The City as LandLord....

[Wrinkle]

Here's a more direct version, with red headlines, no less:
http://www.tulsaworld.com/news/article.aspx?articleID=070607_238_A1_hRelo42652

City could save money with new home

by: P.J. LASSEK World Staff Writer
Thursday, June 07, 2007
6/7/2007 11:26:22 AM


Relocating to downtown tower projected to cut costs by $15 million over 10 years


Moving City Hall to One Technology Center would save the city about $15 million over the first 10 years, a study of a proposal to consolidate city offices shows.

Economic Development Director Don Himelfarb said the city was about 95 percent finished with the due diligence on its proposed purchase of the 15-story glass building at 100 S. Cincinnati Ave. from Leucadia National Corp.

"Because we have deadlines, what we're trying to do now is disclose to the City Council the information so they can start their process of asking questions," he said.

The council is expected to hear a presentation at its Tuesday committee meetings. Himelfarb also has been meeting with councilors this week.

Although the city will not disclose the purchase price, the study by The Staubach Co. indicates that the project to create a consolidated City Hall will cost about $67.1 million, which includes the building purchase, relocation, security, consulting work and other capital costs.

"The purchase price is obviously substantially less than $67 million, but we are unable to disclose it until the council approves it because Leucadia is concerned if for some reason the council doesn't approve it and they have to remarket the building, they don't want anyone to see how little we're paying for it," Himelfarb said.

Mayor Kathy Taylor announced in March that the city had entered into a purchase option with Leucadia, a New York company, on the tower, formerly the WilTel building.

When rumors began to circulate late last year that the city was looking at the center, a real estate broker for the building said the price was $75 million. The asking price was listed in November 2005 at $65 million.

The study did not take into account how much the city would make from the sale of city properties that would be vacated because of the consolidation of departments into the new building.

Himelfarb and Taylor have said the current City Hall site would be ideal for a convention hotel. City Hall is next to the Maxwell Convention Center and about one block from the BOK Center.

Other sites targeted for consolidation that are on prime real estate are the Hartford Building in the eastern part of downtown and the Public Works building at 23rd Street and Jackson Avenue, on the west bank of the Arkansas River.

Parking appears to be the only issue identified by the study. One Technology Center's parking garage has 1,012 spaces. The city needs about 973 spaces for employees and 478 for visitors.

Only 537 spaces in the garage are available, however, because the rest are contractually obligated.

The study indicates that the city has 2,000 spaces available within a two- to three-minute walk from the building.

The study says that the cost of operating One Technology Center would be about $26 million over 10 years, and the cost of staying in the current City Hall, which is 37 years old, would be about $41.3 million over the same period.

That includes $24 million for needed maintenance, half of which has been deferred.

If the city moved into a leased building at the market rate, the cost would be about $45.1 million over 10 years, and a newly constructed City Hall would cost $70.4 million over the same period, the study shows.

Himelfarb said taxes would not be raised to fund the building purchase or office relocation.

Taxes already pay for the costs of the current facilities targeted for consolidation, he said.

"The taxpayers need to just think of it as that money now going to pay the bonds," he said.

The administration hopes the council will vote on the proposal this month, "but that is their call," he said.

The mayor cannot enter into a purchase contract until the council approves it, he said.

If the move is approved, minor office design modifications will be needed for certain departments, such as a City Council chamber.

The actual moving would take place in phases, he said.

[cannon_fodder]

I'm somewhat confused by the math I guess:

Operating Old City Hall would cost:  $17,000,000 over ten years.  Or $1.7mil per year.  That figure would be $4.1mil per year if we spent $24,000,000 on needed repairs for the structure.

Operating New City Hall cost: Estimated at $3,500,000 per year.  It ended up being ~$4,900,000 per year.

Questions?
1) Does that include paying for the $76,000,000 in bonds we issued to purchase and move City Hall? 
2) Does that include operating costs of maintaining the other properties the city has retained?
3) What happened to the $67,000,000 price we were told about?


My guess is no, kinda (but man do I hope so), and "we never really meant $67mil."  So by various ways of looking at it we are spending whatever it costs to maintain the other properties (or the opportunity cost of the city occupying so much property) plus $800,000 or $3,200,000.   But hey, the additional cost "can be attributed to a host of factors, including building operation, safety and security, elevator maintenance, washing the windows of the glass-encased building."  Who would have thought you'd have to operate the new building, secure it, maintain elevators in a sky scrapper, or wash windows on a glass building.  Never saw that coming.

Damn I hope someone is looking for answer on this.

/perfectly willing to stand corrected upon presentation of better information.

[Conan71]

They slipped a sh!t burger past us, CF.

[FOTD]

I'm somewhat confused by the math I guess:

Operating Old City Hall would cost:  $17,000,000 over ten years.  Or $1.7mil per year.  That figure would be $4.1mil per year if we spent $24,000,000 on needed repairs for the structure.

Operating New City Hall cost: Estimated at $3,500,000 per year.  It ended up being ~$4,900,000 per year.

Questions?
1) Does that include paying for the $76,000,000 in bonds we issued to purchase and move City Hall? 
2) Does that include operating costs of maintaining the other properties the city has retained?
3) What happened to the $67,000,000 price we were told about?


My guess is no, kinda (but man do I hope so), and "we never really meant $67mil."  So by various ways of looking at it we are spending whatever it costs to maintain the other properties (or the opportunity cost of the city occupying so much property) plus $800,000 or $3,200,000.   But hey, the additional cost "can be attributed to a host of factors, including building operation, safety and security, elevator maintenance, washing the windows of the glass-encased building."  Who would have thought you'd have to operate the new building, secure it, maintain elevators in a sky scrapper, or wash windows on a glass building.  Never saw that coming.

Damn I hope someone is looking for answer on this.

/perfectly willing to stand corrected upon presentation of better information.

Where'd you get that renovation expense of $17 million? And $24 million counting structure?

Don't believe everything you have been told. And don't look back. The time to raise Cain has long passed.

BTW, where is the original thread on this shenanigan?

[cannon_fodder]

The numbers you referred to came from an article posted just before my post:

The study says that the cost of operating One Technology Center would be about $26 million over 10 years, and the cost of staying in the current City Hall, which is 37 years old, would be about $41.3 million over the same period.

That includes $24 million for needed maintenance, half of which has been deferred.

http://www.tulsaworld.com/news/article.aspx?articleID=070607_238_A1_hRelo42652

I was using their numbers intentionally.  Even using their numbers it still doesn't appear to make sense.  At leas,t not to me.

[FOTD]

Somebody sold them on the idea that the old city hall property would be snapped up and redeveloped.

Dangerous game to play...they did not forecast the lending freeze.

[Conan71]

Somebody sold them on the idea that the old city hall property would be snapped up and redeveloped.

Dangerous game to play...they did not forecast the lending freeze.

Word was Lobeck had a friend who was interested...

[FOTD]

Word was Lobeck had a friend who was interested...

Great. The "friend" probably bought loads of DTG at 1$ instead.

[Conan71]

Great. The "friend" probably bought loads of DTG at 1$ instead.

Much better investment, IMO

[shadows]

The city didn’t deal with the issuing of bonds.  They circumvented the  issuing of the bonds that would have required a vote by the citizens by issuing them through a Trust as tax free bonds.  Also there is a limitation attached to city issued bonds; limited by the total assessed value of all private owned property.  The citizen just bought another “pig in the poke” like financing an airline through a trust of which they were not responsible for guaranteeing the bonds.  Wonder who bought those tax free bonds bearing a premium interest rate for the glass cube purchase? 

Can one expect the formation of another department under public works employing full time window washers?
 
Due to the fact that we have much dirty rainfall caused by western Oklahoma’s dust storms, would it be possible to install windshield wipers on the windows with spray jets?

Stop thinking about the cost as we have industries that are recycling bathroom tissue and it would be very easy for them to add a few pieces of color threads and print some more stimulus money at very little cost to the citizens.  Future generations will pick up the tab.

[DowntownNow]

So what you are saying Shadows is, even though the City should be protected against claims made by the bond holder or its lender by the tax-exempt bonds being issued by a Trust or Authority (TAIT/Great Plains Airlines), based on the recent argument made by BOK attorney Fred Dorwart in that matter...if the BID assessment should be struck down and Dorwart's argument should prevail in the TAIT/City matter (wherein he claimed that the City being the beneficiary of the Trust/Authority and pursued the deal in hand with TAIT), the City could still be held liable for the payment of the bonds and interest if the BID assessment is ruled invalid?

Anyone know where to go to find out who purchased bonds like Shadow suggested?

[TulsaSooner]

The only bonds requiring a vote of the people are GO's....the authorites can and do issue bonds to fund their capital projects.

Not all of the bonds for One Tech are tax-exempt.  A portion of them, roughly half, are taxable due to the leasing or potential leasing of a similar portion of the building to private entities.

[TulsaSooner]

Also, I know of no limit on the amount of GO's the City can issue as long as they are approved by the voters.  No matter the amount, the City levies for the funds to pay the debt, whatever it may be.

I'm guessing you are referring to the limit of 5% of the valuation of taxable property in the city in Article 10, Section 26, however, that limit is exempted in Section 27:

SECTION X 27
Indebtedness for purchase, construction or repair of public utilities.

Any incorporated city or town in this state may, by a majority of the voters of such city or town, voting at an election to be held for that purpose, be allowed to become indebted in a larger amount than that specified in Section 26, for the purpose of purchasing or constructing public utilities, or for repairing the same, to be owned exclusively by such city or town, or for the purpose of constructing, reconstructing, improving or repairing streets or bridges.

That would be MY uneducated take on it anyway.

[Wrinkle]

Even GO Bonds, once approved by voters, are still subject to market interest. The City's rating via Moody's et al is a factor in that. Once they feel the City has overextended itself, bonds become difficult to market.

But, as we'll recall, there was no vote on the Borg Cube.
It was Kitty's deal through and threw. For the World, who became nothing short of a marketing arm of the administration on this, to attempt to put it in the lap of Councilors is blatant blame shifting, revisionist history. The Council was pushed at every turn to do something quick, often without benefit of anything but the Mayor's words, backed up by a bought and paid for 'professional opinion' from Staubach, who reaped not only a fee for the 'study', but became the broker for the sale transaction.

...there's got to be something illegal about that.

That doesn't even address the insider deals on the Master Lease, BOK occupancy of the 15th floor (alongside the Mayor's office, instead of Councilors, who were moved down to 2), and the reasons behind this whole deal from the outset (which, imo, were to unload a dinasour from BOK/Williams in some way).

All while lying through their teeth at every turn, providing knowingly false information to make it look good.

[TulsaSooner]

Of course they're subject to market interest, but investors know that a municipal GO will be paid back because the municipality can and is required to levy for the taxes to pay them. 

There was no vote because the bonds used to buy the building were not GO's and, therefore, a vote was not required.  Just like it isn't required when TMUA issues bonds to improve the water system. 

The City is fortunate that BOK stepped up with the Master Lease whether people believe it or not.

The "dinosaur" of Williams that was "unloaded" cost them, from what I know, in the n'hood of $250 million to build and the City bought the building for less than $60 million.  Old City Hall would have required millions and millions of reinvestment and/or repair if the City didn't move so money was going to be spent one way or the other.  And old City Hall can and will eventually be sold.