Public Funds to Spur Private Development...at what cost?

[DowntownNow]

Last night I attended the TYPros event for downtown redevelopment.  Was a great experience, great turn out and a lot of good ideas came out of it.  But there was one that stuck in my head as I was thinking about the TDA giving the $4mil to ARG (another topic in here).

Someone stood up and said that he felt public tax dollars would have been better spent encouraging numerous developers with incentives, like ARG just received, instead of putting them all into publicly built things like stadiums and arenas.  I think he made a great point and others, including the moderator of the event, seemed to agree.

What development could have been spurred with even a proportional amount of the monies that the City has invested in the BOK Center Arena (hovering around $200 million) and the new Drillers Ballpark at around $60 million (likely to increase given past arena history)? 

The BOK Center Arena was supposed to spur a large economic and redevelopment boom in the downtown area and so far, IMO, we haven't seen it.  Yes, we have various residential units in development, but those have been planned for years.  We have Jones Lang LaSalle at a cost of $350,000+ marketing the property the City owns downtown on a national level, but so far no takers. 

Could we have built an arena for less that would appease those that say we need public legs to spur redevelopment and used some of that money for financing incentives for developers to come in and start new projects? 

Could we have focused on building just a ballpark at around $30-35 million and used the rest to incentivize private redevelopment on its own?  Why was it necessary for the ballpark Trust to control the surrounding property if they believed that by building the so called third public leg (Stadium), it alone would have encouraged private redevelopment?  Seems a bit hypocritical to me to take this approach at a cost of public tax dollars.

Take a few million, lets say the $25mil after the ballpark construction from the total package proposed and lets say we had built a $120mil arena and had $80mil left over plus the $4mil from TDA..thats $109mil.  Heck, lets say we saved even half of that on the packages that paid for these items, left us with $54.5 million. 

Why could we not have incentivized developers with $2mil in no-interest loans for private redevelopment and supported 27 new projects in the downtown area instead of the handful we have now?

Forget all the monies from the arena and ballpark now...why could the TDA not have incentivized 4 new projects with $1mil each in no-interest loans than a project that was already on the books and had said it had its financing in place already?

At what point do we say enough is enough with public investment in things like an arena and a ballpark instead of focusing and incentivizing developers?  To that point, when does a City say here's what we can do for you Mr. Developer? (i.e. tax incentives, tax abatements, TIF funding, no-interest financing, grants, new market tax credits, historic preservation credits, etc).  Right now the City waits on a redeveloper to invest in an extensive RFP and ask for things he may need to make the financials work.  Would it not be better to have these things available already for the developer to take into consideration when outlining his plans?  Could those incentives spur a larger or more affordable development? 

Your opinions?

Also, TYPros will be posting the results of the group think at last night's even on their website soon, was some great stuff as we went around the room.

[cannon_fodder]

For some reason I still think the arena was a good idea.  It makes Tulsa look and feel like a place to be - with big name acts, crowds downtown, and the like.  It can also draw in big events that put us on the map as well as bring in money (how many times do you see OKC on ESPN2?).  Looking and feeling like a happening place is half the battle of actually being one when companies or people are considering a move.  It is unlikely a private developer would have been able to do such a thing.

HOWEVER, I agree 100% with the notion that the ballpark "other" development money would have been far better spent as private incentives.  Put the design ordinances in place that they desired to have an urban landscape that went with the ballpark and give out development funds to encourage what you are looking for.  The money probably would have had faster results (120 lofts would be near breaking ground) and probably encouraged MORe development (no announcements in the area as of yet).

But the #1 thing in development is private.  The city needs to do things to make a climate where development is wanted and needed, make it easy for it to occur, and control the direction/type of development in particular areas with wise zoning, codes, and city plans.  Correct me if I'm wrong, but at the moment the vast majority of projects downtown are either public (arenas, roads, infrastructure, baseball stadium) or heavily publicity subsidized (all the residential).   I hope it begins developing of it's own accord - but it needs direction from the city to do it in a snowballing fashion.

[Conan71]

The BOK Center Arena was supposed to spur a large economic and redevelopment boom in the downtown area and so far, IMO, we haven't seen it.  Yes, we have various residential units in development, but those have been planned for years.  We have Jones Lang LaSalle at a cost of $350,000+ marketing the property the City owns downtown on a national level, but so far no takers. 

I think it's a bit soon to crap on the arena.  It was finished and opened around the first of September.  Considering the economic cataclysm that happened about that time, it's not a conducive environment to attract national developers to snap up hunks of downtown at the moment.  Maybe we should feel fortunate we don't have some idle hotel or shopping/residential projects which were over-leveraged and partially-constructed.  At least on show and game nights, the arena is attracting money to downtown merchants.  I've not heard any bar or restaurant owner characterize the arena as a bust.  I certainly wasn't expecting a whole slew of new housing to have been constructed six months after the opening.

Sorry to bust your chops.  For someone who uses the handle "DowntownNow" you don't have a whole lot nice to say about recent and proposed improvements to downtown.  I wasn't much of an arena supporter and agree the costs have been steep and I'm not happy about the cost of the ballpark either.  But is that a reason to allow Tulsa to slip further into mediocrity and disrepair?  Personally, I don't care for the Beirut look in my hometown.

[DowntownNow]

You're missing my whole point Conan.  I am all in favor of downtown revitalization.  So much so that I spend a great deal of time researching the who, what, why and when of downtown projects and support them best I can.  The arena is what it is, but there has always been the question lingering with regards to 'was it put in the right location to spur the growth and development it was intended to?'  Even by the Mayor's own admission, the BOK failed to spur surrounding growth and development, principally because of its location and lack of available land around it.  Thats a planning issue.  And now Mayor Taylor wants the ballpark and the surrounding property so that the "City can get it right."  I would also argue that it doesnt help that the City doesn't incentivize developers or make it easy for developers to pursue economically feasible projects.

The way in which the City leverages or balances funds available for redevelopment is what I am calling into question.  Again, we spent $200mil+ and spurred no major economic redevelopment, yes we may have helped the surrounding business with a lil extra revenue during events but no where near the projected economic growth that was promised.  We are spending $60mil+ on a ballpark, which at least this time has surrounding property that is viable for private redevelopment.  We spent $350,000+ (not including a commission at time of sale) on a group that is marketing property that most local real estate agents would have marketed for free and taken just a commission. 

In fact, I would argue given the current economic times and in lieu of the City providing any incentives up front (i.e. tax incentives, grants, etc), we should be offering this property at no charge to a developer that fits the criteria for what Tulsa wants to see on that parcel or in that area.  Raw land sitting there unused does nothing to expand the tax bases of either the ad valorem or sales and now the BID assessmment.  In fact, that raw land that continues to sit there, owned by the City, costs you and I money since the BID and property tax is passed on to us.

My comment was directed more at what can the City do instead of, or in conjunction with, these publicly funded developments to spur that promised economic redevelopment of downtown. 

The truth may be more in the pudding than we realize and a bit of a hypocrisy.  The downtown ballpark was originally estimated at $30-35 million to build the stadium itself.  We, as a city (yes, you and I will be paying the Citys share of the BID assessment), are investing $60mil.  The remaining $25mil is going to fund the purchase and redevelopment of the surrounding property.  The whole intent of this 'third and much needed leg' was to encourage privately funded redevelopment in the area.  The land itself is costing the Trust $2.3mil, so instead, what you have is a publicly funded subsidy in the amount of $22.7mil to redevelop 2.75 blocks.  Where is the privately funded redevelopment?  Are we so unsure of the private sector wanting to put money into Tulsa that we have to actually fund such development ourselves (taxpayers)?  If so, are we getting the best bang for our buck?  And who gets to benefit at the taxpayers expense when the Trust gets to choose who gets to develop this area and provides incentives for them to do so with taxpayer dollars?

This goes back to my other point...if these Trust and authorities have money to lend, why not leverage those funds to produce the best return on the investment?  In the case of the TDA providing $4mil to American Residential Group, why not have split those funds 4 ways and encourage four redevelopment projects?  ARG would argue that without the $4mil they couldnt do their project, I would argue that they might have had to scale back a little on their development plans but been able to still do it.  Perhaps no structured parking but still have lot spaces and canopies like Tribune I.  Besides, ARG had already stated that they had the financing capability in place when the executed a contract with TDA last year.

I know many a developer that wants to enter the downtown market, but so many recent things have been happening that leads them to believe they either cant get a fair shake or will be hamperd all along the way, making it unfeasible.  Take the way the 120 Loft project went.  The way Vision2025 funds were distributed.  The failed attempts at redevelopment of the Denver site across from BOKCenter.  And now the TDA appropriation of $4mil to one developer without regard to others or in fairness asking for RFPs as was done with the original Vision2025 funding. 

In terms of the City, TDA or the Trust, some fairness needs to be adopted in the way they allocate funds and some realization that its better to incentivize multiple projects rather than just one.

[DowntownNow]

Also Conan...your so called 'economic cataclysm' hasn't exactly hit Tulsa.  Tulsa's housing market is slowly growing based on recently released figures.  Home prices are steady and slightly increasing in some areas.  Job loss if far lower than it is nationally.  Hotels are continuing to be built and new restaurants are opening.  Apartment construction is rampant (just ask the folks behind Sonoma Grande). 

I haven't seen this 'economic cataclysm' effect the what little development is ocurring in the downtown area or Cherry Street either.  The Courtyard Marriott at the Atlas is under way.  New retail development is coming to Cherry Street. 

Your argument that this 'economic cataclysm' is what has effected downtown redevelopment really has no basis in fact.  The reason private redevelopment hasnt happened, IMO, is poor planning/locating, lack of incentives, lack of fairness, and the long held belief that Tulsa is not developer friendly (this is a view that is held nationally unfortunately and with recent events, is hard to dispell).

Even the YPros meeting at the Crowne the other night hit on much of this feeling of fairness and incentives.  Where were you?

[Neptune]

The arena is what it is, but there has always been the question lingering with regards to 'was it put in the right location to spur the growth and development it was intended to?'

You are aware that the arena is already built correct?  Is it safe to assume your aware that it just opened a few months ago?

At what point is "getting over it" an option?

It's doing fine.  No way to tell what the future holds for development around that area.  Probably won't know until the economy begins to reverse course.

People seem to think the baseball stadium is a decent concept in a decent area.  It's not going to develop as fast as people would hope.  Nature of the game.

[nathanm]

Also Conan...your so called 'economic cataclysm' hasn't exactly hit Tulsa. 

Yes, construction financing is just sitting around waiting for people to pick it up off the table. 

[DowntownNow]

Neptune...

Yes, very aware the arena is built and operating and hoping that with all the money invested in it, it somehow pays off in the long run.  I was just there last night for a hockey game. 

"Getting over it" has nothing to do with what I posted.  The BOK Center is an example of what we have done in the past and should be taken into account for any further public development endeavours.  We should learn from it...what worked, what didnt work, why didnt it work and what can we do to not be doomed to repeat it.  The City's own Mayor has called it a mistake but one that is done and we have to move forward.  She stated so in regards to it location and lack of developable areas immediately around the BOK Center.  This she has said has hurt the economic development that was to have come from such an investment.  She has said she didnt want to repeat that with the ballpark. 

Never said I was against a ballpark, I do however question the motivation behind it, the need to control and subsidize the surrounding prime real estate and the true development potential for private entities if the City must expend all these taxpayer dollars to make it happen themselves.  The ballpark is in a good area, it supports development potential around it but again you miss my point, but if you dont get it by now by reading and understanding rather than flash reacting, then you wont.

So let's study it, learn from it and go forward but with knowledge. 

[DowntownNow]

Nathanm...

Before posting you should at least get out a little.  Drive around, Tulsa is in much better shape for economic growth, even if its slow, than most of the nation.  There is construction financing still available, how else would the new developments be going up?

Courtyard Marriott at Woodland Hills
Tulsa Hills still going, albeit slower
Atlas Life Building/Courtyard Marriott
New residential housing at the Village at Central Park
KOTV/CW Station (being rebid to reduce costs)
IBC Bank moving to McFarland Building
Tribune II
Mathews Warehouse conversion
Cherry Street retail (across from Panera)
Sonoma Grande Apartments
Newly announced apartment complex at Tulsa Hills
Target in BA
Twin Peaks restuarant
New retail/office at 91st & Sheridan
Hideaway Pizza stand alone restaurant at BA/Lynn Lane
New large resdential development at 41st & Lynn Lane
New Builder Housing Starts (Pick up a New Orders Weekly sometime, new construction has started again)

These are the ones I can name off the top of my head in a few minutes, I know there are many more out there.  If there was no construction financing to be had, I suppose none of these would be happening now would they? 

Sure the requirements are tougher now, sure more is demanded of the developer as far as project equity but before making such a rash statement that feeds the fears of the average citizen into believing there is no money out there, you might want to take the time to poke your head out and rationalize what you are about to say. 

[nathanm]

Nathanm...

Before posting you should at least get out a little.  Drive around, Tulsa is in much better shape for economic growth, even if its slow, than most of the nation.  There is construction financing still available, how else would the new developments be going up?

Courtyard Marriott at Woodland Hills
Tulsa Hills still going, albeit slower
Atlas Life Building/Courtyard Marriott
New residential housing at the Village at Central Park
KOTV/CW Station (being rebid to reduce costs)
IBC Bank moving to McFarland Building
Tribune II
Mathews Warehouse conversion
Cherry Street retail (across from Panera)
Sonoma Grande Apartments
Newly announced apartment complex at Tulsa Hills
Target in BA
Twin Peaks restuarant
New retail/office at 91st & Sheridan
Hideaway Pizza stand alone restaurant at BA/Lynn Lane
New large resdential development at 41st & Lynn Lane
New Builder Housing Starts (Pick up a New Orders Weekly sometime, new construction has started again)

These are the ones I can name off the top of my head in a few minutes, I know there are many more out there.  If there was no construction financing to be had, I suppose none of these would be happening now would they? 

Sure the requirements are tougher now, sure more is demanded of the developer as far as project equity but before making such a rash statement that feeds the fears of the average citizen into believing there is no money out there, you might want to take the time to poke your head out and rationalize what you are about to say. 

If they're actually working now, financing was probably finalized last summer. I never said there is no financing to be had, I was pointing out that it's not easily available at this point, especially for a project that has an inherent higher risk (like downtown redevelopment).

[cannon_fodder]

On the flip side:

Tulsa IS a strong market, comparatively.  Our slow and steady pace (read: failing to really benefit from the last two booms) may enable us to keep growing slowly but surely or at least not suffer as much as the rest of the nation.  With any luck, we can draw investment and residents from the rest of the nation in these down times and position ourselves to catch the upswing.

Financing is available for Tulsa projects.  The risk of a real estate collapse in Tulsa is minimal, so the bubble burst that brought many communities down is unlikely.  Thus, Tulsa is attractive as a low risk place to put some investment money.

As far as the stadium is concerned - if we want it, sooner is better than later.  Had we built the BOK Center in an economic downturn we would have saved tens of millions of dollars in labor and commodity prices.  We want a stadium, why wait until prices go back up?

[carltonplace]

I think there are a few simple things we could do to spur development downtown:

1. Complete the downtown comprehensive plan. We need a blue print/guide that says what we want and where we want it. The plan should not be so rigid that it chokes creative development.
2. Once the plan is in place, change the zoning codes to make developing that we want easier. Remove cumbersome need for variance and PUD as long as the site plan is in line with the comprehensive plan and fits an urban design model.
3. Move Property. The TDA needs to stop tight fisting all of the property they are sitting on. We might have to discount some now to get bigger bucks once the empty "blighted" properties are off the map. In my opionion the TDA's focus should be to work themselves out of jobs.
4. Advertise the need. It shouldn't be hard to put together a fact sheet that shows how many people live (in downtown or in proximity), work or visit downtown every month. These people are all potential customers. We also need to build on current momentum by extolling the public investment and new private development that is underway or coming.