City scraps TIF district proposal
Jun. 9—City officials appear to have abandoned an incremental tax district proposed for the purpose of financing infrastructure improvements for a residential development on Muskogee's east side.
City councilors approved the concept in December 2020. A review committee in April 2021 recommended final approval despite objections by representatives of taxing entities that would have been impacted most by the diversion of ad valorem revenue — Muskogee Public Schools, Indian Capital Technology Center and Muskogee County.
The proposed tax increment finance district would have diverted nearly $1.52 million from intended recipients for up to 20 years. City officials made an initial investment of $800,000 for infrastructure supporting construction of the first 40 of about 120 houses planned at Walnut Creek Addition, a 30-acre tract near the 600 block of South Country Club Road zoned as a planned unit development.
Muskogee County commissioners expressed concerns about creating a TIF district to support private development of a residential neighborhood. Those concerns came in response to an inquiry from Assessor Ron Dean, who requested clarification from commissioners about their support for — or opposition to — the proposed tax district.
Dean was appointed in 2021 to represent the county's interests while serving as a member of the committee tasked with reviewing the proposed special tax district. He joined MPS and ICTC officials in opposition to the diversion of ad valorem tax revenue for private development.
"I want to fully understand the commissioners' wishes so I can speak with authority on their behalf," Dean said. "There has been some discussion about the possibility of revisiting this."
Dean said the development of 120 new houses would increase demand for public services. He said schools, libraries, public health agencies and county offices, which receive about 70% of the annual ad valorem tax revenue, would have to provide additional services for 20 years without the benefit of receiving new revenue generated by increased property values.
Another concern Dean shared with commissioners is the potential of creating "an unfair business advantage" for one out-of-town developer. He said local contractors have been building houses in Muskogee County for years without the benefit of public subsidies.
Mayor Marlon Coleman said most everyone agrees there is a housing shortage in Muskogee and "something needs to be done to correct that problem." He also acknowledged the concerns shared by some about resolving the problem by creating "an isolated housing TIF district."
"An isolated housing TIF district is problematic because there must also be consideration for incentives, when necessary, for other potential housing developments," Coleman said. "Theoretically speaking, if a TIF district is established for one development, how do you validate — or invalidate — its use for or against another development?"
Coleman said investments worth at least $1.7 billion will be made during the next three years for infrastructure and the creation of new jobs. The bulk of those investments will be in Muskogee, he said, but investments are planned throughout the county.
"The resulting jobs from those investments demand that we increase our available housing supply," Coleman said. "Myself, along with other city officials, are in conversations now about the best way to immediately address the housing shortage and identify funding to overcome our housing shortfall."
District 3 Commissioner Kenny Payne opposes the creation of a TIF district to support private-sector development of a residential subdivision. He said that could change if the developer demonstrates a demand in the local market for the type of houses it plans to build.
"If they put 40 (new houses) on the ground and a year later we need more, I'd be willing to take a little different look at this," Payne said, citing the lack of progress during the past year as a concern. "Those five (houses) that were there a year ago ... look very similar today to what they looked like then — there's a lot of questions to be answered."
District 1 Commissioner Ken Doke said it is likely "there is a magic proposal" for a TIF district "that at some point I would at least consider." He conditioned his support on cost-benefit analysis showing there would be a return on the investment of public funds.