Council Questions TDA over $4million tax fund allocation to American Residential

[DowntownNow]

I accidentally posted this in the Tribune II Development thread and then realilzed it should have been moved here since it deals with process and not the development itself per se.  Sorry for the confusion all and Admin


And the plot thickens...the following article references the City Council Urban & Economic Development Committee meeting held this last Tuesday that started at 10:45AM - a lil late due to an extended Public Works meeting.  Last chance to see the replay on Ch24 TGOV is Monday starting about 9:00PM.

TDA $4 million loan draws fire
by: P.J. LASSEK World Staff Writer
Sunday, March 29, 2009
3/29/2009 3:27:34 AM

The Tulsa Development Authority is under fire by some city councilors and local developers after it awarded a 10-year, interest-free $4 million loan with no competitive process.

"It really disturbs me that you guys predetermined how the $4 million would be recycled into the economy downtown," Councilor Bill Martinson said during a council committee meeting last week.

In February, the authority voted 3-2 to recycle $4 million in tax money back to American Residential Group for a companion project to its Tribune Lofts project, at Archer and Main streets.

"We have people actively engaged in trying to revitalize downtown Tulsa and they are not even given an opportunity to put these dollars to use," Martinson said.

During that meeting, a local developer said she was told by Authority Chairman Carl Bracy that a member of the mayor's office and other city officials presented the project as the viable one for downtown.

"In effect, (the authority) was to award the money to that project," Mayo Hotel developer Tori Snyder said she understood from Bracy.

Snyder and some other local developers are upset that they were not given the opportunity to vie for the $4 million in 1996 third-penny sales tax funds designated for downtown housing, which was originally awarded to American Residential Group through a bidding process.

American Residential's initial proposal suggested the funds be repaid to provide a perpetual fund for downtown housing, the city agreed and initiated such a policy.

Of the initial award, American Residential has repaid $2 million of the $4 million, with the other $2 million due in 2011.

Bracy, who was present at the council committee meeting with Snyder, did not dispute her comments. Instead, he told councilors that the authority wasn't legally required to competitively bid the funds and could have originally given it away and have nothing.

"I don't think we did anything wrong and inappropriate and that it was fair," Bracy said about the recent award process.

Martinson, who has been critical of the authority, said he and Bracy had a fundamental disagreement.

"I think when we are dealing with taxpayer dollars it needs to be as transparent as possible," he said.

Snyder said there are local developers who have been waiting for those funds to be available and didn't know they could just ask for it outside of a competitive process.

American Residential principal Jay Helm said on Saturday that his firm went to the authority with its financial proposal after it was awarded a contract on purchasing the property that did go through a bidding process.

The financing was discussed several times in the authority's meetings, which are open to the public. A majority of the members appeared not to support the request during those discussions. However, during February's special meeting, the request was approved in a split vote.

Mayor Kathy Taylor said Saturday she didn't direct TDA and has never directed TDA on what to do.

"My friendship with Jay (Helm) had nothing to do with him being awarded the property site for his development or the $4 million."

She said she knew there were plans for an addition to the Tribune, but that she knows about all of the economic development efforts.

Martinson said that the authority's desire to recycle the funds is admirable, "but I'm wondering to what extent they are really being recycled if they keep being recycled with the same developer."

Councilors Rick Westcott and Bill Christiansen also voiced concerns after they said they received several e-mails from local developers upset about the process.

Authority member Julius Pegues, one of the two votes against awarding the funds to American Residential, said the board is working to correct its procedures.

"Let's assume TDA erred in its process to distribute this money," he said.

He said the authority's goal is to prevent these type of issues from occurring in the future as it relates to proposals for available funding.

"We may have made mistakes here recently, but I don't think we made any that we can't correct," said Pegues, who was vocal about the lack of a competitive process.

The principals of American Residential, Jay Helm and Steve Ganzkow, both contributed to Mayor Kathy Taylor's campaign. Helm gave $5,000 and Ganzkow $2,000. Helm's daughter also was employed as Taylor's personal aide for about a year and left in the fall of 2007.

The award of the initial $4 million to American Residential occurred under former Mayor Bill LaFortune's term. Officials at that time said the group's payback clause played a significant role in getting the funds.

Several concerns I have over this:

• Lack of notice and a competitive process in awarding these large funds, essentially pubicly subsidizing a large portion of the overall investment of ONE project and not maximizing the potentials for downtown
  In the televised meeting, Martinson made reference to the contract between City and TDA allowing them to distribute those tax funds for downtown housing and that the contract may have expired in 2003 with no further extension
• Tori Snyder's claim that in a conversation with Chairman Carl Bracy, he admitted TDA was directed to fund this project after Bunney and City staff recommended it - he also left that unchallenged

• Julius Pegues, TDA Vice Chair, was one of the two dissenting votes to approve funding and in an earlier article by the Tulsa World Pegues said he also has concerns about the "process and lack of openness" regarding the reallocation of the funds. "There were no requests for proposals presented," he said. "Other developers who wanted to do development housing downtown didn't get the opportunity to participate."  Juliues Pegues in the meeting Tuesday then acts like this is something new to them, stating TDA "may have erred," and that TDA has a goal to "prevent these types of issues from occurring in the future."  To which one other developer invited by the Council to speak with Snyder said "it isn't rocket science" to address.
• I have a huge problem with Mayor Taylor saying "she didn't direct TDA and has never directed TDA on what to do"...yet people have shown me numerous copies of TDA contracts signed by Taylor - yet she says she has nothing to do with TDA?

• I find it telling how the Tulsa World put in its article the relationship between Taylor, Helm, his daughter and Ganzgow.
• If you watch the meeting, you will see Chair Bracy stumble over his own words, at one point calling on Mike Bunney to jump in the discussion but Bunney essentially refuses.  At the end of the meeting, in what seemed like a surprise to TDA, Council asks two developers or citizens to come up.  They essentially refuted point for point everything Bracy and Pegues said.  Both Pegues and Bracy never stood up to refute any of the information those two provided...which seemed odd since they just took out the argument TDA was making.

[RipTout]

Carl Bracey has integrity and tries to do his best. Christianson seems to be doing his job along with Martinson.

But this other stuff is helter skelter real estate development with the Mayor's office serving as lead director.

Not exactly free enterprise.

It would be much better for this Entertainment District to use TDA as the aquisition/redirection arm for all industrial uses while the COT Planning Dept. lays out a master plan which may or may not include more future corporate welfare developments. Call in Tulsa Parking Authority for a parking garage for the ballpark and adjacent area. The rest of development there should be left to the private sector.

What's happen to Griffin Communications? Are they still moving forward?

[sgrizzle]

The 3-2 vote raises my eyebrows as much as the no-bid process. It's such a "no-brainer" that they forego opening it to bid but at the same time, barely over half of TDA supports the idea? Sounds like even TDA had trouble believing this was the right call.

[DowntownNow]

I've been told that Griffin is still wanting to move forward with their development but the broadcast division has taken a hit as a result of the economy and advertising dollars.  On top of that, they are wanting to rebid all aspects in light of the economy and see if they can realize at least $3 million in costs savings.  At some point though TDA needs to say its time to go or step aside.  TDA contracts typically specify a start of construction date usually within a year of execution of contract...think that time has come and gone or is very, very close.

[DowntownNow]

On that Grizzle, I will completely agree with you.

The larger question here is - when does the Council stop demanding answers only to fail to make changes?  The City administration is using TDA.  Mike Bunney has gone on record saying that the City still needs TDA for the flexibility they provide under state statutes.  The City uses the TDA to advance their objectives even though they are supposed to be separate legal entities devoid of political pressure. 

When the TDA gets called on it, they are forced to respond that they dont have to answer to the Council since they are a state governed entity...I think one could argue that.  Particularly in light of the City dolling over more and more responsibilites to the TDA that have nothing to do with Urban Renewal as defined by statute but everything to do with how taxpayer dollars are spent.  By using the TDA, the City is unaccountable to anyone and that is wrong.

[sgrizzle]

I've been told that Griffin is still wanting to move forward with their development but the broadcast division has taken a hit as a result of the economy and advertising dollars.  On top of that, they are wanting to rebid all aspects in light of the economy and see if they can realize at least $3 million in costs savings.  At some point though TDA needs to say its time to go or step aside.  TDA contracts typically specify a start of construction date usually within a year of execution of contract...think that time has come and gone or is very, very close.

I believe that announcement also said they were going to have a large "internet news" division at that office and I believe that was the same group hit hard in recent layoffs.

Maybe Griffin should look at a phased building plan. Build the museum, helipad, web group space, later.

[rejtul]

Griffin Communication is currently being rebid

[FOTD]

Brenda Miller left TDA in an embarrasing position with their pants down.

Where is the unaccountable beach these daze?

One of her cronies is walking around with Frizzbee's brief case.....

Thanx for the info on Griffin......

[DowntownNow]

I was out of town and missed this great editorial by the Tulsa World on Saturday...

Smelly deal
by: World's Editorial Writers
Friday, April 03, 2009
4/3/2009 3:42:06 AM

The February decision of the Tulsa Development Authority to award a 10-year, interest-free $4 million loan to a well-connected local developer without any sort of competitive process was wrong.

The chairman of the TDA says it was legal, but that doesn't mean it's the right way to use the public's money.

The money is coming back to TDA in repayment of a previous city loan to American Residential Group, developers of the Tribune Loft project, at Archer and Main streets. The original loan money was a piece of the 1996 third-penny sales tax.

The plan — which worked — was to start a recycling loan fund that would create a chain of development.

But when we should be celebrating the success of the program, instead we're wondering if there was a sweetheart deal involved.

The decision to award the latest loan back to ARG for a companion project to the Tribune Lofts could be completely legit, but to do so without first publicly seeing if any other developers have better ideas doesn't pass the smell test.

It isn't lost on anyone that Jay Helm, a principal in ARG, was a big donor to the mayor's election campaign, which makes everyone suspicious.

TDA Chairman Carl Bracy has said there's no legal requirement that the money be awarded on a competitive basis — although it was the first time. There was at least one other potential bidder.

We shouldn't have to say it, but we don't want our city run on the basis of the minimum legal limit.

Tulsa expects transparent, equitable government.

Julius Pegues, one of two TDA members who voted against the plan, has said he thinks the authority has learned its lesson and won't repeat the error.

We hope he's right, but wonder if legislation might be needed to make sure the problem isn't repeated.

If the TDA plans to operate under the bare minimum of public standards, it may be time to tighten the standards.

In the comments section, someone claiming to be a TDA Board Member by the name of John D. (can only assume he means John D. Clayman) posted the following:

John D. 1960, (4/3/2009 2:40:16 PM)
I am a member of the TDA Board and find your editorial to be misleading and devoid of substance. To suggest there was a "sweetheart" deal is libelous, but, then again, calling for a "competitive" process is laughable coming from a monopoly who readily resorts to litigation when someone dares to question the power of the Tulsa World.

I have furnished a response to the improper suggestion of wrongdoing by TDA to your reporter, P.J. Lassek. I encourage you to print my e-mail communication for a more balanced viewpoint of this inflammatory "editorial." 

In response I raise these questions:

What else can you call it when $2 million of the original $4 million loan is "being repaid" but then lent right back out to the same entity?

So John D., if you are a member of the TDA board perhaps you can answer how you and the other board members determined this was a viable project for downtown?

What criteria did you use to examine this proposal?

Did you take into account the ever growing number of high income housing units versus low/moderate income needs?

By what definition did this project outweigh any other potential development project for downtown?

What necessitated the lack of public input or competitive bid?

Did this decision best serve the interests of the TDA's mission to encourage private investment and redevelopment in the downtown area when you essentially have shunned all other developers out of the process by this action?

Guess we will wait to see John D's response in the Tulsa World.

[nathanm]

It isn't lost on anyone that Jay Helm, a principal in ARG, was a big donor to the mayor's election campaign, which makes everyone suspicious.

...and we jump the shark.

Calling the process stupid I'm all behind. Insinuating there was some sort of backroom deal when there's no evidence whatsoever of it? That's irresponsible.

Now, if the World wants to do some investigative journalism and find the evidence, let's all get out our pitchforks. Somehow I doubt that will be happening.

[Oil Capital]

...and we jump the shark.

Calling the process stupid I'm all behind. Insinuating there was some sort of backroom deal when there's no evidence whatsoever of it? That's irresponsible.

Now, if the World wants to do some investigative journalism and find the evidence, let's all get out our pitchforks. Somehow I doubt that will be happening.

No evidence whatsoever???   LOL   A no-bid, no opportunity for anyone else to apply or compete, award of money to a mayoral contributor is evidence of some sort of backroom deal.   Pretty persuasive evidence.

[RecycleMichael]

This guy gives money to every campaign.

He contributed the maximum amount to Hillary Clinton, Rudy Guliana, Mary Fallin, John Sullivan, Dan Boren, and a small amount to Barack Obama.

He gives big money to campaigns and always has.

[DowntownNow]

If you happened to watch the Council's U&EDC meeting on 3/24 you pretty much had your answer.  Tori Snyder of Mayo Hotel development fame stated that in a conversation with Carl Bracy, Chair of TDA, that she was essentially told that the City administration, through Mike Bunney (Dir. of Economic Development), had proposed the project for funding and basically asserted that TDA was told to give the money to American Residential.  Carl Bracy did not stand up to refute that assertion.  

From the previous Tulsa World article on this:

During that meeting, a local developer said she was told by Authority Chairman Carl Bracy that a member of the mayor's office and other city officials presented the project as the viable one for downtown.  "In effect, (the authority) was to award the money to that project," Mayo Hotel developer Tori Snyder said she understood from Bracy.  Bracy, who was present at the council committee meeting with Snyder, did not dispute her comments.

In the original Tulsa World article 2/24 Authority OKs $4 million loan for second loft project  Vice Chair Julius Pegues stated "he also has concerns about the 'process and lack of openness' regarding the reallocation of the funds."

In the TW 3/29 article, the Mayor's statement regarding Jay Helm only addressed the purchase of the land, not the financing.  

Mayor Kathy Taylor said Saturday she didn't direct TDA and has never directed TDA on what to do.

"My friendship with Jay (Helm) had nothing to do with him being awarded the property site for his development or the $4 million."

[RecycleMichael]

The newspaper said a developer said that someone from TDA said that someone from the Mayor's office said that this was a viable project.

Sorry, I need more evidence than that.

[DowntownNow]

Carl Bracy was sitting right there when the allegation was made, the question re-asked by Council, and the allegation made again.  So was Mike Bunney from the City.  This was in a live, attended meeting. 

At neither the U&EDC meeting, nor in the paper, did Carl Bracy stand up and say "whoa, thats not what I said, that never happened."  He had every right to stand up and refute that allegation when it was made and chose not to do so....perhaps because it was spot on? 

By that logic Michael, you would have to be launched into orbit just to be sure the Earth rotates on its axis giving us night and day...might not give any belief just cause the encyclopedia says so eh?