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October 20, 2018, 11:32:51 pm
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Author Topic: Cinergy Entertainment @ 71st and Memorial  (Read 1046 times)
cannon_fodder
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« on: December 11, 2017, 08:22:20 am »

Part of a program to try to rehab existing strip centers, a developer intends to put in a bowling alley, movie theater, lounge/bar, game room and event center at the NW corner of 71st and Memorial.  $3.5 million renovations, about $5mil in equipment.  It appears to be the highest profile example of the Council's incentive program for people to rehab strip center and will receive a tax rebate for ten years.  I have not reviewed the actual dcouments, just the story:

Quote from: The Tulsa World
The pilot program is intended to help revitalize the cityís many vacant and blighted retail spaces.

Under the proposed agreement, Benson would receive a sales tax rebate of up to $53,405 a year for 10 years as long as the entertainment center meets employment and gross sales requirements.

As currently proposed, the company would have to reach gross sales of $6.6 million a year and employ about 100 people, he said.

The proposed development site generates approximately $66,000 a year in sales tax revenue, according to the city. The figure is expected to increase to $267,000 in Cinergy Entertainmentís first year of operation.

http://www.tulsaworld.com/homepagelatest/dine-in-theater-entertainment-center-coming-near-st-street-and/article_b1094a3a-cda9-58e5-9a11-b1d3b2dd689e.html

I'm excited to see new development.  I think it is a great idea to try to rehab existing strip malls, many of which fall into disrepair and can drag down an entire area.  But since this is a first in what the City hopes to be a trend, I thought it deserved a discussion...
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TulsaGoldenHurriCAN
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« Reply #1 on: December 11, 2017, 12:23:16 pm »

I don't know if this is the best way to do it or a good fiscal decision long-term but I am a fan of the concept because the old shopping centers have become such a blight. It is really depressing how the "hot spots" move around further and further out every ten years or so. Admiral used to be the "it" spot. 71st and Memorial was for a while. 71st hot spot moved further east. Then it became far south Tulsa. Then Tulsa Hills came in. So many new strip malls which look nice new and shiny while the old ones are decrepit and (mostly) permanent eye sores.

Most Tulsa strip malls are ugly and old. Who knows how many old ugly ones we will have in 10-20 years as online ordering really takes off and brick and mortars tank. My guess is far too many to count.
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heironymouspasparagus
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« Reply #2 on: December 11, 2017, 12:56:42 pm »

End game of "growth for growth's sake..."

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« Reply #3 on: December 11, 2017, 04:22:42 pm »

I suspect that even without the Amazon assault on brick and mortar retail, Tulsa strip malls have and will fade in areas where the surrounding neighborhoods have faded.  Utica Square maintains itself so well not just because it is a unique destination center but also because it is surrounded by affluent neighborhoods that support it.  The areas around 21st & Yale and 41st & Yale have de-gentrified and the shopping centers have followed suit.
 
In the end, a lot of older Tulsa strip malls need to be repurposed and good for the Tulsa City Council for thinking proactively in this area.  But another way is for Tulsa to help gentrify those areas that have fallen below what they used to be.  Unfortunately, a big part of that is the actual and perceived quality of the school district.  Bring back higher income residents and the local centers will flourish as well, even if as something other than pure retail.
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RecycleMichael
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« Reply #4 on: December 12, 2017, 11:39:04 am »

I like the development.
Tulsa has spent millions of dollars helping rehab buildings in the downtown and most of those do not contribute to our sales tax.

This project does and the taxpayers are not out any rebate money till they exceed $200,000 more in sales tax receipts per year.

Great repurpose
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cannon_fodder
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« Reply #5 on: December 13, 2017, 08:38:36 am »

I heard something on the radio this morning about the vote being delayed to look into it further and the developer not being happy, but I could not find the story. Anyone?

The most recent story I could find was an argument from a local business that this deal would close his long standing shop in favor of someone from out of state (which is disputed by the property owner):
http://www.tulsaworld.com/news/local/proposed-entertainment-center-worries-current-tenant-who-says-it-ll/article_83bc0862-ee8e-54dd-88d2-baf61217191a.html

I get that argument - city supporting new businesses at the perceived expense of long standing businesses. Particularly if I owned a business that was going to compete with a new entity my city was going subsidize.  I don't think QT would be happy if we gave 711 tax breaks to occupy all the abandoned QT stores (sitting across from the shiny new QTs) or Williams if we subsidized ETE to occupy unused space in the old WilTel building.  So it makes sense that local bowling alleys, bars, etc. wouldn't be happy.

BUT -- the incentives are not for the business itself. The purpose, as I understand it, is to get un or underused buildings back into action, get businesses into declining strip malls, and increase the tax base while keeping parts of Tulsa more desirable.  The benefit to the competing business is incidental, and the city cannot openly prioritize local over other business interests. Given that we have many unimpressive strip malls built ~30 years ago that may be aging out of their economic lifespan, some kind of program to reuse them instead of building new in the suburbs makes sense.  And the current plan appears to have pretty strong guidelines before the subsidies kick in (again, I have not seen the actual document).

Then again, lots of variables for the City to consider:  Is the new place a zero sum game (taking business from existing bowling alleys etc.) or will it actual generating more tax revenue in Tulsa?  Is the space currently underutilized? Would it be redeveloped without government incentives? Are the goals being set for incentives enough to help ensure the city wins? Are there other impacts on the neighborhood (like adding a grocery store, day care, etc.)? I'm sure I'm missing  others...
 
I'm not sure how you set the criteria such that the City is likely to win on a macro scale, the neighborhood is likely to win, and you don't offend/punish existing businesses who are paying "full price" to operate. I think the current council and mayors office will put some thought into it and I'm interested to see how this idea develops. 
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« Reply #6 on: December 13, 2017, 10:02:18 am »

The most recent story I could find was an argument from a local business that this deal would close his long standing shop in favor of someone from out of state (which is disputed by the property owner):
http://www.tulsaworld.com/news/local/proposed-entertainment-center-worries-current-tenant-who-says-it-ll/article_83bc0862-ee8e-54dd-88d2-baf61217191a.html

Boo.  Innovation sucks.  I shouldn't have to be competitive.  booo
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TulsaGoldenHurriCAN
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« Reply #7 on: December 13, 2017, 10:35:54 am »

I heard something on the radio this morning about the vote being delayed to look into it further and the developer not being happy, but I could not find the story. Anyone?

The most recent story I could find was an argument from a local business that this deal would close his long standing shop in favor of someone from out of state (which is disputed by the property owner):
http://www.tulsaworld.com/news/local/proposed-entertainment-center-worries-current-tenant-who-says-it-ll/article_83bc0862-ee8e-54dd-88d2-baf61217191a.html

I get that argument - city supporting new businesses at the perceived expense of long standing businesses. Particularly if I owned a business that was going to compete with a new entity my city was going subsidize.  I don't think QT would be happy if we gave 711 tax breaks to occupy all the abandoned QT stores (sitting across from the shiny new QTs) or Williams if we subsidized ETE to occupy unused space in the old WilTel building.  So it makes sense that local bowling alleys, bars, etc. wouldn't be happy.

BUT -- the incentives are not for the business itself. The purpose, as I understand it, is to get un or underused buildings back into action, get businesses into declining strip malls, and increase the tax base while keeping parts of Tulsa more desirable.  The benefit to the competing business is incidental, and the city cannot openly prioritize local over other business interests. Given that we have many unimpressive strip malls built ~30 years ago that may be aging out of their economic lifespan, some kind of program to reuse them instead of building new in the suburbs makes sense.  And the current plan appears to have pretty strong guidelines before the subsidies kick in (again, I have not seen the actual document).

Then again, lots of variables for the City to consider:  Is the new place a zero sum game (taking business from existing bowling alleys etc.) or will it actual generating more tax revenue in Tulsa?  Is the space currently underutilized? Would it be redeveloped without government incentives? Are the goals being set for incentives enough to help ensure the city wins? Are there other impacts on the neighborhood (like adding a grocery store, day care, etc.)? I'm sure I'm missing  others...
 
I'm not sure how you set the criteria such that the City is likely to win on a macro scale, the neighborhood is likely to win, and you don't offend/punish existing businesses who are paying "full price" to operate. I think the current council and mayors office will put some thought into it and I'm interested to see how this idea develops. 

As an update, they have announced that the city counsel has decided not to move forward with this tax abatement at this time. The developer said that might put a halt to the project altogether (as they always say. Who knows if that is just posturing).
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TulsaGoldenHurriCAN
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« Reply #8 on: December 13, 2017, 10:39:53 am »

I heard something on the radio this morning about the vote being delayed to look into it further and the developer not being happy, but I could not find the story. Anyone?

The most recent story I could find was an argument from a local business that this deal would close his long standing shop in favor of someone from out of state (which is disputed by the property owner):
http://www.tulsaworld.com/news/local/proposed-entertainment-center-worries-current-tenant-who-says-it-ll/article_83bc0862-ee8e-54dd-88d2-baf61217191a.html

I get that argument - city supporting new businesses at the perceived expense of long standing businesses. Particularly if I owned a business that was going to compete with a new entity my city was going subsidize.  I don't think QT would be happy if we gave 711 tax breaks to occupy all the abandoned QT stores (sitting across from the shiny new QTs) or Williams if we subsidized ETE to occupy unused space in the old WilTel building.  So it makes sense that local bowling alleys, bars, etc. wouldn't be happy.

BUT -- the incentives are not for the business itself. The purpose, as I understand it, is to get un or underused buildings back into action, get businesses into declining strip malls, and increase the tax base while keeping parts of Tulsa more desirable.  The benefit to the competing business is incidental, and the city cannot openly prioritize local over other business interests. Given that we have many unimpressive strip malls built ~30 years ago that may be aging out of their economic lifespan, some kind of program to reuse them instead of building new in the suburbs makes sense.  And the current plan appears to have pretty strong guidelines before the subsidies kick in (again, I have not seen the actual document).

Then again, lots of variables for the City to consider:  Is the new place a zero sum game (taking business from existing bowling alleys etc.) or will it actual generating more tax revenue in Tulsa?  Is the space currently underutilized? Would it be redeveloped without government incentives? Are the goals being set for incentives enough to help ensure the city wins? Are there other impacts on the neighborhood (like adding a grocery store, day care, etc.)? I'm sure I'm missing  others...
 
I'm not sure how you set the criteria such that the City is likely to win on a macro scale, the neighborhood is likely to win, and you don't offend/punish existing businesses who are paying "full price" to operate. I think the current council and mayors office will put some thought into it and I'm interested to see how this idea develops. 


There are quite a few side effects to consider when the government steps in to a situation! It seems like many laws and policies with good-intentions end up hurting many people. Giving tax abatement for redeveloping old strip malls could set a bad precedent and open a huge can of worms. To what level does it have to be redone? What if more owners let their strip malls go into disrepair just so they can get a tax break?

If we let the "free market" do its work, we will end up with the same blight we have all over. Outside of the nicer areas, there are countless ugly strip malls (and even in some nice areas - such as all around 15th and Lewis intersection or the ones around 51st to 47th and Harvard). If we counted every "ugly" strip mall by City Counsel standards, we would likely have several hundred (maybe 1,000+ by TulsaNow user standards!). So many vacancies. So many ugly parking lots.

Once the government gets involved, even with restrictive clauses like they had with this one, it might create sort of a gold rush to buy ugly strips and get tax incentives for fixing them (which could be good). Could that hurt existing tenants in some cases? Could that cause an abandonment of those that are 10-20 years old causing them to become abandoned eyesores sooner?

This tax abatement sounds pretty good actually - a bit capitalistic in that it is an exemption of taxes so long as sales are above a certain level. If they don't produce enough taxes, they don't get the exemption. Seems like that could be good for the city.
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commonsense
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« Reply #9 on: December 13, 2017, 12:53:27 pm »

Then again, lots of variables for the City to consider:  Is the new place a zero sum game (taking business from existing bowling alleys etc.) or will it actual generating more tax revenue in Tulsa?  Is the space currently underutilized? Would it be redeveloped without government incentives? Are the goals being set for incentives enough to help ensure the city wins? Are there other impacts on the neighborhood (like adding a grocery store, day care, etc.)? I'm sure I'm missing  others...

These are some of the bigger questions I'm really interested in. It appears we're over-retailed, over-restauranted and over-entertained as it is, even with a huge number of dead and decaying shopping centers. So does this program pick winners and losers? Is it robbing Peter to pay Paul, just to have more numerous and nicer-looking shopping centers with the same number of citizens to support them?

Would the development still happen without an incentive? I think it's impossible to determine, but if I had to guess, I'd say yes. A company chooses where to build based on one thing: they think they can make money there. There are lots of details that lead them there (demographics, foot traffic, car traffic, income, education, etc) but in the end, it's about whether the company can make money. A little incentive here and there probably isn't going to make or break a deal.

Are there other solutions? What if instead of subsidizing the rehab of these old retail shopping centers into slightly nicer looking shopping centers without a population growth to support it... they rezoned them as mixed-use and incentivized developers to build a mix of residential and office above a smaller retail footprint?

The city could also strategically buy some of these properties, divide them into smaller lots, and sell them so as to encourage more incremental development. Smaller lots favor local developers instead of large firms that are only capable of producing large, monolithic projects, and smaller projects themselves are typically much more resilient.
« Last Edit: December 13, 2017, 12:55:52 pm by commonsense » Logged
TulsaGoldenHurriCAN
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« Reply #10 on: December 13, 2017, 01:11:33 pm »


Would the development still happen without an incentive? I think it's impossible to determine, but if I had to guess, I'd say yes. A company chooses where to build based on one thing: they think they can make money there. There are lots of details that lead them there (demographics, foot traffic, car traffic, income, education, etc) but in the end, it's about whether the company can make money. A little incentive here and there probably isn't going to make or break a deal.


There are quite a few development companies that look around the country specifically for beneficial redevelopment laws that they can use in their favor (They are like NBA/NFL owners looking for cities which will help pay for their new stadium). It is true that for those types of companies, the tax benefits are the only reason they locate there and it looks like progress to locals seeing all this nice new stuff. In reality, they are profiteering at the expense of tax payers and other local businesses/property-owners.

The 71st and Riverside development sounds like that kind of developer, getting a huge price-cut to build a typical suburban shopping center which might not even be profitable, but the deeply-discounted land makes it worth it because they can always sell at a huge profit at any point as soon as they get the land, even if they never build.

I like how the PAC did it, voting to sell at a great price for them ($5.5 million) so the developer really needs to build what is promised to recoup those costs. The lot might not be worth close to that sales price as the tax assessment is half that and most empty lots around downtown have estimated values around a million.
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« Reply #11 on: December 13, 2017, 05:19:47 pm »

Outside of the nicer areas, there are countless ugly strip malls (and even in some nice areas - such as all around 15th and Lewis intersection or the ones around 51st to 47th and Harvard). If we counted every "ugly" strip mall by City Counsel standards, we would likely have several hundred (maybe 1,000+ by TulsaNow user standards!). So many vacancies. So many ugly parking lots.

Some have embraced the solution to the (yes ugly) strip mall at 15th & Lewis is QT's mini-truckstop with lighted signs visible from the expressway.
We could absolutely do better there, and yes, it could even be a welcome QT if they pulled their heads out and built something a little closer to the scale of the neighborhood.
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