Vote tonight on One Technology Center purchase
Tonight at their regular 6:00 p.m. meeting, the Tulsa City Council will decide whether to authorize the Tulsa Public Facilities Authority (TPFA) to borrow the money -- $76 million -- to buy One Technology Center and to pay for consolidating city offices in that building. Because the financing will be sole-source -- seller-financed -- it will require seven affirmative votes from the city council to pass.
Proponents of the move talk about how a shiny new City Hall would improve the image of the City of Tulsa. I agree that the image of the City is important, but the true image of the City isn't shaped by the appearance of city government's headquarters building, which few of Tulsa's nearly 400,000 residents and few of our visitors will ever see.
The image of Tulsa's city government is not to be found in the City Hall building. Our citizens and visitors see it in our crime statistics, in the smoothness (or lack thereof) of our streets, in whether our pools are in good repair and open for use, in whether our building codes are enforced, in whether our parks are mowed. The public interacts with city government on our streets and in our parks and neighborhoods, and those places, not City Hall, shape their perception of Tulsa as a place to live, visit, and do business.
This deal should be measured by one standard: Will it leave the City with more money or less money available to fund the basic functions of city government?
Based on the numbers in the Staubach Company's report and the analysis of those numbers by Councilor Bill Martinson, there is a high risk that the move will leave the City of Tulsa with less money for police and parks and streets. If one of the current tenants leaves or even reduces its presence, if we are unable to find a replacement tenant who will pay the same price, if rental revenue is less than debt service on the loan, the City will have to make up the difference out of its operating budget. This deal would make the City of Tulsa a competitor in the commercial real estate industry, rolling the dice in a risky business, and using our mortgage money to place the bet.
To shift metaphors, this deal is a house of cards, and if any one of several contingencies fails to occur, the whole thing collapses.
The only facts that matter are these numbers -- how much it costs to operate our current facilities, how much it will cost to operate One Technology Center, how much it will cost to repay the loan on OTC, and how much we are likely to be paid in rent from third-party tenants.
The Council has not been given a full and detailed accounting of the cost of operating our current facilities. This information is surely available in our accounting system -- how much we pay custodial staff, how much we spend on utilities, the cost of repair projects -- based on actual expenditures over the last few fiscal years. Instead, Staubach prepared a sheet estimating cost per square foot for broad categories -- utilities, repairs, security, etc. -- and then multiplied by the sum of those per square feet numbers by the size of our buildings. The $24 million claimed as deferred maintenance costs are buried somewhere in Staubach's per-square-foot figures.
The Council has not been provided with a list of deferred maintenance items, the cost of each one, and the likelihood of needing to fund those items in the near future. Each such item should have a basis of estimate, explaining the work to be done and the manpower and material required. Instead, in response for their request for a detailed list, the Council was given the names of the items and a single number covering the cost of all of them.
With this lack of detail, it would be easy for Staubach to pick numbers for estimates that would make staying in the existing facilities seem to be more expensive than moving. And don't forget that Staubach gets paid more if the deal goes through, so they'd have an incentive to make the existing facilities look as expensive as possible.
The Council should not approve this deal without an accurate apples-to-apples comparison of costs showing that the move will be less expensive in the near term.
MORE: Jeff Shaw has a better idea for One Technology Center.
Laugh of the Day: "'I'm going to live in Tulsa the rest of my life,' [Kathy] Taylor says." Home is where the homestead exemption is.
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Michael has done a quite excellent analysis of this bad deal for the taxpayers of Tulsa.
My only contribution to his analysis would be comment on the $24 million in so-called "Deferred Maintenance".
This $24 million Deferred Maintenance amount is a bogus, "plug" number Staubach invented to force the analysis to conclude it would be a favorable net financial effect to make the move to OTC.
I would furthermore add that the Staubach firm's INDEPENDENCE is critically compromised because they will accrue a much greater financial benefit IF the purchase goes through. An appraiser's independence is totally compromised if a HIGHER fee is dependent upon a sale going through.
When Councilors Eagleton, Martinson et al made direct inquiries of City Finance Director Mike Kier about what actually constituted the $24 million in deferred maintenance, he simply DID NOT KNOW. The City Director of Finance did NOT know??
Deferred maintenance may be real, may be partially true, or it may more likely an ephemeral phantom upon which the future foundation of the city's future financial health is built.
Never forget that when it comes to government expenditures, our SELECTED politicians prefer to let a building run down without ANY diligent regular maintenance because they (and their connected Construction Company cronies) just LOVE to build new high-priced buildings to replace ones that they claim are "falling apart", because they simply do not want to diligently maintain existing ones.
75 years is a decent useful life of a well-maintained building. If it is maintained.
The Deferred Maintance is still what accountants call a "PLUG" number in this equation.
And, in the words of the famous movie director Alfred Hitchcock, the Deferred Maintenance is the veritable "McGuffin" of this deal, i.e. the object upon which the plot hinges upon, and upon which this deal precariously balances.
They don't even have an estimate for insurance. Why would they not have gotten an estimate so it could be figured in?
What else do they not know the cost of?
I think now I have an issue to run against Cave-in Christiansen with.
What a sham. I say it is time to de-annex downtown tulsa from the rest of the city and let it rot.
Mrs. Mommy 4 Congress!
by definition, deferred maintenance is that which should have been done but wasn't. it wasn't done because the city did not have the money. any analysis of this deal should ask the question "if we couldn't afford the deferred maintenance, how can we afford buying the building?".
it could be at some point the city decided that spendng more money on the existing city hall was not a wise investment or at least expenditure. that being the case, why was the idea of a new building not explored by public works, or someone in the city government before now?
its the rapidity of this process that stinks as much as the idea itself.