The Quest for Sustainable, Revenue-Driven Economic Development

February 8, 2022

By Kian Kamas, Executive Director of the Tulsa Authority for Economic Opportunity

Just one  year ago, the City of Tulsa announced an ambitious plan to form a new Public Authority to lead its economic and community development work. The announcement followed a nearly year-long strategic planning process led by HR&A Advisors and Zakerion Strategies, which sought to engage the leadership of a number of the city’s commissions and authorities in a collaborative assessment of how Tulsa might transform its institutional and organizational framework for community and economic development.

The study found substantial opportunity to eliminate inefficiencies and increase revenue by merging the Mayor’s Office of Economic Development, the Tulsa Industrial Authority, the Tulsa Parking Authority and the city’s Economic Development Commission into one single organization. Following an intense six-month sprint, on July 1, 2021, the Tulsa Authority for Economic Opportunity (TAEO) launched its operations, with an inaugural operating budget in excess of $8.5 million – a nearly 7-fold increase over the FY21 operating budget for the Mayor’s Office of Economic Development.

I have had the pleasure of working alongside countless Tulsans to bring this new model to life. At TAEO’s core is a simple, yet powerful principal: cities and public entities own major, valuable assets which can and should be leveraged to support our broader economic and community development goals. For TAEO, our legacy organizations provided a strong foundation of assets which now provide a critical base of revenue for our operations:

• The Tulsa Industrial Authority, in coordination with the City of Tulsa and State of Oklahoma, constructed and owned an 81,000 SF aircraft hangar leased to American Airlines.
• The Tulsa Parking Authority owned four structured parking facilities in Downtown Tulsa, leased an additional two facilities from the City to operate, and owned a key lot prime for development in Tulsa’s Arts District. All these assets generated strong cash flow.
• As a part of the effort to create TAEO, the Tulsa Metropolitan Utility Authority transferred a major industrial building to TAEO, which brought in annual lease revenue of nearly $500,000.
• The Tulsa Development Authority owned more than 170 assets across Tulsa, ranging from single family residential lots to historic buildings in Tulsa’s Greenwood and Pearl District.

As we close out our first six-months of operations and look to the end of our first full fiscal year, our staff, and Board of Trustees – which is led by Mayor G.T. Bynum – are steadily moving forward with efforts to ensure that we leverage these assets to drive direct revenue creation for TAEO. This, in turn, increases TAEO’s ability to provide services and programs. which aim to increase economic opportunity across the city – whether through support to small businesses and entrepreneurs, targeted redevelopment efforts in disadvantaged neighborhoods, homebuyer assistance programs, or other programs and strategies.

For our Board, this more direct and transparent connection between our revenue and our mission provides space to take steps to raise revenue which might otherwise be met with hesitancy or concern.

In fact, in forming TAEO and preparing for the launch of our inaugural strategic plan, our Board has openly advocated for the need to judiciously manage our assets, determine which assets should be disposed of to reduce operating costs, and detect places where  we are allowing our assets to underperform through below-market leases, rates, or fee structures. As a result of these transparent and forthright discussions, TAEO is pursuing the following actions as we work to build a more financially sustainable organization:

• Just two weeks ago, our Board approved a revised rate schedule for event and visitor parking at our Downtown parking assets following nearly a decade of no changes. This change will still place TAEO’s parking rates toward the lower end of the market and will allow us to continue major capital repairs to preserve these assets – in FY22 and FY23, we will implement nearly $2.75 million in repairs to our assets.
• In the coming months, we will present a plan to institute application fees for our larger and more labor-intensive public incentive programs. These fees are meant to allow us to recover up-front costs and ensure private partners respect and recognize the value of the services we provide in spurring their projects.
• Throughout 2022, we will be working on an aggressive disposition plan for our residential real estate lots, with the goal of facilitating neighborhood transformation while also reducing our operating expenses – in FY22, we will spend over $140,000 mowing these lots, some of which have been on our books for over a decade.

While any discussion involving revenue increases can be inherently difficult for a public entity, TAEO’s unique model – and our very public commitment to optimizing our assets – provides an opportunity for our Trustees to take actions that will increase resources to support our mission and the City’s economic prosperity. To ensure we have this ability now and in the future, we must consistently and effectively show the results of our work and ensure Tulsans are able to see how our revenues translate into improvements into their city and lives.

The contents of this blog post reflect those of the author, and not necessarily those of the GFRC.