New East Tulsa outlet mall location

[Townsend]

Don't these malls need commitments from tenants before they can secure funds and build?  At some point the retailers are going to choose which proposal they want to be a part of and that should thin out the heard.  There is no way there is enough demographics to support three outlet malls.  It seems very unlikely to me that the major outlet retailers (Nike, Gap, etc.) would commit to multiple outlet locations in a market the size of Tulsa.

Maybe if Tulsa connected them all with trolley service

[Red Arrow]

Maybe if Tulsa connected them all with trolley service

Tulsa would try to use those rubber tired things that some people mistakenly call a trolley.  People wouldn't ride them since they want to take their own cars to malls and those things are really only buses anyway.  Then the anti-transit folks would say "see, nobody wants to ride trolleys". 

[Townsend]

Tulsa would try to use those rubber tired things that some people mistakenly call a trolley.  People wouldn't ride them since they want to take their own cars to malls and those things are really only buses anyway.  Then the anti-transit folks would say "see, nobody wants to ride trolleys". 

Yeah...I was being sarcastic.  There won't be 3 malls to connect and there wouldn't be usable public transit.

[Red Arrow]

Yeah...I was being sarcastic. 

I actually expected so.

[SXSW]

I'm rooting for this mall to actually get built.  Why?  1) Sales tax stays in Tulsa, 2) this helps drive development in a part of the city that could use it and 3) it hopefully kills the mall by Turkey Mountain.  I think the Cherokee's still build a retail development but likely not an outlet mall.

[rebound]

I'm rooting for this mall to actually get built.  Why?  1) Sales tax stays in Tulsa, 2) this helps drive development in a part of the city that could use it and 3) it hopefully kills the mall by Turkey Mountain.  I think the Cherokee's still build a retail development but likely not an outlet mall.

There already is retail development going on across the road East of the Hard Rock Casino, with additional land yet to be developed.  Don't know if the Cherokees are directly involved in that or not.

[SouthTulsaCountyDude]

http://www.tulsaworld.com/news/government/council-approves-tif-district-for-eastside-outlet-mall-project/article_0aef3773-501f-5588-9e36-3224d32def4c.html


Whats next now? 

[Conan71]

Horizon has to beat the bushes and start getting leases signed.  Without leases, it won't happen.  I'm considering the Woodmont/Cherokee deal as dead considering they were supposed to break ground last April.  I believe they thought they could pair up with Simon like they eventually did in St. Louis.

I've heard speculation from others that Simon has no intentions to develop in Jenks but is keeping up appearances to help deter lessees from signing with Horizon.  To that end, I do believe Simon is in the permitting process with the city of Jenks at the moment which would tend to make one think they are moving forward.  Only time will tell.

[swake]

Horizon has to beat the bushes and start getting leases signed.  Without leases, it won't happen.  I'm considering the Woodmont/Cherokee deal as dead considering they were supposed to break ground last April.  I believe they thought they could pair up with Simon like they eventually did in St. Louis.

I've heard speculation from others that Simon has no intentions to develop in Jenks but is keeping up appearances to help deter lessees from signing with Horizon.  To that end, I do believe Simon is in the permitting process with the city of Jenks at the moment which would tend to make one think they are moving forward.  Only time will tell.

Simon was approved by the Jenks Planning Commission earlier this week and there's a zoning change notice on the site right now. Simon will go to the Jenks City Council here in next couple of weeks. A TIF is already in place and can be reused from the riverfront development that was started and then died back in 2008.

[PonderInc]

TIF districts for suburban sprawl development make no sense to me.

Here's my best attempt to explain what I know about TIFs.  There are lots of variables, and each one is sort of customized and different, so it's hard to wrap your head around.

First off, you can have TIFs that capture new sales and ad valorem taxes, or just new sales taxes.  Either way, you determine the boundaries of the TIF, and then figure out what your current (baseline) taxes are for that area.  In a pure greenfield development like Tulsa Hills, the baseline for sales taxes is zero, and the baseline for property taxes is whatever they were for the undeveloped land. You continue to collect taxes as usual, but any new taxes that are generated above the baseline go into the TIF funds.

TIFs can be for districts or single-owner sites.  You can have a TIF for an area you want to improve (think Brady and Blue Dome districts, for example), where TIF money is spread throughout the district to improve streetscaping or whatever.  In this case, you have multiple property owners within the district, and you make the improvements as you go (as the taxes are collected).  

In other cases (like Tulsa Hills) you have a single developer building greenfield development.  In this case, you are borrowing money to fund infrastructure improvements, and paying off the bond using money collected through the TIF. Either the city borrows the money up front and pays itself back, or the developer borrows the money, and the city hands the money over to the developer so they can pay off their loans.

With the Outlet Mall TIF that just got approved, it will be a 25 year TIF that will only capture the sales taxes. My understanding is that the developer, not the City of Tulsa, will bond the infrastructure improvements for the outlet mall, and we'll pay them back from the TIF money that's collected.  They expect to capture enough sales taxes to pay off the debt.  So, if they fail to deliver the expected sales taxes (gosh, who's ever failed to make an accurate 25 year prediction?!) they will be on the hook for that money. Not the COT.

Meanwhile, everyone assumes that the ad valorem taxes will multiply and benefit whatever school district this is, as well as the library system, TCC, the health department, the county government, etc.  And I guess we get to poach sales away from the neighboring suburbs. Whatever.

Still, I think greenfield TIFs are silly.  The main justification is to prevent development from going to the adjoining suburbs.  But you have to be careful when you shoot yourself in the foot if you're trying to win a race.

In case of the Outlet Mall, here's what makes no sense to me:

In 25 years, we will begin capturing the full taxable value of whatever is being generated within the (now expired) TIF district. (That's assuming that outlet malls even still exist 25 years from now.  I doubt it.  Remember 1990. Yeah, things have changed in a quarter century.)  By then, guess what, all that new infrastructure that was built in 2016 (roads, water, sewer, etc) will no longer be brand new.  It will require maintenance, repair and replacement right around the 25 year mark.  And it will be the city's responsibility to maintain this public infrastructure.  To do this we will use.... wait!  We haven't been saving any tax dollars for the past 25 years, because we used it to pay off the debt to build this place.  So where will that money come from?  It will come from other developments and businesses throughout Tulsa that have been dutifully submitting their tax dollars all along.  But all those other places have their own infrastructure needs, so all the tax dollars are taken.  (Because, face it, we don't generate enough tax dollars to maintain what we already have, much less the new stuff we keep adding.)  So we can either have crappy infrastructure, or take out new debt to pay for the upkeep.

So we get an outlet mall that will be obsolete before you can say "Amazon delivers via drone" and we get the burden of maintaining a bunch of new infrastructure that was built to support something we don't really need.  Because, really, how many shopping districts can our population support?  It's not like we're growing in leaps and bounds. So it's possible that other shopping districts within the city limits will have decreased in value, causing their taxes (which we actually would receive for the next 25 years) to drop off.

This does not even include my problem with wasting resources on car-centric development, which will be even more ridiculous 25 years from now.

It's just a circle that goes round and round and makes no sense.  This is not the worst TIF district ever, since we will at least get some boost to property taxes for schools, county, etc.  But is it worth it?  I just don't think so.

[cannon_fodder]

I thought the justification for the thing was that we needed more sales tax revenue? What percentage of the revenue is going to the TIFF? If 100% of revenue goes to the TIF for 25 years, and the development spec is 25 years (standard spec for box stores) --- isn't it likely a total wash? At best we will gain ad valorem tax and milk the development 25 years from now. Most likely is that we spent all our sale tax revenue on the infrastructure for 25 years, and then 50% of future revenues goes to replacing infrastructure?

Jobs are not a very relevant factor. It will bring jobs, but adding jobs that require government subsidy (medicaid, section 8, etc.) probably don't make economic sense to subsidize. If there are 40 stores, there will be ~110 decent jobs.

Not being critical, I'm really trying to figure it out. What is the expected cash flow and ROI?

[PonderInc]

Well, the land appears to be completely undeveloped, so I would assume our sales tax baseline is zero. (There's an existing McDonald's, but I don't think it's part of the TIF district.)  Supporters assume that the outlet mall will attract other new businesses to the vicinity, and that would "increase" tax dollars.

It's funny b/c they assume that there's some pent up demand for shopping goods that we're not currently able to meet.  Only with a heavily subsidized development will we be able to meet our needs!  ("Did you hear you can buy an orangutan in that store over by the new outlet mall? I'm going to buy one today!") In reality, most of us are buying the things we need--shampoo, shirts, pogo sticks--at existing stores in town... and we can buy any specialty items on the internet.

So, yeah, I still don't get it. (I do sort of understand TIFs used to revitalize existing, strategic locations in the central core.  I also believe they should not exceed 15 years.)

Here's a nice staff report related to the outlet mall TIF district:
http://www.tmapc.org/Documents/Agendas/11-18-15/Admiral%20Place%20Com.%20Dev.%20Plan.pdf

[Conan71]

Well, the land appears to be completely undeveloped, so I would assume our sales tax baseline is zero. (There's an existing McDonald's, but I don't think it's part of the TIF district.)  Supporters assume that the outlet mall will attract other new businesses to the vicinity, and that would "increase" tax dollars.

It's funny b/c they assume that there's some pent up demand for shopping goods that we're not currently able to meet.  Only with a heavily subsidized development will we be able to meet our needs!  ("Did you hear you can buy an orangutan in that store over by the new outlet mall? I'm going to buy one today!") In reality, most of us are buying the things we need--shampoo, shirts, pogo sticks--at existing stores in town... and we can buy any specialty items on the internet.

So, yeah, I still don't get it. (I do sort of understand TIFs used to revitalize existing, strategic locations in the central core.  I also believe they should not exceed 15 years.)

Here's a nice staff report related to the outlet mall TIF district:
http://www.tmapc.org/Documents/Agendas/11-18-15/Admiral%20Place%20Com.%20Dev.%20Plan.pdf

The length of the payback would indicate the city will be getting a reasonable share of funds.  It was estimated that Simon was going to net the city $4m a year in sales tax (either our esteemed Mr. Bird's numbers or Simon's, not sure).  Let's assume just the outlet mall on this location will generate $4m a year.  The TIF is for $20M with a 25 year payback, which means the city will end up receiving 80% of the normal sales tax collected.

The assessor's web site shows the combined parcels of land (@130 acres total) owned by I-244 Admiral Land LLC is currently taxed at about $32K per year.  I would assume since the TIF is alleged to be via sales tax collection, that the property tax assessment on this parcel will be a good deal higher after there's $80+ million in improvements.  The Crossroads Warehouse Center which is the fence line neighbor of this place is valued at $23M and paid $225K in property tax last year.  (Whoops, just found another 15 acre parcel belonging to same group that paid $3300 or so in PT last year.)

Now, consider that this project is much more than an outlet mall.  It will also have pad space for restaurants and space for hotels.  All told, this development group holds around 145 acres and the outlet mall should take less than 40.  As far as it being auto-centric, it's right near the intersection of an interstate and interstate spur, there's really no hope of pedestrian-friendly development right off a major interstate, especially when there's a fair amount of warehouse space, trucking companies, tractor/trailer dealers, etc. in the immediate area this is not going to be any place we'd consider pedestrian-friendly in yours or my lifetime.

Somehow TPS and the COT own land that is hemmed in on the north and east by the I-244 Admiral property which currently nets no property tax.

East of the property on 145th, AEP/PSO is sitting on a 70 acre parcel that is netting $81 a year in property tax.  To the south of that, the tract pays $52 for 20 acres.  To the south of that is another fallow parcel of 20 acres paying $49 in taxes.  To the east of that is another 42 acres paying $56 a year in property tax.

There are a couple of churches in the area that pay no property tax.  If property values get hot enough, those might just be temped to relocate.  Over to Catoosa where they wouldn't pay property tax either would be great!  Perhaps people living in some of the older housing additions in the vicinity might think about selling out.  

I'd say the upshot is there.  Granted, I will never believe the city can sales tax it's way to prosperity.  Our needs and wants have always seemed to outstrip our means, at least in the last 20-30 years.  I also don't care for sprawl nor corporate welfare, but the Tulsa Hills TIF appears to have been a really sound investment considering all the residential and commercial development it has helped catalyze.  I hate to see the great 5 and 10 acre mini-ranches in west Tulsa sub-divided, but that is what happens when people wish to live in suburbia and suburban property is becoming more scarce.

One advantage I do see this has over the previously-proposed Simon site on Turkey Mountain (aside from it wrecking great recreational space) is its access from the interstates is good and it's in the eastern gateway to Tulsa which makes it attractive for people from western Arkansas and SW Mo.

I'd personally rather take a head-long dive into a tree shredder than go to an outlet mall.  The couple of times I've been in the last five years, I was unimpressed with the offerings and found nothing special about the pricing.  MC and I aren't very materialistic and we try to support local retailers and eateries any time it's possible to do so.  I generally hate big box retail shopping so bad, if I were to buy a Christmas or birthday gift from say Target or Best Buy, I'll go on line just to avoid having to: park, dodge moving cars in the parking lot, screaming kids, and people with bad hygiene habits.

[Red Arrow]

I'd personally rather take a head-long dive into a tree shredder than go to an outlet mall.  

That would be too quick.  How about being thrown in feet first?

[Conan71]

That would be too quick.  How about being thrown in feet first?

That would rank right up there with a root canal without novocaine or a hot cheese enema.