Referendum Effort Almost Doubles Signatures Needed

This article provides a brief history of the referendum petition related to the proposed UNP arena district in Norman, Oklahoma. Link to project plan

City Council approved an ordinance creating the Rock Creek Entertainment TIF district by a vote of 5 to 4. There were two public hearings held two weeks apart. These were contentious for multiple reasons. The opposition to the ordinance led to the creation of the non-profit, Normans for Responsible Economic Development and a referendum petition effort that submitted 11,602 signatures to the City Clerk.


FIRST PUBLIC HEARING

The first hearing on September 3, 2024 was intended to be a question and answer format.  Residents were not aware that comments had to be made in a question format and some were deterred from commenting. 

Notably a group of OU students showed up two hours early for this meeting.

OU Daily photo showing group of students at first public hearing

SECOND PUBLIC HEARING: 

The second hearing on September 17, 2024 was grossly one-sided.  OU Foundation and the Texas Development partners (Rainier) were given as much time as they wanted.  OU President Harroz was given time to make comments even though OU is not a party in the economic development contract. OU Foundation is the landowner and developer of record.

Subject matter experts were limited to 3 minute comments. Attorney Robert Norman, who sits on the University North Park TIF #2 committee and has knowledge of the contents of the ordinance and the development agreement, was given 3 minutes to make comments.  Dr. Cynthia Rogers (that's me), OU professor of Economics and subject matter expert on TIF, public finance, and local economic development was also limited to 3 minutes. 

OU STUDENTS WERE OFFERED PAYMENT TO OCCUPY COUNCIL CHAMBERS

Over 60 OU students attended the meeting, showing up early and taking seats in the City Council meeting room.  OU President Harroz pointed them out and a made a big deal about their attendance.

It was later discovered that those students were offered payment to show up and serve as props.  When OU Daily asked students why they showed up (audio) none mentioned they were offered payment. OU Daily obtained a message sent by OU Sophomore, David Echols, which offered payment to students to attend the meeting.  Echols denied sending the message despite the evidence (OU Daily article).   

OU Daily's investigation discovered the source of the payment offer - Jayke Flaggert, an OU alumni, a former employee and current subcontractor for Norman Economic Development Coalition (Link to OU Daily article).   It is unclear who covered those payments.  NEDC, OU Foundation, OU Athletics, OU President's office have all denied knowledge of the payments. Link to OU Daily video

DEVELOPMENT AGREEMENT WAS NOT DISCUSSED 

The development agreement which creates the contractual obligations related to the TIF ordinance was released to the public a mere 4 days prior to the second public hearing.  There was little time to dig into the peculiar and vague language and there was not additional/separate public discussion on the actual contract.

COUNCIL APPROVED TIF ORDINANCE 

City Council approved the creation of the UNP Arena TIF with the minimum number of votes needed in a 5 to 4 vote. Voting for were Mayor Heikkila, council members Scott Dixon (Ward 8), Matt Peacock (Ward 2) , Joshua Hinkle (Ward 6), and Austin Ball (Ward 1).  Voting against were council members Bree Montoya (Ward 3), Michael Nash (Ward 5), Helen Grant (Ward 4), and 2025 mayoral candidate Stephen Tyler Holman (Ward 7).

OKLAHOMANS FOR RESPONSIBLE ECONOMIC DEVELOPMENT (ORED)

ORED is a grass roots, non profit organization formed by Norman residents who seek to provide residents with a voice in economic development matters.  Their first action was to organize a referendum petition allowing Norman residents to vote on the UNP Arena TIF ordinance.  ORED website

A referendum petition is built into the Local Development Act which enables the formation of TIF district in Oklahoma. It is the last recourse for voters if they do not agree with a legislative action.  A petition requires considerable effort and organization. There are specific requirements for the petition packets, including the wording of a gist statement summarizing the issue, the signature page, and a copy of the actual ordinance to be put up to vote. Once the packet is drafted, it is filed with the City Clerk who reviews it and then stamps the date it was filed.    

REFERENDUM PETITION SUCCESS

The referendum petition on the UNP Arena TIF ordinance was filed by three Norman residents, Pamela Mccoy-Post, Paul Arcaroli and Richard Sondag, on Sept. 20. If successful, the petition would put the ordinance approving the UNP arena TIF to a public vote on February 11. The required number of valid signatures is 25% of the number of voters who cast a ballot in the most recent Mayoral election, which was 6,098 in this case.                                      

Over a hundred volunteers participated in the signature gathering process. Women in Action for All of Norman organized training events for volunteers to understand the legal requirements for collecting signatures. Volunteer notaries were available for notarizing signed petition packets.  Several businesses, including Stash, Green Feather, Alameda Market, B&B Liquor Market, supported the effort by having petitions on hand. Roots Salon allowed a tent to be in place daily for drive-up signature gathering. The location was moved to Yellow Dog Coffee's parking lot for better traffic Flow. Pink Pig and St. Stephens UMC allowed petition collection and notarizing on their premises.

Photo from OU Daily article  Link to OU Daily article

On October 15, 2024, ORED and petition volunteers submitted 11,602 signatures on the referendum petition. 

"Municipal Referendum Act and the Local Development Act required us to get 6098 signatures, I am happy to tell you that our official signatures we are submitting is 11,602," said Attorney Rob Norman. (Fox25news)

WHAT COMES NEXT?

The city clerk has 30 days to validate that enough signatures from registered voters in Norman were collected. 

Then there is a 10 day period for challenges.  There was a challenge by 3 former Norman mayors the last time residents filed sufficient signatures for a referendum petition on the UNP TIF #2 amended project plan. 

If the petition survives legal challenges, then voters will get to cast a ballot on Feb 11. Legal challenges could delay the vote to the April election.

Arena Referendum Offers Community Building Opportunity

This letter to the editor was published in the Norman Transcript, October 23, 2024.
link to lte

Arena referendum offers opportunity for community building

Norman’s experience with TIF targeting public spending in the University North Park district between Robinson and Tecumseh continues to divide our community. Norman has been here before. Lather, rinse, repeat.

A referendum petition is the voter’s goal line stance against controversial projects approved by council. All council votes on UNP TIF projects have been controversial.

The proposed UNP Arena TIF was approved by a 5 to 4 vote, the bare minimum needed. The original UNP TIF #2 for the Target anchored retail strip mall and the amended TIF #2 agreement which ended the TIF diversion to balance the city general fund also passed with only 5 council votes.

The referendum petition offers a chance for community dialogue and engagement that should have happened at the beginning of the process.

Do Norman voters want to spend up to $600 million tax dollars on an arena rather than other things? Do Norman voters want to pour more tax dollars into the UNP area which already benefited from TIF #2? Would other areas give a bigger band for public tax spending infusion? Do Norman voters trust a county authority to build, own, and operate an arena? What happens if the project goes belly-up before completion?

This is not the first Norman referendum on UNP TIF projects. In 2019, citizens collected enough valid signatures in to put the amended UNP TIF #2 agreement to a vote. In exchange for ending the TIF diversion which was needed to balance the city general fund, the developers were no longer required to completing the promised (and still not built) lifestyle center or refund its share of Legacy Park which was tied to lifestyle completion. Legal challenges prevented voters from getting to vote on the agreement.

A referendum petition is citizen’s only recourse when the process does not lead to a plan broadly acceptable to voters. Mayor Heikkila, OU Leadership, Norman Economic Development Coalition, and the UNP arena development partners have demonstrated a gross disrespect for citizen input and the petition process.

A referendum petition is the red zone for creating a TIF district. Gathering over 11,600 signatures is not an easy or cheap task. The level of community support for the petition demonstrates a strong and clear message about the TIF plan.

As Norman resident await signature validation, what will Norman business and OU leaders be doing? Will they pursue legal tactics to try to throw out the strong and clear desire to vote on the project? Will they, instead, participate in forums and townhalls with balanced discussions?

If the arena project is so good for Norman, make the case, engage the community, respect the process. Let’s brainstorm as a community on financing that makes sense and does not burden future city, county, and school budgets.

Above all, please be good neighbors.

Cynthia Rogers, Norman

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

 

OU Foundation owns most of the proposed UNP Arena TIF district

 

It is always good to check the facts when developers bring projects forward asking for large amounts of public tax spending. 

The City of Norman has brought in the Center for Economic Development Law and also CoAlign to "run" the TIF numbers. O'Connor from CoAlign gave the city's presentation at the first public hearing for the proposed Arena TIF project in the north half of the University North Park. 

 O'Connor tried hard to make it seem like the difference between the City's independent analysis by HVS and Hunden was how much Land OU controls.  HVS was hired by the Center for Economic Development Law to do economic impact analysis of the project. The performed estimates for a project that was significantly smaller than the original ones provided by OU Foundation and Rainier Partners done by Hunden Partners. 

FACT CHECKING SHOWS THAT OU FOUNDATION OWNS MOST OF THE LAND

The bulk of the project spending would be for an arena and parking structure in the "improvement area" outlined in yellow. This is ALL owned by OU Foundation. 

OU Foundation controls 159 acres if the data at the assessor's office is correct.

Of the land in the larger project area, the stuff outlined in red is already set to pop.

Southwest Wire has an industrial site and has stated it does not want to be included in the TIF district.

What about the remaining lots that might be developed in connection with the arena?

Norman Economic Development Coalition and Moore-Norman Vo-Tech are the primary land owners of the "larger" project area

The taxes paid in the larger increment district will be used to funnel public spending on OU Foundation land.  OU Foundation and OU don't even pay property taxes making it interesting that they want to grab taxes paid by other businesses. 

If you think of it this way, it is a shell game - where do the tax dollars flow?  From one budget to another.  

UNP TIF #2 Oversight Board REJECTS arena TIF district

 

At the June 18, 2024 meeting, the UNP TIF #2 Oversight Board voted 3- 2 to reject the Rock Creek Entertainment Tax Increment Finance District Project Plan Ordinance. You can find the meeting minutes here: Minutes.

Voting against were Dr. Greg Burge, Attorney Rob Norman, and local builder William "Bill" Wilson. 

Dr. Burge is the Oversight Board Chair and the Economics Department Chair at the University of Oklahoma. Dr. Burge is a nationally recognized expert in housing, public finance (impact fees), and real estate economics. https://sites.create.ou.edu/gregburge1978/curriculum-vitae/

Robert Norman who was a leading advocate for Norman Forward Quality of Life special purpose sales tax program. Attorney Norman has a high level of understanding of legal aspects of development agreements as well as displacement effects which result when you bring new stuff in one area of town causing consumer spending to shift from other areas of town. 

William "Bill" Wilson was first appointed to the board in 2015 and is the longest serving member. He has observed the challenges of holding UNP developers/OU Foundation accountable for completing promised development. Mr. Wilson has developed projects in Norman, including a building in downtown Norman.

Voting in favor of the plan were banker Kurt Lee and accountant Kamie Kellis. Mayor Heikkila appointed both in 2022.  

The overriding concerns of the majority of the Committee, included

(1) The amount of future City sales tax and multi-jurisdictional property tax revenue that would be pledged toward the project for up to 25 years; 

The sales tax pledge is $151 million and the property tax pledge is $389 million.  These tax revenues won't go to original taxing jurisdictions. 

(2) the inclusion of properties in University North Park that lie outside of the proposed Entertainment District within the tax increment area;

The increment district includes properties south of Rock Creek Road which were in the original UNP TIF #2 increment district.  These were part of that original project which has spent about $74 million in tax dollars for project costs. 

(3)  The potential negative impact on Norman businesses and the City's General Fund and Capital Sales Tax Fund through "cannibalization" and diversion of customers from areas of the City outside of the Entertainment District to businesses in the Entertainment District.

The shifting of customer spending from outside the TIF to TIF stores negatively impacts the city general fund.  Estimates of these impacts have not been clearly spelled out in the Hunden Partners study which informed the project plan.  The recent HVS study provides estimates which can be used to evaluate the annual impact on the city general fund.  The Statutory Review Committee and the Oversight Board did not have such analysis when they were asked to evaluate the plan.

(4) Who will own and operate the proposed arena and parking garage? 

Mr. Francisco mentioned that this has not been decided. There have been discussions about some sort of city-county authority. The City has no plans to be the owner/operator.  

UNP TIF #2 Oversight Board Meeting clarifies Issues with Development Agreement

The minutes of the University North Park TIF (#2) Oversight board meeting held on July 16, 2024 spell out problems with the arena TIF development agreement. UNP TIF #2 Oversight Board Minutes

The Economic Development Agreement does not define project or commit developer to completing minimal development beyond an arena.

Comments by City Finance Director, Anthony Francisco:

“Before the recommendation will go before Council formally, we want to have an Economic Development Agreement that basically puts meat on the bones if you will, that makes all the contractual parties bound for what is in that Project Plan,” Francisco said. The Economic Development Agreement has been in negotiations for several months. There have been what Francisco describes as the following “sticking points” which have been communicated by City Council and the City Attorney’s Office to the developers and the developer’s counsel:

1. There needs to be an obligation to do a specific and defined project;

2. The project needs to name a specific party that is the main developer;

3. The developer’s counsel proposed changes to the draft Economic Development Agreement that makes the TIF revenue payments to the developer dependent only on construction of the Arena and not the entire District, leading to default concerns. "



Access to I-35 is not under design. 

The proposed East-west Access Oklahoma Turnpike put a stop to the design of the interchange which would serve the arena entertainment district. 

City interim public works director Scott Sturtz commented:

“There is a big circle on the map that basically says that ‘this (Rock Creek and I-35 intersection) needs further study.’ They did not get far enough along to make recommendations,” Sturtz said. “Again, this is all preliminary. They are pretty good concepts, they’re laid out pretty well, but I wouldn’t say there’s anything that’s definite at this point.”

TIF Project Plan does not detail developers' obligations to build anything

The first of two public hearings for the proposed Arena entertainment district in northwest Norman is scheduled for September 3.  Incredibly, the actual project details beyond an arena and parking structure have not been clearly defined.  The ask is for up to $600 MILLION tax expenditure to repay the financing costs of $230 MILLION for the arena and public infrastructure.

What will City taxpayers get for that huge 25-year spending project?

The TIF Project plan details taxpayer legal obligations via establishing the TIF increment district, and the diversion of tax revenues collected in the increment district to the TIF fund for authorized TIF projects (up to $600 MILLION).

What is included in the development? The Arena project plan gives only the vaguest of details about what is planned.

"The project includes the development of a multi-purpose arena to be used by the University Oklahoma basketball and gymnastics teams and the venue for high school and other sports activities as well as concerts and other performances. The development also includes commercial, and retail uses with restaurants and bars and a public festival plaza street, a public parking garage, as we as over 1000 residential units."   https://www.normanok.gov/sites/default/files/documents/2024-08/project_plan_entertainment_district.pdf

What are the Texas developers, OU Foundation, and OU legally required to do to get the $600 Million in financial assistance?

The developer obligations are established in the Economic Development Agreement? The EDA has not been released to the public presumably because it is still being negotiated. 

Will OU be locked into a 25-year lease??

Will the Texas Developer be locked into building at least 750 apartment units? What if only 500 get built, will the arena costs still be covered?  

Will OU be locked into providing some up front $ to cover part of the $330 million arena+parking costs? 

Will OU Foundation be on the hook for part of the costs?

What is the minimum retail needed to get repayment of the arena costs?  The Hunden partner's analysis projected 240,000 square feet of retail/restaurants but the lastest city-funded analysis by HVS only projected 120,000 square feet.  

Who will OWN the arena?  Private? Public? If public when will "the public" get the deed? 

Who will borrow the money to build the arena?

The bottom line is that the project plan sets out taxpayer costs/payments but NOT developer commitments.  

You wouldn't agree to house mortgage without knowing what house you are buying. This is a similar situation, folks  

Also notice the 3-2 NO vote by the UNP TIF oversight Board does not seem to be included with the agenda or project plan documents.  Oversight? Intentional?  

Don't Yum Center my Norman! 
The Yum! Center provides a useful cautionary tale about how mega projects centered around university sports can fail.   Getting STIF[ed]  

Public Finance of Arenas: Ask Economists, Get Answers - OU Econ Club Event

 
The University of Economics hosted an economists panel on the public finance of sports arenas.  The panelists shared the conclusion from data-driven research:  publicly financed sports arenas have not been shown to be economic drivers.   Rather, arenas tend to move where consumers spend money in a local economy. 

Here's a link to the youtube video of the forum. OU Econ - The Public Finance of Sports Arenas - YouTube

Norman Oversight Committee rejects Arena TIF Project Plan

The University North Park TIF #2 oversight committee met on June 18, 2024. Six members were present representing a quorum.  The committee discussed the proposed Rock Creek Entertainment District Tax Increment Finance Plan which would create two new TIF districts to pay for the costs of an arena + parking structure + district infrastructure. 

The project costs are estimated to be $230 million with up to an additional $370 million in financing costs.

The TIF structure is unusual for two reasons. First, the Texas developer, Rainer, LLC would take out a loan and the City would commit to paying off the principal plus interest costs. Second, 100% of the sales and advalorem taxes collected in the increment district would be used to pay off the debt. TIF usually split revenue growth in an increment district so that taxing jurisdictions share in the growth for the entire life of the project.  

Here is a summary of some of the key points: 

1. The committee approved the PUD and rezoning that went through the planning commission last week. The general sense was that this was an issue for the planning commission and that the Tax Increment Finance plan was what the TIF committee should focus on.

2. The committee rejected approving the Rock Creek Entertainment TIF project plan by a vote of 3 no to 2 yeahs with one abstention by the soon-to-be-new CFO of Norman Schools. Notably, the NPS Superintendent votes yes to the exact same plan at the statutory review committee last month. The superintendent had commented that his vote did not represent the opinion of the school board which had not discussed the matter yet. The school board did discuss the plan at their June meeting and expressed concerns about the impact on the school budget. The four members who were present 3. City council approved putting the arena TIF project plan to a public vote last week. The ballot language has been submitted to the county election board for an August 27th vote. There have been no lawsuits challenging that action to dates according to city attorney Walker. 4. Committee members asked for analysis of how including the lots south of Rock Creek by the Young Family Athletic Center and the industrial lots at the far north of the district would impact the project financing. These are not related to the arena or new housing development. Such estimates have not been done. City Finance Director Anthony Francisco estimated that 5 lots of fast food might generate about $250,000 in general fund sales tax revenues. There are approximately 12 lots in the south area. 5. Committee members pointed out how cannibalization is not just moving businesses but also moving where people shop and spend their entertainment dollars. This sort of shifting means less tax revenues would accrue to city, county and schools from outside the TIF leaving less money for public services - police, fire, public works, etc. 6. TIF consultant pointed out that if all the possible yet to be developed sites are not included, the project won't make. Committee member pointed out that the committee is supposed to look beyond whether the financing works but also at how the city as a whole is impacted. You can find the agenda packet here Development Oversight Committee for TIF District No. 2 Meeting-AMENDED | City of Norman Oklahoma Meetings (municodemeetings.com)

Something WILL Definitely Happen in Arena TIF District Without an Arena!

TIF is not that complicated. You divert tax revenue growth from a given area for project costs.  

The CRUCIAL question is not the situation today (are tax $s being generated now) but whether the area would growth without the TIF (fancy word is the "but for" condition). 

Can anyone with any sense make a credible argument that the increment area won't grow at all for the next 25 years? Absolutely NOT!

Even the Hunden Partners report assumes that growth WILL happen in the TIF district without a new arena. 

Sooner Investments makes a clear case that this area is prime real estate. University Town CenterNorman, OK - Sooner Investment

 "UNIVERSITY TOWN CENTER is Oklahoma’s premier destinations for shopping, dining, entertainment, and lodging! Located off Interstate 35 in the vibrant University North Park district, University Town Center is a power center, developed around Legacy Park and the Legacy Park Trail. At the center of the development is the Legacy Park lake, which boasts impressive water features and fountains, as well as an amphitheater that hosts a concert series and and many other events. Legacy Park Trail will take pedestrians from the hotel district to Legacy Park, through the shopping center, and out of the development, through the city to Historic Downtown Norman and the University of Oklahoma." 

To the extent that the district will grow without a $600 Million arena spending plan, then taking 100% of tax revenue growth from the district WILL hurt city, county and school budgets. They will get less tax revenue growth during the period it takes to pay off the project debt (up to 25 years).

Don't be fooled by the attempts to avoid the real issue - it isn't what is there now, it is a matter of what will likely happen without a new arena. 

Housing, is half of the proposed development area - this can and will happen in Norman without a new arena. The Arena TIF will influence where that housing will happen and where related tax revenues will go (to City and schools or to pay off Rainer LLC's construction loan).

New Bars and restaurants (which make an arena an entertainment "district") don't put more money in people's pockets but will spread out where those entertainment dollars are spent.  If entertainment budgets are spent in the Arena TIF district INSTEAD of other areas of Norman, then city and school budgets are harmed. We call this displacement effects.

The Local Development Act even excludes the use of TIF from areas which would have had developed anyway (without the project). 

Note the TIF increment diversion area INCLUDES all yet to be developed land - even lots that will surely attract private capital in the very near future.  

How would UNP Arena impact Norman Public Schools? Background, Questions (and answers)

 

What is Tax Increment Financing?

It is a way to finance debt for a capital project. It allows tax revenues collected in a designated area (increment district) to be spent on TIF project costs instead of going to original taxing jurisdictions. Incremental taxes are the growth in taxes generated in the increment district above the baseline which is typically frozen at the pre-TIF level. The TIF agreement establishes the % of the incremental taxes diverted to TIF projects.

Legal Authorization of TIF Districts in Oklahoma

• Authorized by Article X, Section 6C of Oklahoma Constitution
• Established pursuant to Local Development Act, Title 62, Oklahoma Statutes, Section 850 et seq.

Length of Increment collection period and TIF project

• TIF plans set the length as the minimum of the time needed to pay for project costs or a set number of years (25 years is maximum allowed)
• 25 years is common, but not universal maximum length of increment collection period
• Enid (#7) – 10 years, Sapulpa (#4) – 15 years; El Reno (#4) – 20 years.

Life of TIF (vs. Increment diversion)

• A TIF is closed out when all funds are spent OR the termination date is reached (25 years is max by law).
• The UNP TIF #2 increment diversion ended in 2019 but the TIF district will end in 2030 or when the remaining funds are spent.

The UNP Arena Project Plan proposes two new tax increment finance schemes which have the same increment district from which 100% of sales taxes (TIF #4) and ad valorem taxes (TIF #5) are grabbed

The sales tax diversion (TIF #4) would start sooner to reflect the retail that is ready to be built south of Rock Creek across from the Young Family Athletic Center. This area is site ready for new construction.

1.      Why is the land south of Rock Creek, adjacent to the Young Family Athletic Center, in the district from which tax revenues will be used to pay for arena project costs?  How does re-TIFing this property impact NPS budget?  Isn’t the goal of a TIF to give up funds for a while to get more later? Won’t this plan grab some of the payoff from TIF #2 for up to another 25 years?

Answer: This land is probably the most valuable undeveloped real estate in Norman. It will develop without being in a new TIF district. The project needs quick revenues to start paying off the debt. The Rainer Associates LLC is taking on debt before revenues flow in.

IMPACT on NPS: Giving this up will hurt NPS budget – it is revenue growth that would otherwise go to the school budget (sinking, general and building funds) without the TIF. 

 

2.   Isn’t 25 years a long time to lock in on a TIF?  The last school bond was historically large ($ 350 million) and long (10 years vs. 5 years for previous bonds). Are shorter TIF allowed? Would shorter TIF plans make school budgeting easier?

Answer:  25 years is the maximum allowed.  Developers like the longer period to keep a project live and allows flexibility for renegotiating and maximizing opportunity to spend all the designated funds. 

Examples of shorter TIF projects in Oklahoma include Enid (#7) – 10 years, Sapulpa (#4) – 15 years, El Reno (#4) – 20 years

Impact on NPS: The longer the duration of the TIF increment diversion the more NPS budget years which are negatively impacted.

3.    Why is a 100% diversion acceptable for the district? Are there other 100% TIF ad valorem projects, or is this rare?

The original UNP TIF split the growth in ad valorem tax revenues in the increment district evenly.  The proposed UNP arena TIF contemplates a 100% (TIF) and 0% (School) split.

a. What are the advantages of the 50-50% split vs. 100% split?

Answer: the 50% split to the school district is not treated as local revenue that is deducted from state aid revenues (not a chargeable).  Accounting for the equalization in the state aid formula, the school district gets more state aid revenues from 50% of ad valorem revenues collected in the TIF than it would from 100% of the same amount of revenues without the TIF.    

 b. Does TIF reduce school funding in Oklahoma?

Answer: YES, It diverts local school funding to non-school purposes. 

3.  By how much will non-Sinking Fund Revenues be harmed?

a. How much of each extra dollar of ad valorem taxes does the school district keep accounting for the deduction of local revenue in the school aid formula, as well as the building fund?

Answer:  It is NOT a $1 for $1 deduction because the building fund is not a chargeable item.  Of the 45 mills (.045) school tax, the district keeps about 6.5 mills (.0065) after accounting for the chargeables.  (Steve Ellis has painstakingly estimated this. You could ask for the CFO’s numbers on this.)

b.    The Project plan (page 14) claims that the state aid formula will offset 79% of new non-sinking fund revenues, so the district gets to keep 81% of net new non-sinking fund revenues. Is this correct? Where does this number come from?

c. What would be the hit from the non-sinking funds for the estimated $3.25 billion worth of property whose taxes are completely diverted to the TIF?  Does $21 million sound about right?

Answer: The diversion from non-sinking funds is just over $21 million. The school district gets to keep about 6.5 mills from the 45 mill school levy.  Thus, .0065 x $3,250,000,000 = $21,125,000  

 4.      How long will it take for the school district to make-up the forgone non-sinking fund revenues to make the NPS budget whole?

The City’s Project plan estimates a “net increase in non-sinking fund revenue to the school district of approximately $1,680,000 annually.” (page 9).  No estimates of the yearly impacts are given for the years when non-sinking fund ad valorem taxes are diverted to the UNP TIF fund.

a.      What is the annual hit on the school non-sinking funds revenues during the diversion period?

Answer:  $21 million spread over say 20 years is a little over $1 million per year ($1,056,250). Is this in the ballpark? (NPS has not responded to this inquiry.)

b.      How many years after the project costs are paid off will it take to make up those foregone revenues?

 Answer: Back of the envelop estimation suggests it would take a little over a dozen years after the increment diversion ends to make up for lost revenues. ($21.125 million foregone divided by $1.68 million per year after diversion ends = 12.57 years.)

c.      How will the annual school budget be impacted if there is $1 million hit annually during the period that the TIF project is being paid off?

Answer: It isn’t clear how NPS would address the revenue hit. How many teachers is this?  How many buses? 

5.      Sinking funds are used to pay off bond debt and judgements.  How does diverting 100% of sinking funds impact the school district budget?

a.      What happens if the sinking fund revenues don’t grow as fast as expected due to the concentration of new growth in Norman happening in the new TIF district (1,000 new housing units, new bars and restaurants, etc.)?

Answer: the county assessor will adjust the school sinking fund millage rate to cover the sinking fund obligations. This will impact TIF and NON-TIF ad valorem tax rates. (I suppose the assessor could also increase property values instead of the millage rate – either way this could lead to a tax increase for non-TIF property owners).

b.      What has happened to the NPS sinking fund millage rate since the last bond election?  NPS promised taxpayers it would not increase when asking for 2023 bond approval.

Answer: It has increased slightly since last year.  CFO should have numbers on this.

6.      The schools that include the UNP TIF area are at capacity already. How much does a new elementary school cost to build, including land costs? What about extra transportation to serve a new school?

Answer – Elementary school costs would depend on size of the building. The cost would be put in a bond package in the future.  Will voters support a bond for a new school in the UNP when the ad valorem taxes paid by property owners in the UNP TIF would go to the arena project and not to paying off the bond to build a new school there?  That might ruffle voter feathers.

7.      OU Foundation CEO (Guy Patton) provided a letter of intent (not an actual contract) to offer UNP land to NPS with an option to purchase (not free).  

a.  How will this impact NPS’s ability to pay for a future school? 

Answer – The letter possible sites offered in the letter of intent are not suitable for a school. They are bordered by a car dealership to the west and an industrial activity (Southwest Wire) to the north. 

 b. What is this land worth?

Answer: The price quoted was $8 per gross square foot with a detention pond thrown in at a nominal cost.  If the non-detention pond area is approximately 5.5 acres, bringing the purchase price to about $1.9 million. A detention pond is not buildable, it is a liability.  It is unclear if this is a good price given its location and the surrounding land uses.