Prepared Notes for Board Meeting Ė TIF
November 22, 2010†
Marc A. Schare Ė †
I am philosophically opposed to TIF agreements, or any agreement between a municipality or other taxing jurisdiction and a developer or business that essentially says that if you build here or create jobs here, you donít have to pay taxes for some period of time. Such agreements, by their nature, favor one entity over another simply because one of them is new to the area or, to be accurate, allow the dollars you would have otherwise paid in taxes to be put into the development effort thus lessening the real cost of that effort.
Nevertheless, project TIF agreements are not uncommon and in any event, our boardís responsibility is to do what is best for the districtís stakeholders, personal philosophy aside.
All things considered, this is a good deal for school district taxpayers and it is probably a good deal for Worthington residents.
Under Ohio law, the city can unilaterally grant a TIF of up to 75% for up to 10 years without having to compensate the school district. Under the agreement on the table this evening, the district will receive anywhere from 80% to 100% of the money the district would be entitled to with the percentage based on the assessed value of the property. The catch is that this arrangement continues for 30 years rather than the 10 years that the city could have imposed by itself. On the surface, this would be problematic for us, however, the city is guaranteeing †the value of the parcel will triple within the next two years, going from $6,000,000 to at least $18,000,000. Worthington Schools will capture the tax dollars for most, but not all, of that growth. The question some taxpayers might ask is Ė why shouldnít we get all of the taxes we are entitled to.
In my discussions with the city manager, it is his strong belief that without this incentive, the redevelopment effort would not be viable for the developer, nor would it be viable for any developer in the near future. If this is correct, Worthington Schools would get the taxes on the current value, around $8.5 million, for the foreseeable future, rather than 80-100% of the taxes on the much higher amount that results from the development.
If we reject this agreement, the city might choose to go forward with a 10 year, 75% TIF permitted by the statute. I asked the treasurer to run the numbers and it was clear that Worthington Schools fares worse by rejecting this agreement in every instance that was checked.
So, personally philosophy aside, this deal merits approval on many levels, but there are two †more points that need to be made.
First, the city did have the right to act unilaterally. The fact that Mr. Greeson and the Worthington council chose to partner with the district in this endeavor is testimony to the strength of the bond between the two governmental entities. Iím grateful for that bond and Iím also grateful for the time that Mr. Greeson spent explaining the proposal. Still, we canít lose sight of the fact that there is a quirk in state law that allows cities to make TIF deals where they have everything to gain and little to lose because they collect little in property taxes, whereas school districts in the same jurisdiction are materially harmed. While there may be good reasons for this law, I think that advocating for a change in state law that forces cooperation between governmental entities in situations like this is not inappropriate.
Second, the city needs this redevelopment effort to be successful and after many years of false starts, this proposal has a real shot at revitalizing the entire Wilson Bridge corridor. All of us should wish the city and the developer much luck in their effort.