The ranks of Oklahoma City’s tax increment finance districts may be expanding soon with the addition of one in the Capitol Hill area that could go before the city council in the coming months.
The city currently has 17 TIF districts within its boundaries. That total includes TIFs for downtown OKC, the Innovation District and Classen Corridor. TIFs have aided in the construction of the Omni Hotel and restoration of the Skirvin Hotel, as well as the completion of the First Americans Museum.
TIF districts offer a slightly complex and sometimes controversial method of creating opportunities for the development and redevelopment of areas that need a makeover.
In a nutshell, TIFs can last up to 25 years. When creating a TIF district, cities designate anticipated increases in future sales tax and/or property tax revenues as collateral to borrow money for investment into development, typically in the form of incentives to developers and the construction of public infrastructure like sidewalks and streetscapes. The loans are ultimately repaid by the increased tax payments from the redeveloped areas.
The new Capitol Hill TIF district proposal includes an area of southwest OKC bounded by the Oklahoma River on the north and Southwest 30th Street on the south. Most of the area is occupied by commercial real estate.
Ward 6 Councilwoman JoBeth Hamon hosted a town hall on the proposed TIF at the Yale Theater on May 12, which about 60 people attended with plenty of inquiries. The event included a question and answer session with OKC Alliance for Economic Development CEO Kenton Tsoodle on a broad range of subjects, ranging from how TIFs work to concerns about who benefits from the use of public dollars for private investment.
TIFs have become a commonly used tool for the OKC City Council to promote economic growth and support projects like the Criterion Theater and, more recently, OKANA, which received more than $100 million in financing through a TIF to help fund its construction. Both the Criterion and the new OKANA entertainment and hotel complex sat on undeveloped land before they were constructed. Most recently, a TIF expansion project in northeast OKC saw its revenue terms revised following concerns from leaders in the Millwood Public Schools District.
“TIFs are just a way to take those funds and use them for a different purpose for a period of time,” Tsoodle said. “It’s still always dependent on there being something there. So if you have just a blank parking lot or a lot, and it doesn’t pay much in taxes, if you put it in a TIF, it’s not going to pay any more taxes unless you build something on it. It’s supposed to be a tool to help incentivize something to be built or something to be done to promote a bit higher and better use of the property.”
When a TIF expires, the aim is to have improved the tax revenue from the area.
“If you’ve done it correctly, the taxes have grown at a higher level, and it starts going back into the schools, the county, and the city for things like libraries and county health departments,” Tsoodle said.
Hamon on Capitol Hill TIF: ‘I always want to see that there is some public benefit to it’
Capitol Hill has mostly missed out on the redevelopment trend in OKC going back to the 1990s, which has impacted property valuations.
Prominent developer Steve Mason refurbished the Yale Theater, which reopened in the heart of Capitol Hill on Southwest 25th Street in late 2022. While Mason said the theater project did not have access to TIF funding when its redevelopment process began in 2019, it did benefit from a tax credit incentive that helped see the project to fruition. Mason said that often those in financing apply comparables to the Capitol Hill area that are not realistic or fair, which he said can make financing for projects difficult. He believes a Capitol Hill TIF can help fill that gap, making more development possible for smaller-scale investors.
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“When we restored this theater, the cost was $3 million,” he said. “But we didn’t get that in an appraisal for financing. I think what happens in this area sometimes seems like redlining. You take comps from across the river, like the Criterion, and then you apply that across the river where it’s less developed. The comps aren’t the same. So our project was appraised for $2 million. But it just so happened that we got a $1 million historic district tax credit. So we had a $3 million project that appraised for $2 million, and that tax credit filled that gap so we could do this project. The TIF is equally important because appraisals are tough in this neighborhood for new development. We need the TIF.”
The Capitol Hill TIF remains in the early stages of development. The approval process includes action by a TIF review committee, the OKC Planning Commission, and finally the OKC City Council. If fully approved, the TIF’s individual project proposals would be considered by the committee and recommended if they are viable.
Those proposals could range from an idea for a business or a multifamily housing unit, and those with existing businesses in the area can also apply for TIF funding to support renovation or updates.
“We ask for your budget, like your sources of income and what your plans are, where your funding is coming from,” Tsoodle said. “Is it money you have on hand, or is it debt? Is it grants? Also, what your construction budget is and your full cost. We want to see that the idea is in line with the best uses for public money and also in line with what the area wants and needs. We have to make sure there is a justification for those funds.”
Hamon said she is often skeptical of TIFs, but she realizes they are popular with city leaders.
“A gentleman asked about private investment benefiting from public dollars, and that’s something I’ve been a pretty consistent critic of during my time on the council,” Hamon said. “And so for me, whenever we’re using public dollars to incentivize or give to private projects, I always want to see that there’s some public benefit to it.”
Affordable housing construction can also be incentivized by TIFs. Hamon hosted a town hall for the Classen Corridor TIF district last year. While that project has not yet yielded affordable housing, Hamon remains hopeful it will. She said there was some initial interest in multi-unit affordable housing development after the TIF was created.
GO bond package looms
Meanwhile, OKC voters are expected to decide on whether to approve a massive general obligation bond package later this year. While the exact timeline and package remains unclear, that group of projects could include dollars for affordable housing. The total bond package is expected to be more than $900 million.
Hamon said the Capitol Hill TIF likely wouldn’t include much in affordable housing because the proposed boundaries are primarily commercial properties.
“Whether it’s specifically affordable housing, or maybe affordable commercial tenants, what are the things people really want to see serve the needs?” Hamon said. “No one place is the same as another. For me, everywhere needs affordable housing, so that makes sense to me, but is the community saying that we need affordable tenant spaces for small businesses as well, or does someone have a business that’s been in a building for 30 years but they don’t have the capital to renovate?”
Hamon said it’s almost certain the Capitol Hill TIF will ultimately be approved by the city council. She said the purpose of the May 12 town hall was to educate those in the community and hopefully spur ideas from smaller investors that could help revitalize the area.
“I’m not surprised to hear the mix of concern and maybe anticipation and excitement,” Hamon said of the town hall. “I think for me, knowing that it’s 100 percent going to pass the city council, it was important to educate people that this is very likely coming, but also to hear what the specific needs for the area are and what we could set some budget allocations aside for? What are those special needs so that it’s not a broad free-for-all for all types of development? I think it should be what the community wants and tailored to that so they can take advantage of it.”
