The Norman Transcript

October 31, 2012

Economic development: Planned policy under scrutiny

By Joy Hampton
The Norman Transcript

NORMAN — Controversy continues to swirl around Norman’s attempts to develop a municipal economic development policy.

This spring, city leaders formed the Norman Economic Development Authority, a trust with bonding capacity. The members of city council will serve as trustees to ensure the board is answerable to the public.

Coming soon will be appointments to an Economic Development Advisory Board to be comprised of people with expertise in economics, banking, development, real estate, business and other relevant areas. That advisory board will not have decision-making power, but will be comprised of professionals who can vet a project and make recommendations to the Authority.

Also under review and creation is an economic development policy for the city, along with possible incentives and eligibility criteria to guide the decision-making process.

“Incentives should be used to level the playing field to take away a disadvantage you might have because your costs are higher whether that be transportation costs, land costs or whatever, versus a competing site,” said Norman Economic Development Coalition Executive Director Don Wood. “Incentives need to always be performance based and have clawbacks if they get them ahead of performance. It’s always better to be performance based, but there are times you may want to give incentives ahead of time, and you need to have clawbacks.”

The Norman Economic Development Coalition was formed in 1996. It is a combined effort of the University of Oklahoma, the city of Norman, Moore Norman Technology Center, and the Sooner Centurions, a committee of the Norman Chamber of Commerce.

Critics of the formation of the new trust authority pointed to the Coalition’s efforts in economic development as proof that Norman did not need an additional entity to promote the city as a site for future employers.

But Wood has been an advocate, saying there is only so much the Coalition can do. In addition, the potential for bonding capacity added by the Authority creates a new toolbox of economic development tools.

Those tools — many in the form of incentives — are precisely what some critics fear. They point to deals gone wrong or blunders that other cities have made and express concern that those mistakes could happen in Norman.

But that’s what the Norman City Council intends to prevent.

Wood said any proposed project should be based on an economic impact analysis including jobs creation and what impact it will have on the community.

“Locating major companies is a very competitive business,” he said. “The state of Texas has a dedicated half-cent sales tax all for economic development and most of the cities have voted that in.”

Oklahoma municipalities are competing as well. Bartlesville, Oklahoma City, Ardmore and Ponca City, for example, all have dedicated revenue streams for economic development.

While Norman is unique, it must compete with other cities inside and outside of the state who are aggressively pursuing economic development and jobs creation proponents of the new Authority say.

“Norman has higher costs than other cities,” Wood said. “Real estate is expensive and development costs in Norman are generally higher. We have impact fees that other people don’t have.”

The limited availability of potential sites in Norman creates land higher costs, he said.

The proposed economic policy is still in the early stages, said Norman city attorney Jeff Harley Bryant.

“We met in August and September and reviewed the tools we have in effect,” Bryant said. “Then in September and October, we talked about what other cities are doing.”

But Bryant said examples of what other cities are doing may not always be relevant.

“What they’re doing in other states may not work here,” he said. “Kansas has the ability to waive property taxes.”

In Oklahoma, most property tax goes to the schools and the county, so Norman wouldn’t have much of a property tax to waive, though in cases like the University North Park TIF, the taxing entities did agree to a partial ad valorem tax deferral with the monies used to develop infrastructure to support the development.

In turn, businesses that might not have otherwise come to Norman were attracted to the TIF district, increasing the tax base.

With the creation of the Economic Development Authority, the city council is hoping to make a wider range of incentives available so Norman can be more competitive in the economic development hunt.

All incentives will have to be appropriate to this area.

“Sometimes it’s hard to compare cities in other states with what we do because the governmental structure is different,” Bryant said.

City council members will address a number of these issues in the 9 a.m. meeting of the Business and Community Affairs committee on Thursday at city hall. The meeting is open to the public.

The economic policy draft under discussion outlines potential goals and objectives, a variety of incentives and other economic development tools, eligibility criteria, the evaluation process, performance standards, and methodology for monitoring and evaluating compliance.

“On the eligibility criteria, not every proposal will address all of those,” Bryant said. “These are just some things to consider when trying to decide whether a project should receive public assistance.

“Each project will have to come forward and stand on its own merit,” he said. “All projects will be vetted in public before there is a commitment of public funding.”

 

Joy Hampton366-3539jhampton@normantranscript.com

 

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