Economic Development Director Clay Bird: "The real premise behind this was to look at attracting what I call 'destination retail,' " he told city councilors.
City councilors are considering a multimillion-dollar incentive program aimed at making Tulsa more competitive with surrounding cities in attracting big-box retailers.
"Everyone, it seems, is looking for incentives, and really to be competitive you've got to have those incentives to offer up," Economic Development Director Clay Bird told councilors Thursday.
The program would offer up to $2 million in sales-tax rebates for businesses that would generate substantial sales-tax revenue, such as Costco, a national discount retailer long rumored to be interested in Tulsa, Bird said.
Other cities in the region, such as Oklahoma City, have similar programs, and even Tulsa's suburbs have offered retail incentives where Tulsa has not, Bird and Retail Marketing Coordinator Tammy Fate said.
The new program would give Fate another "tool in her belt" as she pitches Tulsa to major retailers who might be lured by such offers, Bird said.
"The real premise behind this was to look at attracting what I call 'destination retail,' " he said. "Since we are so heavily dependent on sales tax revenues for city funding, retail development is especially important."
Councilors said they plan to discuss the proposal further next week and would aim to vote on it soon, but they offered no objections Thursday.
"At first glance, what I see here and what's been referenced many times is this is a tool in Tammy's belt that when she goes out and talks to retailers and they ask that question - 'What incentive is there for me ... to come to Tulsa' - she has an answer," Councilor Skip Steele said. "Right now, I can see that you can't really answer that question really effectively."
Tulsa has incentivized retail development before, such as when it agreed to spend up to $13.5 million on infrastructure for the Tulsa Hills shopping center and to repay itself over time with sales tax generated as part of a tax increment financing district.
But under the sales-tax rebate program, the city would have a formal incentive structure - something it doesn't have now, Fate said.
Rebates would be limited to reimbursing retailers for public infrastructure.
A new retailer or its developer would be required to build the infrastructure with its own money, and the city would reimburse it over time in payments relative to the amount of tax revenue the business remits to the city each year.
No reimbursement would be given if no tax is generated, Fate said.
Businesses generating $400,000 in city tax revenue in one year would get no more than $800,000 over 10 years; those generating $1 million per year would get no more than $1.2 million over 4.8 years; and those generating $1.5 million or more per year would get a maximum of $2 million over 4.4 years.
Annual reimbursements per business would range from $80,000 to $450,000 under that structure.
An additional limitation on the incentive program would keep the city from spending more in one year than 1 percent of its general fund operating account.
That would limit incentive payments to retailers this fiscal year to $1.48 million.
Proposed sales-tax rebate program
Maximum per business: $2 million over time
Payment period: Minimum 4.4 years, maximum 10 years
Maximum annual payments: 1 percent of general fund*
*Would be $1.48 million this year
Source: City of Tulsa
Zack Stoycoff 918-581-8486
zack.stoycoff@tulsaworld.com
Original Print Headline: City eyes retailer incentives
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