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With $110 million in ongoing and completed development in downtown Kent, residents might assume taxes from these projects will significantly reduce the need for a new operating levy for the community's school system.
According to Kent City Schools officials, they would be wrong.
Kent Superintendent Joe Giancola said because of tax abatements and exemptions, the effect of downtown redevelopment projects of the district's financial situation will be minimal. He said he hopes voters keep this in mind when they make a decision on the district's 8.9-mill continuing operating levy request in May.
"The net effect overall (of the development) is a very small change for us and not a solution," Giancola said.
Deborah Krutz, the district's treasurer, said the Acorn Alley I and II retail developments and Acorn Corner, the project to restore the old downtown Kent Hotel, have been granted 10-year tax abatements on improvements at the sites by the city and the school district. Those projects represent more than $20 million in investment in downtown Kent.
The Portage Area Transportation Authority's $26 million parking deck and transit center, which is under construction at the corner of Erie and DePeyster Streets, will be tax-exempt because of its status as a government building. PARTA is a state entity.
The $16 million Kent State University Hotel and Conference Center, located at the corner of Haymaker Parkway and DePeyster Street and Conference Center, and the Fairmount Properties' downtown office, retail and residential block, located between South Water and DePeyster streets, are located in a Tax Increment Financing, or TIF, district.
TIF districts, meant to encourage public infrastructure development, allow government entities to use future taxes to pay for construction costs.
Krutz said under the TIF agreement, 60 percent of property taxes on the new value of improvements from the zone go to bond repayment for the improvement projects for the next 30 years, while 40 percent go to the schools. She said the district currently represents $215,000 in property tax collections for the district, up from $40,000 before the old buildings in the zone where demolished to make way for the new development.
That net gain of $175,000 is good news for the district, but another aspect of the downtown redevelopment has negative financial consequences for Kent City Schools.
Krutz said the KSU's Esplanade walkway expansion project, which led the university to buy more than 40 homes between Lincoln Street, the northwestern edge of its campus, and downtown Kent, will cost the district $75,000 in property taxes annually. The previous owners of the houses had to pay property taxes to support the district, while KSU does not.
Doing the math, Krutz said, shows taxes from the downtown redevelopment project are not a windfall for a district projecting a $24 million deficit by the end of its latest five-year financial forecast.
The district's 8.9-mill levy proposal would raise an estimated $4.25 million in new funds for the school system per year. A homeowner with a house valued at $100,000 would pay $272.56 per year in additional taxes if the levy is approved.
Giancola said the district also cannot cut or save its way out of its current financial situation. He said the district has achieved $4.2 million in costs savings annually in the past four years by solutions as simple as turning off computers at night and as tough as not replacing all retiring staff members.
The district employed 312 teachers before the cost-savings plan started, a number that has decreased to 300 today. Giancola said the district also now employs 19 administrators compared to 22 four years ago.
While the cost savings have not allowed the district to postpone a levy request indefinitely, Krutz said they have extended the life of the most recent one, a 6.9-mill continuing levy approved by voters in 2006. She said the district hoped that funding could be stretched out four years before a new levy request, and the district is now almost seven years removed from that levy.
Giancola said factors like Ohio's elimination of tangible personal property tax, a $4 million per year source of income for the district at one time, and rising health care costs, have made the levy a necessity despite cost saving efforts.
"We're losing money at the state level faster than we're able to save at the local level," Giancola said.
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I don't think tax dollars should subsidize a Private enterprise/business. The arguement is, jobs, the workers will pay taxes, the vendors will pay taxes, the public when they frequent the establishments will pay taxes. Yeap everybody pays, except the rich folks that can most afford to pay the taxes. Would having to pay your fair/fare share of taxes be the deal breaker? I've been in the county going on 60 years, no abatement for me. As a matter of fact. Tell Columbus you are thinking about starting a business in Ohio, the state will send you a thick packet of all kinds of paperwork for taxes you will pay and collect. Who started tax abatment? Everything is made so complicated. Thats how you know your get screwed. Local politians/private enterprise/educators and tax money. Nothing to worry about.
Elected folks on all levels of government - local (city, twp, village, school district, county), state and federal - have great power and responsibility in their ability to hire, appoint and give contracts.........Legislatively created and changed when desired, the authority to tax (and ability to appoint a board to negotiate 'incentives') is often included as a method of funding the entity (airport board, health dept, port authority, mental health/substance abuse, transit authority, school districts, etc.)............Public dollars, no matter what they are called, are generated by taxes (of all kinds) and fines or fees (by those entities who have been granted power, legislatively, to impose fines or fees)When those pubic tax dollars are passed thru or awarded, the agency or entity receiving those tax dollars is allowed to take a percentage (usually 15%) to use for administrative uses (pay salaries, obtain equipment, etc.) while they are spending the other 85% according to the directives issued (legislatively or by the boards appointed to create policy) for utilizing that fundingSince it is all public money, we the people who pay the taxes, are entitled to see how it is spent.......Businesses who sign up with the TIFs, TIRCs and other incentive programs arrive at a set of goals to achieve for receiving the incentives, abatements, etc.............Some businesses don't meet their goals and some businesses change their location based upon the incentives they can receive so when the end of their agreement comes along, some leave...........Businesses, individuals, non-profits and governments (on all levels) who invest time and energies in the PEOPLE (who pay all those taxes)will thrive.......... "...it's time to support examples we respect and challenge those we do not respect..." But we have to learn about them first.
Redleg6, you make some good points. The local politicians pick the businesses that provide the most jobs, to give tax breaks to. If they don't produce, they lose the tax break. They still pay taxes, on property, income, sales, etc, but they get the temporary abatement of some of the property taxes as an incentive to locate in Kent. Having said that, I can see your point. You seem to be saying that no one should get tax breaks unless everyone gets a tax break. I can see value in that position, but will it result in new development? It might! Imagine if sales taxes were also temporarily, partly suspended for the same period of time as the abatement. It might result in increased sales. This sounds good; spread the tax breaks around!
@ CoG....Thanks for the info. Big business wants to be a part of the community let them pay local taxes like everyone else. Is it an incentive, or legal bribe? Either way, what gives the local politicians the right to pick and choose who pays taxes, and who doesn't. The workers pay taxes, the public pays taxes, the rich business man no tax? Just because he wants to build in Kent, that makes him a tax free citizen? How special!
OK Redleg6, let's break this down because I know you are sincere, but faulty info has been used.... If it's for the children, it's because they benefit along with the rest of us when we increase jobs and sales in the local economy. Besides the wages being for local people mostly (yeaaa!), there is also the income tax increase that the jobs produce for the local, State and Federal governments.
The tax abatements, and the Federal Grants, are what encouraged this project to happen. Please remember that this started during the Great Recession, when FEW other projects were being developed due to lack of bank financing. Some Ohio private projects happened since 2007, but those were self-finanaced. This project would not have happened without those Grants and the Tax Abatements, Tax Increment Financing, the private sector taking a risk by investing Million$ into the Kent economy, and tons of work by Kent and private sector staff in putting this together. Sorry, but I don't see any bribes here, just incentives to make this complicated deal, and it's parts, worth doing financially.
Besides, the schools are doing a whole lot better by having this deal rather than leaving Kent to deteriorate with the delapidated structures that were taken down. We all are doing better due to that. Actually, this article seems to be more of a Pro-Levy advertisement than a balanced article regarding the benefits and costs of the huge re-development effort in Kent. So the School District is doing some cost cutting moves, but they are so little compared to what the rest of the Economy is experiencing. Yea, we need to keep good teachers, but Kent Schools can do a whole lot more cost-cutting moves than just not replacing 4% of the employees who retired. Try harder Kent. What about those huge benefits that our teachers enjoy? The private sector, which provides the tax money, can't pay benefits like those! Retiring Teachers and other government empolyees can get as much as 80% in retirement pay, of what they got when they worked. 80%!! Retired public employees also get health care, at no or little cost to themselves! I think it is time for public employees to try harder and give the tax payers a break.
Do some businesses close their doors when the tax break stops? Yep, some do. But if the business is making a profit, it will stay. If not, it will close. Would you continue to work if you weren't receiving a paycheck?
Big Business&Politicians, both say they are for the children, yet, they make deals where schools/kids get little to nothing because of tax abatements,..(legal bribes)..in my opinion... What happened to everybody pay their fair/fare share.. Tax breaks for the rich? The same tax abatement deals go on all over the country. When the ten year abatement is fulfilled, its funny how some business's seem to close their doors, and move on.