Rep. Tom Gann, R-Inola, has filed House Bill 1379, which would require a vote by citizens to “redirect” property tax through Tax Incremental Financing (TIF) Districts. Gann issued a press release on topic today.
Gann explained that in Mayes County, Mid-America Industrial Park (MAIP) officers proposed “redirecting” county property tax through the implementation of a TIF district to benefit new corporations coming into the industrial park.
As the first graphic shows, however, TIF Districts do not “redirect” existing tax, rather they impose an additional tax collected within the area to support specific pledges for construction of specific infrastructure. This is a funding structure common throughout the United States.
MAIP was established to operate and develop the industrial park property using funds generated by revenues from a water plant, waste treatment plant, and the sale or lease of authority properties and interest earned on investments, Gann said.
Wikipedia notes, “MidAmerica Industrial Park (“MAIP”) is Oklahoma’s largest industrial park. The park is located in Pryor Creek, Oklahoma.[1] Over 80 firms[2] are located within the industrial park including operations of seven Fortune 500 companies,[3] such as Google, DuPont and Nordam.[4] The park was founded in 1960, when the Federal government sold most of the former Oklahoma Ordnance Works to a public trust, the Oklahoma Ordnance Works Authority.[5] It covers 9,000 acres (36 km2).[6]“
The Mayes County commissioners appointed a review committee tasked with determining whether the TIF District proposal should proceed or not. The committee voted to form the TIF District, with one dissenting vote. County commissioners then voted 2-1, to affirm the decision.
“The process I personally observed was not one where balanced information was provided on whether a TIF District was a viable proposition for economic growth,” Gann said. “I saw a process of one-sided information, using sales techniques to promote the proposal.”
Gann was told by some local citizens that they wanted to know what the new industries would be. “The answers they were given were vague and they were told the information couldn’t be revealed because it was part of a non-disclosure agreement. This caused further frustration and more questions about the creation of a TIF district.”
The citizens of Mayes County consequently came together and set out to challenge the proposal and bring it to a vote of the people. After a costly legal battle with MAIP officials, the group’s petition was placed on the ballot in November 2022. The citizens of Mayes County voted the TIF District down in every precinct in the county with the overall vote against at 63.9%.
“House Bill 1379 will put the power back into the hands of citizens by requiring a TIF District proposal to go to a vote of the people for approval,” Gann said. “It will eliminate the costly legal battle against government imposing a TIF District without the consent of the governed.”
Gann said, “Thomas Sowell said it well ‘It is hard to imagine a more stupid or more dangerous way of making decisions than by putting those decisions in the hands of people who pay no price for being wrong.'”
The contrary perspective suggests that businesses within the TIF District and their consumers (in an industrial park, other businesses) pay for infrastructure that then increases area land value and new base tax revenue without costing those not engaged in commerce within the TIF District. Said another way, if you don’t do business within the TIF District, it doesn’t cost at all.
This is a great idea. TIF allows for debt financing and should get all the due diligence that bonds get, including approval of tax payers. Is the project likely to increase net activity and property taxes? This is tricky to answer. Generally estimates of project impacts look at gross (not net) revenues and assume all activity in the TIF is net new. This is a big error.