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Norman council to apply formal "but-for" test to future TIF proposals
Summary
City staff told the Norman City Council the proposed ordinance would require an economic "but-for" test for tax increment financing (TIF) proposals — even in enterprise, historic preservation or reinvestment areas — and proposed early stakeholder review and safeguards for dedicated sales tax revenue.
A city staff member told the Council the draft ordinance would require a formal "but-for" economic and risk analysis for any proposed tax increment financing district, including projects inside enterprise, historic preservation or reinvestment areas. "And that's important because in this ordinance, we are implementing a but for test even for enterprise zones or historic preservation areas or reinvestment areas," the staff member said.
The change would standardize an evaluation process staff described in section 12-703(b) and add post-adoption standards in 12-706. The staff member said the process includes third-party review of developer-submitted analyses, recommendations from a proposed seven-member stakeholder committee representing businesses, residents and nonprofits, EDAB economic review and the statutory review committee's findings before council consideration. "This would be, 7 members representing businesses, residents, and nonprofits within the project area," the staff member said.
Supporters said the test is intended to ensure TIF assistance advances city goals — such as affordable housing and public-infrastructure improvements — rather than simply accelerating development that would occur without incentives. Council members raised examples including the Griffin property and University North Park to illustrate sites that may be developable but not deliver the council's policy priorities without targeted assistance.
The ordinance also includes a revenue-protection provision to preserve dedicated sales-tax funds: staff said proposals that capture sales tax would be limited to "non-dedicated sales tax revenue only." The staff member said the item is on the agenda for first reading tonight and could return for a second reading and public hearing on May 26.
Councilors questioned whether a higher vote threshold should be required for certain TIF approvals; staff advised that changing the five-vote rule would require a charter amendment. No formal motion to amend voting thresholds was made during the discussion; staff said they will take any requested changes back to draft language and return with options.
The Council did not take final action on the ordinance at the meeting; staff will schedule the public hearing and second reading as part of the regular agenda schedule.
