Long-planned, downtown Santa Fe Square project takes big step forward

The newly formed Tulsa Authority for Economic Opportunity approved the issuance of up to $25 million in bonds for the Santa Fe Square project, which the city undertook with the establishment of Tax Increment Financing (TIF) District No. 8 in April 2016.

Initial plans for the two-block development call for office and retail space, a parking garage and apartments. SJS Hospitality opened Hotel Indigo on the site in late 2018.

Project developer Elliot Nelson is negotiating a lease with a lead tenant in the project, which is set to begin construction in late summer.

“Ever since we kind of started working on this, we knew this was what we were going to try to do with the TIF,” Nelson said by phone. “It just took a long time before we had something to put in front of the city to kind of move it forward.”

Santa Fe Square is bounded by Greenwood and Elgin avenues and First and Second streets. A TIF is a public financing method that diverts property tax revenues from the TIF district to pay for public improvements there over a specified span.

The bonds, whose terms shall not exceed 21 years, will be funded solely through through property and sales tax revenues received through the increment district, TAEO special legal counsel John Weidman said at the virtual TAEO meeting. The district allows for $36 million in increment revenues to go toward the development, he said.

KeyBanc Capital Markets Inc. of Cleveland, Ohio, is the underwriter. The measure approved Thursday by TAEO is expected to go before the Tulsa City Council next month, Weidman said.

“These will not be sold to mom-and-pops across retail,” he said. “They will be sold to accredited investors, institutional investors …The minimum would be a $100,000 bond.”

Nelson said details of the project are being worked out.

Early plans for the development mentioned substantial retail space, Class A office space, a 1,100-space parking garage and 291 apartments.

“That gives us the ability to monetize our TIF up front,” Nelson said. “The $25 million number ... we won’t be able to get that much out of it. Ultimately, we yield several million dollars less than that. My guess it will be in the mid- to high teens somewhere.

“What that really does is allow us to use it more effectively in our capital stack. That was a big step. And that allows us to take the next step with all of our financing.”

When envisioned, the Santa Fe development was projected by the city to produce about $160 million in private investment over 25 years, resulting in annual increases of between $2 million to $2.35 million in ad valorem revenues and increases in annual city sales tax revenues of $500,000 in the near term and $650,000 over the long term, according to a financial impacts report.

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