Most of the audience seats were filled for the Alva City Council’s public hearing on a tax increment district to help support the proposed arena. Several were there as part of the arena authority.
Jeff Sabin, an attorney with the Oklahoma Center of Economic Development Law, presented information about the district. He fielded a few questions from city council members, but none of the citizens present made comments.
Increment District vs. Project Area
Sabin briefly explained the different between an increment district and a project area. The increment district is the geographic area from which the increment taxes are generated. The project area is where the increment may be spent.
In the proposal presented, the increment district covers an area around the arena site while the project area covers most of that same area plus an area southwest of Alva including the fairgrounds and the recreation complex.
Arena Project
According to Sabin, the arena project includes an 85,000 sq. ft. arena, a 31,000 sq. ft. exhibit hall, a 35,000 sq. ft. exposition/livestock building, an additional 52,000 sq. ft. arena (for warm-ups), a 50,000 sq. ft. stall barn and connector to the arena, 1,100 permanent seating capacity, 900 portable seating capacity, and 2,500 potential floor seating capacity.
Distribution of Newly Generated Taxes
The idea of a tax increment financing (TIF) district is fairly simple. When a new entity such as the arena is built it is expected to attract new business and raise property values. This added value is calculated each year for the life of the district and a designated portion is used for the new entity (arena). By law the TIF district lasts until the entity is paid off or for 25 years and then it goes away.
It can get a little more complicated (math is involved) when you get down to how the taxes are shared. For the arena, 20 percent of the ad valorem taxes (Woods County) above levels at the start of the TIF will go into the arena support.
Only two percent of the city sales tax is not earmarked. So the sales tax increment is based on that two percent. It’s proposed that half of the new sales tax revenue in the district will go to the arena project.
Not Complete Solution
Sabin then went into more detail about projected new revenue from the increment district based on new growth and business generated by attendance at arena events.
However, he concluded that a TIF is not a complete solution. Estimated costs for the arena project are approximately $15-20 million. The TIF provides financing capacity for only around $6 million.
He said other sources of revenue will be needed to pay for construction and run the arena project. These include other public tax revenues from the city and county such as tourism tax, significant private funding pledges and arena rents and licensing revenue.
Sabin said the arena operating models also show operating cash flow deficits so ways must be found to support the arena project after it is constructed.
He cautioned that additional work is needed to find funding sufficient for the arena to be financially feasible over the long term. A TIF is only a part of the solution, and it is focused on the arena’s construction.
Second Hearing Aug. 20
A second round of hearings will be held on Monday, Aug. 20. The first will be at the Woods County Commissioners meeting at 10 a.m. in the county courthouse. The second will be at the Alva City Council meeting at 6:30 p.m. in the council chambers of City Hall.
The second hearings will give members of the public time to mull over the information presented on July 16 so they may make comments and ask questions.
The public hearing and the entire city council meeting may be viewed in the video offerings at AlvaReviewCourier.com.
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