The City of Stillwater has taken a variety of measures to increase and incentivize development downtown.
Its latest effort has gathered support and opposition.
The City is in the process of passing a tax increment financing (TIF) district. A TIF is a public financing strategy that uses tax collections within a defined area to create funding for future development. Ad valorem – or property – taxes and sales taxes that exceed the current threshold would be collected and used at the City Council's discretion to incentivize city development. In this case, the Council will create an advisory committee to bring ideas and recommendations to the Council.
The defined area is Hall of Fame Avenue on the north, Lowry Street on the east, 15th Street on the south and Washington Street on the west.
The City Council held a public hearing on the matter April 23. The second and final public hearing is slated for June 4.
"I think a lot of people in town recognize the need for community to take an ambitious approach to the core redevelopment to create a long-term strategic plan that will generate more tax revenue and creates long-term growth plan for the city," said Mayor Will Joyce, who was also Chairperson of the Stillwater Downtown/Campus Link Project Plan.
The "campus link" portion is not a new idea. For more than a decade, City officials have tried to come up with ways to mix the college committee with residents. The "link" is more literal than figurative, with the idea being a walking trail or connection that brings the ideas of visiting downtown Stillwater and the Oklahoma State University campus together, as opposed to identifying the two as separate trips.
"There is a sense in Stillwater at some level that the university is on an island, its kind of closed off," Joyce said. "We wanted to help alleviate that. We want a stronger connection between the university and the surrounding City, for students to see downtown as a viable shopping option, create a unique, attractive district for people outside of Stillwater."
The idea was popular enough for both candidates from the April mayoral election to be in favor of its use. There has been some pushback however.
Other entities that rely on sales tax for funding stand to lose out on the additional funds to be raised. County and education entities in particular could lose funds that otherwise would be allocated to them.
"It costs the county quite a bit of money, at least $700,000 at a time we are having a hard time making expenses," said Chris Reding, Payne County District 2 Commissioner. "We are getting more and more responsibility from State, but with less money to do so."
Reding served as the Payne County representative on the Stillwater Downtown/Campus Link Project Plan. He, along with Dr. Doug Major of Meridian Technology Center, voted against the TIF district.
"If you have to do something wrong to do something right, it isn't really something right," Reding said.
The wrong, in Reding's opinion, is the City's boundaries on the TIF district.
The Oklahoma Local Development Act authorizes the use of TIFs by Oklahoma municipalities. But Reding believes the City is not following the law's intent, particularly the portion that states, “the tools of this act not be used in areas where investment, development and economic growth would have occurred anyway and that the governing body take care to exclude areas that do not meet this criteria.”
"The picked areas all had big apartment complexes and the area by Block 34," Reding said. "All the property values are going to go through the roof when they are finished and City of Stillwater is getting the difference. This area really does not meet the intent of the legislation."
Joyce doesn't see it that way. He stands behind the committee's due diligence as to whether the law is being applied correctly. He understands the concerns of those who oppose it and the arguments being made. But disagrees with the narrative that some student housing and other similar projects removes the boundaries from qualifying under the Act.
"It doesn't require the area to be completely dead," Joyce said. "It is geared toward areas where additional development is needed and difficult, but not impossible.
"(Student housing is) not long-term sustainable redevelopment of area, just a small subset. Just because some stuff happens doesn't mean long-term, full-scale redevelopment happens without some assistance. But what we haven't seen is the larger mixed-use development, office, retail, the kind of stuff that will create the kind of neighborhood that is sustainable over the long term."
Another change that will come is renewed Business Improvement Districts (BID). The Downtown BID expired last summer. The TIF calls for the creation of another Downtown BID as well as a BID for the area closer to campus, such as Campus Corner or The Strip. The creation would be its own process.
While the previous Downtown BID focused much on facades and event planning, the new BIDs would be more singularly focused on planning events that bring people to the areas and generate interest, Joyce said. The TIF will be used for improvements.
Winners and losers
Stillwater Public Schools likely stands to benefit from the TIF.
While Superintendent Marc Moore – who was the SPS representative for the TIF Review Committee – wasn’t initially on board, he said he was able to work through several scenarios with the City to offset potential losses to the school district.
The City has agreed to give SPS a $2.8 million incentive within the next few years and another $2.8 million toward the end of the TIF, around 2026 or 2027, according to Moore.
“We appreciate the City working with Stillwater Public Schools,” Moore said. “We are in support of the TIF.”
While SPS will miss out on roughly $21.4 million due to their tax base being locked during the TIF and not being able to capture funding from potential growth – which will go fund the TIF – the district shouldn’t be impacted thanks to the state's equalization funding formula, which makes up the difference lost in local tax dollars by increasing state funding the same amount.
With a $5.6 million total incentive, SPS stands to benefit financially from the TIF.
"The effect on SPS potentially would be the largest because they collect the largest percentage of ad valorem tax," Joyce said. "They have generally the most financial difficulties. We wanted to focus on them a bit to make sure the plan didn't further add to their burden. It was something I felt was important."
On the other hand, Meridian Technology Center is against the TIF, worried about not receiving nearly $5 million, not happy with the City’s approach and is considering legal action.
Meridian superintendent and CEO Doug Major – who was on the TIF Review Committee – is encouraging the community to talk with members of the City Council ahead of a public hearing June 4 and a potential TIF vote.
“My problem is not what they are wanting to do, but it is their use of the tool. The Local Development Act clearly says that the tool not be used in areas where investment, development and economic growth would have occurred anyway,” Major said. “When you look at the boundaries of the TIF it is very difficult for me to look at these apartment complexes that are being built (along Hester and Ramsey streets between Fourth and Sixth avenues) ... and say this area qualifies for where growth would not occur anyway. I don’t think it is right for five people on a city council, or four since they are short one, to be able to come in and take away tax dollars that required a vote of the people. It is not right that because a city government is having financial difficulties that they then start taking away from other entities that are also providing quality services to the citizens.”
Major said MTC – which previously supported a TIF in Logan County that brought a sanitary sewer under and to the east side of Interstate 35 – isn’t comfortable with the City of Stillwater collecting money from a TIF without a specific plan on how they expect to use the $32.5 million.
Major would like to see a specific plan for the TIF funds.
He would also like to see the TIF boundary lines redrawn.
“Exclude any property that is already under construction or has been developed or approved by the City,” Major said. “If this is allowed to go, then we might as well plan for other municipalities to do the same, which I think threatens the balance of funding.
“We will have to absorb it. We’ve lost 20 percent of our state funding in the last 10 years. The reason we’ve been able to continue quality programs and services is because we’ve seen that moderate growth in ad valorem. I don’t think we will ever see significantly any money from the state and so it’s our role to protect the local base that we have. And in fact our job is to try to create more growth in the area. We’ve been a great partner in workforce development and economic development. We’ve done that because we’ve had the resources to do so. When those resources start going away, then we have to start shrinking what services we have to provide. So ultimately it is a few number of students we are able to serve and a fewer number of industries we’re able to train.”
According to 2015-16 MTC figures, Meridian saw nearly 850 high school students and adults enroll in one of 24 career training programs, served 231 area businesses with more than 12,000 enrollments, and offered more than 400 short courses for professional development or personal interest.
“TIF is an economic development tool and we are all about economic development,” Major said. “It comes down to an interpretation of how the act should be used and whether or not it is the good and proper use. It fits the criteria, it doesn’t fit legislative intent.”
Major is worried about the precedent that could be established.
“A city can have up to 25 percent of their territory in a TIF,” Major said. “Let’s say Stillwater goes 25 percent, Perry goes 25 percent, Guthrie goes 25 percent, then Logan County says ‘Look what Stillwater did, they created an economic development fund by putting in a TIF.’ So we could very quickly see all of our municipalities and our counties creating TIFs to create economic development funds. Taking that growth away from public schools, technology centers, county governments, county health. So it is really changing the equilibrium. That’s the danger that I feel. Stillwater might be the first domino. I would have a hard time thinking that other communities wouldn’t do the same.”
It is unfortunate entities in Oklahoma are structured that improvement ideas can seem adversary, Joyce said. But he believes this plan will achieve its goals.
"The idea here is to try to create a plan that has real widespread community input, involvement and get entities that have some stake in it to come together to build a sustainability plan together," Joyce said. "We all contribute something to it and see benefits from it. In evaluating whether it's right, I hope thats the what gets across. Are we doing everything we can to collaboratively bring long-term benefit to the community?"
Twitter: @dbittonNP, @Kieran_Steckley