I graduated from the University of Oklahoma this May. Around campus, I heard a lot about the planned Rock Creek Entertainment District. The development will be anchored by a new arena for the university’s basketball and gymnastics teams, which will be surrounded by other event venues, hotels, and restaurants.
Because I don’t watch sports, this was initially a mundane piece of news for me. The topic became more interesting when I observed how many of my fellow Sooners took issue with the plan.
Some felt the new arena will be too far from campus and downtown Norman, Oklahoma. It will sit miles to the north and just off of Interstate 35. The location is sure to be convenient for visitors, but it may lead them to get back onto the interstate quickly once an event ends rather than sticking around Norman and spending money which would generate tax revenues for the city.
Another critique owes to the funding plan attached to the arena. This month, Oklahomans for Responsible Economic Development sued a slew of parties involved in the project’s development to stop it on these grounds. The group argues that the two tax increment financing districts Norman created for the project are illegal under Oklahoma’s constitution, among other complaints. The same group previously raised a petition for a public vote on the tax increment financing plan which garnered over 11,000 signatures. That effort failed after Oklahoma’s supreme court rejected it.
What is TIF?
A TIF district, or tax increment financing district, reallocates future tax dollars raised in an area to fund a project’s development costs. Essentially, a local government wagers that once the project is complete, it will generate new tax dollars in the form of sales taxes, property taxes, hotel taxes, or other levies. The local government borrows money today, and the loan is later repaid via tax dollars the project creates once finished. Separate tax increment financing districts can be created for the same project to commit tax revenue from different sources to this purpose.
The taxes used to repay the loan generally only include new revenues generated, which will ensure that the local governments can continue to fund services as they did before the tax increment financing district was created if this money were not to be raised otherwise. This arrangement is attractive to local governments who want to invest in large development projects without the appearance of giving over large quantities of public dollars to developers instead of investing them into services which more directly benefit the public welfare.
Why is Norman’s TIF Controversial?
The Rock Creek plan is not one tax increment financing district; it is two. A first controversy is the scale of the public commitment. The total authorized public financing across the two districts is up to $600 million. Some doubt that the Rock Creek District can generate enough new tax growth to justify authorizing that much money over the plans’ 25 year lifetimes. Beyond concerns about the price tag, each of the districts carries its own controversy.
The Property Tax Increment Financing District
This tax increment financing district captures growth in taxable property value above the existing base. In theory, a property tax increment financing district doesn’t take money away from existing public services. If $10 million in annual revenue is currently generated, and later the area generates $30 million in property taxes, the original $10 million continues being collected as it always has, and the added $20 million is used to pay for the project.
The Rock Creek tax increment financing plan depends on the claim that the entertainment district will create property tax growth that would not otherwise exist. If the arena and its nearby hotels, restaurants, and retail developments generate new, taxable activity, the city can argue that the project is partially paying for itself.
But what if, in the absence of the district, there would have been property tax growth anyway? In that case, the city’s future tax revenues would suffer. Without tax increment financing, that new tax revenue would have supported city services, schools, and other public needs. With tax increment financing, the growth is instead redirected to a development tied closely to college athletics.
The Sales Tax Increment Financing District
This tax increment financing scheme captures a portion of the city’s sales tax revenue generated inside the district. Specifically, the sales tax increment is drawn from Norman’s non-dedicated and capital improvements sales taxes, which together equal 3% of gross taxable sales inside the district. Those revenues would otherwise flow into Norman’s General Fund or Capital Improvements Fund.
The logic here is that the project will generate sales that would not otherwise occur in Norman. Developers argue the city is not giving up existing revenue as much as they are dedicating a portion of the new sales tax created within the district to pay for the development that made it possible. If the district succeeds, the project helps finance itself.
This argument depends on a key assumption: that the sales generated by the project would not happen without the project. If visitors come from out of town and spend money in Norman that they otherwise would have spent in another city, Norman may come out ahead. But if they just choose a restaurant or hotel inside the entertainment district instead of one elsewhere in Norman, the city has not gained new economic activity. Instead, local spending was redirected into a district where the project, rather than the city budget, gets to claim some of the tax receipts.
Why Tax Increment Financing Matters Beyond Norman
The Rock Creek fight is local to Norman; tax increment financing is not. The tool has become a common way for local governments to finance economic development. Tax increment financing is authorized in nearly every state, and some states use them extensively. In Wisconsin, there were 1,400 active tax increment districts in 2024. Minnesota had 1,657 in 2024, and Illinois had 1,488 in 2025.
These thousands of tax increment financing plans don’t generate many news stories because they tend to be used for lower-profile projects than Norman’s Rock Creek District. They often support development in underused or “blighted” areas by financing roads, utilities, brownfield cleanup, or other infrastructure needed to make land more developable. Using tax increment financing that way does not usually produce high-profile public conflicts like Norman’s arena district has.
Tax increment financing may be so common because its appeal to cities is obvious. Local governments are often asked to produce economic growth without raising taxes, and tax increment financing offers a way to promise development today using revenue the project is expected to create tomorrow. Structuring investments this way can make public financing feel less costly than other methods might.
But tax increment financing does not create money out of nothing. Future revenue is still public money, and giving one development first claim on those dollars means the money cannot be spent on anything else. If growth would have happened without tax increment financing, or if spending shifts from elsewhere in the city to the new development, then the city may just lose access to future tax revenue it otherwise would have received.
Using tax increment financing for arena or stadium districts is especially noteworthy because stadiums and arenas have a weak record as economic development investments. The economic literature consistently finds that these facilities tend to produce modest and sometimes negative effects on local economies. Norman’s Rock Creek District may prove to outperform the average arena project. Still, the poor track record of stadium-centered economic development investments should be considered. The more uncertain the payoff, the more important the tax dollar tradeoff becomes.
Despite this, Norman will not be the first place to use tax increment financing this way. Washington D.C. used tax increment financing to fund improvements to Capital One Arena. Louisville and Port St. Lucie, Florida used tax increment financing for soccer stadium developments. These examples suggest that tax increment financing may be becoming a route for local governments to finance sports and entertainment projects while describing the public’s contribution as self-financing.
Research on tax increment financing gives reason for caution about that claim. In a 1999 study on northeastern Illinois municipalities, researchers found evidence that tax increment financing may stimulate growth inside of the designated district while slowing growth elsewhere in the same city. More recent reviews find that though tax increment financing remains popular, it often falls short of their promise to reinvigorate struggling areas, especially when cities do not rigorously examine whether development would have happened without granting tax increment financing.
That is why the Rock Creek Entertainment District fight has relevance far removed from Oklahoma college sports. It makes plain the question which every tax increment financing plan should have to answer, whether used to finance a sporting arena or a more mundane development. Is the project creating enough new public value to justify the future tax revenue it receives? If the answer is yes, the claim on tomorrow’s taxes may be worth granting. If property tax growth would have happened anyway, or if spending is merely shifted around town, tax increment financing may not actually pay for itself.
