Public-Private Efforts Required: Tax Increment Financing Districts Benefit Everyone


Joint private-public financing is making it possible to build shopping centers and industrial facilities. Without that funding - Tax Increment Financing (TIF) Districts - shopping centers like the Tulsa Hills at East 71st St. and Highway 75, and the River District project in Jenks would not be possible.

Kevin Coutant, an attorney with the Doerner, Saunders, Daniel & Anderson law firm, said that during the past decade the firm been engaged even more in economic development matters for municipalities, developers and employers. Financial and legal issues with these districts can be complicated and at times contentious as parties involved negotiate for their best position as projects are planned. Yet, the TIF district is one of the major tools that local governments have on a relatively short list to assist with economic development in a way they can control it, he said. The State of Oklahoma has any number of incentives. Those are good and very effectively promoted by the state, Department of Commerce, State Chamber and the Metro Tulsa Chamber of Commerce.

"Our state incentives could be better, but they are competitive and work really well in many instances," Coutant said. "But at the local level, when you have a prospective employer or tax base and something that is important for the public interest, there are relatively few tools. The Tax Increment Financing District is One." Tulsa and surrounding cities have used these districts for economic development in a way that has been embraced by all taxing authorities and that speaks highly of the city's approach, he said. The legal process requires the TIF application to go through a review committee mandated by statute. Members include city representatives and members of taxing authorities. The review committee has the responsibility of reviewing the proposal and making a report to the city council as regard to the project plan and whether or not it is recommended. It is during that review process that all taxing authorities and the people have their say. At the end of the process, the goal is to ensure that everyone has had a chance to have input about the viability and appropriateness of the program. Tulsa has used TIF districts any number of times and done so successfully. Planners of the Tulsa Hills and River District programs considered the impact the projects and district would have on school funding and made specific accommodations, Coutant said. That's pretty much the trend as matters are hammered out in the committee review process and becomes part of the recommendation that goes to the city council.

Doerner Saunders has become more and more involved in economic development related work during the past decade, he said. That has involved the representation of public trusts and public agencies of all kinds, municipalities, economic development corporations, developers and everyone else involved in these kind of transactions. "We like to think of ourselves as being particularly prepared to help entities on any type of these transactions to navigate through what is a fairly challenging process, Coutant added. Preparation comes from past experiences. A group of the firm attorneys have handled a large number of the transactions and have a pretty complete background. That includes handling everything from industrial revenue bonds — an old standby — to new market tax credits which are a creature of federal law but administered through the state process. "When opportunities come, we work collaboratively with clients, making certain they have the complete information about their opportunities — and risks," he said. The Tulsa Hills project is a good example of how a TIF district can work to the benefit of the community.

A good portion of Tulsa was, by everyone's standards, under served by a quality retail space. Few locations were available where a quality retail center could be built. Sites must qualify with traffic counts, accessibility and utility availability. Shopping centers can't be located just anywhere with an expectation of success. Serious challenges existed in the Tulsa Hills planning and that is where TIF made the difference. The project could not have gone forward without TIF that helped deal with public improvements related to the project costs. That was one of the standards that had to be cleared through the review committee process. Looking at Tulsa Hills today, it is possible to see the benefit of the project, Coutant said. Now there is between 600,000 and 700,000 square feet of retail space that wasn't there previously. It also has spurred a lot of secondary development in that part of town. It also is providing a sales tax base to the City of Tulsa that wasn't there before. Sales tax from that site is to a large extent captured in the TIF to pay off the public improvements. There is some short-term advantage on sales tax to the city and a longer term benefit, also to the city, because that retail space will be there for a long time.

When construction starts on the River District south of the Creek Turnpike at 96th St., that project will be a boon to Jenks, he said. That city has done a great job navigating through sometimes competing interests that arise from any material economic development initiative. Other projects are being reviewed. Mayor Dewey Bartlett, in his State of the City address, outlined an interest in going back to developing the Arkansas River in Tulsa, Coutant said. There has been talk by the city council and administration about using TIE planning to facilitate development along the west bank of the river. The city seems to be ready to move forward with a well-conceived plan to facilitate that type of development. "I am sure that any number of developers would be interested in this opportunity, depending upon the direction the city chooses to go," he said, TV funds also can be used for industrial projects and Oklahoma City in particular has used them in a non-retail manufacturing sort of development, Coutant said. It should be a consideration of any type of worthy economic development project. Industrial projects, however, require using ad valorem taxes and that demands an additional policy burden of justifying the impact of TIF on tax-based governmental units, including schools. The case can be made stronger in some of those T1F projects if there is a substantial benefit to all parties involved. What has historically been found is that it can be helpful to a T1F financing if the improvements come out of tax revenues that is spread evenly among everybody, city, county, schools, everybody.

TIF financing will be vital for future economic development because bank financing is quite difficult, even for the best of projects, Competition with other communities for new business and expansion of existing business is getting keeper all the time, Coutant said. I hope that in the coming years, using the economic tools we have by law in Oklahoma, TIF and a number of others will be utilized for high quality, publicly justified projects.   

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Justin represents clients throughout Oklahoma in family law, civil litigation, guardianships, adoptions, estate planning, trust and probate matters. 

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10.07.18 Legal Insights with Kevin Coutant and Lauren Brown