Tax Increment Finance Districts
Overview
Established through the Oklahoma Local Development Act in 1992
(OS 62 § 850 et seq) as an economic development tool for
local governments, Tax Increment Finance Districts capture the
increase in tax revenues in designated areas for a specified amount
of time to fund public improvements in order to stimulate and
enhance reinvestment and spur redevelopment.
The City of Tulsa currently has six Tax Increment Finance
Districts. The Tulsa Development Authority, as implementing agency,
administers five. The Tulsa Industrial Authority administers
district #6. The City established its first district in 1993 within
the Brady Village. District number two, Central Park, was created
in 1994. The third, Technology, in 1999; the fourth, North Peoria
Avenue in 2002 and the fifth in 2003, is the Blue Dome district.
Districts 1, 2, 3, and 5 are located in or adjacent to the central
business district; a map of these districts is attached. In
2006 Tulsa Hills was created at the intersection of HW75 and West
71st Street.
Although in 1992 the legislative intent of the Local Development
Act anticipated advance funding for projects through TIF bonds, the
Oklahoma Supreme Court did not uphold those provisions of the
statute until recently. To date, Tulsa's districts 1-5 have
operated on a pay-as-you-go basis and improvements have therefore,
been gradual. Public projects supporting the Tulsa Hills district
were funded through the issuance of revenue bonds to be repaid from
the tax revenues associated with this retail center. In
addition, the Local Development Act allows for a 25-year term for
each district; to date, however, Tulsa has elected a 15-year term
for all districts.
According to state statute, each proposed district requires the
development and adoption of a Project Plan. These are distinguished
by the perception of opportunities for redevelopment or the
possibility of private investment on the horizon. The creation of
TIF plans involves extensive research into the conditions of the
project area and producing detailed projections of public
improvements as well as estimated revenues.
Experience in implementation of the first five plans by the
Tulsa Development Authority has resulted in two significant
observations:
- Revenues, both sales and property taxes, generally do not
attain the City's projections during the first 50% of the term of
the plan. It is possible that the inability to advance fund,
through TIF bonds, public improvements in these districts is
responsible for the delayed reaction.
- Public projects that were identified during the development of
the plan are often altered by the circumstances of private
investment that were unforeseen
during the creation of the plan. Consequently, the categories of
public improvements need to be, rather than highly detailed,
general enough to accommodate evolving priorities.
Amendments to the Local Development Act since 1992 have been
enacted to support constitutional authorization for the issue of
TIF bonds. Therefore, the Tulsa Development Authority could
consider issuance of bonds to fund projects within existing
district plans. Additionally, the eligible project costs defined in
the act have been amended to now include private buildings,
structures, and fixtures. When a critical mass of public
improvements accrues, private investment ensues.
Review of Districts' Performance and Forecast
Each of Tulsa's districts has a slightly different structure in
terms of the percentage of tax revenues that are captured for the
district and the categories of project expenditures. In addition,
each district has unique development attributes from which the tax
revenues are derived. Collectively, however, as of CY2007 for each
$1 in city sales tax increment appropriated there has been a $1.21
property tax increment generated to complement the implementation
of public projects in the districts.
While the growth in Tulsa's first five districts has been
gradual, there has been an overall 32% increase in property taxes
and a 91% increase in sales taxes since the inception of the
districts in 1993. This positive growth exceeds the average growth
of property and sales taxes city-wide.
Summary of TIF Districts
