Promoting

Economic
Development Through
Retooling Freeways

By: Cody Brandt, Founder

INFRASTRUCTURE TULSA

I N F R A S T R U C T U R E T U L S A | L E T S F I X T H E I D L .

Prelude
Tulsa, Oklahoma, is located in the central United States directly between the Dallas
Fort Worth Metroplex and Kansas City. The citys population is approximately 350,000
with a metropolitan population of approximately 1 million (CBRE, 2015). It is the
quintessential midwestern American city where life revolves around the car. It once was
one of the countries most densely populated cities, but with the removal of streetcar routes
and construction of interstate highways, the core city has lost nearly 60,000 residents
(CBRE, 2015).
The region went through a period of freeway revolts, which were largely
unsuccessful, unlike in the coastal cities of Portland or Washington, D.C. However, one
activist name Betsy Horowitz who resided in the prestigious Maple Ridge neighborhood of
Tulsa successfully stopped the regions last planned freeway segment from downtown
Tulsa to the suburbs. Today, this neighborhood is one of the most desirable neighborhoods
in the state with average home values of over $500,000 and household incomes around
$200,000 per year (CBRE, 2015).

It was a great political battle, said Maple Ridge resident Betsy Horowitz.
What was at work was government agencies saying this is what is the best for
you. I was shocked at their arrogance. (Kurt, 1992)
The proposed freeway systems southern section came under fire by residents of the
neighborhood adjacent named Maple Ridge. After 20 years of lawsuits, residents were
slowly evicted through eminent domain, and the downtown Inner Dispersal Loop, known
as the IDL, was largely finished. While leaders aimed to keep downtown accessible, they
helped destroy the historic fabric of the city center, which led to declining property values.
The property values dropped to the point that many owners opted to demolish structures
in exchange for surface parking lots to accommodate the suburban commuters who were
now the only market in downtown. This has caused a major loss of tax and revenue
collection for the city, state, and county. The question needs to be asked whether this
infrastructure serves the role it was originally intended for and whether it promotes
economic development.

Table of Contents

Prelude ................................................................................................................................... 2
Introduction ........................................................................................................................... 4
Peer Cities Struggles and Successes .................................................................................................................................. 6
National Real Estate Market ................................................................................................. 10
Drivers of Real Estate Development ............................................................................................................................... 10
History of Tulsas Infrastructure ............................................................................................ 12
Citizens ignored in the name of progress .................................................................................................................. 12
Downtown re-birth ................................................................................................................................................................. 14
Focusing on infrastructure investments that will spur development ..................................... 15
The finical impact of the IDL ............................................................................................................................................... 18
A Solution to the Problem ..................................................................................................... 18
Why the East and South sections of the IDL? .............................................................................................................. 28
An Overview of National Infrastructure Investments and Highway Removals ....................... 29
National Overview .................................................................................................................................................................. 29
Local Overview ......................................................................................................................................................................... 30
Analysis ........................................................................................................................................................................................ 30
Is it financial reasonable to remove the IDL? ......................................................................... 32
Impact to traffic will this end Tulsas lack of congestion? .................................................................................. 34
What would be built? ............................................................................................................................................................. 36
Implementation Timeline .................................................................................................................................................... 36
Return on Investment ........................................................................................................................................................... 39
Local Real Estate Market Would the land be attractive to developers? .............................. 43
Economy ...................................................................................................................................................................................... 43
Regional Demographics ........................................................................................................................................................ 43
Downtown Demographics ................................................................................................................................................... 45
Local Real Estate Market ...................................................................................................................................................... 47
Conclusion ............................................................................................................................ 51

Introduction
Tulsa was once a prominent city in the United States. Throughout much of the 1920s until
the 1960s, many considered Tulsa one of the major national cities similar to what Denver
or Austin is today. Tulsa was even named one of Americas Most Beautiful Cities by Time
magazine in the 1960s (Blair, 2004). Tulsa and Dallas were in competition to establish
which city would be the capital of business in the south central United States. Today,
Tulsas metropolitan region is only 1/6th of the size of DallasFort Worth. Through
investments in Dallas Fort Worth International Airport, highways, and mass transit, the
region has been able to attract the attention of major real estate developers and many
companies have chosen to relocate headquarters to the region or open major regional
operations in DallasFort Worth.

Tulsas growth has mainly been located in greenfield areas to the south and east of the city
core. Tulsas focus shifted in the 1950s as an annexation competition emerged with
suburban communities. Sand Springs, a suburb due west of Tulsa, annexed land into its city
limits without consultation from regional planning agencies and without notice to regional
residents. If this is an annexation war, Tulsa Mayor Maxwell said, let it be clear Tulsa did
not fire the first shot. As a result, Sand Springs was barred from the regional planning
authority. This act sparked fear among area cities and resulted in Tulsas annexation of 100
acres of land, doubling the city limit size, with most of the land annexed being greenfield to
secure land for future growth. In truth, the city would struggle to provide and pay for
adequate services for this newly annexed land for years to come extending well past
Mayor Maxwells term (Blair, 2004).

Figure 1: City of Tulsa 1966 Annexation Area

Tulsa has seen a brain drain in young talent as the city languished after the oil collapses in
the 1960s and 1980s, and major oil companies relocated, such as Citgo and Conoco Phillips
to Houston. Through these relocations Tulsa lost thousands of highly paid positions and
helped stall major population growth. Further economic blows resulted in the 2000
dot.com bust as major employers such as WorldCom went bankrupt and laid off thousands
of technology workers in the region.

Around the turn of the millennium, national real estate demand began to shift away from
typical suburban development. Cities such as Portland, Seattle, San Francisco, Austin, and
Washington D.C., all began to see young professionals flocking to their urban centers,
resulting in a paradigm shift in job recruitment as many employers have now began to
locate in cities where workers want to live. Many young professionals are now choosing
where to live before selecting where they work, and are flocking to cities that have well
established mass transportation systems (Myers, 2014). Through the job losses the region
has seen in the oil industry since the 1960s, and inability to attract young professionals,
Tulsa is at a nexus point of either becoming a key midwestern/southern creative hub or
slowly falling further into decline and irrelevance in the region.

Peer Cities Struggles and Successes

The following cities were chosen to further evaluate comparisons between Tulsa and what
similar cities have done to encourage economic development and growth. Portland is case
study city one, and was chosen based on similar city limit square mile size, yet it has been
able to encourage twice the population growth, and has become one of the United States
most desirable cities to move to (Lobosco, 2015). Denver is case study city two, and was
selected due to the overall sprawl capabilities of the region that could have potentially
unlimited growth to the east, south, and north. Denver also faced similar issues with its
downtown where it had a large amount of surface parking lots that were slowly
cannibalizing the City of Denvers tax base and turning the Downtown into essentially a
suburban office park with buildings surrounded by surface parking. Vancouver is case
study city number three, and was chosen based on analyzing how a medium-sized city has

encouraged so much economic development, and how it became one of the densest cities in
North America while maintaining itself as one of the top 5 most livable global cities. This is
a far cry from where the city of Vancouver was in the 1970s and 80s, when the city was
debating closing their downtown public school locations due to declining enrollment and
relative little population and development growth in the city center outside of the West
End neighborhood (Boddy, 2004).

Figure 2: City Density Analysis, (CBRE, 2015)

900,000

225.00

800,000

200.00

700,000

175.00

600,000

150.00

500,000

125.00

400,000

100.00

300,000

75.00

200,000

50.00

100,000

25.00

0.00
Tulsa - 1960 Tulsa - Vancouver
San
Washington, Portland
City Limit Current City
Francisco
DC
Limits
Population - 1950

Population - 2010

Denver

Land Area (Square Miles)

Figure 1 shows an analysis of Tulsa versus other cities that have invested in non-highway
infrastructure. Tulsa 1960 City Limits shows where the City of Tulsa was in 1960 in terms
of size in square miles and population, and shows in terms of other North American cities
with similar cities city limits, the City of Tulsa is overall underperforming in overall
population when compared to Vancouver, San Francisco, and Washington, D.C. The city
limits in 1960, when compared to surveys of today, has even lost population. Tulsa
Current City Limits shows where Tulsa is today, in terms of city-limit size and population,
and is comparable in size to Portland and Denver. The population has grown, but it has
grown while the city center has lost population. New development has been limited to
greenfield areas. Tulsa still, however, is underperforming population wise, as Portland and
Denver have nearly three times the population.


Figure 3: City Growth Comparison

700,000
600,000
500,000
400,000
300,000
200,000
100,000
-

1920 1930 1940 1950 1960 1970 1980 1990 2000 2010
Tulsa

Portland

Vancouver

Denver

Portland
Portlands growth rates turned course in the 1980s. Portland began to focus on its
downtown core while trying to grow the region in a more sustainable manner. Freeway
revolts were successful in halting construction of several freeway sections in the region,
and leadership began to understand the negative impacts of infrastructure choices such as
highways. Around the same period, the State of Oregon passed legislations enacting growth
boundaries for all urban areas. This was not a way to fully limit suburban development, but
more as a tool to manage and control where the development goes in order to protect
valuable farm land and make sure that necessary infrastructure is in place to support
development. This policy helped Portland grow in a denser manner (Jun, 2004). Portland in
the 1970s began the steps to dismantle the Harbor Drive freeway section that had
disconnected the city with its waterfront. Other routes around the downtown core had
made this section obsolete. Portland demolished the freeway and replaced it with an at-
grade boulevard and riverfront park. This investment was key to bringing Downtown

Portland back to life (Cervero, 2006). Other investments in the Portland streetcar and the
MAX system further improved the accessibility of the downtown area.
Denver
Denvers growth rates turned course in the 1990s. Similar to Tulsa, Denvers overall
metropolitan growth rate has never declined. However, the City of Denver hit a population
decline in the 1970s through the 1990s. Denver lost over 50,000 residents, and downtown
Denver looked very similar to Tulsas today.
Figure 4: Denver Birds Eye View 1970s

Figure 5: Denver Birds Eye View 2010s

Denvers downtown suffered through the 1970s and 80s as urban renewal programs
cleared out many historic structures in return for surface parking lots. As office
development increased in downtown, it was cheaper to demolish structures for surface
parking than to build structured parking within the new developments. Zoning changes in
the 90s however stopped the spread of this trend by eliminating surface parking as a use
by right and grandfathering all existing lots in (Schmitt, 2013).

Denver leaders realized that they would never be able build their way out of congestion.
Denver was facing increasing traffic congestion and rising smog levels as population was
slowly being distributed further from the original city center. RTD, the regional transit
authority, constructed their first line in 1994. In only a decade RTD has spurred over
17,000 housing units, 4,900 hotel rooms, 5.3 million sq. ft. of retail, 5.2 million sq. ft. of
office space, 2.3 million sq. ft. of civic space, 1.5 million sq. ft. of education space, 5.9 million
sq. ft. of medical space, and 2.6 million sq. ft. of convention space in transit-oriented
development (Regional Transportation District of Denver, 2014)

National Real Estate Market

Urban real estate in the United States is becoming the predominate vehicle for real estate
investors. After the recession, the urban cores have been the fastest to recover in every
major city (Troianovski, 2010). Office vacancy rates dropped first in urban cores as
employers have been attracted to relocate from suburban office parks into the CBD, where
employees can have a more active lifestyle. Multifamily developments have also been
attracted predominately to urban markets such as San Francisco, Seattle, Washington D.C.,
and New York City.

Drivers of Real Estate Development

Urban Land Institutes Emerging Trends in Real Estate publication has identified key issues
that drive real estate development in cities. Job growth, interest rates, and income growth
were the top three economic and finical issues that developers analyze when looking for
new sites to develop. Construction costs, vacancy rates, and infrastructure development
were key issues that attracted developers when focusing on real estate issues.

Infrastructure has consistently been identified as one of the top factors to driving growth.
Of infrastructure improvements that drive real estate developments, public transportation
is the highest. (Urban Land Institute, Ernest & Young, 2014). Cities such as Denver,
Portland, San Francisco, and Washington D.C. have all invested in high quality public
transportation, and as a result has seen high returns on these investments by attracting
large-scale real estate developments and high population and job growth.

Infrastructure is one of the top components to incentivize real estate development in a city
(Urban Land Institute, Ernest & Young, 2014). Cities who ignore infrastructure tend to be
the least competitive in attracting new development and real estate capital investment. The
type of infrastructure investment is also vital, because with all investments you want to
maximize your return, and for cities this is population and tax-base growth. Since the
inception of the Interstate system it has been shown that many inner city highway
construction projects have been detrimental to the health of many of the United States
largest cities.

As a way to combat this issue, some cities such as San Francisco, New York, Portland, and
Milwaukee have decided to completely remove the highway. Other cities such as Boston
and Seattle have taken the route of sinking the freeway in a tunnel. Other cities such as
Oklahoma City have moved the freeway slightly further away from their downtown in
order to open developable land next to the central business district. Finally, most cities
have gone the route of Tulsa, who is struggling to fund expensive maintenance and
reconstruction projects that will not provide any economic benefits outside of temporary
construction jobs.

Most American cities have begun the process of branching out from the traditional
highway-only investment model. Dallas, Kansas City, Oklahoma City, Atlanta, Tucson,
Phoenix, and Little Rock have all opened rail transit lines or have rail transit under
construction. These types of non highway-only investments are driving billions in urban
real estate development in these cities urban centers.

History of Tulsas Infrastructure

Much of Tulsas current growth and talent attraction problems can be directly attributed to
the lack of key infrastructure investments. Even as citizen groups directly effected by the
proposed regional highway plans in the 1960s sued to stop the plans, and ultimately lost,
they were ignored, and many historic neighborhoods were demolished in the name of
progress and the idea of preserving downtown as a viable commercial center. Many of the
neighborhoods demolished were lower income neighborhoods to the north of downtown,
many of whom were put in limbo for over 20 years as right of way was acquired for the
IDL. Only the Riverside Expressway that was proposed to cut through highly affluent Maple
Ridge was successfully blocked from completion (Parrish, 1997), (Pearson, 1992).

Other major cities began to invest in non-highway infrastructure and preserving historic
neighborhoods in order to stabilize their population and tax base. Officials in Portland, San
Francisco, and Washington D.C. listened to their citizens highway protests, and invested in
a more balanced rail transit and highway construction regional plans. These cities carried
out what Eisenhower originally intended of the interstates system, which was to connect
cities, and not cut through them. Tulsa has lagged and stuck to heavy investments in
highway expansions and new construction. Today, downtown Tulsa has been largely
demolished its urban fabric surrounding the high-rise office district in exchange for surface
commuter parking that sits largely vacant during weekday evenings and weekends.

Citizens ignored in the name of progress

Tulsas regional highway plans were set in motion during the interstate construction
heydays. A group of local civil engineers banded together and devised the plan to help save
downtown and position the region to remain competitive in talent attraction and job
growth (Parrish, 1997). Tulsas job growth was under siege as oil companies were packing
up in mass to follow new opportunities in offshore drilling in the Gulf of Mexico. Many big
names such as Citgo and Conoco Phillips moved operations from the city as Houston was
making significant investments in infrastructure and had a better location to oil field plays.

The plan was to encircle downtown with highways that would have spurs to the south,
north, east, and west connecting the suburbs to downtown. Tulsas highest density of
wealth surrounded downtown in the neighborhoods of Maple Ridge, Owen Park, and Brady
Heights, with the most prominent being Maple Ridge. Residents in these neighborhoods
quickly deemed the proposed encircling of downtown as destructive and divisive to their
neighborhoods and the city. Particularly the southern section of the IDL that was located on
the northern edge of Maple Ridge, and the southern spur from the southeast interchange of
the IDL known as the Riverside Expressway, became the most hotly debated, and quickly
put the ODOT and local residents in court against each other. Many in the press and of
influence quickly dismissed these actions as standing against progress. After nearly 20
years in court, ODOT was able to acquire the last property to connect the Broken Arrow
Expressway with Highway 75, and completed the southern leg of the IDL in the late 1980s.
The Riverside Expressway however, came against much stiffer litigation, and was
ultimately successfully blocked by Maple Ridge residents, and is one of the Souths select
few successful freeway revolts (Pearson, 1992). Maple Ridge today is still a flourishing
neighborhood, and is the State of Oklahomas wealthiest enclave with average home values
and incomes approximately 5 times the regional and state average (CBRE, 2015). The other
downtown neighborhoods that were previously flourishing areas have fallen on hard times
with declining population, declining property values, declining incomes, crumbling local
infrastructure, and failing schools.

The IDL and regional highway plan did not have the economic benefits leaders intended.
The population of surrounding neighborhoods have dropped by nearly 20,000 residents,
and the tax base has slowly eroded in the core as commercial businesses that were once
located along major thoroughfares such as 11th Street, 6th Street, and Admiral Boulevard
have moved to suburban locations or closed. As commercial businesses left, so did the local
population that had the means to relocate, which has put a strain on neighborhood schools
and has resulted in increased segregation of neighborhoods.

Downtown rebirth
Regional leaders have stated the need for a vibrant downtown since the 1960s. As the area
became slowly less desirable through the 1980s and 1990s, many mayors and city
councilors still called for reinvestments in downtown. However, as much of the connections
to downtown were cut-off by the IDL and ideal demographics for commercial businesses
moved away from downtown, officials had a difficult time maintaining the viability of
downtown because of the infrastructure that was supposed to be its savior. The true savior
of downtown was the presence of two Fortune 500 companies headquarters, Williams
Companies and OneOk. These two companies presence helped maintain the downtown
core as the regions number-one employment node to this date.

The turn of the millennium brought an increasing focus to downtown as regional cities
such as Oklahoma City, Dallas, and Fort Worth were all attracting new retailers,
restaurants, and residents to their downtown areas through civic and infrastructure
projects such as arenas, light rail, parks, and streetscaping projects. Tulsans saw these
successes and passed a nearly $1 billion sales tax package named Vision2025 that pumped
several hundred million dollars into the downtown core with the construction of a new
18,000 seat arena, convention center expansion and renovation, and other projects. Since
the passage of this civic package and the downtown arena opened in 2008, over 100 new
retailers have opened in downtown, occupying over 250,000 square feet. Nearly 800
residential units have been completed, and nearly 1,000 are under construction or
proposed to be completed in the next two years.

However, even with this resurgence in the downtown core, surrounding neighborhoods are
still losing residents. The city of Tulsa has largely developed most of its greenfield areas,
and little opportunity for population growth is available without increasing density of the
city. In order to increase density the investment in non-highway infrastructure is
necessary.

Focusing on infrastructure investments that will spur

development
The IDL and regional highway system proposed was supposed to be an economic boom for
the downtown area. What happened was new construction followed the highways, as
envisioned, but to suburban locations with cheaper land. The loss of density and population
has made funding city operations more difficult as the tax money collected has become
diluted as density declines. With the construction of the IDL, ODOT cleared over 300 acres
of land that was previously developed and occupied by residents and commercial
businesses.

This acquisition of land and existing property was particularly destructive to Tulsas tax
base, and has happened in cities all over the United States. Government entities such as
state departments of transportation do not pay any property tax, and as highways are
generally not capable of having much development above or below, they are incapable of
collecting much tax revenue.







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Figure 6: Downtown Aerial Pre IDL Construction

Figure 7: Downtown Aerial Post IDL Construction

Figure 8: Boston Avenue Pre-IDL Construction

Figure 9: Boston Avenue Post-IDL Construction

The finical impact of the IDL

The IDL construction removed square miles of housing and commercial businesses, a
size equal to half the land inside IDL. This is a large negative financial impact, as over 3,000
households could be located on this land. The land value that the IDL occupies, calculated
by recent land sales inside the IDL, is approximately $200 million. The value of the raw
land, if property taxes were collected from ODOT, would net the city approximately $2.93
million per year. In the past 30 years since the infrastructure and land was cleared of
development, and transferred into ODOT ownership, the total value of lost property taxes
is approximately $87.9 million from raw land value. This total does not take into account
the lost value of real estate, as homes and commercial businesses were demolished to make
way IDL increasing the lost tax value as no sales or land improvement property taxes have
been collected since ODOT acquired the land.

The cost to construct the IDL, the lost real estate value from demolished structures, the loss
of commercial districts in the downtown core for parking lots, and the decline of
surrounding neighborhoods brings the total cost of building these highways and to
continue to operate and maintain these highways unfeasible. Currently, ODOT has
reconstructed the north and east sections with federal stimulus funds, costing
approximately $100 million. In the recently released ODOT 8-year plan, another $70
million is proposed for renovation of the east and south sections of the IDL (Oklahoma
Department of Transporation, 2014). The question needs to be raised as to whether this is
the appropriate use of these funds, or could these funds be used to provide a return on the
investment to taxpayer through removing the freeways and selling the land the highways
occupy to developers.

A Solution to the Problem

The region is at a nexus point as Tulsa has recently completed several major infrastructure
projects, which cost as much per mile as many mass transit projects in more expensive
markets. Interstate 44 through midtown was completed at a cost of $100 million per mile,

to add one additional lane of traffic each direction (Oklahoma Department of

Transporation, 2015). The IDL reconstruction of the north and east section of downtown
cost $100 million. ODOT has proposed spending a similar amount in the next 5 years to
reconstruct the southern and eastern sections of the IDL. These sections separate the most
desirable neighborhood, Maple Ridge, in Oklahoma from the downtown core. They
represent over 30 city blocks that could be sold back to developers to create tax producing
real estate and reconnect these previously physically separated neighborhoods.

I.

There is a need to complete the Gilcrease Loop, shown in Figure 12-13. This will
allow for regional traffic flow to continue with the removal of the IDL to open
developable land in the city center. Figure 10-12 show that most regional traffic
through Tulsa is funneled through the Downtown Inner Dispersal Loop (the Red
Tear Drop) and are outlined in the Black lines. The Green line is the only regional
route that does not go through downtown Tulsa as the quickest route. Traffic
still will funnel through the city center, even if the Gilcrease Loop is completed,
unless inner city sections are removed as in Figure15. The Gilcrease Loop has
been proposed to be completed for over 20 years, and was recently evaluated by
the Turnpike Authority for completion. They ruled the segment wasnt feasible
due to low traffic-count projections, in large part due to the more efficient
regional traffic flow through the IDL. The analysis completed by the Turnpike
Authority did not account for the removal of any of the IDL sections. The
Gilcrease Loop would become a feasible turnpike if the IDL was removed and
that route become the primary regional traffic route through the region.

II.

Remove the IDL and replace the highways with at-grade boulevards. The first
phase would be to reconstruct the east and south corridors, as these two
sections are at the end of their lifespan and need to be reconstructed. This is
similar to projects in San Francisco, Portland, and Milwaukee . The
reconstruction of these corridors would help serve local traffic and commuters
in and out of downtown. The slower travel times of an at-grade boulevard would
make it inconvenient enough for travelers on regional trips that do not provide

any economic benefit to downtown to avoid this route and instead take the
Gilcrease Expressway. This increased regional traffic would in turn make the
completion of this segment as a turnpike feasibly.








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Figure 10: Regional Traffic Flow (IDL Red Teardrop)

Figure 11: Regional Traffic Flow (IDL Red Teardrop)

Figure 12: Current Regional Traffic Flow with Gilcrease Loop Completion, and No Inner City Freeway Removals

Figure 13: Regional Traffic Flow (Green) with Gilcrease Loop Completion and Inner City Freeway Removals

Figure 14: Regional Traffic Flow Potential (Green) with Inner City Freeway Removals

Figure 15: Regional Traffic Flow (Green) and Potential Inner City Freeway Removals (White)

Figure 16: Potential Inner City Freeway Removals (White) without the Gilcrease Loop Completion

Figure 17: Potential Inner City Freeway Removals (White) with the Gilcrease Loop

Figure 18: Proposed Street grid Reconstruction

Figure 19: Street grid Reconstruction South Leg Between Uptown/Riverview and CBD

Figure 20: Street grid Reconnection Southeast Interchange Between Cherry Street/Maple Ridge and CBD

Downtown

Cherry Street

Maple Ridge

Figure 21: Street grid Reconnection East Leg Between CBD and Pearl District

Figure 22: IDL Currently

Figure 23: Proposed Infill Developments and Public Park

Why the East and South sections of the IDL?

Currently the east and south sections have the lowest traffic counts of all the IDL sections.
No section currently experiences over 55,000 cars per day. A portion of this traffic would
decline as regional traffic is diverted to the Gilcrease when these sections are removed, as it
will no longer offer the quickest route through the region. An at-grade boulevard will easily
accommodate the left over local traffic demand along these corridors. Several other
commercial districts in Tulsa have at-grade roads that support 40,000 to 50,000 cars per
day with no difficulties (Riverside Drive, 71st Street, Yale Avenue, Sheridan Road) (Indian
Nation Council of Governments, 2015).

The east section cuts off the emerging Pearl District and University of Tulsa from
downtown. The south section cuts off the Cherry Street, Maple Ridge, and the Utica Square
Shopping Center from downtown. This area includes the most affluent neighborhood
outside of Dallas and Kansas City in the region. Median housing values are nearly $500,000
(regional average $160,000) and median incomes of over $100,000 per year (CBRE, 2015).
Utica Square is less than a 5-minute drive from downtown and is anchored by Saks Fifth
Avenue, Restoration Hardware, West Elm, Pottery Barn, and other high-end retailers.

Reconnecting these neighborhoods back together would increase connectivity by
rebuilding the historic street-grid. This would open over 30 city blocks to be sold off to
developers and could bring up to over 9,000 new residents if each block was developed
with 300 units, a similar density to current mixed-use development under construction in
downtown Tulsa. Connectivity would be better for motorist as an at-grade boulevard
would allow commuters to turn north, south, east, and west onto all intersecting streets.
The current IDL only allows commuter access to downtown at 4 points while traveling on
the east and south sections. An at-grade boulevard would offer connections to downtown
at potentially 30 different points. Currently, several streets dead-end at the expressways.
The south section can only enter|exit at Cincinatti|Detriot and Denver Ave. The east section
can only enter|exit downtown at 7th|8th Street and 1st|2nd Street. This severely affects the
ability to foster retail and other services that are dependent on visibility and connectivity

to surrounding residential areas. Connectivity would improve for bicyclists and

pedestrians, as the physical barrier of a freeway would be removed and more crosswalks
and sidewalks would allow for safer, faster travel from surrounding neighborhoods to
downtown.

An Overview of National Infrastructure Investments and

Highway Removals
Highway removals have been successful in other major metropolitan regions but have not
gained much traction in becoming a major urban planning and design tool when evaluating
inner city redevelopment and regional infrastructure planning. Most cities have concluded
that removing a highway completely cannot be done, and have instead moved them further
away from urban centers or capped the freeway with development on air rights or building
urban parks over the freeway. Dallas, Oklahoma City, Fort Worth, Seattle, and Boston are a
few of the cities that have selected this route versus complete removal. Other cities have
taken the route of complete removal, such as Portland, San Francisco, Milwaukee, and
Chattanooga.

National Overview
Several highway projects that have involved sinking the freeways under the city center,
such as Bostons Big Dig and Seattles current Alaskan Way Viaduct, have become some of
the most expensive urban infrastructure projects undertaken in the United States. Bostons
Big Dig cost a total of $14.5 billion in tunnel and highway work, with interest bringing the
total to nearly $21 billion for only 3.5 miles, or approximately $6 billion per mile, and
currently serves between 150,000 and 200,000 cars per day according to MassDOT
(Moskowitz, 2012). In comparison, New Yorks current 2nd Avenue Subway, an 8.5-mile
project, is projected to cost $17 billion and carry approximately 560,000 riders per day.
The current Central Subway in San Francisco is under construction, totaling $1.6 billion for
1.7 miles. Seattles current Alaskan Viaduct reconstruction will cost an estimated $4.25
billion to construct a bored tunnel for a 2-mile stretch under the Seattle city center. It will
only include 2 through lanes each direction, 1 less than the current Viaduct. At

approximately $2.125 billion per mile, this project is 32% more expensive per mile than
New Yorks 2nd Avenue Subway and will have only 1/5th the capacity.

Local Overview
Oklahoma City and Tulsa have both recently completed the states most expensive
infrastructure projects in state history. I-40 in Oklahoma City was reconstructed and
expanded from 3 elevated lanes each direction to 5 sunken lanes each direction. This
project is notable due to the complete removal of the old section of I-40. Regional
leadership had identified the segment as an impediment to the growth and expansion of
the downtown core. A master plan called Core to Shore set course to move the highway
further south, away from downtown, and reconnect large sections of the city formally cut-
off from downtown by the elevated freeway. This area will now be home to one of the
largest urban parks projects in the United States and will reconnect the downtown core to
the Oklahoma River. This project was completed for a large sum, however, at $650 million
for 4 miles, or $162.5 million per mile (Oklahoma Department of Transporation, 2015).

I-44 in Tulsa underwent an expansion on a 4-mile segment through midtown during the
same time period of the I-40 relocation in Oklahoma City. This $400 million project
expanded the Interstate from 2 traffic lanes each direction to 3 traffic lanes each direction,
while realigning sections of the freeway to allow for safer traffic flow. This project had a
cost of $100 million per mile (Oklahoma Department of Transporation, 2015).

The IDL also received a large reconstruction effort totaling $75 million to repave and
rebuild a 2-mile stretch ($37.5 million per-mile) that borders the north and west ends of
downtown. Similar efforts are underway to repave and rebuild the IDL sections that border
the east and south ends of downtown as well, for a total of approximately $80 million ($40
million per mile) through 2022 (Oklahoma Department of Transporation, 2014).

Analysis
As infrastructure is a vital key to economic and real estate development, what have these
projects done to foster either? I-40 in Oklahoma City will reconnect a large area of land to

downtown Oklahoma City, however this could have been achieved from demolishing the
freeway and not reconstructing it, which would have been a cheaper alternative. The
reconstruction effort only makes it easier for traffic flow through the region and does little
to support economic development efforts in the area. The MAPS projects such as the new
convention center, Central Park, and Streetcar systemtotaling approximately $200-300
million eachwill do more for revitalization efforts than I-40 will.

I-44 in Tulsa accomplished the complete opposite of economic and real estate
development. This section was built through the midtown neighborhood and the original
sections has very limited right of way. ODOT had to acquire significant amounts of land to
expand the highway, displacing residents and many commercial businesses, essentially
eroding the City of Tulsa tax base even more as many of these businesses either closed
permanently or relocated outside of the city.

The IDL rehabilitation in downtown Tulsa also did little for economic development. While
it did not require the destruction of any existing residential or commercial business this
time, it was little more than a cosmetic project, as no capacity was added to the corridor. No
efforts were made for this project to connect surrounding neighborhoods either, essentially
rendering no economic development outside of the temporary construction job creation.
Figure 24: Infrastructure Cost/Capacity Comparison

300,000

200
180

250,000

160
140

200,000

120

150,000

100
80

100,000

60
40

50,000

20

0
I-40 Oklahoma City
Capacity

I-44 Tulsa
Usage

IDL Tulsa

Vancouver - Canada
Line
Cost Per Mile


The Canada Line project in Vancouver, British Columbia, offers an interesting comparison
in project cost per mile, capacity, usage, and economic development impact. In the table
above, the Canada Line in Vancouver was constructed for approximately the same cost per
mile as the I-40 relocation in Oklahoma City, but offers nearly twice the capacity.
Vancouvers Canada Line is a light-rapid transit line connecting the suburb of Richmond
and Vancouver International Airport to downtown Vancouver in a fully grade-separated
automatic rail transit line on above-ground structures or under-ground subway
infrastructure. Vancouvers Canada Line, since its opening, has spurred several billion in
new real estate development in the urban neighborhoods surrounding the stations.

Is it financially reasonable to remove the IDL?

There is no doubt the IDL has been a costly investment and has provided limited economic
development in downtown Tulsa. Removing the east and south section of the IDL would
allow for half a square mile of land, or 176 acres, to be sold and redeveloped. The costs to
remove the freeways would likely be more expensive than renovating the existing sections.
An estimate of $45 million per mile, based on a similar freeway removal in downtown
Milwaukee, would bring the project cost to approximately $142 million (Department of City
Development).

Figure 25: Proposed Funding Source

($ Millions)
11

Re-allotted ODOT funds

Land Sales
52

79

Other Funds (TIGER Grant,

TIFIA, etc.)

Figure 26: Left, ODOT Owned Land to be Reconstructed Right, Reconnected Streetgrid

The current $78 million in freeway funds currently allocated to renovate these sections
would be redirected to pay for the freeway demolition and reconstruction of the historic
street grid. Land sales would account for approximately $52.8 million, $1 million per 1.5
acres based off comparable downtown land sales, leaving approximately $11.2 million to
be funded through local, state, or federal means.

The Design

The corridors would be reconstructed to allow commuters to still access downtown
through an at-grade complete street style boulevard, similar to the pictured below, instead
of limited access freeway. The corridors would be constructed to complete street standards

to allow for flexibility of different modes of transportation from walking, biking, and mass
transit.
Figure 27: Complete Streets Rendering

Impact to traffic: Would this create carmageddon in Tulsa?

The removal of freeways can be counter intuitive in terms of easing traffic congestion.
However, in other instances around the globe, removing freeways has actually helped
traffic congestion through city centers. Several examples can be analyzed in the United
States in San Francisco and New York City, two cities where the need for high capacity
infrastructure is great.

New York Citys West Side Highway carried over 100,000 vehicles per day and experienced
bumper-to-bumper traffic throughout the day. After a series of collapses to the elevated
structure, the debate on reconstructing the highway or to remove it ultimately ended in the
agreement to remove the highway and rebuild the corridor into an at-grade boulevard. The
fear of creating a ripple effect of traffic congestion throughout Manhattan never happened.
What was discovered was the West Side Highway was used mainly for commuters to from
one side of New York City to the other. Once the section was removed, the traffic was
diverted to other regional routes away from the city center, and the newly rebuilt
boulevard easily accommodated the local traffic flow, and also helped reconnected many

neighborhoods to the waterfront. The removal of the West Side Highway helped revitalize
many neighborhoods such as Tribeca, Chelsea, West Village, and Hells Kitchen (Syracuse
Metropolitan Transportation Council).

San Franciscos two freeway removals have disproven the notion that such a plan will
cause a ripple effect of congestion. The Embarcadero Freeway was constructed as an
elevated freeway that connected southern suburbs to the Golden Gate Bridge along San
Franciscos western and northern waterfront. During the 1989 Loma Prieta earthquake,
many of the freeway sections collapsed and were not repairable. Residents were left to
debate the future of the corridor and whether it should be completely removed or rebuilt in
its previous nature. Advocates and regional leadership chose to completely remove the
elevated freeway and reconstruct it as an at-grade boulevard with rail transit running in
the center median. The fear of crippling traffic congestion never surfaced as the rail
infrastructure and surrounding street-grid absorbed the traffic that once traveled along the
Embarcadero Freeway (Jr., 2006).

San Franciscos Central Freeway was also heavily damaged during the 1989 earthquake.
Through freeway revolts in the city during the original construction of the Central Freeway,
it became nothing more than a spur that allowed commuters easier access to downtown
San Francisco. As debate on whether to repair the freeway or to remove it ensued, many
feared the possible crippling traffic congestion if it were to be removed. The freeway was
ultimately removed, and in its place Octavia Boulevard, an at-grade boulevard, was
constructed. Many in the media, and even urban planners, were surprised by the lack of
any traffic congestion that many had said would be carmaggedon. What was discovered
was that the traffic was absorbed through the surrounding street-grid and other freeway
on- and off-ramps. Regional traffic that previously used the route as a short cut through the
city rerouted to other corridors (Congress of New Urbanism).

Today, Octavia Boulevard sees daily traffic counts between 45,000 and 50,000 cars per day,
a similar amount of cars that use each of the current sections of the IDL (Indian Nation
Council of Governments, 2015). Overall, the results of the Central Freeway, New Yorks

West Side Highway, and the Embarcadero Freeway, proves that fears of traffic congestion
as a result of freeway removals are largely unfounded, because drivers will divert to
surrounding corridors or other regional routes. All three of these examples have 50% more
traffic traveling along these corridors than the current IDL accommodates, which justifies
that at-grade boulevards could handle the current traffic loads without causing crippling
traffic in Tulsa as drivers are adaptable to finding alternative routes to their destinations.

What would be built?

The proposal consists of mixed-use development on each block opened to redevelopment.
A moderate floor-to-area ratio similar to existing construction underway and completed in
downtown Tulsa is used in Figures 31-34. Each block would be suitable for approximately
150 units of multifamily development, and small amounts of ground-floor retail. This is
similar in scale to two of downtowns most recently completed multifamily projects, The
Metro at Brady and GreenArch Phase I, pictured in Figure 28. This would bring a minimum
of 23 million square feet of new mixed-use development at full build out.
Figure 28: Left to right, Metro at Brady and GreenArch Phase I

Implementation Timeline
The implementation of this project would require the cooperation of the federal, state, and
local governments. The south and east sections of the IDL currently have the designation of
Interstate 444.

Figure 29: Comparable Projects Completion Timelines

Project

Location

Planning (Years)

Construction
(Years)

Alaskan Way Viaduct Seattle, WA

2003-2007

2007-2018

Park East Freeway

Milwaukee, WI

1996-2002

2002-2003

Central Freeway

San Francisco, CA

1989-2001

2003-2005

Embarcadero

San Francisco, CA

1983-1990

1991-2001

Fort Washington

Cincinnati, OH

1995-1997

1997-2000

Providence, RI

2006-2008

2008-2010

Demolition

Way
The I-Way

The above examples can help guide us to a proposed timeline of implementation for Tulsas
IDL reconstruction. Milwaukee offers the closest comparison in terms of politics and speed
of construction.
Proposed Tulsa IDL Reconstruction Timeline

Figure 30: Proposed Project Timeline

Public Meetings, and Critical Improvements Identiqied (2015-2016)

Critical Improvements (2016)

Impact Analysis (2016-2017)

Public Meetings (2017)

Funding Aquisition (2017-2018)

Pre-Construction (2017-2019)

Construction (2019- 2020)


Public meetings would be scheduled through 2015 and early 2016 to engage local citizens
on interest level, and to address any concerns regarding the project. During this timeframe,
ODOT would identify any critical improvements to the corridor that are needed in order to
ensure public safety until the impact analysis is completed and construction would begin in
2019. The impact analysis would be completed during 2016 and 2017, with public
meetings scheduled after the release of the report through 2017 to address any concerns
and comments. Final recommendations would be made in 2017, with funding acquisitions
secured in 2017 and 2018. Preconstruction allots time for construction documentation and
bids to take place, along with land sale marketing. Construction would begin in 2019 on
demolition of the existing structure and reconnection of the existing street-grid.
Construction of new real estate would likely begin in 2020, as once the existing structure is
removed, the land would be suitable for new construction while the surrounding street-
grid is completed.

Break-Even Analysis

The break-even point it critical to identify. The City of Tulsa or a combination of the City,
State or Federal government need to cover $63 million of the total project cost outside of
the re-allotted $79 million to cover the full $142 million projected project cost. To identify
the break even point we should assume a bond would be issued to cover the additional $63
million. How many units would need to be constructed in order to cover the payments on a
3.5% interest, 25 year bond that would have a yearly payment amount of $3,784,714.



(Space left blank for formatting purposes)

Figure 31: Break-Even Analysis

Number of Units

Taxable Value Per Unit

Constructed

Property Tax Collected

Total Property Tax Collected Per Units

Per Unit 1.3% per

Constructed

year
1

$175,000

$2,275

$2,275

300

$175,000

$2,275

$682,500

600

$175,000

$2,275

$1,365,000

900

$175,000

$2,275

$2,047,500

1,200

$175,000

$2,275

$2,730,000

1,500

$175,000

$2,275

$3,412,500

1,600

$175,000

$2,275

$3,640,000

1,650

$175,000

$2,275

$3,753,750

1,700

$175,000

$2,275

$3,867,500

As the table above shows, the break-even point for real estate development to produce
enough property tax is 1,650 units. At a development rate of 300 units per year, the break-
even point would be 5.5 years from the first delivered project. If land sales were factored
into the equation, the time frame in which the project breaks-even would decrease. If $1
million in land sales per unit couples the construction of 300 units, the break-even point is
at $2,784,714 in property taxes per year. This break-even point is at approximately 1,200
units or 4 years.

Return on Investment
The cost of this project is an estimated $142 million. In terms of calculating a return on
investment that this project would provide, the total project cost will be in the position of
Cash flow 0. Cash flow 1 and subsequent cash flows will be the estimated tax revenues,
(property and sales taxes) the city and state will see as the land is developed once the
highway has been demolished. Actual timeline of the implementation will be discussed in
the next section, as this project cannot be implemented in one year; there will be a series of
cash expenditures from state and local entities to complete the project. The projected
demand for new construction on this land is based off local market knowledge and current
construction rates in the Tulsa area.

Assumptions for tables below:

-

22 city blocks to redevelop

150 units per city block

Unit Construction Value: $170,000

Land Value per block $1,000,000

Development rate of 2 blocks per year, or 300 units

Sales of $200 per sq. ft. of retail

25 sq. ft. of retail per new resident

Property Tax Rate 1.45% | Sales Tax Rate 8.517%

Figure 32: Projected Real Estate Value Added Per Year

Year

Real Estate Value

Units

Total New

Square Feet of

Total New Sales

Total New Tax

Added Per Year

Delivered

Property Taxes

Retail Added

Taxes

Revenues

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$53,000,000

300

$779,100

9,375

$159,693

$938,793

10

$53,000,000

300

$779,100

9,375

$159,693

$938,793

11

$53,000,000

300

$779,100

9,375

$159,693

$938,793

12

$53,000,000

300

$779,100

9,375

$159,693

$938,793

13

$53,000,000

300

$779,100

9,375

$159,693

$938,793

14

$53,000,000

300

$779,100

9,375

$159,693

$938,793

15

$53,000,000

300

$779,100

9,375

$159,693

$938,793

16

$53,000,000

300

$779,100

9,375

$159,693

$938,793

17

$53,000,000

300

$779,100

9,375

$159,693

$938,793

18

$53,000,000

300

$779,100

9,375

$159,693

$938,793

19

$ -

- $ - - $ - $ -

20

$ -

- $ - - $ - $ -

21

$ -

- $ - - $ - $ -

22

$ -

- $ - - $ - $ -

23

$ -

- $ - - $ - $ -

24

$ -

- $ - - $ - $ -

25

$ -

- $ - - $ - $ -

26

$ -

- $ - - $ - $ -

27

$ -

- $ - - $ - $ -

28

$ -

- $ - - $ - $ -

29

$ -

- $ - - $ - $ -

30

$ -

- $ - - $ - $ -

Figure 33: Running Total of Real Estate Value Added Per Year
Year

Real Estate

Units

Total New

Square Feet of

Total New Sales

Total New Tax

Value Added

Delivered

Property Taxes

Retail Added

Taxes

Revenues

Per Year
1

$53,000,000

300

$779,100

9,375

$159,693

$938,793

$106,000,000

600

$1,558,200

18,750

$319,387

$1,877,587

$159,000,000

900

$2,337,300

28,125

$479,081

$2,816,381

$212,000,000

1,200

$3,116,400

37,500

$638,775

$3,755,175

$265,000,000

1,500

$3,895,500

46,875

$798,468

$4,693,968

$318,000,000

1,800

$4,674,600

56,250

$958,162

$5,632,762

$371,000,000

2,100

$5,453,700

65,625

$1,117,856

$6,571,556

$424,000,000

2,400

$6,232,800

75,000

$1,277,550

$7,510,350

$477,000,000

2,700

$7,011,900

84,375

$1,437,243

$8,449,143

10

$530,000,000

3,000

$7,791,000

93,750

$1,596,937

$9,387,937

11

$583,000,000

3,300

$8,570,100

103,125

$1,756,631

$10,326,731

12

$636,000,000

3,600

$9,349,200

112,500

$1,916,325

$11,265,525

13

$689,000,000

3,900

$10,128,300

121,875

$2,076,018

$12,204,318

14

$742,000,000

4,200

$10,907,400

131,250

$2,235,712

$13,143,112

15

$795,000,000

4,500

$11,686,500

140,625

$2,395,406

$14,081,906

16

$848,000,000

4,800

$12,465,600

150,000

$2,555,100

$15,020,700

17

$901,000,000

5,100

$13,244,700

159,375

$2,714,793

$15,959,493

18

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

19

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

20

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

21

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

22

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

23

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

24

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

25

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

26

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

27

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

28

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

29

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

30

$954,000,000

5,400

$14,023,800

168,750

$2,874,487

$16,898,287

Figure 34: Return on Investment Potential

Year

Total New Tax Revenues

$(123,750,000)

$(123,750,000)

$(123,750,000)

$(123,750,000)

$(123,750,000)

$938,793

$938,793

$938,793

$938,793

$938,793

$1,877,587

$1,877,587

$1,877,587

$1,877,587

$1,877,587

$2,816,381

$2,816,381

$2,816,381

$2,816,381

$2,816,381

$3,755,175

$3,755,175

$3,755,175

$3,755,175

$3,755,175

$4,693,968

$4,693,968

$4,693,968

$4,693,968

$4,693,968

$5,632,762

$5,632,762

$5,632,762

$5,632,762

$5,632,762

$6,571,556

$6,571,556

$6,571,556

$6,571,556

$6,571,556

$7,510,350

$7,510,350

$7,510,350

$7,510,350

$7,510,350

$8,449,143

$8,449,143

$8,449,143

$8,449,143

$8,449,143

10

$9,387,937

$9,387,937

$9,387,937

$9,387,937

$9,387,937

11

$10,326,731

$10,326,731

$10,326,731

$10,326,731

12

$11,265,525

$11,265,525

$11,265,525

$11,265,525

13

$12,204,318

$12,204,318

$12,204,318

$12,204,318

14

$13,143,112

$13,143,112

$13,143,112

$13,143,112

15

$14,081,906

$14,081,906

$14,081,906

$14,081,906

16

$15,020,700

$15,020,700

$15,020,700

17

$15,959,493

$15,959,493

$15,959,493

18

$16,898,287

$16,898,287

$16,898,287

19

$16,898,287

$16,898,287

$16,898,287

20

$16,898,287

$16,898,287

$16,898,287

21

$16,898,287

$16,898,287

22

$16,898,287

$16,898,287

23

$16,898,287

$16,898,287

24

$16,898,287

$16,898,287

25

$16,898,287

$16,898,287

26

$16,898,287

27

$16,898,287

28

$16,898,287

29

$16,898,287

30

IRR
Total
Revenues
Collected

-8.3%

$16,898,287

0.3%

4.0%

5.6%

6.5%

$61,960,387

$127,675,950

$211,228,593

$295,720,031

$380,211,468

Local Real Estate Market Would the land be attractive to

developers?
Tulsas location plays a key role in the desirability of the market, but it is rarely cited and is
not well known how large the regional market is. Tulsa is the center point between Kansas
City and DallasFort Worth, and it is also the center point between Oklahoma City and
Fayetteville-Bentonville. A three-hour drive from downtown Tulsa gives a business or
person access to well over 12 million people, which is similar to the size of AustinSan
Antonio and is a larger trade area than Salt Lake City, Denver, or Portland (CBRE, 2015).
Even Tulsas immediate metropolitan area designated by the Census Bureau is
underestimated. Several adjacent counties are excluded from the statics that are key job
and population hubs to Tulsa, which if added to the Metropolitan Statics Area would bring
the metropolitan population up from approximately 950,000 to 1.1 million. This key metric
keeps Tulsa out of many economic development or site selection surveys for large
metropolitan areas.

Economy
Tulsas economy has been one of the strongest in the nation since 2000. Even through the
recession, the areas oil and natural gas sectors helped stimulate population growth, wage
growth, and job growth. Tulsas aerospace community employs well over 20,000 people,
with American Airlines employing approximately 7,000 at Tulsa International Airport.
Tulsas Port of Catoosa is the United States furthest inland ice-free port and continues to
see increasing manufacturing development and has set shipping records every month
through 2014. Job growth in the region since 2011 has added 18,000 new jobs with over
half paying salaries over $50,000 per year (Tulsa Chamber of Commerce). Tulsas economic
growth makes the region attractive for new real estate development.

Regional Demographics
The citys central location between the multiple metropolitan areas of Oklahoma City,
Fayetteville-Bentonville, Fort Smith, Joplin, Springfield, and Wichita makes it an ideal
location of destination retail and regional business operations. The regions income levels
are growing, and its relative cost of living remains one of the lowest in the nation with

housing costs nearly half of Denver, Austin, Portland, or Salt Lake City (Tulsa Chamber of
Commerce). Relative education levels are comparable to Kansas City, but overall less
desirable than Denver.
Figure 35: Population Comparison

8,000,000
7,000,000
6,000,000
5,000,000
4,000,000
3,000,000
2,000,000
1,000,000
0
Tulsa

Oklahoma City Kansas City Salt Lake City

2014 Estimated Population

Portland

Denver

2019 Projected Population

Figure 36: Income Comparison

1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Tulsa

Oklahoma City Kansas City Salt Lake City

Income over 50K

Portland

Income over 100K

Denver

Figure 37: Education Attainment Comparison

1,800,000
1,600,000
1,400,000
1,200,000
1,000,000
800,000
600,000
400,000
200,000
0
Tulsa

Oklahoma
City

Kansas City Salt Lake City

Portland

Denver

Population with Degrees

Downtown Demographics
Tulsas downtown is situated next to the regions wealthiest neighborhoods. Directly
adjacent to downtown Tulsa, the midtown neighborhood is home to the regions highest
housing values and highest incomes. The midtown neighborhood is an 8 square mile of
Tulsa that stretches from I-44 to the Broken Arrow Expressway and Harvard Avenue to
Riverside Drive. It has a population of 25,000 residents, with an average household income
of $117,000, per capita income of $54,000, and average housing values of $431,000 making
it the largest concentration of wealth between Dallas and Kansas City (CBRE, 2015).

Figure 38: Population Comparison

80,000
70,000
60,000
50,000
40,000
30,000
20,000
10,000
-
Tulsa
2000

Oklahoma Kansas City

City
2010

Austin
2014

Salt Lake
City

Portland

Denver

2019 Projection

Figure 39: Income Comparison

12000

10000

8000

6000

4000

2000

0
Tulsa

Oklahoma Kansas City

City
$75,000 +

Austin

Salt Lake
Portland
City
$100,000 +

Denver

Figure 40: Education Attainment Comparison

35,000

30,000

25,000

20,000

15,000

10,000

5,000

Local Real Estate Market

Tulsas real estate market is in the midst of resurgence due to a strong and diversified
rising local economy. The city experienced little effect from the recent recession due to a
large employment base in natural resources. As the city grew during the recession, the local
real estate market was still constrained by national lending issues, as many large-scale
planned projects were cancelled or put on hold due to financing difficulties, resulting in
decreasing vacancy rates. Tulsa is currently experiencing strong demand in all sectors of
real estate including single-family housing, multi-family housing, industrial, retail, office,
and hotel.
Office Market Overview
Tulsas office market has vacancy rates around 20% and rental rates around $14.00 gross.
The opportunity within the market when analyzed on a deeper level exists within the Class
A market. Vacancy rates have remained under 5% for the past several years. No speculative
development over 150,000 square feet has taken place, with new construction being

limited to build-to-suit projects for tenants not capable of finding enough space in this
constrained market. The Class A market remains the tightest within the downtown CBD,
with vacancy around 2%. Demand continues to increase as job growth in the region
continues to rise (Brandt, Tulsa Office, H2 2014, 2014).

One Place Tower, a 320,000 square foot office tower, broke ground in the height of the
recession in the heart of downtown Tulsa, marking the first new construction office project
in the CBD since the 750,000 square foot One Technology Center in 2002. One Place Tower
was the first phase of a total block mixed-use development next to the BOk Center. The
tower was financed based on a preconstruction lease for 100% of the building to Cimarex
Energy. Cimarex had previously occupied 120,000 square feet in the downtown CBD, but
due to strong growth it needed to double its space requirement. Due to the constraints in
supply in the downtown office market for quality space, a build-to-suit was the only option
(Brandt, Tulsa Office, H2 2014, 2014).
Retail Market Overview
Tulsas retail market is undergoing brisk expansion. As many retailers worldwide began to
cut back store locations, Tulsa locations outperformed expectations, as the regional
economy remained robust. As some national markets became saturated with retail
development, Tulsas market remained tight due to little new large construction projects.
Retail vacancy in Class A product remains around 6% metropolitan wide. Tulsa Hills, a
600,000-square-foot power center on the west side of the city delivered, during the height
of the recession but has commanded some of the regions highest rents and maintains near
100% occupancy rates with increasing demand from tenants (Brandt, Tulsa Retail, H2
2014, 2014).

Tulsas retail market can be dissected into different categories: Regional retail centers and
super-regional retail centers. Regional retail centers are clusters of big-box style stores
such as Walmart, Target, Home Depot, Lowes, Bed, Bath & Beyond with a gross leasing
area of over 500,000 square feet. Tulsas regional retail centers are Tulsa Hills, Owasso
Smith Farm, North Broken Arrow, Expo Square, and the South Memorial Corridor. Each of

these markets has similar population demographics and income levels. Tulsas super-
regional retail centers are concentrated around indoor malls with gross leasing areas of
over 1 million square feet. Tulsas two super-regional retail areas are Woodland Hills and
Tulsa Promenade, both anchored by indoor malls of 1 million square feet. These centers
have also spurred regional retail center development in close proximity as big box and
other retailers are attracted to the high traffic counts and visibility super-regional retail
creates. These areas contain similar demographics to Tulsas other regional retail centers,
but with the unique tenants and department store anchors such as Macys and Dillards
they are capable of attracting customers from the entire Northeast Oklahoma market.
Tulsas most unique retail center that does not fit into the typical mold is Utica Square,
located a mile southeast of Downtown Tulsa. It is smaller in gross leasable, around 300,000
square feet, and is home to Oklahomas most exclusive retailers such as Saks Fifth Avenue,
Miss Jacksons, Restoration Hardware, and many others that were the stores first Oklahoma
locations such as Coach, Pottery Barn, White House Black Market, and Anthropologie. While
this center is smaller than the typical super regional or regional retail center, its design,
history, and location within the midtown-downtown Tulsa market has attracted and
retained strong high-end national tenants, which attracts visitors throughout the region to
shop at the unique high-end tenant mix. Vacancy rates remain below 10% in all of Tulsas
super-regional and regional retail clusters except for North Broken Arrow, exhibiting
strong demand for retail in Class A locations with strong demographics (Brandt, Tulsa
Retail, H2 2014, 2014).

Tulsa Promenade Mall and Woodland Hills Mall command sales of $400 to 500 per square
foot, ranking them toward the top performers of super-regional malls in the nation, as
typical sales are closer to $300 to 400 per square foot. Occupancy rates in both Woodland
Hills and Tulsa Promenade have remained above 95% in the past 5 years, signifying strong
and sustained demand for super-regional retail in Tulsa.

Tulsas regional retail market has experienced an uptick in construction during recent
years. The Walk at Tulsa Hills, a 200,000 square foot center, broke ground in August and is
currently 70% pre-leased to retailers such as Gander Mountain and Carmike Cinemas.

Tulsa also has several emerging regional retail markets. The South Broken Arrow area is
home to a new Warren Theater, a $60 million 150,000 square foot project, aiming to be one
of the finest theaters to open in the United States. Warren Theater will be surrounded by a
planned 500,000 square feet of retail. Glenpool, south of the Tulsa Hills District on the
Highway 75 corridor, is also experiencing a surge in retail development after the
completion of the Walmart Supercenter and the City Conference Center. Several outlet mall
proposals have been announced in the third quarter. Simon Outlets is looking to construct a
300,000 square foot center north of Tulsa Hills, Horizon Group has proposed a 200,000
square foot center in east Tulsa, and the Cherokee Nation has announced a partnership to
construct a 300,000 square foot high-end outlet center on its Hard Rock Casino site in
Catoosa (Brandt, Tulsa Retail, H2 2014, 2014).
Multifamily Market Overview
Tulsas multi-family market has experienced growth in recent years. New high-end
construction and renovation projects have been centered in proximity to key retail and
office hubs. Southeast Tulsa, 1-mile from Woodland Hills and adjacent to Cancer Treatment
Centers of America has seen the largest construction of high-end apartments. Nearly 600
units have delivered since 2012, and current occupancy rates in South Tulsa are over 90%.
New construction has also been clustered in proximity to the Tulsa Hills retail center and
the North Broken Arrow retail center with approximately 600 units delivering between
both markets since 2012 (Brandt, Tulsa Multifamily, H2 2014, 2014).

Tulsas downtown market has seen the second largest wave of construction in multi-family
product outside of the Southeast Tulsa market. Demand in downtown has even outpaced
construction of new units in the submarket. Occupancy in the downtown market has been
sustained at 98 to 100% as most buildings currently have wait lists (Brandt, Tulsa
Multifamily, H2 2014, 2014).

The City of Tulsa commissioned a housing study in 2010, completed by CDS/Spillete
Consulting. The findings stated a demand for 1,700 rental units, and 2,200 for sale units in
the downtown core by 2020 (CDS Spillette, 2010). Today only approximately 200 rental

units and 0 for-sale units have delivered since the study was completed. Approximately
240 rental units are currently under construction in the downtown area. Several projects
are currently under development in pre-construction phases, totaling approximately 400
units to deliver by 2016. As occupancy rates in the core remain at 98-100%, marking a
significant gap in delivery of units in comparison to suggested market demand evident.
There is opportunity to significantly increase construction of multi-family and for-sale
units in the urban core, and the proposed 300-unit per year for this proposal would not
flood the downtown multifamily market, and would help to meet the demand for urban
housing in Tulsa. As most new renters are seeking product in mixed-use environments, the
demand for product in the downtown core will remain strong (Brandt, Tulsa Multifamily,
H2 2014, 2014).

Conclusion
The proposed solution to Tulsas infrastructure problem is not in the traditional school of
thought for development site selection or infrastructure improvements. This solution is a
way for the City of Tulsa to regain lost revenues and reverse unsustainable growth trends
by refocusing development in urban neighborhoods close to the core. Reconnecting
neighborhoods and creating vibrant mixed-use development will position the City of Tulsa
to remain competitive in the next decade as urban real estate markets have significant
future growth potential. These types of urban developments are the key to attracting the
young talent the City of Tulsa is currently seeking, as this is the product they are
demanding. As many Millennials are choosing cities before even finding a job, it is critical
for Tulsa to facilitate these types of developments to remain competitive in attracting
talent that businesses need to expand and be successful.

Further research needs to be completed on how investments in light-rail, streetcars, and
bus rapid transit can impact the demand and viability through lower parking ratios for
urban development in Tulsa. This paper has identified one significant barrier to profitable
development in the urban core of Tulsa: the tremendous cost of structured parking. The
added costs of parking quickly inflates construction costs, and results in negative cash flow

during the lifecycle of a 10-year hold. The reduction of parking requirements in the core
through expansion of mass transportation in the Tulsa region could help ignite
development demand from investors, as development in the core would require less
expensive parking solutions.

The redevelopment of the ODOT right-of-way presents the City of Tulsa and the State of
Oklahoma a tremendous opportunity to use value-capture mechanisms on the land that is
currently producing no tax revenues. As this land is developed into revenue producing real
estate, capturing these revenues and allotting them to pay for infrastructure such as a
streetcar, light rail, or bus rapid transit that will act as broader regional redevelopment
engines is critical. Currently, value capture can become a political issue, as with most TIF
Districts take income producing land and redistributes revenues to developer to pay for
infrastructure needs. The land occupied by the IDL is already off the tax base since ODOT
does not pay taxes, which would result in no lost funds to schools or public services by
creating value capture districts along the east and south sections.

This proposal presents the City of Tulsa and the State of Oklahoma with a viable alternative
to our current infrastructure investments. By the reallocation of current planned
transportation funds that will provide no new real estate development benefits, the City
can reconstruct the corridor back to the historic street-grid and open hundreds of acres of
land back for redevelopment. The national and local markets are demanding new urban
mixed-use developments, and significant gaps exist in super-regional and regional retail in
the Tulsa metropolitan area, and the redevelopment of ODOT right-of-way and other large
parcels in the downtown core will deliver needed urban product to fill this market demand,
while positioning the city to remain competitive in attracting new residences and
businesses who seek out this form of real estate.

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