Downtown assessment fees

[RecycleMichael]

http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20090412_11_A15_Offici607631

City Council has few options on assessment fees
Higher fees on most downtown properties will repay a $25 million loan for the new ballpark. 
By P.J. LASSEK World Staff Writer
Published: 4/12/2009 

Officials say it is premature to discuss what would happen if the assessment roll for the Tulsa Stadium Improvement District isn't in place by the district's effective date on July 1. "No one needs to speculate about the consequences of the City Council not doing that which it is obligated to do," said Phil Lakin, the executive director of Tulsa Community Foundation. The council is legally bound to approve the assessment roll, he said Friday. "We do not anticipate that this will be an issue," Lakin said.

The foundation, a tax-exempt public charity, is financing $25 million of the $39.2 million needed to build the downtown ballpark, ONEOK Field. The $25 million is to be repaid over 30 years through a portion of the district's assessment fees that will be levied on downtown properties within the Inner Dispersal Loop. Last summer, the council approved a new district with a higher assessment rate to replace the current improvement district that is set to expire June 30. The council now must set the assessment roll that will determine the annual payments for each of the properties.

Objections raised at a public hearing last week by property owners including Tulsa County, the state and nonprofit agencies might delay this week's scheduled council vote on the assessment roll. Councilor Bill Martinson said Friday many questions surfaced at the hearing "that definitely warrant resolution" before action is taken on the roll. City legal officials initially had asked for council action on the roll following the required public hearing last week. However, councilors said that wasn't possible, and officials agreed that pushing it another week would not jeopardize the process. Senior Assistant City Attorney Linda Redemann has expressed concerns about having enough time to resolve any litigation that might arise before the district goes into effect July 1.

Martinson said he "is not prepared to vote to approve something for purely administrative convenience." He said the council owes a thorough review of the assessment roll to all of the property owners because of the "significant financial burden" of the fee and in some cases the absence of any benefit the ballpark brings to some properties. He said his goal is to minimize any legal exposure to the city by not rushing the process and "closing all of the loops." A pending lawsuit filed in July by some property owners asks a judge to void the creation of the new improvement district.

Mayor Kathy Taylor said Friday that the council in November unanimously approved the issuance of $25 million in revenue bonds or negotiation of a financial transaction with a local foundation. "I can't ever remember the city voting to issue bonds and then backing up on the method by which they would be paid," she said. The bond has been issued and construction has started, she added. Taylor noted that property owners who have about 88 percent of the square footage that will be assessed have not objected.

The mayor said most of the objections raised during the public hearing are the same ones that came up in July when the council created the improvement district. "Nothing has changed," she said. Councilor G.T. Bynum agreed. "At this point, there is not a great deal that can be done," he said. The council is limited in changes it can make to the rolls — accuracy of square footage of land and structures, and whether property falls into one of three exemptions. The exemptions are federally owned land, property owned by religious organizations and used for religious purposes, and properties with single-family homestead exemptions.

Bynum said he thinks objections that the council can consider likely can be resolved in time for the council to approve the roll this Thursday. He said he disagrees with statements that the council was rushed by the administration to create the improvement district last July, thus creating unintended consequences with the assessment. "I'll be the first to stand up and take responsibility for my vote," he said.

The new assessment rate will increase to 6.5 cents per square foot on land and structures on property in the district. Of that, 4.3 cents will provide $25 million over 30 years that will go toward stadium construction. The remaining 2.2 cents will continue to provide downtown services, such as street cleaning. If the bond is paid off before the 30-year life of the district, the 4.3 cents will be removed from the assessment, officials have said.

The Tulsa Community Foundation purchased the $25 million bond from the Tulsa Stadium Trust with a loan from the Bank of Oklahoma. The bank's president, Stan Lybarger, is a stadium trust member, and the bank has donated $2 million to the $60 million ballpark project. The project includes the stadium, which will be home to the city's Double A baseball team, the Tulsa Drillers, and surrounding development of mixed-use venues. Private donations totaling $30 million and $5 million from the Drillers' lease will provide the remainder of the funding.


About the assessment district
A 30-year annual fee on property within the downtown Inner Dispersal Loop
Current total square footage in land and building —49,744,309
Fee per square footage —6.5 cents
Total annual assessment at 100 percent collection —$3,233,380
Of the fee, 4.3 cents will fund principal and interest on $25 million bond for ballpark —$2,139,005
The remaining 2.2 cents will fund current downtown services and other expenses —$1,094,375
The ballpark portion of the assessment over 30 years is $64,170,150
The 2.2 cent portion is subject to annual hikes based on inflation to a maximum 4 percent cap

I think it is interesting that federal government-owned property is exempt and other government-owned property is not. Why is single-family homestead exempted?

I do respect Councilor Bynum's comments. This issue has been discussed for months (including extensively on this forum). I have posted often on my views on this issue. I think the funding formula for the downtown improvement district is much fairer and will allow better maintenence of the downtown area as a whole. I also think the ballpark will be a great addition to downtown and will spur more development than we have seen so far in the BoKcenter.

Come on, council. Let's move this city forward. Please vote yes on Thursday. 

[Wilbur]

I think my views on the assessment district are known, but, I have to ask......

If the City needed $25M for the ballpark, why are they raising $64M in the name of the ballpark?  They could have purchased the whole thing with that amount.  They'll raise the $25M then play with the other $40M.

Mayor....  remember how broke we are?

[USRufnex]

The new assessment rate will increase to 6.5 cents per square foot on land and structures on property in the district. Of that, 4.3 cents will provide $25 million over 30 years that will go toward stadium construction. The remaining 2.2 cents will continue to provide downtown services, such as street cleaning.

------------------------------------------------------------------------------------------

The Tulsa Community Foundation purchased the $25 million bond from the Tulsa Stadium Trust with a loan from the Bank of Oklahoma.

The bank's president, Stan Lybarger, is a stadium trust member, and the bank has donated $2 million to the $60 million ballpark project.

The project includes the stadium, which will be home to the city's Double A baseball team, the Tulsa Drillers, and surrounding development of mixed-use venues.

Private donations totaling $30 million and $5 million from the Drillers' lease will provide the remainder of the funding.

Methinks this ballpark will spark alot of interest... about 30 years worth...

[sgrizzle]

What's being ignored is that these fees are also paying for downtown maintenance which used to be performed primarily at 5th and Main and will now extend to everyone inside the IDL. That means landscaping upkeep, street sweeping, trash pickup, etc. So even if you don't "directly benefit from downtown baseball, you're still getting something.

[Mjcpr]

Come on, council. Let's move this city forward. Please vote yes on Thursday. 

I don't think they have a choice do they?  The debt was incurred and the work has begun, I don't think they can do much now even if they wanted to.

[nathanm]

I don't think they have a choice do they?  The debt was incurred and the work has begun, I don't think they can do much now even if they wanted to.

They "can," but it would expose the city to quite the lawsuit. At this point, it would be more fiscally responsible to go ahead, even if the council thinks that the funding mechanism is a bad idea.

[sgrizzle]

I don't think they have a choice do they?  The debt was incurred and the work has begun, I don't think they can do much now even if they wanted to.

They could try to exclude certain properties or otherwise give leway, but it would just cause more problems than it solves.

[PonderInc]

My only fear is that people will demolish buildings rather than paying the assessment.  (So as to keep their "investment" in downtown, w/o having to pay for it.)

If anyone has any reassuring words for me on this front, I'm all ears.  

Question:  If you live in your downtown building and have a homestead on it, is the whole property exempt from the assessment?

If the assessment encourages people to put underutilized buildings on the market, that could be a great thing.  (Since we are constantly hearing how "six people own downtown" and nobody else can get a piece of the action.)  If the assessment somehow acts as a catalyst for new opportunities, cool.  

But...

[Cats Cats Cats]

My only fear is that people will demolish buildings rather than paying the assessment.  (So as to keep their "investment" in downtown, w/o having to pay for it.)

If anyone has any reassuring words for me on this front, I'm all ears.  

Question:  If you live in your downtown building and have a homestead on it, is the whole property exempt from the assessment?

If the assessment encourages people to put underutilized buildings on the market, that could be a great thing.  (Since we are constantly hearing how "six people own downtown" and nobody else can get a piece of the action.)  If the assessment somehow acts as a catalyst for new opportunities, cool.  

But...

"Homestead Exemption is an exemption of $1,000 of the  assessed valuation of a primary residence you own.   In tax year 2006, this can be a savings of $84 to $132 depending on which area of the county you are located." -Tulsa County Assessor Website

[pmcalk]

^^That's just the homestead exemption for regular property taxes.  My understanding is that the special assesment (which is in addition to regular property taxes) is not charged to those buildings upon which a homestead has been filed, just as it isn't charged to religious institutions.

For those who didn't catch this, apparently the state legislature is getting involved:

Legislation would exempt properties from Tulsa ballpark assessment

OKLAHOMA CITY -- Financing of the baseball stadium already under construction in downtown Tulsa may be in jeopardy after the Senate passed without discussion legislation that would exempt county and state property from development district assessments such as the one being relied on to help pay for ONEOK Field.

The measure would also exempt all nonprofits, most of which now must pay the assessment.

http://www.tulsaworld.com/news/article.aspx?subjectid=11&articleid=20090416_298_0_OLHMIY78876&rss_lnk=298,297

[waterboy]

And unfortunately it makes sense.

As Dwntnr postulated, when the county and state properties pay that assessment they are undeniably assessing the taxpayer at large. We pay that assessment, and WE didn't vote on it at large. Simply, not fair taxation. I am in a minority that thinks that the religious property owners downtown are getting to skate on this. They will undoubtedly watch the value and utility of their properties be enhanced. Since they bought so much of downtown and flattened it, they should at least have to pay assessments for the properties purchased and/or renovated during the last decade. Or, be asked to pay an assessment when one of their properties is sold or transferred. If it is not a tax, but a maintenance assessment, as others have suggested, then they are not being taxed. They are being asked to help maintain and improve the value of their properties and the access that they enjoy.

If its a tax, then....

[Wrinkle]

The 2.2-cents/sq.ft for property and floor space is a _service_, thus tenants of IDL spaces are directly paying for a service, which all receive. Even State, County and non-profits recieve directly this service and, as such, should be required to pay for it. It's a cost of doing business. That's not the issue here.

It's the 4.3-cents/sq.ft. for property and floor space charged all IDL property owners, but exempting church property owners and properties on which there's a recorded Homestead Exemption on file.

That's not a service, it's a tax (IMO), and if paid by State and County (it's unclear yet if the City actually pays this tax on city-owned properties, but suspect so), then it is effectively paid by all residents of the entity paying. That's a tax without representation, authorization and, IMO, illegal.

There's also been some discussion about double-dipping by tax both the land square footage and the ground floor area of the building. While that's a detail left to those implementing this, it would seem fairness would exempt 1st floor areas of buildings if the underlying property was taxed.

I also have a problem with the target of $25 million becoming $64 million (with bond interest over 30 years). I know of no provision which allows the issuance of Public Bonds for discretionary work without a vote.

All in all, this is an ill-concieved fiscal plan which will cost almost as much as the original target in legal expenses before it's resolved.

And, in all likelihood, will be found illegal in formation, thus requiring another obtuse gymnastic to arrive at another less than optimum plan to do the ballpark, probably with many of the same issues as the current plan.

IMO, it requires a vote.

[swake]

And unfortunately it makes sense.

As Dwntnr postulated, when the county and state properties pay that assessment they are undeniably assessing the taxpayer at large. We pay that assessment, and WE didn't vote on it at large.

Do you vote on the trash contract for the county? How about the city franchise fees that AEP charges on electrical bills for county buildings. Do you vote on the tire recycling fees that the state charges when the county buys a new tire?
 
Just because the revenue that goes to pay a fee is derived from taxes doesn't make it a tax. There have to be hundreds of government fees that the county pays for various items and functions that while paid with tax dollars would never be voted on because they aren't a tax, it's a fee.

[waterboy]

Do you vote on the trash contract for the county? How about the city franchise fees that AEP charges on electrical bills for county buildings. Do you vote on the tire recycling fees that the state charges when the county buys a new tire?
 
Just because the revenue that goes to pay a fee is derived from taxes doesn't make it a tax. There have to be hundreds of government fees that the county pays for various items and functions that while paid with tax dollars would never be voted on because they aren't a tax, it's a fee.

True enough. Though that seems to be a little bit of semantics. At some level of rationalization just about every expense of government could be portrayed as a fee. Effectively, the fees are paid by a tax. More fees yields higher taxes.  And, it can be argued that the entire community is well served by a fee that provides utilities to everyone like electricity or anti-pollution efforts.

So, scope is important.

We're talking baseball. No longer America's pastime. We're talking a baseball stadium that serves a fairly small group of enthusiasts, built by a fairly small group of developers for a private sports club owner,  in a part of town rarely visited by most of the taxpayers (yes, Michael, they draw 100's of thousands of patrons a year but they are the same 5500 to 7500 people each game). I know downtown Tulsa will use this stadium as very good leverage for more development and I understand the effort to keep the home team at all costs, but the reality is, this plan has a fatal flaw. It bypasses the taxpayer and has dubious returns for most of them. It exempts some landowners (churches) who will benefit from responsibility yet overburdens others who will receive scant benefit. The final straw was the area around the stadium being wrested away from an existing downtown developer and given to another entity.

If Lamson couldn't afford to build this stadium like any other businessman and needed our support then this should have been put before the taxpayers as a straight up vote.

[cannon_fodder]

Swake, define the difference between a fee and a tax for me.  I find the distinction interesting.

As I understand it, you are defining a "fee" as a use-based tax.  A toll road is a fee.  Tire recycling.  Trash pickup.

But given that definition, only the most generic tax is actually a tax.  Sales taxes and income taxes would be all that qualifies I suppose.  And even then, portions of those are allocated to specific items that we are paying for.  Social Security is not a tax - it is a fee to get governmental retirement benefits.  Medicaid isn't a tax, it is a fall back health insurance fee.  A portion of our sales tax isn't really a tax, it goes to fix the roads.  Another portion to pay for the BOk center.

I'm afraid Waterboy is convincing me.  I want the ballpark, I'm a fan. And I think all downtown property owners will benefit from it as it will generally encourage the downtown area to be improved.  But it is a tax, there is no vote, and it is controlled by a small group of people under a less than transparent "authority." 

The package is:

- Ballpark stadium

- Land acquisition for (desired development)? controlled by (the authority?) and to profit (probably people on controlling the authority)?

- Regular maintenance/cleaning up downtown expanded contract for the inept group that currently does it and I believe is also represented on the authority (was this put to a bid?)


My questions:

What influences do the major donors have?

I want more details on the land use, who controls it, what exactly do they want there, who profits from it?

Was there a bid process for maintenance work downtown?

What are the terms of the Driller's lease?  I know the owner "donated" $1,000,000 and they have a lease, but what portion of the total cost of the stadium will the Driller's actually cover?  (I'm not looking for 100%, just think it should be well known)

Funding:  is the funding secure?  Have we create a situation in which we "must" proceed or face dire consequences.  If so, how did we get in that position?  Even though I agree with the ends, setting it up in such a way that it "has to happen" seems dirty.

What about the old Drillers stadium?  More city owned property to be abandoned?  The Fairgrounds have lost Bells (which, fwiw, is STILL a "just" damn parking lot), the 66ers, and soon the Drillers.  Or 3/5 tenants if you are keeping score.  Without disparaging the improvements to the fairgrounds and it's excellent utilization, it appears to be a bit concerning. 

- - -

Again, I want the stadium.  I will go frequently (was at Drillers last night actually, horribly crowded, 15 minute waits for a beer.  If I was selling 50 cents worth of beer for $4.50 do you have any idea how fast I could serve them?).  But the city needs to be careful with this project.  It is feeling more and more like it is being crammed down peoples throats as fast as possible hoping no one really notices, while many questions go unanswered.