Edmond TIF district supports business growth

Edmond’s first Tax Increment Finance (TIF) District was approved by City Council in October 2020 to support public improvements, encouraging more private investment in downtown Edmond and its surrounding areas. Since then, two major housing projects have been a shining example of the type of development city officials hoped to attract and support with TIF funding.

Edmond’s TIF District

TIF districts are economic drivers that promote new development and have been used by cities around the country for more than 40 years. Within a TIF district, municipalities can use a portion of property taxes generated in the district to invest in the new projects or infrastructure created there. 

The Increment District No. 1, City of Edmond, the official name designated in the ordinance, is projected to create nearly $530 million in new investment in downtown Edmond through commercial, residential, and mixed-use development. 

The Edmond TIF allocated budget is $55 million and will last for 20 years or until funds are depleted. Ten percent of the revenue created by the new development will be allocated for Edmond Public Schools, with the other 90% being returned to the developer until the original agreed investment is paid back. 

The designated district runs along Broadway from Thatcher down to 9th Street, as far east as University and west as Fretz. It follows the railroad but also includes Stephenson Park and the historic neighborhood west of Boulevard. 

Local developers, including Switchgrass Capital Manager Partner Matthew Myers, are taking advantage of the TIF and creating new projects specifically within this area. 

“With more people living, working, and playing downtown, a TIF creates more revenue for downtown businesses,” said Myers. “Plus, the sales tax collections from these sales are provided to the city of Edmond to improve our city, and the Edmond Public Schools receives a financial reward from the TIF.” 

How it works

To qualify for TIF funding, developers must apply and state their case to the city. Assistance amounts are determined as a percentage of hard construction costs required for the project. Once the project is complete, the funds are distributed over multiple years as property taxes increase until the total allocated amount is met. 

Myers provides an example, “Let’s say a current piece of land generates $10,000 a year in property taxes, and a developer wants to construct a building on that land that will generate $100,000 a year in property taxes.”

There could be public parking requirements, sidewalks, lighting or utility work, etc., that need to be completed by the developer, which might cost $300,000. But, in making these public improvements, the project is not economically possible and would stop the development. What is the solution? A TIF.

The incremental difference between $10,000 (the current property taxes) and $100,000 (future property taxes) is $90,000. So, the developer builds the building, and property taxes increase to $100,000. Edmond Public Schools receive 10% or $9,000 of the $90,000 tax increment, leaving $80,000 left over.  

Remember, the developer paid $300,000 to construct the public improvements. So, in this case, the developer would be paid back $80,000 annually until he has recouped his $300,000 for public implements.  

“When structured correctly, so the developer is held accountable, there aren’t many downsides to a TIF. When you add up the numbers, a TIF does not cost the city or taxpayers anything out of pocket,” said Myers. “If you want to see downtown Edmond with better schools, restaurants, offices, entertainment, and nice places to live, a TIF is a big step toward those goals.”

Requirements for TIF funding

While most development increases property taxes and benefits the surrounding area, the City of Edmond has set specific parameters of TIF project requirements in the Downtown Edmond TIF Policy Guide. 

There are two categories of TIF assistance for projects in the district: public improvements assistance and assistance in development financing. Public improvement assistance would support projects that include improvements beyond the actual structure that benefit all patrons in the area, like additional parking, new water lines, or storm sewer extensions. 

The second category is broader and would provide assistance for developing a vacant property or redeveloping a building or site within the district. These projects must involve an investment of at least $2 million in hard construction costs, land ownership or a long-term lease, and design and density standards from the City of Edmond. 

The city also created a priority list of the types of projects it will consider funding based on the Downtown Master Plan. The goal is to support development that creates “a vibrant, enjoyable environment that becomes a significant economic center to our community.”

Priorities include new residential living units, specifically higher-density development, and retail activities, with a preference for new-to-market retailers that strengthen downtown’s evening activity. Other considerations include office development, connectivity with the UCO campus, makers or producers, and projects that promote new and improve existing public spaces. 

Current TIF development

Myers and his firm are utilizing the TIF at their new development, Ember, near 9th and Boulevard. The project will include new cottage-style homes, similar to another of Myers’ projects, a “pocket neighborhood’ called The Lark. 

A downtown residential complex called The Silos and an adjacent parking garage were the first to use TIF funds in Edmond. The project broke ground in April and will include 276 units with top-tier amenities and walkability to downtown businesses, including the Railyard District. 

Both of these projects are expected to generate significant property tax increases. With the TIF district structure in place, the developers and the school district will see the benefits as soon as construction is complete. 

“A TIF promotes a win-win-win between the city of Edmond (taxpayers), the Edmond Public Schools, and the developer,” said Myers.