CHICKASHA – In another split decision, the City Council voted to officially create a downtown tax increment finance district effective New Year’s Day 2025.
The TIF district will encompass much of downtown. It will encompass approximately 300 properties,” said attorney Nathan Ellis of the Public Finance Law Group, of Oklahoma City.
According to the Public Finance Law Group, the new district will include 179,030 square feet of retail, restaurant and service industry space; 205,500 square feet of office space; and approximately 75 units of hotel space with average occupancy rates of $170 per night, with a 50% occupancy factor.
The TIF district is scheduled to terminate in 25 years, on June 30, 2050.
Once again the TIF concept divided the council, this time in a 6-3 vote Oct. 21. Approving creation of the downtown TIF were council members Oscar Nelson, Kea Ginn, Georgianne Hebblethwaite, John Smith, Erica Alexander and Mayor Zach Grayson. Voting against the proposal were councilmen Charlie Burruss, Kelly Boyd and Brian Gerdes.
The City Council authorized the “Gateway to Chickasha” economic development plan on Sept. 3. That plan envisioned two TIF districts: the “Downtown Chickasha Project” and the “Highway 62 Corridor.”
The latter district would focus on development of property east of downtown, along U.S. Highway 62 extending to the turnpike interchange. That district would encompass properties along the north and south sides of the highway, with the exception of the Grady County Fairgrounds and tribal property at the southeastern corner of the targeted area, Ellis said.
The Highway 62 Corridor TIF would encompass approximately 200,000 square feet of retail and service industry space, and 41,500 square feet of office space.
The “Gateway to Chickasha” proposal eked by on a 5-4 City Council vote Sept. 3. The council has 10 years to decide whether to enact the Highway 62 Corridor TIF.
A TIF is designed to “incentivize” capital investment in undeveloped or underdeveloped property to enhance the tax base and increase employment opportunities within the municipality. “A lot of the purpose of a TIF is to create a coordinated effort of development, Ellis told the council previously.
When redevelopment occurs, property values go up and so do ad valorem tax receipts, sales taxes and hotel/motel taxes. When that happens, the tax receipts 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.
Ad valorem taxing jurisdictions affected by the “Gateway to Chickasha” plan include Grady County, the Grady County Health Department, Chickasha Public School District, Canadian Valley Technology Center, and Grady County Emergency Management Service.
Costly improvements may be necessary to support TIF districts City officials “recognize the difficulty in development” of the entire proposed redevelopment areas “due to significant infrastructure and utility improvements necessary to support the entirety of the project area,” the plan acknowledges.
The city has identified “an aggregate total of $581.6 million in costs associated with the infrastructure improvements and economic incentives,” the Gateway to Chickasha development plan states.
Potential infrastructure improvements would include $154 million in upgrades of the water system, $141 million in repairs to the sanitary sewer system, $131 million for street and bridge repairs, $33 million in improvements to the storm water drainage system, and approximately $90 million for contingencies.
Those project costs would be incurred in phases “in coordination with specific development projects,” the draft plan states.
“We are not committed to all of this plan,” Community Development Director Rachel Bernish told the city’s Planning Commission.
The City of Chickasha cannot finance expenditures of that magnitude with existing revenues, municipal officials acknowledged.
Chickasha’s 2005 TIF ‘moderately successful’ The new downtown TIF district is the city’s second.
Chickasha’s first TIF district was created in 2005 and ended in 2020. It extended “from Tractor Supply Co. on East Grand Avenue to the area across South Fourth Street behind the Jiffy Lube, where Chick-fil-A and Scooters on South Fifth Street are located today,” Bernish said. “We have many businesses in place” because of that TIF district. “Not every lot was sold or tenant space filled, but we have many flourishing, successful businesses for our community and citizens.”
The 2005 TIF was “moderately successful,” said Steve LaForge of Chickasha, a real estate investor.
“Initial hopes were that we would get a Home Depot or a Lowe’s. A few local businesses objected and delayed full implementation of the TIF for several years, and lawsuits were filed to stop the TIF.
“By the time the dust settled, the 2007 recession was in full stride. Home Depot and Lowe’s were not building any stores anywhere in the country. Walgreens, Interurban, Tractor Supply, Dollar General, the Cotton Patch building and the Tropical Smoothie building did get built as part of the 2005 TIF. Chick-fil-A, Starbucks, Scooters, Burger King and Quick Lube were all built on TIF-developed land but after the TIF had expired.
“I consider the 2005 TIF to be a success but not the home run we had hoped for,” LaForge said.