NORMAN — Editor, The Transcript:
The following is in response to Councilmember Jungman’s recent letter, “Incentives don’t often work.”
Let’s assume that Councilmember Jungman is right and there are numerous mathematical errors in the report, which would then mean the report is not reliable. Let’s focus on the known numbers. IMMY is going to build a $12 million building. Assuming 50 percent is materials and 50 percent is labor, they will pay 3.5 percent Norman sales tax on the materials or about $210,000 in local sales tax: 40 percent of which will go to the general fund or about $84,000 and the rest ($126,000) stays in the TIF fund pursuant to the TIF development agreement.
The building and the land will be assessed at approximately $14 million for an annual property tax of about $200,000, of which 50 percent will go to the schools and 50 percent will go to the TIF fund. Once the building is complete, an additional $500,000 of equipment will be purchased. This equipment will be assessed as a personal property tax at a rate of about $3,600 per year.
In year one, the general fund will receive $84,000 and the TIF will receive about $230,000. In each of years two through 10, the TIF will receive $103,600 in property taxes.
This totals about $1,162,400 in proceeds to the TIF alone over a 10-year period. If IMMY performs as expected and triggers the full incentive on the jobs they create (remember they must create the jobs or NEDC does not get reimbursed for the purchase discount granted to IMMY), that would be $770,000 or a profit of $392,400 or a 51 percent return on the taxpayers’ money over that 10-year period.
Had the Council said no to the development agreement with IMMY, the result would be a piece of land sitting unused generating no property tax and creating no jobs for our citizens. Instead, we have a company that, after looking at several sites outside of Norman, chose to invest here to continue their growth and expansion. IMMY is to be commended for making such a commitment to Norman.
As was pointed out, 98 percent of IMMY’s sales come from outside of Oklahoma. That means new money is being pumped into the local economy. Additionally, it is these types of higher paying jobs that reduce the “brain drain” for our college graduates. Let’s keep our college graduates here and help grow our community.
I do not have a dog in this fight but I feel if the NEDC has evaluated the arrangement and concluded that this was an acceptable risk and was within their mission, then I am fully supportive. I will be the first to agree that not all incentives work. However, the NEDC and the city have done their homework on this one.
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