In an order released today, Cleveland County District Judge Jeff Virgin found the referendum petition challenging two controversial Norman tax increment financing districts to be invalid, and he struck it from the ballot.
Although the petition opposing the twin TIF districts garnered more than 10,600 signatures from Norman voters, Virgin concluded that its “gist” or description was “insufficient.” Virgin released his five-sentence order Friday afternoon, two days after attorneys for those that began the referendum petition and those challenging its validity conducted oral arguments in his courtroom. Attorney Rob Norman, who represents the proponents of the petition, said he hoped to put the case before the Oklahoma Supreme Court on an expedited basis.
“My statement is simple: We do plan to appeal,” Norman said. “We move on.”
The Norman City Council approved the Rock Creek TIF districts — one for sales tax and another for property tax — in September by a vote of 5-4, setting up a publicly financed pathway for construction of housing projects, limited retail developments and a new arena and parking garage that would be used for University of Oklahoma basketball and gymnastics events. Concerned with the TIFs’ $600 million price tag cap and up-to-25-year duration, a group of residents organized a referendum petition to put the TIFs to a public vote. The petition received 10,689 valid voter signatures, but a group of protestants — including David Nimmo, president and CEO of Chickasaw Nation Industries — challenged the petition, with their attorneys arguing the referendum’s gist was insufficient to inform signatories about the vote being proposed.
“After reviewing the pleadings presented as well as arguments of counsel, the court finds, for the reasons stated in the petitioners’/protestants’ pleadings as well as oral presentation, that the gist contained within Referendum Petition 2425-1 is insufficient,” Virgin wrote. “As such, the court finds Referendum Petition 2425-1 to be invalid and the same shall be stricken from the ballot.”
Petition referendums require a “simple statement of the gist of the proposition” by law. In court Wednesday, attorney Denise Lawson argued on behalf of the protestants that the gist of the petition was “severely deficient.” The gist, Lawson said, omitted the percentage of the tax base subject to allocation within the TIF districts, created confusion about the project’s true price tag and misled voters to think tax money would be given to private land developers.
She also said the gist omitted an important way the TIF districts could be terminated. The project plan states the TIF districts will stop allocating taxes when $600 million is raised, or after 25 years elapses, which the proponents’ gist reflected. However, the project plan also states the TIF would terminate when “the period required for payment of the project costs authorized” has elapsed — essentially if the project ends up costing less than $600 million, when that figure is met, the TIF would terminate.
Lawson argued the gist lacked “enough accurate information” for the petition’s signatories.
“The gist, as drafted and circulated, when you distill it down, does not meet the standard of any relevant case law that relates to tax initiatives,” she said.
Lawson cited Oklahoma’s Future, Our Children Inc. v. Coburn, a state Supreme Court decision that ruled “the gist alone must work to prevent fraud, corruption and deceit in the initiative process.” The decision struck down a referendum question the court found to omit crucial information and mislead voters about the historic revenue-raising legislative measure it aimed to reject. Lawson also cited Miller v. Ellis, a decision that struck down a referendum to modify a previous TIF district in Norman brought by Stephen Ellis, an OU professor who has been outspokenly critical of the new arena TIFs, for failing to explain the effects of the modifications properly. Virgin was the lower court judge who ruled against Ellis before the case progressed to the Supreme Court.
“The only remedy is to strike [this refederndum] from the ballot,” Lawson said of the precedent set by the Coburn and Ellis decisions.
In his response representing the proponents, Norman came out of the gates arguing the referendum transcended matters of minutiae — it was an issue of democracy itself, of the right to vote promised in both the Oklahoma and U.S. constitutions.
“This right is precious,” Norman said. “This is what separates us from the oligarchs, the monarchs, and the dictators and the few who would seek to influence them by going against the will of the people.”
Norman said the protestants “denigrate the signatories” by arguing they would not understand the gist as written. Further, he argued distilling the 133-page project plan into a short paragraph will always, by nature, require omission of some detail, but the level of omission must constitute “fraud” to warrant being struck from a ballot.
“We have to take this,” Norman said, holding up a stack of papers, “and get it down to this.” Norman made a pinching motion, his fingers spread about three inches apart.
Referring to the Coburn decision, Norman said the gist in question in that case omitted two of five taxes the referendum would effect, and improperly opened with the question of whether a law should be “repealed” instead of whether it should be “approved.” Any deficiencies in the proponents’ gist, he argued, did not meet the bar necessary to constitute fraud by omission as set by the Coburn decision. Further, he said more recent decisions by appellate courts have discouraged “nitpicking” when it comes to language in referendums.
“What the Oklahoma Supreme Court has said in the last few years is, ‘Stop it, guys, stop it.’ They’re issuing one-paragraph opinions saying, ‘this is good,'” Norman said after the hearing. “That kind of started with the concurrences of a few judges saying, ‘Guys, this is a constitutional right. There’s nothing in the Constitution, there’s nothing in the statutes that says we can flyspeck and quibble over these, so let’s stop it.'”
Lawson declined to comment after Wednesday’s hearing.
Paul Arcaroli, an OU professor and one of the three legal proponents of the referendum, said he believed residents had the right to vote on such an expensive project. He added he was willing “to do this until I die.”
“For me, this is ultimately all about a vote of the people. I mean, all those arguments about the gist, it doesn’t really matter,” Arcaroli said. “We are better as a community when we make the decisions, when we get more eyes on it.”
In full, the gist on the petition stated:
The referendum petition seeks an election for the voters of Norman to approve or reject City of Norman Ordinance 0-2425-2. This Ordinance adopts and approves the “Rock Creek Entertainment District Project Plan.” The Project Plan area is located between Interstate 35 and Max Westheimer Airport, and it runs south from Tecumseh Road to an area just south of Rock Creek Road.
The Project Plan creates two Tax Increment Financing (TIF) Districts. Increment District No. 4 allocates 100% of the City’s nondedicated, general fund and capital improvement sales and use taxes generated in District 4, beginning May 1, 2025. Increment District No. 5 allocates 100% of certain ad valorem taxes (taxes in excess of the base assessed values of property within District 5) generated in District 5, beginning December 31, 2026. Both Districts would last a maximum of 25 years.
The Project Plan authorizes project costs of up to $600,000,000 for administration, implementation, and assistance to the Project Developer in financing $230,000,000 in costs related to the construction of an arena, a parking garage, and additional infrastructure. The incremental tax revenues generated and allocated in the TIF Districts, along with all potential state matching funds, would be used to pay for authorized project costs, and for no other purpose.
The Norman TIF story so far
The saga of the arena, which would offer a long-sought upgrade for OU’s basketball programs, began in 2017, when the OU Foundation pitched a similar plan. However, after pushback from the community and city council members, the foundation withdrew its request for a TIF district in 2018. In September 2023, a coalition called “Team Norman” — featuring members of City of Norman, Cleveland County, the University of Oklahoma, the Norman Economic Development Coalition, the Norman Chamber of Commerce and VisitNorman — brought the idea back with renewed interest.
The new arena would seat 8,000 people, a decrease from the Lloyd Noble Center’s 10,967-person capacity. The city is expected to contribute $230 million in principal toward the arena, its associated parking garage and infrastructure, but like a mortgage on a house, financing costs associated with the project must be paid off over time with interest. The city’s actual contribution is expected to be up to $600 million. As part of the economic development agreement the city crafted for the arena, private developers are compelled to build a mixed use “entertainment district” around the arena, intended to include retail, restaurant and office space, along with a 150-room hotel, 500 multifamily housing units and up to 177 medium density housing units, “built in phases based on market demand.”
The city’s financial contribution would be made through a tax increment financing district, which reallocates newly generated sales tax dollars from a specific area to go toward projects improving that area. An overlapping TIF district would divert property tax dollars to the project as well. Norman has had several TIF districts before, dedicated toward development in areas of the city in Campus Corner and University North Park.
The newest TIFs, too, would be held in University North Park, although mostly north of the existing district. The new entertainment district would be built just east of Interstate 35 between Corporate Center Drive and Rock Creek Road to the north and south. The physical entertainment district would not reach east beyond 24th Avenue Northwest, but the TIF district to fund the arena would, stretching from I-35 on the west to Max Westheimer Airport on the east, and from just south of Rock Creek Road to just south of Tecumseh Road.
Owned primarily by the OU Foundation, the land currently sits vacant. Rainier Companies, a Dallas-based firm with Oklahoma ties through its CEO Danny Lovell, is the largest private developer linked to the entertainment district.
The TIFs would reallocate 100 percent of sales and property taxes from the arena and its surroundings for 25 years, or until the city’s contribution was paid off. Proponents of the TIFs tout the fact there would be no new dedicated taxes levied against Norman residents, but opponents fear redirecting financial activity in Norman from other areas of the city — where taxes contribute to the General Revenue Fund — to the TIF district, where taxes are captured for the arena, would have long-term negative effects on the city’s budget.
After two heated public forums, the Norman City Council passed the TIFs in the early morning hours of Sept. 18, 2024. However, the council’s composition has shifted significantly since the vote.
In February’s municipal election, longtime Ward 7 Councilmember Stephen Tyler Holman defeated incumbent Mayor Larry Heikkila. Holman voted against the TIFs, while Heikkila voted in favor, and Holman’s Ward 7 spot will be taken by Kimberly Blodgett, who said she would have voted against the proposal had she been a member of the council at the time. Bree Montoya and Michael Nash, incumbent councilmembers representing Ward 3 and Ward 5, respectively, retained their seats and previously voted against the TIF. Ward 1 incumbent Austin Ball, however, lost his seat after voting in favor of the TIF — although Ball also had legal troubles that likely discouraged voters in his reelection bid. Still, every council member who voted against the TIF will retain a position in office come the summer, while two who voted in favor of it lost their seats.
Holman and Ward 8 Councilmember Scott Dixon attended Wednesday’s hearing.
“I’m just here to learn more about both sides,” said Dixon, who voted in favor of the TIF in September. “I really don’t have any feelings one way or the other.”
Holman has previously said he told OU representatives from the outset that residents would not support public financing unless there was a vote of the people. He was one of the six officials who voted in favor of a doomed non-binding “advisory vote” when it was approved by the council in June 2024. That non-binding vote was struck following a court challenge, which prompted the referendum petition as a mechanism to hold a binding vote.
“People that signed the petition, I think, clearly knew what they were signing, and that seemed to be the basis of the argument against it, is that the gist, people didn’t know what they were signing. But I feel pretty confident that people that signed it did know what they were signing,” Holman said after the hearing. “I didn’t find the argument against it very persuasive. So I’m hopeful Judge Virgin will make a decision to go ahead and send it to a vote of the people, and then we can get this thing decided once and for all.”
With its makeup so different than it was last September, Holman acknowledged the council might vote differently if the TIF were somehow re-presented before the dais with its new lineup.
“I don’t know what would get it in front of council again, because it’s already been decided by the council,” Holman said. “But that’s something we would ask the city attorneys to give us some advice on, is, if we were to explore that scenario, what would that look like?”
