Tulsa World: August 2009 Archives

The Whirled editorial board says, regarding the news that the new Tulsa City Hall at One Technology Center will cost $1.4 million more to operate than projected this year, draining Tulsa's general fund budget, that "the old I-told-you-so refrain isn't going to help anything."

On the contrary, a healthy dose of IToldYouSo Political Purgative is exactly what Tulsa politics needs. It might stimulate some needful skepticism in our city leaders. It might encourage councilors to ask more questions and to dig in their heels when the answers aren't forthcoming. It might act as a vaccine against the establishment's PR machine.

(Funny how the Whirled makes excuses for and warns against holding officials accountable for the bad decisions that they editorially encouraged. I seem to recall a similar editorial when the Great Plains deal came unraveled. Heaven forfend that those who encourage us to make expensively bad decisions should lose credibility when their folly comes to fruition.)

So here, in chronological order, is what I said about the City Hall move.

In my March 28, 2007, column, I praised the idea of relocating to One Technology Center as a planning concept, but with a big IF:

But as appealing as the move is, aesthetics and urban design aren't sufficient reasons to spend millions of public dollars. There has to be a net cost savings in the near term. City officials need a business plan that will give them a realistic picture of how much the current City Hall block and other city buildings would be worth.

(A business plan for the cost of operating the BOk Center might be a good idea, too. Before we go buying new buildings, we need to know if one we're already building is going to blow a massive hole in the city budget.)

They also need a conservative estimate of energy and maintenance cost savings. They shouldn't underestimate the monetary cost and lost productivity involved in a move, along with the need to support duplicate facilities for a time.

There ought to be a look at alternatives, too. A group of two or three of the historic buildings in Maurice Kanbar's inventory might serve well as a new City Hall.

Tulsans have already committed all our special projects money for the next six years; it's tied up in the Third Penny, Four to Fix the County and Vision 2025. Redirecting Third Penny funds away from existing projects to pay for a new City Hall would be possible, but politically hazardous. (The City might get away with diverting money for other downtown projects.)

It would be a good thing to do, but only if the move could be done without straining the already-constrained city budget. At the very least, it's worth the due diligence that city officials are now pursuing.

After some of that due diligence had been done -- from my June 20, 2007, column:

There are plenty of subjective reasons to like the idea of moving City Hall. The old building is ugly and sits in the middle of an ugly plaza. It was constructed in view of the projected needs of the City of Tulsa in 1985. The new location puts City Hall at the crossroads of streets that tie directly to the expressway system. It also puts City Hall closer to the center of new development activity on the east side of downtown. The newer building ought to be more energy-efficient.

None of that changes the fact that the move will cost $67.1 million, of which (according to the daily paper) $52.25 million is the purchase price of the building. That money has to come from somewhere, and we've already been told that the City budget won't allow for a net increase in the number of police officers, repairing and opening more pools than last summer, or operating the golf courses, even with an increase in utility rates....

In all the material that has been publicly released, there doesn't seem to be anything that says how the City will pay for the new building. It's one thing to claim, as the Staubauch report does, that moving to OTC will save the City $15.2 million over the first 10 years. That claim assumes operating costs to go up at a certain rate and that the City would have to fund $12 million in deferred maintenance costs that are currently unfunded.

(One of the charts that illustrates the asserted savings is a year-by-year graph comparing the costs of different scenarios. The first year estimate that the OTC option will cost less than $2 million vs. about $5 million for the status quo is clearly erroneous. The move to OTC has to be more expensive in year 1 than staying put because the City will be paying duplicate operating costs and additional one-time moving costs. One also has to wonder about the straight line on the graph estimating the cost of the status quo. Surely a thorough accounting of projected capital costs would show some variation from year to year.)

From Brian Ervin's story in the same issue:

Following the conclusion of the feasibility study, [Mayoral economic adviser Don] Himelfarb said operating out of OTC would save the city $15.2 million over the first 10 years by consuming 30 percent less energy and allowing for more efficient use of space.

"This is basically $15 million that is freed up that the city would not otherwise have to spend on police, roads and other services," he said.

The move would also get the city out from under $24 million in deferred maintenance costs to existing facilities, $12 million of which is unfunded.

Here on BatesLine, on the night of the vote, July 12, 2007 (emphasis added):

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.

That night, here's what I told the City Council (thanks to David Schuttler for the video):

The morning after the eight-to-Eagleton vote, July 13, 2007:

Needless to say, I'm disappointed with last night's results, but I'm going to save most of my commentary for my column, and I've got some family-related entries I want to post. I'm not so much disappointed in the vote to buy OTC as in the reasons the councilors gave for voting yes. In the end, costs only mattered to one councilor: John Eagleton. In this vote, and in previous votes on the budget, he seems to be the only one who thinks through the full financial implications of his decisions. Councilor Cason Carter's solution only protects the City on the income side, and that not completely, as a master leaseholder could very well go bankrupt, leaving the City holding the bag. Councilor Bill Martinson's worse-case (not worst-case) estimate still uses Staubach's S.W.A.G. for the cost of current operations, not the City's actual expenditures, which would be a findable number that would have given them a firm basis for knowing the bottom-line impact on the City's general fund. It is disturbing that they would go ahead without those numbers.

From my column the following week -- Believe in the Cube:

Prior to the 8-1 vote to allow the Tulsa Public Facilities Authority (TPFA) to incur $79 million in debt to buy the shiny symbol of Tulsa's fall from high-tech glory, Taylor read a speech that appealed to anything but hard financial facts. Councilor John Eagleton was the only one able to resist the Mayor's siren song.

I'm not so disappointed that the eight councilors voted for the purchase (it may turn out to be a good deal) as I am in the reasons they gave for their decision. They switched off their B. S. detectors, set aside logic and any concern about cost, and set the City up for a repeat of the Great Plains Airlines debacle.

Although the Council made a show of reducing the risk involved in finding tenants to fill the Borg Cube's excess space, they proceeded to a vote without using the best available information to determine whether the move would leave the city with more money or less money for police, streets, and parks over the near term....

The decision to go into debt to buy OTC for a new City Hall should have come down to this question: Will this deal leave us with more money or less money to spend on government basics?

One would hope that that question would be uppermost in the minds of our city councilors, who had just been through a grueling budget process, unable to open more pools, unable to fund enough new police officers to outpace attrition.

What did the Whirled have to say? A commenter called TCB wrote this comment under their "don't say 'I told you so'" editorial (hyperlinks added):

Based on their recent track records, maybe editorial board and the Chamber of Commerce shouldn't be so quick to hurl insults at city councilors for asking questions about large, complex transactions involving taxpayer assets.

Editorial quotes:

Great Plains:

"There is no taxpayer money involved . . . ." (2-27-00) [actually 7-22-2000]

New City Hall:

"The new building, One Technology Center, would be a perfect fit for city offices. It would require little renovation . . . . the decision to go ahead should be a quick and easy one for the Council." (6-8-07)

Ballpark:

"The plan to fund a new baseball park . . . has the backing of . . . the owners of the majority of the property affected. Delaying the Thursday vote will accomplish nothing, other than stalling progress and driving up costs." (7-10-08)

Over on TulsaNow's Public Forum, there's a link to this front page feature story in the June 7, 2007 Whirled, which used big bold red type to call attention to the projected financial benefits. I think they would have made the ink on the page blink if it were possible. (The print version is even more dramatic.)

CITY COULD SAVE MONEY WITH NEW HOME

Relocating to downtown tower projected to cut costs by $15 million over 10 years

In other news, for possibly the first time ever, I laughed at a Bruce Plante cartoon. Queen Kathy's crown is a lovely touch. Bruce had better update his resume, maybe check into adult education classes for a career change. Wasn't he instructed always to draw Mayor Taylor in a serious and deferential manner?

ONE MORE THING: A friend phoned to wonder if the Whirled is playing up this issue now to try to hurt three councilors -- Westcott, Martinson, and Christiansen -- who voted the Whirled's way in 2007 but have since defied them and Mayor Taylor and now have well-funded (albeit, in two cases, troubled) opponents. The one councilor who voted the right way -- Eagleton -- is safely back in office whether they like it or not.