Downtown TIF proposal goes down at City Hall

KEVIN HARVISON | Staff photoFrom left, Ward 6 Councilor Zach Prichard, along with Ward 5 Councilor Maureen Harrison and Ward 4 Councilor James Brown listen to a debate during the regular Tuesday night meeting of the McAlester City Council.

Another Downtown Tax Increment Finance Review Committee meeting is tentatively planned before the end of the month, when committee members are expected to once again consider details of two differing plans — both of which are touted as the best way to help revitalize downtown McAlester.

Several involved with the committee say they’ve been asked if they can meet at noon on Aug. 30 at City Hall.

The Downtown TIF Review Committee — which is officially known as the Downtown Area Reinvestment Review Committee — has two proposed plans on the table. Neither has been approved by the McAlester City Council.

Review Committee Chairman Zach Prichard, who is also the Ward 6 city councilor, presented a plan to the city council in mid-May. The measure had previously been approved by a split vote of the TIF Review Committee, but failed to receive a majority of the votes when presented to city councilors. 

McAlester Mayor John Browne then presented an alternative plan to the Downtown TIF Review Committee in July. The Review Committee listened, but the meeting agenda did not call for them to take a vote on the proposal at the time. Several members of the TIF Committee indicated they wanted to review and compare the plans prior to their next meeting. 

Browne said Tuesday he would not be surprised if a final Tax Increment Financing District plan for the downtown McAlester area turns out to be some sort of hybrid between his plan and the previous plan presented by Prichard.

Prichard said Tuesday the plan he presented had input from other TIF Review Committee members.

“I don’t really think of it as my plan versus the mayor’s plan,” Prichard said. After Prichard presented his original plan to his fellow TIF Review Committee members, “We made significant changes in the light of comments by the TIF Committee,” he noted. 

Three of the major changes proposed by Browne include vastly reducing the size of the area which had originally been suggested for the Downtown TIF, removing McAlester Public Schools as a beneficiary and reducing the time the TIF would remain in effect from 25 years down to 10 years.

The difference in the proposals for a 25-year TIF versus a 10-year TIF is one of the major points of contention in the two plans. Prichard expressed his reasons for wanting the longer TIF.

“I don’t know if doing something that will not have a potential transformative effect over the downtown area would be worth doing,” Prichard said, because of the revenue that would be diverted from the other taxing entities, including McAlester Public Schools, the Kiamichi Technology Center, the Pittsburg County Health Department, the McAlester Public Library and Pittsburg County.

They each receive a portion of the ad valorem property taxes collected by the county.

Browne continues to contend that it would better to have a shorter TIF in place, although he recognizes there could be a compromise of sorts — something between the 10-years he proposed and the 25 years that’s in the other plan.

Prichard’s plan proposes making up to $30 million available through the 25-year TIF.

It includes:

• $15 million for public infrastructure

• $5 million for McAlester Public Schools

• $5 million for redevelopment of private property.

• $4.5 million for contingency.

• $500,000 for administration.

Prichard said the plan does not guarantee that $30 million would be available.

“That’s a cap,” he said — meaning it would not go over the $30 million threshold.

Prichard’s proposal would pay for TIF projects through a portion of ad valorem property taxes collected within a designated downtown TIF District.

Browne’s proposal calls for both ad valorem property taxes and sales taxes to be utilized.

Under  the mayor’s plan, sales tax funds would be used as rebates to building owners who make an investment to improve their value either through adding livable space that’s been renovated to pass city codes necessary for occupancy or by expansion of existing commercial space.

In regard to ad valorem taxes, the initial five-year increment produced by the district would be banked for future infrastructure needs, with funds from the second five-year period to be used when produced. “In both cases these funds will be used exclusively for infrastructure needs within the district,” the mayor’s plan states.

An exception would be permitted if the total increment produced within the first five-year period exceeds 75% of the initial baseline, with the baseline reset by a 25% increase.

Both plans called for a baseline to be set regarding what is currently collected. The amount of the baseline would be paid to the receiving entities for the life of the TIF, unless a “trigger” is included. The baseline is designed to ensure the receiving entities do not get paid less from collections than they currently receive, while the TIF is in effect.

Any valorem taxes collected from property in the designated TIF district, as well as sales taxes if approved under the mayor’s plan, would then be set aside in a TIF Fund. That fund could then be accessed in the form of grants or loans to make improvements to the property of those participating in a Downtown TIF.

Contact James Beaty at jbeaty@mcalesternews.com