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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