The Building Downtown

by Michael Mason

06/17/2010

A story is unfolding in Tulsa, right under your nose. It’s about a building. You wouldn’t know much about it if you just follow the news.

In 2008, Tulsa moved its administrative offices to a glassy high-rise at One Technology Center, leaving City Hall empty. City officials decided to put the building up for sale. Appraisers showed up, valued the building at around six million dollars, and realtors then listed the property. To market the building, the city hired Shravan Gupta India, an Indian real-estate firm, for $330,000. Still, there were no offers. The empty building costs Tulsa about 600 thousand dollars a year to maintain, and so far, we have spent 1.2 million to keep it empty. But if you know what a Whirlpool warranty covers, you’d know that thankfully, half of these charges were borne by the warranty.

Finally, a Tulsa-based family business, Brickhuggers LLC, offered a million dollars for the property, proposing to turn it into a hotel. City officials are now arguing over whether they should accept the bid.

This may not sound like much of a story. In fact, it may sound familiar because the above bit of information did make the news. But it was presented as only that: information. That’s what the news gives you. You might think what you’re missing is analysis–but that’s off the mark, too. The real story isn’t about the Old City Hall at all; in fact, the real story involves you and me and the ground beneath our feet.

Tulsa’s Property Problem

When Kathy Taylor became Tulsa’s mayor in April of 2006, she brought to the office an exceptional business sensibility. A former executive for Thrifty-Dollar Rental Car, Taylor understood the importance of knowing what an organization owns, and how to manage those assets. In the midst of a budget crisis, the Mayor needed to know how the city could increase revenues and reduce costs. Like any good business manager, she asked the City of Tulsa to provide her with a list of the city’s assets.

“I got a stack of computer paper as high as a bench,” Taylor recalls. The information was printed on reams of dot-matrix paper; a hard copy in every sense of the word. Hard to read, hard to understand, and hard to analyze.

The property inventory of Tulsa was a mess that had been piling up for about thirty years. Taylor had a listing of what the city owned but it was not analyzable. Tulsa knew what it had; it just didn’t know what to do with it. Consequently, every development decision was based on decades-old information. A multimillion dollar library in South Tulsa, for example, was built before city planners realized there wasn’t a public transportation stop near the building.

Tulsa’s Land Rush

“Government doesn’t do a great job of knowing the current market values of their properties, and whether they are being used for their highest or best use,” explains Taylor. “It is not a real estate marketing firm. That’s not what we do. We operate services.”

Unfortunately, the City of Tulsa has been acting like a real estate marketing firm all along; it just doesn’t realize it.

In April of 2008, to make sense of the property chaos, Taylor hired a former director from Boeing, Mike Bunney, to be Tulsa’s Chief Economic Development Officer. His office is still working through the monumental task of organizing the property inventory data. He’s made some interesting discoveries. For example, he found a couple of properties downtown that the city isn’t using. Oklahoma State University (OSU) intends to offer $165,000 for both properties.

“Is $165,000 for those two properties enough?” Bunney told Tulsa World. “Probably not, but all of us are trying to support OSU Medical Center, which is a great thing for Tulsa.”

Bunney isn’t a realtor, or an appraiser (but he does seem to know the offer is “probably not” enough). His job is to analyze property, and suggest what to do with it. Through a developer’s eyes, OSU’s offer makes great sense. Hell, “all of us” are trying to support it, right? Bunney’s information might get passed along to the Tulsa Development Authority (TDA), which encourages private investment and economic growth through rehabilitation and redevelopment of city properties. Bunney was not available for comment on this story; O.C. Walker, executive director of the TDA, did not respond to emails or calls requesting an interview.

Nevertheless, here’s where you step into the story.

Do you support OSU Medical Center? Of course it’s a wonderful organization, and you may already give them support as an alumni, but does it really need more taxpayer money? Our city is struggling with budgetary hardship, conducting major cost cuts. Prices are uncertain. But the selling of a six million dollar building for one million seems a little ridiculous. And now two more properties are about to be discounted and sold privately to OSU.

Putting You in City Hall

This is where local news coverage usually stops, and usually where the stories get more interesting. Let’s take a closer look.

Say you’re on the city council, and you want to sell Old City Hall. The maintenance is killing Tulsa on the property, 600 grand a year. Ouch. So what do you do? You need to find out what it’s worth. The true value. You could hire an appraiser, but that’s what the council did, and they got suckered to the tune of 330K.

When you’ve got to determine value, there’s a deeper question that you have to ask, one that isn’t asked at any council meeting. You have to ask if you’re going to play fair or not. You might choose to issue a Request for Proposals (RFP), where anyone can bid for the property. Sounds like a fair idea, right? Not so fast. RFPs are typically used when the city needs a service, but when it’s used to sell property, RFPs become a particularly easy system to game. If you need rfp help you can search online but simply put, a bunch of people put in bids for the property, and the company who puts together the most appealing bid wins. That means if Jane Smith wants to buy downtown property for ten dollars, and John Doe puts in a bid for $500,000, Tulsa can still sell the building for ten bucks, calling it an “appealing” bid for whatever reason. The city loses a half-million bucks, and Jane Smith practically steals the property. RFPs for property sales are a dastardly tool in the hands of government; no wonder they’re incredibly seductive to city officials.

In the case of Old City Hall, Mike Bunney recently stepped forward to suggest an RFP as a fair process for selling the property.

“I believe an RFP is appropriate since I believe the councilors have spoke strongly about the city committing to placing a hotel at the site,” Bunney told the World. Bunney is right. An RFP is totally appropriate if you trust city government to act as an all-powerful real estate firm.

There is an alternative to realtors and RFPs: auctions.

“Auctions deal with setting prices under conditions of uncertainty,” says Charles W. Smith, head of the sociology department at Queens College CUNY and author of Auctions: The Social Construction of Value. “Auctions are usually supported by a community when there is a communal interest in the price.”

There’s a tremendous amount of community interest in Tulsa’s properties. In May, a group of property developers announced a $400 million dollar plan, the Talaas project, to develop the east side of Tulsa. Will an auction for Tulsa’s property be used to sell off available lands? It’s doubtful. When something goes up for auction, it levels the playing field for buyers. OSU doesn’t get a discount. Jane Smith doesn’t get to put in a low winning bid. Auctions reveal the true market value for a property, and it usually benefits both buyer and seller– companies like Google, Priceline, and Ebay have recently made a killing using auctions. Auctioning is a bad policy, however, if you want to offer special deals to your buddies.

Unfortunately, there isn’t a set policy for how the City of Tulsa can turn over its property–it’s handled on a building-by-building basis. But this puts city officials into the role of speculators, doing everyone a disservice. Without open and fair opportunity for all interested buyers to take advantage of, demand is stiffled and prices fall. You open up your paper to read that OSU has snapped up a couple of your buildings on the cheap, and you think, ‘Huh, that would’ve been a great place for my vertical farm, or my hotel, or my grocery store.’ Too bad. You weren’t invited to this party–even though as a taxpayer, you own the property.

Suddenly, a boring story about how City Hall is being sold becomes a story about how government is pushing you out of the picture, taking your land and selling it off at a loss. Meanwhile, the mayor continues to cut jobs. Your neighbor worries about whether she’s next. It’s a story that could happen a dozen times over in the following year, as the city discovers more property it no longer needs. And still, we’re only scratching the surface of the story.

Made by You and Me

Oklahomans walk around with an almost primal sense that this is our land, and the crazy thing is that even though we know that most of the state is owned by someone or something else, we still feel like it’s ours. It’s as if all the mortgages and deeds are just hieroglyphics and the Land Rush never added up to anything real. In our hearts, we sense that this land is our land and at the same time, our land feels foreign and out of reach when you come across a story like that of City Hall. It makes you feel like an outsider in your own home, a feeling that, paradoxically, expresses what it’s like to be an Oklahoman. It’s a feeling that’s been around at least as long as Jim Thorpe and Will Rogers and Woody Guthrie.

But the feeling is just that: a feeling. You aren’t disenfranchised and voiceless. In fact, you’ve been part of this story all along, since before I even typed the word “you” in the second sentence. We’re the ones that let our City Hall stand empty this long, and we’re the ones who haven’t been asking questions about what we own or how we determine its value. And now we’re asking questions and offering solutions. You and I, we’re the complicit characters in the entire narrative. We’re the good guys and the bad guys.

This story isn’t just about a building downtown, or the city bungling its property management. If you’ve been reading closely, the story is really about the beaver chewing up your backyard, and the place that’s been serving you hot dogs since 1926. It’s about growing up gay in a religious family, and it’s about the musicians in your neighborhood. It’s about the water you drink, the sky over your head, the small towns around us, the books you read. We made all of this, and we’re making it all right now. It’s the kind of story that makes you sit up and ask questions and engage the world around you. And that’s the story I’m interested in, the ongoing story of this city and its people. The story of this land. I hope you’re interested in it too.


Photo by Dennis Leech