The University North Park Tax Increment Financing District was created in 2006 with an objective of creating a master-planned mixed use development adjacent to I-35 between Robinson and Tecumseh. The initial TIF (#2) provided for $54.725 million in public spending to support the objective. It included: traffic and roadway improvements, $10.5 million; Legacy Park, $7.5 million; engineering, legal and other professional fees, $1.75 million; conference center and cultural facilities costs, $15 million; lifestyle center costs, $7.5 million; economic development costs, $7.5 million and a 10% contingency on everything. The conference center was removed in 2008 and the bridge over I-35 at Rock Creek replaced it in the project list. To date, about $33 million of that public spending has occurred or the revenue collected for it.
The public money to spend comes from two sources, incremental sales taxes generated within the TIF area and property taxes generated within the TIF boundaries. Almost all property taxes in this area are incremental. Right now, the sales taxes generated in the TIF area are apportioned with 60% going into the TIF fund and 40% going into the general fund of the city. Again, the money in the TIF fund can only be spent on the $54 million of approved projects in the TIF project area while the money in the general fund goes to daily operating expenses of the city.
The general fund revenue for these daily operating expenses is not keeping up with expenditures and people are searching for ways to increase the flow of funds to the general fund. One way is to stop apportioning the sales tax going into the TIF fund and redirect it to the general fund. This idea has resulted in the “End the TIF” movement.
Just ending TIF#2 has no benefit whatsoever unless some or all of the remaining $21 million in TIF approved projects are cancelled. If you end TIF#2 and continue the projects the same net revenues and expenses occur, they just move through a different account. There are two major projects remaining in the TIF project plan, a Lifestyle Center and the Cultural Center, accounting for approximately $8.5 million each. The Lifestyle Center is subject to a contract between the City and the UNP developer with requirements on both sides including substantial penalties for non-performance. The Cultural Center is not subject to any such contract, but it has special control assigned to the statutory review committee to prevent the city council from cancelling the project without a super majority. It is the only project where this special control was delegated to the committee. The need for either of these projects is debatable.
Cancelling these projects and ending TIF#2 will violate the contract with the UNP developer, force a political showdown with the statutory review committee, violate agreements with Cleveland County, the Norman Regional School System, Moore-Norman Technology Center and Norman Regional Hospital. The action could result in substantial legal costs and certainly will result in political turmoil for some time. In addition, several tax exempt entities within the TIF boundaries now pay assessments equal to property tax rates and these assessments would end with the TIF meaning total tax revenue would decline.
There is another solution to the objective of increasing revenue flow to the General Fund. Simply change the apportionment percentages between the General Fund and the TIF fund from 60/40 to 95/5. This means that 95% of the incremental sales tax collected within the TIF boundaries will go to the General Fund with 5% going to the TIF fund. The practical effect is that the remaining projects will be delayed but they are not anywhere near ready to proceed anyway. This action is within the control of the city council and has been recommended by the TIF Oversight Board. It will not violate any existing agreements and has not been openly resisted by the other taxing authorities.
Our position is that reapportionment should be the course of action taken now and a full review of the need for a Lifestyle Center and Cultural Center be undertaken. If it is determined that those projects should be cancelled, then TIF#2 will end automatically in about one year.
Our past efforts to grow Norman have been focused on sales tax growth. This means that we are trying to expand the number of retail companies so we can collect more sales tax to pay for city government. This course of action has two unintended results, first, our economic development is skewed towards retail jobs which generally tend to be on the lower end of the pay scale and second, we are increasing the supply of retail outlets but not the demand for goods and services through an increased number of shoppers.
We should refocus our efforts and be investing our limited city resources in attracting growth in non-retail jobs. We can target specific industries where we have an advantage in existing resources or talent. These are the type of jobs that pay a higher salary and over time improve the general standard of living for the community. If we successfully improve the general standard of living then retail growth will follow because demand improves.
Some of the areas where we can improve our ability to attract businesses include planning services, financing assistance, a fast track approval process and job training assistance. We can also leverage the state’s Quality Jobs Program.