Conditions required by Devon Energy for the City of Oklahoma City to meet before it builds its 54-story world headquarters came a step closer to satisfaction Nov. 7.
With an uncontested, unanimous vote, the Downtown/MAPS Tax Increment Review Committee recommended the approval of a new tax increment finance district within an existing TIF district by the Oklahoma City Council. The review committee includes representatives from the taxing entities whose ad valorem taxes are taken to fund the district.
If approved by the City Council, increased ad valorem tax revenues generated by Devon's world headquarters, costing more than $750 million " as well as the sales and use taxes resulting from its construction " will be diverted to Increment District No. 8 to fund projects required by Devon.
Over its proposed 25-year duration, TIF No. 8 is projected to capture nearly a quarter-billion dollars in diverted ad valorem tax revenues, plus $20 million in diverted sales and use taxes to be matched in $20 million in state funds.
Devon requires the establishment of the TIF to fund the Devon Development Conditions contained in Devon's proposal to purchase its building site from the Oklahoma City Urban Renewal Authority.
DEVON CONDITIONS
Under the Devon conditions, some of the TIF funds will be used to bring utilities to the building site and to revamp the area around the headquarters. This includes bringing the Myriad Botanical Gardens, across the street from the site, to "world-class urban park" status and creating attractive streetscapes on surrounding streets.
"It's our tax dollars and this TIF spends it," Devon Chief Executive Officer Larry Nichols said. "None of the money is being spent on Devon projects. The development part is going to fix up the neighborhood, to improve all the streets, landscapes, streetscapes and city parks."
Under the Devon conditions, a substantial portion of the TIF No. 8 funds must be used to implement mixed-use development in the Core to Shore projects (see Page 11).
Former Oklahoma City Mayor Ron Norick, who chairs the TIF committee, also stressed that none of the funds will directly benefit Devon.
"It will be used on other projects," Norick said. "As Larry (Nichols) said, they don't need the money for their building. They want the money to go to develop the city and the surrounding areas."
Under Devon's plan, Nichols said, the tax money will go to making the streets, parks and sidewalks warm and inviting.
"That is the plan," Nichols said. "It's our tax dollars that come to the TIF, and the TIF and the city will figure out how to spend it in that area. They'll look at every street, every sidewalk, every park, every possibility to put a mini park, and make downtown beautiful."
The recommended Amended Downtown/MAPS Economic Development Plan, including the creation of the proposed Increment District No. 8, must be approved by the City Council before implementation.
The new TIF requires that all funded projects must be approved by a Devon Redevelopment Implementation and Coordination Committee, which will include Devon representatives.
The public entities from which the ad valorem tax revenues are taken for the TIF may request $20 million for their projects.
All TIF No. 8 projects are subject to review by the Devon committee, the TIF committee and the City Council.
TIF 411
What is a TIF district?
Cities in Oklahoma are authorized by state law to create tax increment finance (TIF) districts to finance redevelopment of blighted areas and economic development. After a TIF district is created, all or part of the increases in ad valorem taxes within the district can be used to fund redevelopment and economic development within its project area for a period not to exceed 25 years.
What TIF districts are now within downtown OKC?
There are two existing TIF Districts in the downtown and Bricktown areas of Oklahoma City. The first is TIF District No. 2 in parts of downtown and Bricktown, which diverts ad valorem tax revenue to redevelopment of a larger project area. (See map.) The second is TIF District No. 3, which diverts city sales taxes generated by the Skirvin Hotel to partially fund its redevelopment.
What is the new TIF district being considered by council for downtown?
It is TIF District No. 8, which is less than a city block, carved out of the existing TIF No. 2, which consists of the proposed site for the new Devon buildings and parking garage. (See map.) It will take all increases in ad valorem tax revenues generated by the development for a period of 25 years and use them to fund projects required by the Devon Development Conditions.
What are the Devon Development Conditions?
These are requirements set by Devon that must be met if Devon builds its proposed office development. Devon's offer to purchase the property is binding only if the Authority enters into a binding agreement that the conditions are met. In general, these conditions are to provide:
How much ad valorem revenue will be taken by the city to fund TIF No. 8?
Funding Devon Development Conditions: $115,000,000 Funding developments for the public entities from whom the ad valorem revenues are taken: $20,000,000 Interest and expenses for bonds and 5 percent administration fee charged by the City: $90,000,000 Total ad valorem revenue taken to fund TIF No. 8: $225,000,000Whose ad valorem revenues are taken by the city to fund TIF No. 8 projects?
Oklahoma City Public Schools: 52 percent, $117,000,000 Metro Technology Center: 15 percent, $33,750,000 City of Oklahoma City: 15 percent, $33,750,000 Oklahoma County: 11 percent, $24,750,000 Metropolitan Library System: 5 percent, $11,250,000 County & City Health Department: 2 percent, $4,500,000 Total ad valorem revenue taken to fund TIF No. 8: $225,000,000Note: Taxpayers within their boundaries will have to pay higher ad valorem taxes to make up for the diverted revenues. Currently, 27.25 percent of the ad valorem revenues in the downtown area go to the sinking fund to pay off general obligation bonds and judgments of these public entities.
Editor's note: The data and figures presented in this article were obtained from Devon Energy's Redevelopment Proposal to the Oklahoma City Urban Renewal Authority; the Amended and Restated Downtown/MAPS Economic Development Project Plan dated Nov. 7, 2008; City of Oklahoma City and Oklahoma County Treasurer. " Gazette staff
