Offsetting financing difficulties
Oklahoma City approves tax increment financing for NE 23 businesses.
A $1.3 million tax increment financing agreement aimed at offsetting difficulty in financing development along NE 23 was approved Tuesday by the Oklahoma City Council.
More than two dozen northeast Oklahoma City residents, business owners and civic leaders packed City Hall to support the redevelopment of a former service station at 1708 NE 23 into an 18,000-square-foot office building that will house Oklahoma City Clinic and other health care providers.
The developers, Pivot Project, are teamed up with northeast Oklahoma City resident and businessman Sandino Thompson. Since announcing the project earlier this year, the group discovered financing commercial development in the historically black northeast corridor is not easy.
“We assumed we could get financing quickly and be ready to go,” Pivot Project partner Jonathan Dodson said. “We really didn’t have any luck. If you were to combine all the difficulties we had in financing our other projects, that doesn’t equate with what we faced with this project getting financing.”
Dodson credited Citizen’s Bank of Edmond and investor Steve Mason for rescuing the deal when no other banks were willing to back the project.
“The biggest challenge banks have right now are comparables on the northeast side,” Dodson said. “We heard that from every bank. They just don’t have any buildings to look at right now to see what’s been done.”
Thompson said the project, which has future phases to the east and south that will include retail, restaurants and potentially housing, started with a discussion over how to replicate urban success stories in other areas of the urban core into northeast Oklahoma City.
History of success
The Pivot Project’s previous success stories
include the Tower Theater and adjoining retail in Uptown, restaurants and housing in the Plaza District, and the Sunshine Cleaners building along Classen Boulevard.
“There have been a lot of folks who have showed up on the northeast side with a lot of promises and we’ve never seen things followed through,” Thompson said. “After a lot of creative effort, a lot of stops and starts, we are in the process of renovating 10,000 square feet into medical office space that will be home to the Oklahoma City Clinic. This project will provide critical access to health care on this part of town. But long term, it will lead to transformative change that will spur more investment.”
The package, as approved, calls for payback of the principal amount over 15 years with the city getting a share of any increase in rent or sale of the property (the developers are not allowed to flip the building for 10 years).
One councilman, Ed Shadid, opposed the funding because the $1.3 million represents 30 percent of the $4.3 million project cost — a higher percentage than usually asked for on tax increment financing packages. The deal also requires an “internal” loan from the city’s GOLT economic development fund to the
northeast Oklahoma City TIF district due to a lack of accumulated funds since its creation two years ago.
“Perhaps minority investors would want to bid on a project like this,” Shadid said. “It seems like, as a policy, if we want to do a grocery store or increase health care access, let’s open it up to everyone, not just have Caucasian investors buy buildings on the northeast side and once they own it, come to us and say ‘we can’t do it without record-setting amount of taxpayer dollars.’”
Quintin Hughes, president of the Northeast OKC Renaissance Inc., told the council the development, along with plans for a second phase of retail planned for a blighted shopping strip to the east of the clinic, is what is needed to get a revival started. He applauded plans by Pivot Project to provide an equity ownership to future minority retail tenants in the second phase of retail.
A second TIF request for the retail is expected within 90 days.
“If successful, this model could and should be replicated throughout the quadrant,” Hughes said. “This opportunity could be a major catalyst to make the Northeast Renaissance community to be a major hub for our city’s future transformation.”