Headlines of the Week

OKC receives triple-A S&P rating
By Brian Brus
Journal Record

OKLAHOMA CITY – The difference of a single letter A will likely mean a better interest rate for Oklahoma City and the difference of attracting about a dozen institutional investors for the upcoming issuance of bond debt instead of in the single digits, authorities at City Hall said.

Standard & Poor’s Ratings Services recently assigned its AAA long-term rating to Oklahoma City’s series 2011 general obligation bonds and affirmed the city’s triple-A long-term rating and underlying rating on the city’s outstanding general obligation debt with a stable outlook.

The municipal government received a similar triple-A bond rating from Moody’s Investor Service. Both ratings are the highest offered by the services, putting Oklahoma City in an elite group of the best municipal credits in the marketplace that include Austin, San Antonio, Denver, Indianapolis, Salt Lake City, Minneapolis and Seattle. It also tops Tulsa’s double-A S&P rating.

About $43 million in general obligation bond debt will be put up for sale Tuesday, finance business manager Kenton Tsoodle said. When the city issued $64.4 million in G.O. bonds last year, it received an effective rate of 3.47 percent over 20 years.

The practical outcome of S&P’s highest rating means the city will be able to fund more capital projects such as streets, bridges, sidewalks and trails and park improvements, Tsoodle said. But it also affirms City Hall is treating its finances as efficiently as possible.

When S&P issued its latest review, the reporting service said Oklahoma City earned its rating because of an expanding regional economic base, ongoing downtown redevelopment and political stability. The service also cited “consistently strong financial performance and position that includes strategic business planning, multi-year forecasts, balanced budgets, long term capital plans and compliance with reserve policies.”

Tulsa has only two A’s according to S&P. In 2008, Tulsa voters approved the issuance of $285 million for street work, a total which has not yet been fully sold. The city has sold $140 million over three issues since then, with an interest rate of 3.8 percent for 20-year bonds and 1.93 percent and 2.26 percent for 10-year bonds. The public has authorized the city to issue bond debt of $145 million more before another election is necessary.

In S&P’s overviews of the two cities, similar strengths are noted for both – a deep and diverse economy that helps drive the state’s economy, for example, and strong financial reserves.

And also to Tulsa’s benefit, the analysts wrote, “Tulsa posted operating surpluses in three out of four fiscal years from 2004-2008, which increased the unreserved general fund balance to $37 million for fiscal 2008, or 13.6 percent of expenditures, a figure we consider very strong.”

Both cities’ financial management practices are also considered “strong” under S&P’s financial management assessment methodology, indicating practices are well-embedded and likely sustainable.

But differences between the cities’ assessments are subtle and difficult for city officials to gauge. For example, Tulsa is noted as having a debt management policy; “however, the policy is not comprehensive,” S&P analysts said.

Also noted as a mitigating factor in Tulsa’s overview is “a reliance on sales taxes for the majority of operating revenues, subject to economic cyclicality.” But Oklahoma City also relies heavily on sales tax revenues.

In Tulsa’s case, “Income levels remain adequate, with median household income at 96 percent of the state, but 81 percent of the nation,” S&P analysts wrote.
For Oklahoma City, “We consider median household effective buying income only adequate, at just 103 percent and 88 percent of state and national levels.”

“They don’t offer guidance on the subtle difference between one rating level and the next,” said Tulsa Treasury Analyst Matt Cooper. “So I don’t know exactly what they’re expecting us to do differently.”

The diversity of the municipal market defies easy generalization, S&P’s Credit Analyst Gabriel Petek wrote in January. And within that diversity, governments have been making difficult policy and budget choices in an effort to balance their budgets. Most public finance issuers were able to remain stable in 2010, and none of the defaulted bonds of the S&P/Investortools Municipal Bond Index in 2010 were of the type of traditional G.O. debts of states and municipalities.

“But because of the slow progress of recovery from the Great Recession, we believe that continued revenue decreases for state and local government may increase fiscal strain on budgets, and monitoring of liquidity will be especially important in 2011,” Petek wrote.

“We also believe, however, that fundamental credit performance throughout the market – as measured by default rates relative to debt outstanding in the market – will likely remain mostly stable with the possibility for a modest uptick,” he wrote.

Open Beta 6: Startup showcase seeks Southern exposure
By Brian Brus
Journal Record

OKLAHOMA CITY – A dozen Oklahoma businesses are traveling to Texas for the annual South by Southwest entertainment and interactive conference that begins this weekend.

The companies are participating in Open Beta 6, a business startup showcase that normally is held in Oklahoma City and organized by some of the same people involved in the Oklahoma City Coworking Collaborative environment, or OKC CoCo.

Open Beta has proven popular and successful in Oklahoma, organizer Derrick Parkhurst said recently while he was on a preparatory trip to Austin, where SXSW will be held.
And given the expanded emphasis on interactive technology at the conference in recent years, it made sense for Oklahoma’s interests to tap into resources in attendance for their own development goals.

“What we do in Oklahoma City is grow and strengthen our community, and Open Beta is about showcasing the excellence that we have in Oklahoma,” Parkhurst said. “South by Southwest is a huge conference expected to attract about 17,000 people just for the interactive portion. The music and film portions will draw about 25,000 for a two-week period. … So you can see there’s a lot of money there to invest in online startups and mobile companies.”

OKC CoCo, 723 N. Hudson Ave., is a work environment of about 7,500 square feet that provides co-working areas, conference rooms, a board room, a social area, office suites, a classroom and event space. It’s designed as an alternative for small company operators who don’t have an office of their own, such as freelancers, entrepreneurs and telecommuters.

Parkhurst first started organizing Open Beta with fellow entrepreneurs Chad Henderson and Tommy Yi before OKC CoCo was established. This year they’re partnering with other startup support groups such as i2E Inc. and the Greater Oklahoma City Chamber.

This will be the sixth Open Beta event, providing opportunities for so-called lightning talks or elevator pitches for businesses that include website designers, keynote presentation organizers, grocery coupon databases, and even a crime-solving social network.

“In Oklahoma City it’s been a good opportunity for these creative people to get together and show off what they’ve done. In one aspect it’s a pure networking event, but in another it’s an opportunity to present themselves by the work they’ve completed and ideas that they’re developing and getting ready to launch,” Parkhurst said.

“The state film and music commission has been going to South by Southwest for the last couple of years, and this year they reached out to the chamber, which contacted us to collaborate on the interactive aspect of the conference,” he said. “So we’ve got some excellent talent going down there to promote Oklahoma businesses and our Oklahoma brand to a national audience that might not normally associate technology strengths with our state.”

Transformation of downtown Oklahoma City lures many to live there
Public relations and marketing firm Saxum makes statement by moving into old Kirkpatrick Oil Building at NW 12 and Broadway Drive, and young professionals follow to live in heart of city.
BY STEVE LACKMEYER
Oklahoman

I forgive Chad Previch. I forgive him for abandoning the pursuit of journalism and going over to what some in our industry jokingly call “the dark side” of public relations.

His recent move back to downtown, meanwhile, makes for a great case study at his expense of how even a small firm can make a splash on the neighborhood.

My friend Chad isn't a stranger to downtown. When he started at The Oklahoman eight years ago, he lived in Deep Deuce. He's one of those likable guys who seems to have a circle of friends always nearby — which might explain why he was lured away a few years ago by Saxum, a public relations and marketing firm.

By the time Chad switched to the dark side, he was living in one of the many cookie-cutter apartment complexes in north Oklahoma City. But when Saxum decided to move into the old Kirkpatrick Oil Building at NW 12 and Broadway Drive (last home to the Oklahoma City Community Foundation), Chad made a move of his own to the nearby Aberdeen Apartments across the street.

Now, let's extrapolate this a bit. Saxum founder Renzi Stone readily admits that when he opened his firm a few years ago, his choice of setting up his office at Waterford was quite deliberate. He was making a statement that his firm was for real — that he had big ambitions.

And indeed, the firm has grown and now has 22 full-time employees in Oklahoma City and Tulsa (most are in Oklahoma City). Eight of the employees are under 30 (Chad is an old guy — he's about to turn 31). And while the firm also employs people in their 40s, 50s, 60s and 70s, it is fair to say Saxum has a good representation of the young creative class.

Stone is making another statement. This time he's saying that if one wants to be in the heart of the community and the middle of the city's renaissance, it's not a bad time to be downtown.

The immediate impact of Saxum's recent move is easy to list; downtown sees another historic building renovated and life is brought to an area that has long been run down. But what influence will Chad's new “walk to work” lifestyle have on his friends?

Will co-workers soon decide they too will want to live nearby to not just walk to the office, but also to nearby restaurants, shops, clubs and entertainment venues?

And now that he's back living downtown, will friends making trips to hang out with Chad be attracted to the urban lifestyle and make a similar move? Will they begin to gravitate more toward patronizing downtown restaurants and shops?

Saxum isn't the only creative-class firm to move downtown. Ghost Advertising opened up this past year in a 91-year-old former dealership at NW 9 and Broadway that had been used as storage. deadCenter Film Festival, meanwhile, has called Steve Mason's 1015 N Broadway Building home for the past year.

The impact of this emerging creative class cluster can't be fully measured. But walk into nearby coffee shops like Coffee Slingers or Beatnix and you might just see some of these folks gathered around a small table, hatching the next great idea to transform downtown in the years to come.

Myriad Gardens won't be complete for Oklahoma City's spring arts festival but the show will go on
Delays caused by blizzards and late material shipments will present a “challenge” with reduced capacity for the spring Festival of the Arts, but Oklahoma City officials and festival organizers say the $36 million makeover will be worth any temporary pain.
BY STEVE LACKMEYER
Oklahoman

Delays caused by blizzards and late material shipments will present a “challenge” with reduced capacity for the upcoming Festival of the Arts, but Oklahoma City officials and festival organizers say the $36 million makeover will be worth any temporary pain., and City Manager Jim Couch acknowledged all parties will be challenged with the festival being restricted to the west half of the gardens. City council members, meanwhile, marveled at the progress to date during a soggy tour Tuesday morning.

Those being given an update on the work later Tuesday included Devon Energy Executive Chairman Larry Nichols, who made the gardens a priority in his company's tax increment financing agreement with the city that is funding Project 180.
‘Totally different'

Project 180 engineer Laura Story said that despite setbacks in the completion schedule, dramatic changes are being seen week to week.

“Last week the entire north side of the gardens was filled with plants,” Story said. “They are gone now — they're already planted. Each week it looks totally different.”

Likewise, the 40-foot band shell that will serve a new 2,500-seat amphitheater is almost complete after arriving two weeks ago. The entryway sidewalk along Sheridan, lined with trees on both sides, greeted council members at the start of their tour.
Story said the sidewalk is different from regular concrete and consists of a mix of “lithocrete” and “aggregate” (stones within the lithocrete).

The sidewalk is a light shade, Story said, that “takes a lot of professional judgment by landscape architects to get the mix right.”

Oklahoma materials
Crews on Tuesday also were completing construction of a new granite fountain just south of Sheridan Avenue. Nearby visitors could see the nearly completed rock waterfall built from materials brought in from northeast Oklahoma.

Much work remains inside the Crystal Bridge, which was achieving iconic status in the opinion of area architects before the work was started. Voters in 2007 approved a bond issue that included $12 million to replace the botanical tube's glass exterior skin. (The remainder of the $36 million gardens makeover is funded by the Devon tower tax increment financing district.)

Council members touring the Crystal Bridge saw familiar palm trees and other plantings, though vast empty spaces still awaited final plantings. A new south entry will not be ready for the public when the festival starts April 26, but festival visitors should be able to see the main botanical area, Story said.

Open and closed
New multicolored LED lighting in the Crystal Bridge's skin was successfully tested last week, but Story could not say when the first light show will be performed for the public.

Story said every effort is being made to ensure sidewalks surrounding the gardens will be open in time for the festival, set for April 26 through May 1, though Sheridan Avenue will remain closed.

Other areas that won't be ready next month include a restaurant facing Robinson Avenue. The restaurant is awaiting a delivery of glass. Nichols and others were shown photos of the view diners will enjoy of the Crystal Bridge and gardens when it opens later this year.

Most of the gardens remain an active work zone, with dozens of construction workers putting together the rebuilt Water Stage on Tuesday morning while other groups worked on a fountain near the new children's area near Hudson and Reno avenues.

Resuming concerts
Angela Cozby, Festival of the Arts director, told The Oklahoman she has communicated often with project coordinators and is confident a successful 2011 festival can be held in the part of the gardens that will be opened next month. With offices located in the McAlpine Center across the street from the gardens, Cozby has kept a close eye on the project's progress.

“They started last May, and I had things still in the park when they began tearing it down,” Cozby said. “The construction they've gotten done is remarkable.”
In addition to staging the festival in the gardens, Cozby said the Arts Council of Oklahoma also is looking forward to resuming summer concerts at the Water Stage and adding children's performances at the new band shell.

She also believes the gardens, when fully completed, will provide the Arts Council of Oklahoma City with greater opportunities to stage events throughout the year.
Nichols, meanwhile, is enjoying seeing the transformation of the gardens with the new Devon Energy Center rising into the air across the street.

“Having toured the gardens very recently, it's very exciting to see how those plans have materialized from mere dreams and aspirations to real trees, concrete and waterfalls,” Nichols said. “It lives up to my wildest dreams and expectations. I think all of Oklahoma City will be very excited to see it.”

Oklahoma City's Devon Energy celebrates 40th anniversary
Devon Energy Corp. celebrated its 40th anniversary with a luncheon for its Oklahoma City-based employees at the Cox Convention Center.
BY JAY F. MARKS
Oklahoman

Larry Nichols never expected the company he and his late father, John, established in 1971 to grow into one of the country's leading independent oil and natural gas companies.

“Forty years ago, we never dreamed that Devon would someday become the company it is today,” Nichols said. “It's great to pause and celebrate.”

Devon celebrated its 40th anniversary Thursday at Cox Convention Center, feting its 1,500 Oklahoma City-based employees with lunch and a performance by sand artist Ilana Yahav.

Yahav, the Israeli artist featured in many Devon television commercials, created a landscape dotted with pump jacks on a light table.

She used her hands to skillfully transform the image into a pair of birds, then two hands gripped in a handshake.

Yahav ended another performance with a picture of a three-tiered cake in honor of Devon's anniversary, earning a standing ovation from the company's employees.

Yahav, who was making her first visit to Oklahoma City, said she was impressed by the people of Devon.

Nichols, the company's executive chairman, said employees have worked hard to turn Devon into the company it is today.
Jeff Hall joined Devon in 1989 because he wanted to work in Oklahoma for an independent oil and gas company with growth potential.

Devon has been through 27 mergers and acquisitions in the last four decades, as the growing company became known for its innovations in coalbed methane production, horizontal drilling and hydraulic fracturing.

“It's been a remarkable ride,” said Hall, a geologist who is vice president of exploration for the central division.
Nichols maintains the best is yet to come.

“While we are gratified with Devon's accomplishments of the last 40 years, we are even more excited about the possibilities ahead,” he said.

Nichols touted Devon's “fabulous assets” and plans to invest nearly $1 billion this year on production and drilling operations in Oklahoma.

He said Devon started the same year as coffee giant Starbucks.

“While they're better known than we are, we're a whole lot bigger,” he said.