maintenance issues even while the project is still moving toward full build out. 

Here's what Dan Munson wrote:

The city of Norman has invested more than $100M in the University North Park (UNP) area with Norman Forward & TIF funded projects. There have been substantial investments in infrastructure in that area since 2006. Legacy Park & The Young Family Athletic Center (YFAC) are two major projects that have helped drive an increase in revenue to businesses.

When UNP property owners don’t maintain their properties (to include parking lots and landscaping) there isn’t any recourse for the city of Norman since it’s considered private property.  When I drive through portions of the UNP, I see potholes, large cracks in pavement, and parking lots that should have been resealed and stripped years ago. I also see dead trees and unkept landscaping in some areas.

Perhaps, I’m just old fashioned, but I think when we give UNP property owners a $100M+ gift, we should expect they keep up with the maintenance of their properties.  I believe that if we allocate an additional $600M to expand the UNP TIF area then we’ll just see more of the same in years to come. 

The TIF applicant (*Rainer) has been a 50.4% owner along with South African REIT Emira Property Fund who is a 49.6% owner (more on the South African Emira tomorrow) since June 2019. According to Rainer’s website (link in comments) they jointly own Super Target, Crest Foods, Academy, Dollar Tree, Home Goods, Kohls, Petco, TJ Max, and Ulta Beauty.  I’ve included some photos of their properties and others in this post. I believe these photos represent a very small sample of the maintenance needed.  I would encourage you to take a drive or stroll through the UNP starting at Target and ending at Guitar Center to see for yourself.

Since the city of Norman is unable to enforce property maintenance on private property, we should consider changing the form-based code in the UNP to require all parking lots to be made with concrete rather than asphalt for all new construction moving forward. Concrete parking lots are significantly more durable, can withstand hot weather, they radiate less heat, and can be textured to improve safety.

https://www.facebook.com/groups/1547280172174370/?hoisted_section_header_type=recently_seen&multi_permalinks=3990267434542286&__cft__[0]=AZXnBlDNGPLefX6lHcsXtHRzuY8H6pGwey10b3L09Q1mGzk8w3UhvjVVhDlOT-RSJI8eLru_P9vhJngQYpjNQ_S6ebROlVgxHulw_CQII0NMiubu0VqbMgR1kALsjvHEc5U0JUmmZHjVWMczVqoDDcNgC8DxsJ1z0mSjqeZb94oNnYDfudCBX8RgRhL7CzoMEzWMvaEnhJsH5-cu4PpPCeV4JoadJlDz5CYiTQdxCJ6IUGDB1XbqzoWndeUEriM50z4&__tn__=-UC%2CP-y-R

Referendum to put the Arena TIF plan to a vote

This article has information about the petition process. 
Norman residents want public vote on arena and entertainment district (newsbreak.com)

Once filed, petitioners will have 30 days to collect signatures.
6200 signatures are needed to put the project plan ordinance to a public vote.
Signatures must be from registered voters who live in Norman.

A nonprofit has formed to organize the referendum petition.
See Oklahomans for Responsible Economic Development for more information (responsibleok.com)

About 40 people attended a training on how to collect signatures.
Women In Action for All Norman organized the training.
There will be a second training event on Tuesday, September 24th.

I will be at the training to answer questions about the Arena TIF plan, how it impacts the city and school budgets, and how it displaces activity from nontif businesses. 

 

Articles on how TIF works (and doesn't work)

 Does Tax Increment Financing Really Work? Usually, No. - Bloomberg

Your Questions Answered: Is TIF Always Bad? (strongtowns.org)

Trouble with UNP Arena TIF: Slides explaining how TIF hurts City Budget