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Tulsasaurus Rex
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« Reply #540 on: May 02, 2016, 09:02:05 am »

The concrete plant on West Bank has been accused of the same. But they bought the land fair and square and have use for it. If you want it you'll have to pay them not just the value of the land, but the inconvenience of having to relocate, having to pay todays prices and probably include a healthy profit. If the city/county finds it is indeed hindering the public good, they have a process to wrench it out of their hands called eminent domain. CF made good points about why they may have listed it which don't include that they really want to sell it. In fact, it may be trolling by the realtor.

Not really. The Oklahoma Supreme Court said in Muskogee County v. Lowery that eminent domain cannot be used for private economic development. It violates the Oklahoma constitution. Even if everyone on this forum really really wants to see some new lofts and shops built there, commercial uses are not truly public uses. Even contributing to a wider tax base (a public purpose) is not a public use. It would have to be taken for something like a road, or a bridge, or a government building. And just as well.
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TulsaGoldenHurriCAN
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« Reply #541 on: May 02, 2016, 11:26:32 am »


Ahhh...growth for growth's sake....

Hindering progress - one of the worst "4 letter words" around.  And the attitude that goes with it. 


Listing it for sale the way they have is called "fishing" - if they can get someone to bite, like AquaMan said, then they will be very happy to let it go and let "Progress" proceed.  If no one is willing to pay the price, then the people who are "in the market" to buy are actually the one's hindering progress because they are not willing to pay the owner's desired price - it's like if I go into a Honda dealer and say I want an Accord.  But since the dealer is unwilling to sell me a new one for $2,500, he is hindering progress - of me getting what I want...sounds like a Communist plot.  The dealer should be punished!  Raise his taxes!  Charge him fees!!  Do something so I can have my way....!!


Wow! I am continuously amazed by how just about every comment I make on here gets dissected and attacked. Any comments which aren't dismissed are completely ignored. Starting to wonder what the point of "discussion" on this board is.

I said nothing like the above and that is a ridiculous argument and a stupid comparison. If a Honda dealership was charging double/triple the market value for cars, that would anger buyers and the manufacturer and would be a big hindrance on progress. I specifically said "I know it is their right and is perhaps a smart thing to do for them, but it sucks when landowners hinder progress by sitting on a property and doing nothing with it waiting for a big payday".

Putting an unrealistically high sell price just to see if there is a bite is perhaps smart for them. It might not be great for the area and will no doubt dissuade potential developers of those lots. The ROI for downtown projects is currently at a level where it often takes tax incentives or non-profits stepping in to make it worthwhile or doable (ONEOK Field, BOK Center, Santa Fe Square, all of the many GKFF developments). I don't see demand for an overpriced empty lot to be high enough for someone to pay far above market value any time soon. No big deal, it will just stay empty for many more years.
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heironymouspasparagus
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« Reply #542 on: May 02, 2016, 12:05:35 pm »

Wow! I am continuously amazed by how just about every comment I make on here gets dissected and attacked. Any comments which aren't dismissed are completely ignored. Starting to wonder what the point of "discussion" on this board is.

I said nothing like the above and that is a ridiculous argument and a stupid comparison. If a Honda dealership was charging double/triple the market value for cars, that would anger buyers and the manufacturer and would be a big hindrance on progress. I specifically said "I know it is their right and is perhaps a smart thing to do for them, but it sucks when landowners hinder progress by sitting on a property and doing nothing with it waiting for a big payday".

Putting an unrealistically high sell price just to see if there is a bite is perhaps smart for them. It might not be great for the area and will no doubt dissuade potential developers of those lots. The ROI for downtown projects is currently at a level where it often takes tax incentives or non-profits stepping in to make it worthwhile or doable (ONEOK Field, BOK Center, Santa Fe Square, all of the many GKFF developments). I don't see demand for an overpriced empty lot to be high enough for someone to pay far above market value any time soon. No big deal, it will just stay empty for many more years.


Not actually trying to dissect and attack.  Definitely try to dissect, analyze, and discuss.  My naturally brusque nature and possible lack of 'politically correct filter' may make it seem like attack, but it's not.  You will absolutely have no doubt if I 'attack'....it won't just "seem" like an attack.  Ask Breadburner about some of his more outrageous comments and my replies.  And he has some I agree with from time to time, too, where I don't attack.

As for other posts - I never ignore yours...or pretty much anyone else around here either.  If I don't jump in to say something, it's MOST likely because I agree with whatever it is you say - so for all those posts you have made where I made no reply, it was a friendly gesture of agreement.  Or maybe I just don't have a strong enough opinion to make a comment.  As a Tulsa U alum, and fan of Golden Hurricane, I am naturally a little more inclined to be "friendly" just due to your name...


Example is still good.  Excellent in fact!  Be it a new Honda, an old Rolex, or a mint Honus Wagner - or a piece of downtown land.  Any item of real property.  It isn't "hindering progress" - your words - for the owner to keep it no matter what his motivations are - his property, his reasons.   Just because you, I, some real estate agents, and even a thousand other people have opinions on what we THINK the market value is - the owner's belief of what the market value is rules - if it happens to be close to what anyone else thinks, well, a sale will ensue.  If not, then we can look elsewhere for something more suitable to our opinions.  The REAL - ACTUAL - market value is whatever someone, somewhere is willing to pay - not what we "think" it should be, especially just because we think he should conform to our "group-think"...

It's not like there aren't other pieces of land for dollars per sq foot that someone is very enthusiastically trying to sell.  No matter what any outside party thinks.  His progress goals may be just perfectly in line with the wait - this could be a retirement, or cash out event to come for the company, same thing for individual owner.  It doesn't matter.   Don't have a "busy-body" attitude....you are too young to develop one of those, with too much life ahead to live with it all that time!  (gentle admonishment, not an attack.)



One very important comment you made, buried in the last paragraph, goes to a question that should have a bigger presence - and this is not directed just at you - it is a general broadcast/question/comment - just happens to relate to our talk;

The ROI for downtown projects is currently at a level where it often takes tax incentives or non-profits stepping in to make it worthwhile or doable....

If the ROI isn't good enough to justify commercial developments, then how on God's green earth can they be justified using even relatively short term tax incentives??  Doesn't the whole concept of "not justifiable on ROI" pretty much mean that it ISN'T worth tax incentives?   So why would the public get involved at all??  It certainly isn't for some nebulous non-valid "payback" of those lost taxes - they are lost.  Meaning gone.

Rather than sitting around and everyone nodding their "bobble-head" affirmatives for every silly thing that comes along - stop and think about it.  Our most recent vote has some non-productive, non-contributing components that should have had better thought.


« Last Edit: May 02, 2016, 12:07:38 pm by heironymouspasparagus » Logged

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TulsaGoldenHurriCAN
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« Reply #543 on: May 02, 2016, 12:51:52 pm »


The ROI for downtown projects is currently at a level where it often takes tax incentives or non-profits stepping in to make it worthwhile or doable....

If the ROI isn't good enough to justify commercial developments, then how on God's green earth can they be justified using even relatively short term tax incentives??  Doesn't the whole concept of "not justifiable on ROI" pretty much mean that it ISN'T worth tax incentives?   So why would the public get involved at all??  It certainly isn't for some nebulous non-valid "payback" of those lost taxes - they are lost.  Meaning gone.

Rather than sitting around and everyone nodding their "bobble-head" affirmatives for every silly thing that comes along - stop and think about it.  Our most recent vote has some non-productive, non-contributing components that should have had better thought.




Ok fair enough. Thank you for the clarification!

I meant the ROI for the developer. The projects looked too risky for private businesses to fund them fully so taxpayers took the risk and funded them (some call it corporate welfare). Look at Santa Fe Square. They said the project would not be possible without that TIF (so not worth the risk  based on the ROI they wanted). So the taxpayers will be providing incentive via unrealized taxes. Will the ROI for the city be greater than the tax discount? That is to be seen (and maybe impossible to determine), but regardless those tax gains are gone and will fund that development.

If it works out, it should be a net positive for the area and for downtown, but will it just discourage the same type of buildings being built elsewhere outside of a TIF? Will it encourage others pursuing similar TIFs? Or will it create a new urban mall that creates a large thriving shopping district that pulls in regional visitors and promotes even more development? (I think this is what those who bought in are hoping for).

The cost per square foot of new urban construction is so high in comparison to the demand for space downtown, especially retail. Residential makes more sense but is limited (e.g. no new "affordable" condos for sale). If the lot is $70/sf to begin with, the building will have to be pretty tall to distribute that cost out between enough tenants. So maybe you can argue they're helping progress by assuring that whatever is built there is a massive building!  Grin
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DowntownDan
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« Reply #544 on: May 02, 2016, 01:39:22 pm »

Tax incentives make sense for rehab of old buildings.  The cost of rehabbing old buildings is more expensive than new construction.  But the city and its citizens don't want buildings to be left vacant and not rehabbed, and in the current climate, we are trying to save many of them from the wrecking ball.  In those situations, I think it's fair for the city and its citizens to chip in to account for the increased cost to the developer and the benefit the city gets by reusing existing space and preventing demolition. 

Santa Fe Square is a bit different but I think I'm okay with it because of its scale.  It is a literal game changer for downtown similar to the BOK Center and ONEOK field.  There is room for debate on this one, but I'm for it.  I think the city will benefit more than its costs in tax relief.
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BKDotCom
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« Reply #545 on: May 02, 2016, 01:48:17 pm »

I think it's fair for the city and its citizens to chip in to account for the increased cost to the developer and the benefit the city gets by reusing existing space and preventing demolition. 

Commie corporate welfare
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heironymouspasparagus
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« Reply #546 on: May 02, 2016, 02:08:28 pm »

Ok fair enough. Thank you for the clarification!

I meant the ROI for the developer. The projects looked too risky for private businesses to fund them fully so taxpayers took the risk and funded them (some call it corporate welfare). Look at Santa Fe Square. They said the project would not be possible without that TIF (so not worth the risk  based on the ROI they wanted). So the taxpayers will be providing incentive via unrealized taxes. Will the ROI for the city be greater than the tax discount? That is to be seen (and maybe impossible to determine), but regardless those tax gains are gone and will fund that development.

If it works out, it should be a net positive for the area and for downtown, but will it just discourage the same type of buildings being built elsewhere outside of a TIF? Will it encourage others pursuing similar TIFs? Or will it create a new urban mall that creates a large thriving shopping district that pulls in regional visitors and promotes even more development? (I think this is what those who bought in are hoping for).

The cost per square foot of new urban construction is so high in comparison to the demand for space downtown, especially retail. Residential makes more sense but is limited (e.g. no new "affordable" condos for sale). If the lot is $70/sf to begin with, the building will have to be pretty tall to distribute that cost out between enough tenants. So maybe you can argue they're helping progress by assuring that whatever is built there is a massive building!  Grin



In general, TIF's don't seem to be much more than corporate welfare (like BKDotCom facetiously stated.)  Santa Fe in particular, I suspect there would be much better/greater return to society on that investment (and more), over a much longer time if money used for a public transit, or education funding.   It is likely a big benefit to the insider's getting the break.  Will it help the city?  Probably some.  Will it hurt the city?  Probably some - a little more.  At best, I think it is a small loss.

These things are used as a semi-private "sandbox" for political patronage.  Like the Oklahoma Turnpike Authority is used on a statewide scale.  We as an electorate justify the ugly side of it by rationalizing that "jobs", "economic activity", etc....




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Conan71
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« Reply #547 on: May 02, 2016, 03:12:31 pm »



In general, TIF's don't seem to be much more than corporate welfare (like BKDotCom facetiously stated.)  Santa Fe in particular, I suspect there would be much better/greater return to society on that investment (and more), over a much longer time if money used for a public transit, or education funding.   It is likely a big benefit to the insider's getting the break.  Will it help the city?  Probably some.  Will it hurt the city?  Probably some - a little more.  At best, I think it is a small loss.

These things are used as a semi-private "sandbox" for political patronage.  Like the Oklahoma Turnpike Authority is used on a statewide scale.  We as an electorate justify the ugly side of it by rationalizing that "jobs", "economic activity", etc....


This one is much more worthwhile in that there is a direct increase in the developed value of the land which will out-strip the annual exemption for the TIF.  Add in new convention business which might come here due to the increased hotel space in the development and you are now importing sales tax dollars.  It also has the “rising tide” effect on all properties within a few blocks and increases their assessed value.

I was skeptical & jaded on this one as well at first, but looking at the wisdom behind it, it’s a slam dunk great deal for the tax base and it benefits local rather than out of state developers.  The developers on this have already invested millions upon millions in downtown prior to this and on other current projects they are working on.
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« Reply #548 on: May 02, 2016, 04:49:01 pm »

If the City of Tulsa did it's math right then the total up front subsidy given to the developer is less than the net present value of the increase in property tax receipts on that property (the "increment") over the life of the TIF.  The idea is that if Santa Fe Square requires a $36m subsidy up front but generates revenues with a present value of $50m over the life of the TIF then the city is a winner.  It even gets some extra money to throw around. 

That math is a little bit of black magic that can be massaged, of course, but if the economic development people at City Hall got it figured out then the city shouldn't be losing money on this. 

It also depends on how they structure the TIF financing.... is it a direct cash subsidy?  Is it a zero interest loan so that the city gets back its money minus inflation?  That may be publicly available info but I honestly don't know. 
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cannon_fodder
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« Reply #549 on: May 03, 2016, 06:12:29 am »

I will defend the use of incentives. For full disclosure, I have been an advocate of rehabbing old buildings in Tulsa since they destroyed the Skelly Building because they didn't need the space (that they are now rebuilding). I also have some professional interest in some development in and around Tulsa that can benefit from such incentives. But I don't think my bias in favor of incentives is misplaced or skewed by my interests.

Economics operates on many different scales but we are basically talking  about metro area economics here. Should I have my company downtown, or should I have my company in the suburbs, or points in between? Each comes with its own decision tree for the business and for the City of Tulsa (in where to encourage this development).

For the business, it will consider what the location does for its image, employee commute times,  work environment, closeness to synergies/customers, and what kind of investment return might be expect if it owns the facility. Overall, redevelopment wants to affect the image of the companies that move there --- that's why an office suite on 5th Avenue in NYC is so expensive. But it doesn't really play into individual decisions of the business (I want to move to 5th Ave because if everyone else does it would be so cool!). Same with various synergies, it happens on the macro and not in an individual decision. The element that is easiest to influence for an individual decision is the economics of it.

And this logic applies not only to convince a business to move somewhere on its own, but for a developer to build space to rent to a business. And, of course, to lure in residential customers too. The particular decision trees may be somewhat different. But cost is the easiest element to influence from the cities perspective.

Now, the City has to make choices too. It will choose how and where it chooses to influence development behavior. (yes, I realize many other factors come into play, like State/Federal funding for highways... but this isn't a thesis, it's an internet ramble)

If it builds wide and fast arterial streets and freeways to usher traffic to far flung reaches - it has spent money to give an incentive to build outside the core of the city (the year the Broken Arrow Expressway opened BA had ~6,500 people, 20 years later it had 45,000 people...and the miles in between went a long way towards filling in). As a result of that decision we will need to subsidize new or wider roads, sewers, water lines, police coverage, fire stations, schools located near the new subdivisions and the maintenance that goes along with all of those city services. And that's just fine with the developer, because it is usually cheaper to build a new structure on empty land than it is to redevelop a space downtown. The developer doesn't have to pay for the highways, road widening projects, or other increased infrastructure or city services... so sprawl away!

As a result, the incentive for the developers can natural be to continue building out and building new, even if the new construction seems to outstrip actual demand. If the demand lags for the core, it begins to rot as it is replaced with newer (cheaper) development. Very rarely will it rot away entirely, but the overall density will decline as the city still has to provide the same city services and infrastructure. Making for reducing return as the ongoing costs remains stable, or even rise (as infrastructure approaches replacement age).  The city is left with a added costs for developments on the fringes and stable costs with lower revenues for existing development, and what results is a death spiral whereby the city cannot keep up with infrastructure demands and faces budget crisis after budget crisis as it tries to grow itself out of the spiral. Of course that doesn't work, no small part is that much of the new development isn't self sustaining, but also because suburbs prevent a core city from growing in that manner indefinitely.

The idea of incentives is to encourage behavior that ends up being positive for the city economically and for the community that may not naturally occur in the market. One can view this as correcting market irregularities caused by other subsidies (as mentioned above) or simply as an investment to capitalize on the sunk cost of existing infrastructure and underutilized assets.  While Tulsa may not gain as much directly from the project because it is deferring tax revenue, it also hasn't had to invest much (if any) money in the project because it is utilizing existing infrastructure. Tulsa may have to do some improvements to support rehabilitating the Tulsa Club building, but it won't have to widen any streets, it won't add pressure to add another fire station or more police to the area, it won't be extending water or sewer lines, and it won't add to drainage issues or freeway traffic.

That argument, of course, buys into the "but for" logic of the incentives. "But for this incentive, they wouldn't build it." If you do not ascribe to that statement, then Tulsa is giving away too much and has negotiated poorly. It has given away tax revenue it may have been able to capture.

But I say it is worth the risk. Because in addition to increasing revenues from existing infrastructure, we are working towards the other factors in the decision tree we discussed above. Each new development increases the potential for synergies, for image enhancement, for work environment, and expected return on investment. How many art galleries moved into the Brady in the last 5 years because everyone else was there? How about incubators and start ups? How many apartments have been built because the one before it was successful? Bringing life and vitality to an area adds value for projects to come. And we can use the incentives to influence what those projects are.

Finally, I say its worth it because it is buttressing a competitive advantage Tulsa has over every other city in our region: an urban core. If a young person or a company wants to move to a suburban environment with a prefab Applebees, a Walmart, affordable mid-level subdivisions, and easy access to a freeway --- Tulsa is in competition with Owasso, Broken Arrow, Bixby, and even Muskogee.  And they have more open land to build on, which is cheaper for developers to build on. Eventually, Tulsa runs out of the ability to compete in that market.  I assume the incentives that allow Owasso (Hwy 169), Broken Arrow (51), and Jenks (75) to continue growing with ever more cheap land aren't going away anytime soon.

What they don't have is an urban core. If we let ours rot away, we have given up a huge competitive advantage. If it takes incentives to hold on to that advantage, so be it.
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TulsaGoldenHurriCAN
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« Reply #550 on: May 03, 2016, 07:55:26 am »

Well said cannon!

When I see the horrible traffic on the BA to downtown, I wonder how much more those commuters will put up with before moving closer. Waiting 40 minutes in traffic for a few months would be enough to convince me to move closer to make it a 5 minute commute. It is a shame the "free market" encourages sprawling growth.
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DowntownDan
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« Reply #551 on: May 03, 2016, 08:05:45 am »

If the City of Tulsa did it's math right then the total up front subsidy given to the developer is less than the net present value of the increase in property tax receipts on that property (the "increment") over the life of the TIF.  The idea is that if Santa Fe Square requires a $36m subsidy up front but generates revenues with a present value of $50m over the life of the TIF then the city is a winner.  It even gets some extra money to throw around. 

That math is a little bit of black magic that can be massaged, of course, but if the economic development people at City Hall got it figured out then the city shouldn't be losing money on this. 

It also depends on how they structure the TIF financing.... is it a direct cash subsidy?  Is it a zero interest loan so that the city gets back its money minus inflation?  That may be publicly available info but I honestly don't know. 

Even if it's not a perfect match and the city losses some revenues, I'd still be okay with it within reason.  It improves our quality of life and civic pride and is a much smarter and cheaper investment that subsidizing professional sports franchises like larger cities are forced to do.
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« Reply #552 on: May 03, 2016, 08:06:26 am »

Does anyone know why the View has been stagnant for so long? They emptied the lots last year and put signs up and there has been no sign of progress since October.

American Residential Group's only other active project is the Edge at East Village. I wonder if that is exceeding costs so they've put the View on hold or if demand for leases has decreased (oil downturn/Williams) has caused that or something else. They have a great portfolio of urban properties. The view has 200 units and 13000 sqft of retail so it could be a neat addition to the area.
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johrasephoenix
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« Reply #553 on: May 03, 2016, 08:49:24 am »

They said in a news piece a while back that they are finishing The Edge first and want it 60% leased before starting on The View.  I get the impression they just don't have the capacity to develop two projects of that size simultaneously. 
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swake
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« Reply #554 on: May 03, 2016, 09:15:04 am »

Does anyone know why the View has been stagnant for so long? They emptied the lots last year and put signs up and there has been no sign of progress since October.

American Residential Group's only other active project is the Edge at East Village. I wonder if that is exceeding costs so they've put the View on hold or if demand for leases has decreased (oil downturn/Williams) has caused that or something else. They have a great portfolio of urban properties. The view has 200 units and 13000 sqft of retail so it could be a neat addition to the area.

I think the plan always was to start on The View as The Edge wrapped up.
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