Prepared Notes for Board Meeting – TIF
November 22, 2010
Marc A. Schare –
614 791-0067
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 don’t 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 board’s responsibility is to do what is best for
the district’s 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 – why shouldn’t 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. I’m grateful for that bond and I’m
also grateful for the time that Mr. Greeson spent explaining the proposal.
Still, we can’t 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.