Midwest City Council voted unanimously Tuesday to establish a tax incremental financing, or TIF, district in conjunction with the Warren Theater and Sooner Rose Shopping Center development.
The vote represented the final step in approving the project, which has been in the works for several months.
The development will include a 10-screen Warren Theater and 160,000 square feet of restaurant, entertainment and retail space near the Sooner Rose Shopping Center located at SE 15th Street and Sooner Road.
The developer, Sooner Investment LLC, estimates the mixed project will generate about $60 million in new private investment and will create approximately 300 new jobs in the retail, entertainment and food service industries.
In the ordinance, the Midwest City Memorial Hospital Authority, a public trust, will provide tax incentives, property and cash to defray expenses for the development. Property taxes, use taxes and a portion of the sales taxes generated from the new development in the district would go toward reimbursing the city for costs it incurred to create the development. The ad valorum revenues from the TIF would be diverted from the school district, county, technical college and library system for as long as the district is in place.
In the agreement, Warren Theatres LLC will receive $11 million in development financing assistance to defray the cost of construction and development of a 50,000-65,000 square-foot movie theater. The theater will include at least 10 screens with state of the art audio and visual technology.
Sooner Investment will receive $3.7 million for development expenses, infrastructure and land contributions for the mixed used commercial development. That development would comprise of 55,000 square feet of retail and service industry space and 56,000 square feet of food service space.
The TIF District is expected to continue for 20 years. Any excess taxes generated by the district will be used to pay off the loans early.
City Manager Guy Henson said the ordinance allows the city to move forward with the next stages of the development process. The next step includes rezoning property, completing development agreements between the Hospital Authority and Warren Theatres LLC and Sooner Investment, and securing financing for the project.
“We know it’s a mountain but we still have another half to climb,” Henson said.
Henson said they hope to begin preparing the site soon. They need to relocate a gas line and remove old gas storage tanks on the property. Henson expects construction will begin in late summer.
“I don’t think we’ll be able to open the theater by Memorial Day unless they really turn on a dime,” Henson said. “I think we’ll be staring at the holiday season next year.”
The development is expected to increase property taxes by about $138,000-$884,000 and personal property taxes by about $165,000-$231,000 per year. Sales and use taxes are projected to increase by about $49 million over the 20-year term of the loan.
Before approving the TIF District ordinance, the city council hosted the second of two public hearings on the issue. A couple of residents expressed their support for the project and asked for clarification on details of the plan.
Ed Graham, a citizen, asked what type of liability the city would accept with the TIF District.
Dan McMahan, an attorney hired by the city, said the type of financing involved, tax apportionment bond, eliminates liability for the city and city residents.
“If the wheels fell off in a few years and there wasn’t enough increment revenue being generated that there would be a financial loss, that financial loss would be borne by either the bond holders or the lenders on the tax apportionment notes,” McMahan said. “That’s a risk they bear when they purchase that kind of obligation.”
Charles Thompson, a citizen, asked if the TIF District is necessary to attract this type of development.
“I love Warren Theaters and I think something needs to happen on that piece of property but it seems like to me that you use TIFs for some place that is blighted,” Thompson said. “That is right off the interstate and there is a whole lot of development going in there. Would they not come on their own?”
Henson confirmed the project would not happen without the TIF District.