UNP ARENA PLAN: PRICING TO PERFECTION, CANARY IN COAL MINE
Norman's UNP TIF #2 advisory board met on April 7, 2024 to discuss the proposed arena/entertainment district in the north part of the University North Park area. Only 4 members were present (Dr. Greg Burge, Attorney Robert Norman, Developer Bill Wilson, and Norman Schools CFO, Brenda O'Brian). Without a quorum, no voting action could be taken. The committee members asked some great questions.
Discussion centered around three studies which provided projections for different versions of "THE PLAN" plus commentary provided by me (Dr. Cynthia Rogers, OU Economics Professor).
Hunden Partners - provided economic activity projections based on assumed net new activity for Cleveland County. Does provide some fiscal impact analysis based on full-build out scenario.
Rainer/Lincoln provided projections to the UNP Arena/Entertainment district statutory review committee. These projections included land south of Rock Creek adjacent to the Young Family Athletic Center in the increment calculations.
OK Department of Commerce - provided projections of multiplier effects from inputting completed project plan into a regional econometric model (Remi). Details of model inputs, or model details, were not provided.
SCHODINGER'S PLAN
Committee Chair Dr Burge: Project plan is STILL in the works. No one has seen the proposed plan yet. The studies inform a plan that is not completed, which begs the question of how one can assess a plan that doesn't yet exist. How useful are studies of non existent/partial/incomplete plans?
Dr. Burge: Dept of Commerce and Hunden Partners reports follow similar approach. Base figures on estimates from key stakeholders that have provided market values and additional land controlled by NEDC which has that has given "some level" of commitment. Best practice (due diligence):
1. Generally get independent analysis - not just info from developers and main beneficiaries of public spending
2. Contemplate more than one scenario and look at projected vs. collected for similar projects, and city's own projections.
Did not see any of that discussion. Only saw "Pricing to perfection" projections.
Francisco mentions projections made by Dr. Lex Holmes (OU Regents Prof, former State Budget Director) in 2005/2006. [COMMENT - Holmes made projections of retail sales activity - he did not do economic impact analysis or consider impacts on sales activity outside the TIF. We see that the city budget DID suffer from displacement of retail activity and related tax revenue collections - which drove the city to end the increment diversion.]
Francisco - City's job is to say is this [the full build out] is realistic. Burge - are there going be any discussions of net present value discounting. Reports show profits 5 years, 10 years out and comparing to present value of costs. Francisco - yes - going to do that.
Dr. Burge - need more serious discussion of cannibalization - impact on Lloyd Noble current and future activity and impacts on city budget.
Francisco - Hunden Report did a better job of that then Dept of Commerce. Dr. Burge - Hunden didn't give discount present value. Even if just take Hunden's best case scenario without discounting, rate of return would be less than 1% a year - can get better return from investing in bank without risk.
DOUBLE TIF-ING LAND IN ORIGINAL UNP TIF #2/ CANARY IN THE COAL MINE
Committee Member Robert Norman asked how/when properties South of Rock Creek were added to the UNP North TIF. UTC (University Town Center, LLC) owns land in south. UNP LLC and UTC are both subsidiaries of OU Foundation. PUD zoning for south allows commercial and other uses. North has limits on commercial, residential and convenance preventing retail in the north, part of negotiations.
Robert Norman - thought idea when settled to end UNP TIF #2 increment diversion was to stop devoting TIF money to increment district. Young Famity Athletic Center (YFAC), opening area south of Rock Creek, was part of negotiation. YFAX used Norman Forward (special purpose sales tax revenue and UNP TIF #2 funds to purchase UNP Land and create a publicly owned and operated facility).
The south part was going to be fully returned to the city. Now to say we want to TIF this south bit, seems like double dipping with south TIF. Developing around YFAC is going great guns, in position to do deals. Area does not qualify or need TIF financing. That little area south of Rock Creek - does not qualify in intent or spirit of the local development act.
Why included? Right by YFAC. Great benefit to city, county, and schools to realize tax money from YFAC related activity. Taking away promise to end the UNP TIF #2 diversion. Canary in coal mine - is the deal feasible without capturing 100% of sales tax and ad valorem in that little spot. It makes a difference if we a draw line at Rock Creek and bring forth new TIF.
Burge: is there precedent to double TIF land? No answer.
Norman: Not supposed to TIF land that is primed for development already. Raises red flags that this is suddenly being included.
Norman - what is UNP LLC going to do with land north of Rock Creek in tif - sell it? be landlord? UNP LLC (wholly owned subsidiary of OU Foundation) - their rational thinking is they have open land and in $2 million fund raising campaign. How to accomplish goal to fund OU? Land development is the driver of the choice to locate arena in the UNP North area.
City Attorney Walker - not privy to that info. City finance director, Anthony Francisco, thinks OU Foundation would form another LLC to develop/own/operate.
WEATHER MUSEUM STATUS IS UNCERTAIN
What about the proposed Weather Museum? Sean Reiger (representing OU Foundation) had spot for it, but said it was not part of TIF increment. Francisco - in district but not approved project to receive TIF funds. Francisco - not certain if it would help financing.
LESS PARKING THAN AVAILABLE AT LLOYD NOBLE CENTER (LNC)
Parking - 1,200 parking spots proposed, and Lloyd Noble has 4,600 which fill for big events. Committee Member Bill Wilson: Where will people park? Francisco - part of PUD discussion. YFAC is discussing shared parking and circulator transport. Robert Norman - in 2018 mentioned lack of parking around OU stadium, park in streets, etc. Answer - go away from LNC model with enormous parking lot surrounding facility. Begs question of where you put them. Wilson - no neighborhood to absorb street parking.
PLAN DOES NOT PROTECT CITY/COUNTY/SCHOOL BUDGETS FROM CANNIBALIZATION
Dr. Burge - looks like Dept of Commerce jobs analysis was jobs being pulled out of Lloyd Noble. Jobs in new arena were old jobs in Lloyd Noble. There would be nearly 1 for 1 cannibalization of arena/event staff. Walker - jobs for office development (but this would also cannibalize office jobs outside of TIF).
Robert Norman - would there be cannibalization adjustments to TIF increment [transfer adjustments]? Under TIF #2 if retail moved from within Norman to TIF then this was taken out of increment [ in fact, this happened to only a very limited extent]. Settlement to UNP TIF #2 - tried to protect schools.
Francisco - thinks b/c TIF #4 is not retail based, there is not much need for anti-cannibalization restrictions. City new that UNP TIF #2 included Target moving from Main Street. No big Target store for relocation. Winston is not driver to general fund.
Robert Norman - area around YFAC would be taken out of city/county/school funds. This is a problem. South of Rock Creek IS retail. Don't have analysis of how much sales tax is being forgone by including that in the TIF #4 increment. Area around YFAC will go great guns with all the YFAC activity.
Can mitigate some of the hit on city/school budgets with cannibalization requirements.
NEXT STEPS - STATURORY REVIEW COMMITTEE EVALUATION & PLANNING COMMISSION
Planning Commission application has been postponed yet again - to June.
SRC is scheduled to meet May 13, 16, and 23.
How can SRC evaluate a plan that has not been created or presented to Planning Commission?
