Drew Hutchinson | OU Daily
NORMAN — During a city council study session, Norman’s mayor and a development counsel lawyer clarified that the proposed University North Park project would not be paid for directly from the city’s general fund.
City council held a study session Tuesday, June 5 at the request of council members who wanted to ask questions to UNP project leaders. During a discussion about city liability for the project, Norman mayor Lynne Miller and Emily Pomeroy, an economic development lawyer who’s drafting the UNP project plan, both said the project’s funding would come from potential tax dollars as part of a tax increment finance district, and from not existing city money.
Miller said she wanted to clarify source of the funding after seeing social media discussions in which people suggested that the UNP project would be financed out of pocket from the city’s general fund.
“It is not that we have $90 million for an arena that we’re giving to the development,” Miller said. “If this agreement is done, there’s no money unless the development itself produces the money.”
If the UNP project were realized, the arena and surrounding area would exist in a sales tax increment finance district. Cynthia Rogers, an OU economics professor, said this complicated economic structure would freeze sales taxes at a base rate. Any accrued revenue above this expected rate is tax increment finance revenue, according to a presentation by OU philosophy professor Stephen Ellis.
Pomeroy said this incremental revenue is what would be used to pay the project costs, not dollars from the general fund.
“It’s only the incremental revenues that are pledged (to pay for the project)… no money from the general revenue fund is pledged,” Pomeroy said. “So if this development does not occur, the incremental revenues are not generated, thus those incremental revenues do not exist in order to be pledged to pay the debt.”
Council member Robert Castleberry asked what would happen if the district fails and no tax revenue is generated. Pomeroy said the city’s general fund still would be under no obligation to pay back the debt — it’s the private developers’ risk.
At a May 22 study session, Pomeroy proposed an amendment to the development master plan that would allocate 80 percent of tax revenue — instead of the original 40 percent — to the general fund to help Norman’s budget issue.
“At the direction of city council, we’ve been asked to look at the allocation of incremental revenues in such a way that more will go to the general fund on the front end,” Pomeroy said. “So it’s meant to try to help alleviate some of this budget issue. So that means less is available for the project but more goes directly to the general fund.”
But Pomeroy, who is currently drafting the project plan, said June 5 that this ratio may change.
“We’re tweaking with some things now to try to make sure that the financing of the project will actually work, which might require a different allocation,” Pomeroy said. “We’re just trying to figure out what the right balance is.”
OU Foundation attorney Sean Rieger will present the UNP plan to the Norman Planning Commission tonight at 6:30 p.m. Miller said this is another necessary step to be made before city council can vote on the final project.
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