CHICKASHA – A newly empaneled review committee met recently for a ‘skull session’ about the structure of a special taxing district proposed for an industrial park adjacent to Chickasha’s municipal airport.
Entrepreneur/developer Chet Hitt envisions a park occupied by manufacturers, an electric generation plant powering a data center, and perhaps a motor home and recreational vehicle park, on land near the airport.
Hitt unveiled plans June 5 for a multibillion-dollar power generation project that would constitute the largest single private investment in Chickasha’s history. He proposes construction of a natural-gas fired electricity generating plant that would power a data center on the 280 acres he acquired adjacent to the airport.
Hitt said he intends to subdivide some of the acreage into several lots that will be marketed for commercial and industrial sale. He said he’s already had a conversation with one local manufacturer who’s considering expansion.
Some of the land could support approximately 40 to 50 buildings of various dimensions, and Hitt said he intends to construct one or more spec buildings in the industrial park.
In early October he flew to Los Angeles, California, accompanied by Governor Stitt and several local residents, to recruit Golden State manufacturers to Oklahoma. “His focus is aerospace jobs, in part because of Chickasha’s proximity to Tinker Air Force Base” in the Oklahoma City metro area, Jim Cowan, director of the Chickasha Economic Development Council, told Southwest Ledger.
Hitt’s goal is to attract companies, each of which is willing to create as many as 150 manufacturing jobs in Oklahoma.
During an Oct. 20 meeting at City Hall, Cathy O’Connor, founder of the Coalign Group, and Nathan Ellis, of the Public Finance Law Group based in Oklahoma City, outlined for the review committee the basics of a tax increment finance district and a tax incentive district.
A TIF is an economic development tool to incentivize capital investment in undeveloped or underdeveloped property to enhance the tax base and increase employment opportunities within the municipality, Ellis related. “A lot of the purpose of a TIF is to create a coordinated effort of development.”
In a TIF, a municipality designates a geographic area to be redeveloped. When that occurs, property values go up and so do ad valorem, sales, and hotel/motel tax receipts. Those taxes are split into two streams.
The first tax stream, tied to the original property value before redevelopment – the “baseline value” established by the county assessor – continues to go where it always went: schools, roads, parks, sanitation, fire and police departments, etc.
The additional ad valorem taxes tied to the increase in property values – the so-called “tax increment” – are used to fund eligible project costs. Those can include land acquisition, infrastructure, parking, financing and assistance in development finance.
The goal is to create approximately $600 million in new investment around the Chickasha airport, the review committee was told. The intent is to capture 75% of the ad valorem tax increment to finance infrastructure improvements, and the remaining 25% would be allocated to the various affected taxing entities, which include Chickasha Public Schools, Canadian Valley Technology Center, the Grady County Health Department, Grady Emergency Management Service District, and Grady County.
A “rough calculation” is that a $600 million “full build-out” would generate approximately $6 million in ad valorem taxes, of which $4.5 million would be devoted to capital improvements and $1.5 million would be distributed among the taxing entities, Ellis said.
Those are just preliminary estimates, he cautioned “We will have more specific projections as we go along.”
A TIF district is an economic tool A TIF district can be established only in a reinvestment area, which is defined as an area requiring public improvements to reverse economic stagnation or decline.
O’Connor said aTIF is intended to be a catalyst for creating new jobs or retaining existing jobs, to attract major investment in the area, to preserve or enhance the tax base, to generate investment in an area where 50% or more of the structures are at least 35 years old, or in an area that is deemed to be blighted.
It is an “economic tool to incentivize capital investment in undeveloped or underdeveloped areas,” said O’Connor, whose Coalign Group describes its mission as “to make development projects easier and help create well-paying jobs, vibrant cities and high quality of life for everyone in the community.”
A TIF does not affect the tax rate and does not forgive the obligation to pay taxes, O’Connor and Ellis said.
A TIF can promote economic development to increase tax revenues, raise property values, and improve economic stability, they said. TIFs also “make possible investment and economic development and growth that otherwise would be difficult or impossible without assistance provided by the TIF,” they said.
The increment area is where the increase in tax revenues are collected. The project area is where the funds can be spent; the project area can be larger than the increment area.
The TIF Review Committee will now consider a project plan, which must include a budget and a description of the desired outcome, among other things. The project plan must be structured to share some of the incremental revenues with the other taxing jurisdictions, especially school districts.
The litmus test for creating a TIF is whether the development would occur – to the same degree and in the same manner – if the TIF were not created.
Hitt told the Ledger he paid $1.358 million for the 280 acres – $4,850 per acre – adjacent to the airport, and closed on the property June 3. That city-owned, tax-exempt acreage has been leased for several years for $400 per year for agriculture, Mayor Zach Grayson noted. It would take Chickasha 3,395 years of rentals at that rate to generate that much money on the acreage. The lease on the wheat field expired June 30, city officials said.
Unlike a TIF, a tax incentive district provides an exemption from property taxes rather than capturing any increase in ad valorem taxes.
In a TID, an exemption of up to 25 years is authorized for a data center. However, agreements pertaining to a data center require the developer to make inlieu- of-taxes payments in exchange for the tax abatement. Also, a tax incentive district requires formal approval from all taxing entities in the incentive district.
The driving force behind TIFs and TIDs is that new business inside the special district will create short-term and long-term employment opportunities; the creation of primary jobs will have ancillary economic impact; and the payroll will likely result in increased spending within the city, to the benefit of local businesses.
Several more steps remain After the project plan for the airport industrial park is developed and endorsed by the Review Committee, the Chickasha Planning Commission must then pass judgment on it, too. Finally, the Chickasha City Council must approve the project plan after conducting two public hearings.
“We will start preparing the project plan before our scheduled meeting with the TIF Review Committee,” O’Connor said. The next TIF Review Committee meeting is set for 1:30 p.m. on Dec. 1.
Members of the Tax Increment Review Committee include: Mayor Grayson, a Chickasha business owner; Mike Mosley, chairman of the Planning Commission; Dr. Gayla Lutts, superintendent and chief executive officer of the Canadian Valley Technology Center based at El Reno; Daryn Kirkpatrick, regional administrative director of the State Health Department, District 6 in Chickasha; Chloe Berry, executive director of the Grady Emergency Management Service District, Chickasha; Grady County Commissioner Ruth Bingham; and Chickasha Public Schools Supt. Rick Croslin.
At-large representatives are Cooper Mosley (nephew of Mike Mosley), Brandi Winters and Christy Martin. Joshua Woods was selected to be an alternate.