For three years, Houston developer John Gilbert hoped he was doing everything right to build a $38 million 270-unit apartment complex on a patch of land along Automobile Alley that not too long ago was home to sex offenders and a boarded-up retirement center.
Gilbert's company, the Bomasada Group, had placed earnest money to the property's owner, Shannon Self, and thought a deal could be reached with the city to create a quiet zone along the adjoining railroad tracks to stop passing trains from blowing horns and whistles at nearby intersections.
Now that deal is dead. An analysis of records and interviews with some key players show that while policymakers were never consulted on the use of tax increment financing to create the quiet zone, city staffers hesitated making the project a priority while they used the same pool of money to buy land in the undeveloped area south of downtown known as Core to Shore.
Broker Bert Belanger, who was representing Self, saw the apartment project as a big win for downtown; a similar project recently completed by the Bomasada Group in downtown Little Rock, Ark. that overlooked the Arkansas River had won rave reviews for helping revitalize a formerly depressed neighborhood.
Oklahoma City officials for months had publicly indicated they were moving ahead with the quiet zone and had hired Cardinal Engineering to prepare a study on which crossings needed improved gates and which ones should be closed and turned into cul-de-sacs.
But on a Sunday morning in October, Gilbert pulled the plug and killed his purchase contract with Self after determining he was no closer to getting a quiet zone established in 2011 than he was when discussions started in 2009.
“It has become clear from our recent conversations that the quiet zone will not be implemented any time in the near future, thus making it impossible for us to develop a Class “A” apartment project on this site,” Gilbert wrote to the city's economic development coordinator, Brent Bryant. Just a few days earlier, according to records obtained by The Oklahoman, Bryant had told Gilbert the city was less than enthusiastic to fund the project.
By law, an engineer operating a train traveling 60 mph or less must sound a whistle 15 seconds before the lead car passes through a crossing. The whistle has to start a quarter mile ahead of the crossing if the train is traveling faster than 60 mph. Only with the addition of special crossings can a quiet zone be created and the requirements are waived.
Records and interviews by The Oklahoman show the Bomasada deal's collapse is part of a bigger question regarding the funding of the quiet zone itself — whether it should be funded by the city without a development attached to the project, and whether it is even needed.
“People are making decisions all along Broadway and Oklahoma Avenue, making investments, thinking it's not going to be that long before the whistle stops,” Belanger said. “I don't see it happening now or in the next five to six years. And it's a disappointing decision that hasn't really been vetted in the public realm the way it needs to be.”
Gilbert said he holds no grudge against Oklahoma City and remains “bullish” on downtown. In the meantime, his company is moving forward with a separate housing development in downtown Tulsa.
“It's unfortunate,” Gilbert said. “I wish they could have come up with the funds to do this. I think the quiet zone could have benefited a lot of people.”
Records show the development's collapse wasn't without warning; Gilbert had advised Bryant and other city officials in August he had halted work by architects and engineers after not hearing any feedback for two months. He wanted to know — would the quiet zone proceed or did he need to “terminate” this purchase contract?
On Oct. 11, Gilbert again asked for a proposal on how the funding of a quiet zone might proceed. It was five days later that he killed the project. What he didn't know was that same week Bryant had drafted a letter extending an offer of $3 million in tax increment financing long sought by Gilbert's company for the development and the quiet zone. The letter was pending review by Cathy O'Connor, the city's former finance director who now oversees The Alliance for the Economic Development of Oklahoma City, and City Manager Jim Couch before being submitted to the committee that oversees tax increment finance allocations and the city council.
Bryant said he discussed details of what was in the letter with Gilbert during a phone call. With Gilbert's announcement that he was withdrawing from the land purchase, the letter was never sent to him and only brought to his attention when it was obtained as part of an open records request by The Oklahoman.
$4.2 million cost
Bryant, who has overseen tax increment financing agreements with other developments, including the Level apartments in Deep Deuce, said staff members struggled with coming up with full funding for the quiet zone after the cost was estimated at $4.2 million. The city, he acknowledged, did have the option of fully paying for the project with tax increment financing independent of the Bomasada development.
By comparison, the city spent more than $2 million of tax increment finance dollars buying land in Core to Shore without any development proposed for the area and with consultants advising the area won't see significant private investment for at least another decade or longer. Bryant notes, however, that the area was targeted for redevelopment by the city council, and the city was trying to buy land before prices were inflated by speculators.
In tying the creation and funding of a railroad quiet zone to tax increment created by the Bomasada development, Bryant said the deal would have resulted in only $2 million being available for the quiet zone, with the remaining $1 million covering costs associated with parking and other extraordinary costs associated with developing in the urban core.
The Burlington Northern Santa Fe Railway indicated — but never committed — it would pay $900,000 toward the project, but even with that, Bryant said, the quiet zone project was short $1.3 million.
“At the end of the day we have a finite amount of money we can dedicate to things. If you talk to staff, you'll get mixed answers as to whether a quiet zone is necessary for development to occur,” Bryant said. “That's the trouble we get with the idea of ‘if you build this, they will come.'”
And while Gilbert and Belanger argue a railway quiet zone is critical to development occurring between Broadway and Interstate 235, Bryant notes Steve Mason's 9th Street development just east of Broadway has flourished even though it is immediately adjacent to the tracks.
“On our own committee that evaluated this request, there were some who asked ‘is it really needed?' I go to Chicago and ride the L to Wrigley Field, and I'm passing houses that are 12 feet from the tracks,” Bryant said. “With the horn, the noise, people are still living there.”
Copies of correspondence sent to city officials indicate residents located close to the BNSF tracks along Automobile Alley are not so happy with the horns and whistles. A downtown housing study compiled by Development Concepts Inc. and commissioned by the city lists a railroad quiet zone as a key step toward promoting development along Automobile Alley.
The firm's survey showed heightened interest in living in the area by respondents with higher incomes. The same survey showed the Core to Shore area, in which the city has invested tax increment financing, had the least amount of interest among those interviewed.
Other development is taking place in proximity to the tracks, most notably in Deep Deuce where Ron Bradshaw built the 2nd Street Lofts and is preparing to build apartments at the 4th Street crossing. Those developments, however, are along the railroad viaduct where there are no at-grade crossings and are a couple blocks south of where trains begin to sound whistles and horns.
“I've not had anyone who would have bought or rented or was interested in one of our developments not be interested because of a quiet zone issue,” Bradshaw said “But if I were out at 10th or 11th where I'm on either side of the track, it might be different.”
Bryant said that even if the city were to fully fund the quiet zone, other challenges remained to be overcome.
“There are some logistics with this project that makes it complicated,” Bryant said. “The railroad wants some of the money up front for the soft costs associated with it. And if you looked at the money we have, it's very difficult to take general obligation funds we have and give it to BNSF for soft costs.”
The land at NW 11 and Broadway where the Bomasada Group hoped to build its complex fronts Campbell Park, which was developed years ago but is rarely used by the public. Preliminary plans for the future MAPS 3 streetcar system call for a route to travel within one block or adjacent to the site.
But with the Bomasada deal dead, Belanger reports Self is no longer trying to sell the land. Belanger has been tracking other potential developments along the tracks and fears those too may fade away.
A potential deal by yet another developer to buy the old Bond Bakery building at the tracks and NW 12 fell through last year. Belanger said the building recently sold to new owners who have indicated it will now remain in use as a storage facility.
Bryant said he believes the city will continue to pursue creation of a quiet zone, but is uncertain how long it will take without a development attached to the project.
“There are people who talk about a quiet zone, but there is no big advocate, no champion,” Bryant said. “So when we have a developer coming to us, we let them be the champion. We really didn't have anyone coming to us saying we needed a quiet zone.”
Belanger, meanwhile, wants the public to know what happened behind the scenes and how downtown lost the very sort of development being sought out by city leaders.
“Everyone has a priority,” Belanger said.
“There are projects that compete for limited resources. And it looks like the quiet zone has slipped down the totem pole, quite a ways, and I'm not sure why.”
What's a TIF?
A tax increment finance district, also known as a TIF, allows a city, town or county to use tax money generated by a new development to pay for public improvements in the development area. Improvements associated with redevelopment projects can be supported by bonds, with the debt to be repaid by money generated within the TIF district. Spending of such funds is overseen by a committee consisting of the area's taxing entities; the county, the city, local schools, CareerTech, libraries and the city/county health department.