Prepared Comments Made to
NORTH CANTON CITY COUNCIL
September 14, 2009
On tonight’s agenda is legislation on an emergency asking for city council’s approval of a settlement agreement between the City of North Canton and Larizza Management Group, Ltd. It is Ordinance No. 93-09. Larizza Management, Ltd. is the previous lessee of The Fairways of North Canton.
The settlement agreement calls for the City of North Canton to accept $35,000 as payment in full for delinquent lease payments and property taxes totaling $104, 311.74. In financial terms, this is a good deal for Kevin Larizza, the President of Larizza Management Group, Ltd. In ethical terms, a clear conscience for Mr. Larizza might not come as easily.
The seeds for the economic loss now facing the city arise out of the passage of emergency legislation in 2003, Ordinance No. 98-03, which gave blanket approval for the Rice Administration to negotiate the lease contract without subsequent review of the terms negotiated by then City Administrator David Held.
The bottom line for North Canton taxpayers is that the city is unable to collect nearly $70,000 in revenue for which it is rightfully owed. There is a need for a public accounting of the failings of the lease contract.
These failings are numerous. 1) Lack of a performance bond as urged by former North Canton Law Director Roy Batista; 2) No personal guarantee by the lessee; 3) No review of the contract by the city law director as required by state law; and 4) Failure to collect the $50,000 security deposit as specified in the lease.
Three weeks ago Mayor Held attempted to answer in this chamber why the above protections for the city were not incorporated into the lease when he negotiated the contract with the lessee. In all honesty, Mayor Held’s answer as to why the $50,000 security deposit was never collected by him and former Finance Director Julie Herr raises more questions than it answers. It also raises other issues foremost is the failure of a city official to enforce a city contract resulting in great financial loss to the City of North Canton.
Mayor Held, you stated in your answer that a performance bond “just priced Kevin Larizza right out. He [Larizza] said I simply can’t do it.” You continue “So we decided at that time that we were going to forego the security deposit because he [Larizza] said I don’t have that kind of money or was unwilling to invest the security deposit….”
Mayor Held, your answer brings up a number of questions. I would like to ask who is the “we” you are referring to in your statement. It appears it is you and Mr. Larizza.
Who decided to “forego” as you put it, the security deposit? It appears to me from your response that this was a mutual decision between you and Mr. Larizza. If this was a mutual decision between you and Mr. Larizza, when was this decision arrived at?
Was that decision arrived at before or after the lease was signed?
If this were agreed upon before the lease was signed, why wasn’t ARTICLE IX of the lease requiring the $50,000 security deposit deleted before signatures were affixed to the contract? Why would Mr. Larizza sign a contract that had terms he opposed?
Who else had knowledge that the security deposit would not be collected?
If there were a mutual agreement with Mr. Larizza that no security deposit would be collected after the lease was signed as appears to be the case, why was the lease not amended to reflect that?
Why would you agree to not collect a security deposit? Surely, you understand that doing so would leave the city completely exposed to financial risk. And, in fact, this is what has happened.
Mayor Held, your explanations do not hold water and I can only conclude one of two things happened. One, you as well as former Finance Director Julie Herr forgot to collect the security deposit outright; or two, without authority you, Mr. Held, had a private understanding with Mr. Larizza that you would not enforce the signed contract and no one in the city, including former Finance Director Herr, questioned your actions.
Your decision to remove the last vestige of any financial security that the city had in the lease contract has resulted in great financial harm to the taxpayers of North Canton.
For City Council, I understand that accepting $35,000 is better than walking away with nothing at all. The loss of nearly $70,000 at a time when the city is struggling to maintain city services while remaining fiscally solvent is heartbreaking to say the least.
What I find more wrenching is the fact that as a former City Administrator and now Mayor that you have misled city officials, the citizens of North Canton, and the general public with a lease that offered absolutely no protections for the city.
This is a lease for which you expended $4,200 in public funds to a law firm a thousand miles away for legal services and stated, “From my perspective it was the best $4,200 that I spent while I was working as City Administrator.”
Mayor Held, the contract to lease The Fairways of North Canton is not worth the paper it is printed on and you have either known this fact or been oblivious to that fact from the beginning. One can only conclude that your performance in this matter as North Canton City Administrator and now as Mayor has resulted in great financial loss to the city.
I ask again tonight that this council and that Law Director Randy McFarren commence an investigation into how one individual could single-handily inflict financial loss of this magnitude on the city and have it go unnoticed for five years.
Mr. Revoldt, as President of City Council, I am aware you are a member of the Host Committee in support of Mayor Held’s reelection. I hope you will place politics aside and support an investigation of how and why the city has suffered a loss of nearly $70,000.
If funds were embezzled from the city of this magnitude, there is no doubt that an investigation would be conducted. The financial loss to the taxpayers of North Canton highlights failures that cannot be swept aside.
The process of government in North Canton has failed its citizens and it has resulted in a substantial loss to the city. Last year this council expended in excess of $64,000 for a state audit looking for increased efficiencies in government. Surely, there is an equally compelling interest to determine how, why, and who is responsible for the loss of nearly $70,000 of public funds.
The citizens of North Canton deserve answers.
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, September 14, 2009
Monday, August 24, 2009
Shortcomings of Arrowhead Lease Adds to North Canton’s Financial Distress
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
August 24, 2009
Last fall, in a Committee of the Whole meeting held on October 20, 2008, there was an item on the agenda for discussion under the Finance & Property Committee regarding the collection of delinquent city income taxes. The agenda request had been made by Finance Director, Alex Zumbar. In a memo to council, dated October 17, 2008, Mr. Zumbar states “…The collection of these delinquent taxes is of great importance to the City.” Fortunately, for the city, there is a legal process that allows for the collection of delinquent income taxes and this was explained to council by Law Director, Randy McFarren.
Finance Committee members have advised me that delinquent income taxes owed to the City of North Canton total as high as $150,000 and that these are delinquencies that have accumulated over a number of years and are owed by hundreds of debtors.
Tax collections are significant for every community and given North Canton’s current financial plight, collection of city taxes takes on added significance. Equally important is fairness in tax policies. Everyone must pay his fair share.
My topic of concern tonight is the delinquency of a specific account and how the city has found itself with little or no means to collect on this delinquent account.
I am referring to a debt owed to the city by the former lessee of the Fairways of North Canton. According to city documents, the city is owed $104, 311.74. Despite numerous letters from the city, the earliest dated October 7, 2008, the city has not received payment.
City records indicate that the overdue amount is comprised of $55,000 in past due lease payments and $49,311.74 is property taxes for 2008. Under the triple-net lease with the city, the lessee was obligated to pay property taxes. To prevent a delinquency on the property taxes for 2008, the city paid the taxes to the county directly and is now attempting to collect from the lessee, Larizza Management Group, LTD.
In contrast to the delinquent income taxes discussed above in which the city has legal standing to force collection, it appears that the City of North Canton has little or no legal basis to force the collection of this debt of over $104,000.
It is not my intention to embarrass anyone at this time but there should be a public understanding of how and why the city has found itself facing an economic loss of this magnitude should the former lessee continue to ignore demands for payment. Steps should be taken to prevent repeating the same mistakes in the future.
The seeds for the predicament that North Canton now finds itself originate with the contract to lease the Arrowhead Golf Course property, signed on December 31, 2003, by former Mayor Tom Rice.
The handicap facing the city today arises from the fact that the city required no performance bond, received no security deposit, and failed to require the lessee to sign the lease contract both as a corporate officer and personally. Kevin Larizza signed only as President of Larizza Management Group, LTD, which allows him to shield himself personally from any legal obligation to honor the contract with the city.
ARTICLE IX of the contract to lease the golf course specifies a $50,000 security deposit to be collected in two $25,000 installments. The first installment was to be paid within the first six months of the lease and the second installment was due no later than eleven months into the lease. No security installment was ever collected.
Mayor Held, as city administrator at the time, why were no lease payments ever collected?
In minutes of an August 26, 2003, Board of Control meeting to authorize the Mayor to enter into a Lease Agreement for the premises known as Arrowhead Country Club, City Administrator Held asked Law Director Roy Batista if Batista preferred a $500,000 performance bond over a security deposit. Law Director Batista replied “….I really would want both.”
On August 19, 2003, a Repository story titled, “North Canton agrees to lease Arrowhead,” reports “….the lessee will have to sign a $500,000 performance bond to protect the city if Arrowhead is damaged or neglected while leased.”
Mayor Held, the record begs the obvious question of why was there no requirement for a performance bond as urged by Law Director Batista and reported to the public in the newspaper?
On August 28, 2003, a Repository story titled, “Chippewa offered city most bang for its buck,” reports “The city is paying a leasing consultant from Texas for its advice on the seven proposals and has hired Addison Law Firm of Dallas, Texas, which specializes in golf course management contracts and leases, to formulate the final lease agreement with Chippewa.”
City records document that North Canton paid the Addison Law Firm of Dallas, Texas, at least $4,200.15 for their legal services. The identity of the leasing consultant or the costs to the city for their services could not be located.
Mayor Held, why did the city have to retain a law firm located a thousand miles away at an added expense to the taxpayers of North Canton to draft a contract to lease property when North Canton had not one but two law directors already on the city’s payroll?
In your opinion, did the city benefit from the use of outside legal expertise in the drafting of this lease?
Further, Mayor Held, was there any thought given to requiring Kevin Larizza to sign the lease contract as an individual as well as in his capacity as an officer of the corporation?
The minutes of the Board of Control meeting dated August 26, 2003, referenced above, have former Mayor Tom Rice stating, “I never enter into a contract before it’s been approved by the law department….”
However, a search of all city records related to the Arrowhead Golf Course property fails to show that the lease was ever reviewed by the North Canton City Law Director. Failing to have the city’s law director review and approve the lease for form and content is a violation of state law under ORC 705.11.
The statute states in part “[The city director of law] shall indorse on each [contract] approval of the form and the correctness thereof. No contract with the municipal corporation shall take effect until the approval of the …city director of law is indorsed thereon.”
I urge this council to pass legislation codifying this requirement under the laws of North Canton as added protection against economic loss to the city and its taxpayers in future contracts.
Lastly, I would like to speak to another aspect of this sad saga that resulted in a contract that has failed to protect the City of North Canton and exposed the city to economic loss. Council minutes along with Board of Control minutes clearly reveal city council’s failure to provide oversight of the Rice administration and City Administrator Held who are ultimately responsible for the failed contract.
At a special council meeting held on August 18, 2003, city council voted, on an emergency, to give the former Rice Administration total authority to negotiate the lease contract.
I was on city council at this time and after I was prevented from speaking out against the lease in the proceeding Committee of the Whole meeting, I refused to vote on the measure and excused myself from participation in the vote. The remaining six members of council voted to authorize Mayor Rice to enter into a Lease Agreement for the premises known as Arrowhead Country Club for a term yet to be negotiated.
Whatever happened to the idea of checks and balances in government and of the fiduciary responsibility city council has to their constituents?
The potential economic loss of over $104,000 facing any municipality is nothing to brush aside, and given the devastating financial distress now facing the city, any loss in revenue is devastating.
Mayor Held, I realize that less than a month after the Arrowhead lease contract was signed you were removed as city administrator and that might explain why the security deposit was never collected by you.
But you did return to the city as mayor two years later in 2005. For the last three years of the lease you did have an opportunity to collect the long overdue security deposit. It is unfortunate that your city administrator, Earl Wise, also has not thought to collect the security deposit in his nearly four years at city hall. And I might add, neither did former City Administrator Michael Miller who served during the first two years of the lease and made modifications to the lease that expanded the definition of capital improvements.
The potential economic loss that the city finds itself facing is the result of what one might call a “perfect storm.” First, city council gave blanket approval for the Rice Administration to negotiate the lease contract and never asked to review the terms negotiated; second, the contract was signed within the first ninety days of a change in city law directors; third, there was a change in city administrators thirty days after the lease was signed; fourth, there was a failure to have the North Canton City Law Director review the lease contract as required by state law.
I urge this council to commence an investigation into all the shortcomings that apparently have now put the city at a great disadvantage in pursuing the collection of these badly needed funds and conceivably could result in a sizeable economic loss to the city.
Clearly, the city’s law director needs to review all contracts as state law mandates. I will wait to see what other recommendations this council elects to put in place after their study is completed.
Thank you,
Chuck Osborne
Resident,
City of North Canton
NORTH CANTON CITY COUNCIL
August 24, 2009
Last fall, in a Committee of the Whole meeting held on October 20, 2008, there was an item on the agenda for discussion under the Finance & Property Committee regarding the collection of delinquent city income taxes. The agenda request had been made by Finance Director, Alex Zumbar. In a memo to council, dated October 17, 2008, Mr. Zumbar states “…The collection of these delinquent taxes is of great importance to the City.” Fortunately, for the city, there is a legal process that allows for the collection of delinquent income taxes and this was explained to council by Law Director, Randy McFarren.
Finance Committee members have advised me that delinquent income taxes owed to the City of North Canton total as high as $150,000 and that these are delinquencies that have accumulated over a number of years and are owed by hundreds of debtors.
Tax collections are significant for every community and given North Canton’s current financial plight, collection of city taxes takes on added significance. Equally important is fairness in tax policies. Everyone must pay his fair share.
My topic of concern tonight is the delinquency of a specific account and how the city has found itself with little or no means to collect on this delinquent account.
I am referring to a debt owed to the city by the former lessee of the Fairways of North Canton. According to city documents, the city is owed $104, 311.74. Despite numerous letters from the city, the earliest dated October 7, 2008, the city has not received payment.
City records indicate that the overdue amount is comprised of $55,000 in past due lease payments and $49,311.74 is property taxes for 2008. Under the triple-net lease with the city, the lessee was obligated to pay property taxes. To prevent a delinquency on the property taxes for 2008, the city paid the taxes to the county directly and is now attempting to collect from the lessee, Larizza Management Group, LTD.
In contrast to the delinquent income taxes discussed above in which the city has legal standing to force collection, it appears that the City of North Canton has little or no legal basis to force the collection of this debt of over $104,000.
It is not my intention to embarrass anyone at this time but there should be a public understanding of how and why the city has found itself facing an economic loss of this magnitude should the former lessee continue to ignore demands for payment. Steps should be taken to prevent repeating the same mistakes in the future.
The seeds for the predicament that North Canton now finds itself originate with the contract to lease the Arrowhead Golf Course property, signed on December 31, 2003, by former Mayor Tom Rice.
The handicap facing the city today arises from the fact that the city required no performance bond, received no security deposit, and failed to require the lessee to sign the lease contract both as a corporate officer and personally. Kevin Larizza signed only as President of Larizza Management Group, LTD, which allows him to shield himself personally from any legal obligation to honor the contract with the city.
ARTICLE IX of the contract to lease the golf course specifies a $50,000 security deposit to be collected in two $25,000 installments. The first installment was to be paid within the first six months of the lease and the second installment was due no later than eleven months into the lease. No security installment was ever collected.
Mayor Held, as city administrator at the time, why were no lease payments ever collected?
In minutes of an August 26, 2003, Board of Control meeting to authorize the Mayor to enter into a Lease Agreement for the premises known as Arrowhead Country Club, City Administrator Held asked Law Director Roy Batista if Batista preferred a $500,000 performance bond over a security deposit. Law Director Batista replied “….I really would want both.”
On August 19, 2003, a Repository story titled, “North Canton agrees to lease Arrowhead,” reports “….the lessee will have to sign a $500,000 performance bond to protect the city if Arrowhead is damaged or neglected while leased.”
Mayor Held, the record begs the obvious question of why was there no requirement for a performance bond as urged by Law Director Batista and reported to the public in the newspaper?
On August 28, 2003, a Repository story titled, “Chippewa offered city most bang for its buck,” reports “The city is paying a leasing consultant from Texas for its advice on the seven proposals and has hired Addison Law Firm of Dallas, Texas, which specializes in golf course management contracts and leases, to formulate the final lease agreement with Chippewa.”
City records document that North Canton paid the Addison Law Firm of Dallas, Texas, at least $4,200.15 for their legal services. The identity of the leasing consultant or the costs to the city for their services could not be located.
Mayor Held, why did the city have to retain a law firm located a thousand miles away at an added expense to the taxpayers of North Canton to draft a contract to lease property when North Canton had not one but two law directors already on the city’s payroll?
In your opinion, did the city benefit from the use of outside legal expertise in the drafting of this lease?
Further, Mayor Held, was there any thought given to requiring Kevin Larizza to sign the lease contract as an individual as well as in his capacity as an officer of the corporation?
The minutes of the Board of Control meeting dated August 26, 2003, referenced above, have former Mayor Tom Rice stating, “I never enter into a contract before it’s been approved by the law department….”
However, a search of all city records related to the Arrowhead Golf Course property fails to show that the lease was ever reviewed by the North Canton City Law Director. Failing to have the city’s law director review and approve the lease for form and content is a violation of state law under ORC 705.11.
The statute states in part “[The city director of law] shall indorse on each [contract] approval of the form and the correctness thereof. No contract with the municipal corporation shall take effect until the approval of the …city director of law is indorsed thereon.”
I urge this council to pass legislation codifying this requirement under the laws of North Canton as added protection against economic loss to the city and its taxpayers in future contracts.
Lastly, I would like to speak to another aspect of this sad saga that resulted in a contract that has failed to protect the City of North Canton and exposed the city to economic loss. Council minutes along with Board of Control minutes clearly reveal city council’s failure to provide oversight of the Rice administration and City Administrator Held who are ultimately responsible for the failed contract.
At a special council meeting held on August 18, 2003, city council voted, on an emergency, to give the former Rice Administration total authority to negotiate the lease contract.
I was on city council at this time and after I was prevented from speaking out against the lease in the proceeding Committee of the Whole meeting, I refused to vote on the measure and excused myself from participation in the vote. The remaining six members of council voted to authorize Mayor Rice to enter into a Lease Agreement for the premises known as Arrowhead Country Club for a term yet to be negotiated.
Whatever happened to the idea of checks and balances in government and of the fiduciary responsibility city council has to their constituents?
The potential economic loss of over $104,000 facing any municipality is nothing to brush aside, and given the devastating financial distress now facing the city, any loss in revenue is devastating.
Mayor Held, I realize that less than a month after the Arrowhead lease contract was signed you were removed as city administrator and that might explain why the security deposit was never collected by you.
But you did return to the city as mayor two years later in 2005. For the last three years of the lease you did have an opportunity to collect the long overdue security deposit. It is unfortunate that your city administrator, Earl Wise, also has not thought to collect the security deposit in his nearly four years at city hall. And I might add, neither did former City Administrator Michael Miller who served during the first two years of the lease and made modifications to the lease that expanded the definition of capital improvements.
The potential economic loss that the city finds itself facing is the result of what one might call a “perfect storm.” First, city council gave blanket approval for the Rice Administration to negotiate the lease contract and never asked to review the terms negotiated; second, the contract was signed within the first ninety days of a change in city law directors; third, there was a change in city administrators thirty days after the lease was signed; fourth, there was a failure to have the North Canton City Law Director review the lease contract as required by state law.
I urge this council to commence an investigation into all the shortcomings that apparently have now put the city at a great disadvantage in pursuing the collection of these badly needed funds and conceivably could result in a sizeable economic loss to the city.
Clearly, the city’s law director needs to review all contracts as state law mandates. I will wait to see what other recommendations this council elects to put in place after their study is completed.
Thank you,
Chuck Osborne
Resident,
City of North Canton
Monday, June 22, 2009
Construction Management Agreement with Developer Not a Public Emergency
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
June 22, 2009
At last Monday’s council of the whole meeting, there was discussion under the Community and Economic Development Committee, chaired by Marcia Kiesling, to ratify a Construction Management Agreement appointing Maple Street Commerce as “Manager and Construction Agent” for the City of North Canton. This agreement will allow Maple Street Commerce to oversee the expenditure of $3.0 million of Ohio’s Job Ready Site funds that were recently awarded to the city for the North Canton Hoover Campus Redevelopment Project.
I have a number of concerns.
For me this agreement is a little like letting the fox guard the hen house. There should be qualified and independent oversight of the expenditure of the millions of dollars of public funds that are being made available to Maple Street Commerce, a private developer. There is no such requirement under this agreement.
Another concern is that I do not believe the city’s economic development director, Eric Bowles, should be thrust into the role of “Project Manager” as outlined in this agreement. I do not feel Mr. Bowles has the necessary academic credentials or experience in construction management to manage the depth, breadth and complexity of a project of this size.
Furthermore, Mr. Bowles should not be placed into the position of “good cop bad cop” and that is exactly what you are asking him to be. How can the economic development director of any community be asked to promote and market his community to business interests and then oversee enforcement and compliance by those same business interests that locate into the community? Wearing two hats in this manner diminishes the effectiveness of each position and presents conflicts of interests.
Has anyone ever seen a single real estate agent represent both the buyer and the seller in a real estate transaction?
The discussion last week to allow Maple Street Commerce to be Manager and Construction Agent for the city is on tonight’s agenda as Ordinance No. 56-09 and is slated for passage on an emergency.
Do the health and welfare of the city or of its citizens require immediate passage of this legislation tonight? I believe the health and welfare of the city and its citizens would be better served if this legislation
were discussed further and passage not rushed.
I applaud my 3rd Ward Councilman, Councilmember Jeff Davies, for urging last week that the legislation have at least one additional reading before final passage. Mr. Revoldt, I did not care for your heavy-handed tactics when you replied that the legislation was going to be passed tonight.
I wonder how closely every member of this council has read through the agreement. Though some council members asked questions last week, it appeared to me that it was easier for some council members to coast along and rely on the law director’s legal craftsmanship of the document to protect the city and its taxpayers.
I would encourage every council member to closely review the “Construction Management Agreement” and then read the Phase I Environmental Site Assessment Report for the Hoover Company Facility.
Why are the concerns of the Phase I Environmental Site Assessment not addressed in the Construction Management Agreement?
Page 6 of the environmental assessment states that there is a substantial asbestos presence on the site and it is deemed an environmental concern. Page 39 of the environmental assessment recommends that “a new owner/occupant utilize an asbestos management plan when conducting any building renovation or demolition.”
Not surprisingly, there are many environmental concerns noted in the Phase I Environmental Site Assessment at the former Hoover Facility and there are recommendations made that deal with each of those concerns.
Why are these concerns not addressed in the Construction Management Agreement?
Who is going to ensure that those concerns are addressed? Who has the expertise to judge if those concerns are handled properly?
Will Maple Street Commerce choose to spend grant funds to implement management plans for asbestos, lead paint, concrete, groundwater, and other environmental issues as recommended in the Phase I Environmental Site Assessment Report over spending funds for planned renovations? Who will ensure that they do?
I can not see the Held Administration standing up to Maple Street Commerce and demanding that environmental issues be remedied over planned renovations. I do not see Maple Street Commerce alleviating environmental issues without a contract stating that environmental issues will be remedied.
Any Construction Management Agreement that is put in place needs to address environmental concerns as well as construction oversight with total objectivity.
I urge this council to not rush passage of this legislation and to implement an agreement that truly safeguards the city and the taxpayers.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
June 22, 2009
At last Monday’s council of the whole meeting, there was discussion under the Community and Economic Development Committee, chaired by Marcia Kiesling, to ratify a Construction Management Agreement appointing Maple Street Commerce as “Manager and Construction Agent” for the City of North Canton. This agreement will allow Maple Street Commerce to oversee the expenditure of $3.0 million of Ohio’s Job Ready Site funds that were recently awarded to the city for the North Canton Hoover Campus Redevelopment Project.
I have a number of concerns.
For me this agreement is a little like letting the fox guard the hen house. There should be qualified and independent oversight of the expenditure of the millions of dollars of public funds that are being made available to Maple Street Commerce, a private developer. There is no such requirement under this agreement.
Another concern is that I do not believe the city’s economic development director, Eric Bowles, should be thrust into the role of “Project Manager” as outlined in this agreement. I do not feel Mr. Bowles has the necessary academic credentials or experience in construction management to manage the depth, breadth and complexity of a project of this size.
Furthermore, Mr. Bowles should not be placed into the position of “good cop bad cop” and that is exactly what you are asking him to be. How can the economic development director of any community be asked to promote and market his community to business interests and then oversee enforcement and compliance by those same business interests that locate into the community? Wearing two hats in this manner diminishes the effectiveness of each position and presents conflicts of interests.
Has anyone ever seen a single real estate agent represent both the buyer and the seller in a real estate transaction?
The discussion last week to allow Maple Street Commerce to be Manager and Construction Agent for the city is on tonight’s agenda as Ordinance No. 56-09 and is slated for passage on an emergency.
Do the health and welfare of the city or of its citizens require immediate passage of this legislation tonight? I believe the health and welfare of the city and its citizens would be better served if this legislation
were discussed further and passage not rushed.
I applaud my 3rd Ward Councilman, Councilmember Jeff Davies, for urging last week that the legislation have at least one additional reading before final passage. Mr. Revoldt, I did not care for your heavy-handed tactics when you replied that the legislation was going to be passed tonight.
I wonder how closely every member of this council has read through the agreement. Though some council members asked questions last week, it appeared to me that it was easier for some council members to coast along and rely on the law director’s legal craftsmanship of the document to protect the city and its taxpayers.
I would encourage every council member to closely review the “Construction Management Agreement” and then read the Phase I Environmental Site Assessment Report for the Hoover Company Facility.
Why are the concerns of the Phase I Environmental Site Assessment not addressed in the Construction Management Agreement?
Page 6 of the environmental assessment states that there is a substantial asbestos presence on the site and it is deemed an environmental concern. Page 39 of the environmental assessment recommends that “a new owner/occupant utilize an asbestos management plan when conducting any building renovation or demolition.”
Not surprisingly, there are many environmental concerns noted in the Phase I Environmental Site Assessment at the former Hoover Facility and there are recommendations made that deal with each of those concerns.
Why are these concerns not addressed in the Construction Management Agreement?
Who is going to ensure that those concerns are addressed? Who has the expertise to judge if those concerns are handled properly?
Will Maple Street Commerce choose to spend grant funds to implement management plans for asbestos, lead paint, concrete, groundwater, and other environmental issues as recommended in the Phase I Environmental Site Assessment Report over spending funds for planned renovations? Who will ensure that they do?
I can not see the Held Administration standing up to Maple Street Commerce and demanding that environmental issues be remedied over planned renovations. I do not see Maple Street Commerce alleviating environmental issues without a contract stating that environmental issues will be remedied.
Any Construction Management Agreement that is put in place needs to address environmental concerns as well as construction oversight with total objectivity.
I urge this council to not rush passage of this legislation and to implement an agreement that truly safeguards the city and the taxpayers.
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, April 13, 2009
North Canton Continues to Gratuitously Provide Tax Abatements to Able Corporations
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
April 13, 2009
My comments tonight deal with an issue I have addressed before to this council and that is the issue of tax abatements and how they are given out simply for the asking in North Canton.
Nearly two years ago, council was considering tax incentives for the construction of a Sherwin Williams Paint Store on Applegrove Street. In remarks to council regarding the tax abatement for Sherwin Williams on May 14, 2007, I said “Tax abatements for businesses in North Canton took on a whole new meaning at last Monday night’s Council of the Whole meeting when Economic Development Committee Chairman Jim Repace brought to the table a request for a CRA Tax Incentive for a Sherwin Williams Paint Store on Applegrove Street, NE.” Continuing, I asked “...[are] the taxpayers of North Canton now expected to subsidize a public corporation, traded on the New York Stock Exchange with sales last year of $7.8 billion with an exemption from property taxes.”
The discussion of tax incentives for the Sherwin Williams Paint Store subsequently ended and the Sherwin Williams Paint Store was later constructed without the need for tax incentives. Imagine that!
On tonight’s agenda, titled as Ordinance No. 33-09, is yet another request for tax incentives for a corporation. This corporation also has sizeable annual sales and financial clout.
And typical of tax abatement requests before North Canton City Council, the legislation is being considered as emergency legislation.
The emergency legislation is for an abatement of taxes under the city’s Community Reinvestment Area Tax program for remodeling and improvements that are planned at the Acme Fresh Market Store located on North Main Street. The store is operated by the Fred W. Albrecht Grocery Company.
The Fred W. Albrecht Grocery Company is a privately owned corporation that has sales in excess of $400 million dollars a year. I am gratified that the Acme Fresh Market store here in North Canton is going to be remodeled and expanded and I look forward to the expanded services that the new Acme will provide to me and the community, but are tax incentives actually needed in this situation?
As I stated in my opening statement, tax abatements are given out simply for the asking in North Canton and they have not been a factor in any of the decisions by businesses who have received them to invest in the city. They have been an afterthought and simply a handout.
In the case of the Fred W. Albrecht Grocery Company, the tax incentives being offered are more than a handout. Last Tuesday, I met with a representative of the Fred W. Albrecht Grocery Company at the company’s headquarters in Akron. In that meeting, the company’s secretary/treasurer told me that Albrecht Grocery Company does not generally ask for tax incentives and in regards to the planned improvements of their Acme store here in North Canton the city simply offered the tax incentives carte blanche, with no questions asked. Sort of like last week’s council meeting when not one single council member posed a single question regarding the request for tax incentives.
The secretary/treasurer for the Albrecht Grocery Company advised me that tax incentives offered to the company have no bearing on plans for the remodeling and improvement being made to the Acme Fresh Market on North Main.
Do I need to refresh everyone’s mind that North Canton is still facing a fiscal crisis? President Revoldt, in Town Hall meetings has indicated that the city could face fiscal emergency and state takeover of the city’s finances. Has anyone forgotten the $1.0 million plus deficit that the city is facing for 2010 and beyond?
And what is truly sad in terms of each and every one of these tax abatements is the fact that the majority of the tax monies that this council is talking of abating are funds destined for the North Canton City Schools.
Is anyone on this council aware of the financial constraints that the North Canton City School District is facing over the next three years?
The North Canton Education Association has just been told the following in a recent meeting of its members: For the school year, 2009-2010, if the district is able to trim this year’s expenditure by $1.5 million, the school district can end the school year with a $2.4 million carryover. For the school year, 2010-2011, the carryover will have dwindled to $660,000. For the school year, 2011-2012, the North Canton School District expects a deficit of $1.7 million.
In last week’s Council of the Whole meeting, Finance Chairman Jon Snyder remarked that the dollar amounts that have been abated in previous tax abatements by council were insignificant. Mr. Snyder, the only thing insignificant about the amounts of those tax abatements is how insignificant the tax incentives were in persuading those businesses to locate and build in North Canton.
The tax abatements given in this city are corporate charity and they take away money from the North Canton City School District and if this council continues to hand them out like party favors you will drive the city’s school district into budget deficits that we now face in the City of North Canton.
Mr. Snyder, an abatement of $6,600 a year on property taxes for a corporation that does $400 million a year in sales is insignificant. It is also tax deductible. Downsizing the City of North Canton and the North Canton City School District is not insignificant.
Last Friday, I delivered a letter to the President of The Fred W. Albrecht Grocery Company, Steve Albrecht, asking him to decline the city’s offer for tax incentives. I am appealing to his moral sense of duty for a community that is in deep financial distress.
Lastly, I must say that I am disheartened that no one in North Canton City Government knows that his fiduciary responsibility is to the citizens and taxpayers of this city first and foremost. Offering tax abatements just because you can clearly is irresponsible.
I am hoping that The Fred W. Albrecht Grocery Company is a good corporate citizen and will be a strong supporter of our community and decline the offer of tax incentives.
The North Canton City Schools need all the money they can collect and most certainly the City of North Canton needs all the revenue it can collect.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
April 13, 2009
My comments tonight deal with an issue I have addressed before to this council and that is the issue of tax abatements and how they are given out simply for the asking in North Canton.
Nearly two years ago, council was considering tax incentives for the construction of a Sherwin Williams Paint Store on Applegrove Street. In remarks to council regarding the tax abatement for Sherwin Williams on May 14, 2007, I said “Tax abatements for businesses in North Canton took on a whole new meaning at last Monday night’s Council of the Whole meeting when Economic Development Committee Chairman Jim Repace brought to the table a request for a CRA Tax Incentive for a Sherwin Williams Paint Store on Applegrove Street, NE.” Continuing, I asked “...[are] the taxpayers of North Canton now expected to subsidize a public corporation, traded on the New York Stock Exchange with sales last year of $7.8 billion with an exemption from property taxes.”
The discussion of tax incentives for the Sherwin Williams Paint Store subsequently ended and the Sherwin Williams Paint Store was later constructed without the need for tax incentives. Imagine that!
On tonight’s agenda, titled as Ordinance No. 33-09, is yet another request for tax incentives for a corporation. This corporation also has sizeable annual sales and financial clout.
And typical of tax abatement requests before North Canton City Council, the legislation is being considered as emergency legislation.
The emergency legislation is for an abatement of taxes under the city’s Community Reinvestment Area Tax program for remodeling and improvements that are planned at the Acme Fresh Market Store located on North Main Street. The store is operated by the Fred W. Albrecht Grocery Company.
The Fred W. Albrecht Grocery Company is a privately owned corporation that has sales in excess of $400 million dollars a year. I am gratified that the Acme Fresh Market store here in North Canton is going to be remodeled and expanded and I look forward to the expanded services that the new Acme will provide to me and the community, but are tax incentives actually needed in this situation?
As I stated in my opening statement, tax abatements are given out simply for the asking in North Canton and they have not been a factor in any of the decisions by businesses who have received them to invest in the city. They have been an afterthought and simply a handout.
In the case of the Fred W. Albrecht Grocery Company, the tax incentives being offered are more than a handout. Last Tuesday, I met with a representative of the Fred W. Albrecht Grocery Company at the company’s headquarters in Akron. In that meeting, the company’s secretary/treasurer told me that Albrecht Grocery Company does not generally ask for tax incentives and in regards to the planned improvements of their Acme store here in North Canton the city simply offered the tax incentives carte blanche, with no questions asked. Sort of like last week’s council meeting when not one single council member posed a single question regarding the request for tax incentives.
The secretary/treasurer for the Albrecht Grocery Company advised me that tax incentives offered to the company have no bearing on plans for the remodeling and improvement being made to the Acme Fresh Market on North Main.
Do I need to refresh everyone’s mind that North Canton is still facing a fiscal crisis? President Revoldt, in Town Hall meetings has indicated that the city could face fiscal emergency and state takeover of the city’s finances. Has anyone forgotten the $1.0 million plus deficit that the city is facing for 2010 and beyond?
And what is truly sad in terms of each and every one of these tax abatements is the fact that the majority of the tax monies that this council is talking of abating are funds destined for the North Canton City Schools.
Is anyone on this council aware of the financial constraints that the North Canton City School District is facing over the next three years?
The North Canton Education Association has just been told the following in a recent meeting of its members: For the school year, 2009-2010, if the district is able to trim this year’s expenditure by $1.5 million, the school district can end the school year with a $2.4 million carryover. For the school year, 2010-2011, the carryover will have dwindled to $660,000. For the school year, 2011-2012, the North Canton School District expects a deficit of $1.7 million.
In last week’s Council of the Whole meeting, Finance Chairman Jon Snyder remarked that the dollar amounts that have been abated in previous tax abatements by council were insignificant. Mr. Snyder, the only thing insignificant about the amounts of those tax abatements is how insignificant the tax incentives were in persuading those businesses to locate and build in North Canton.
The tax abatements given in this city are corporate charity and they take away money from the North Canton City School District and if this council continues to hand them out like party favors you will drive the city’s school district into budget deficits that we now face in the City of North Canton.
Mr. Snyder, an abatement of $6,600 a year on property taxes for a corporation that does $400 million a year in sales is insignificant. It is also tax deductible. Downsizing the City of North Canton and the North Canton City School District is not insignificant.
Last Friday, I delivered a letter to the President of The Fred W. Albrecht Grocery Company, Steve Albrecht, asking him to decline the city’s offer for tax incentives. I am appealing to his moral sense of duty for a community that is in deep financial distress.
Lastly, I must say that I am disheartened that no one in North Canton City Government knows that his fiduciary responsibility is to the citizens and taxpayers of this city first and foremost. Offering tax abatements just because you can clearly is irresponsible.
I am hoping that The Fred W. Albrecht Grocery Company is a good corporate citizen and will be a strong supporter of our community and decline the offer of tax incentives.
The North Canton City Schools need all the money they can collect and most certainly the City of North Canton needs all the revenue it can collect.
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, February 09, 2009
North Canton's On Again Off Again Annexation Policy Hinders City's Future
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
February 9, 2009
I would like to begin by commending City Council as well as Mayor Held in the city’s newfound efforts to expand the city’s borders through annexation of 22 acres of property belonging to Dan Fosnaught. City leaders should follow through at all costs to make this annexation a reality for North Canton. If required, the city can fund the annexation efforts with the $973,000 remaining of the $1.5 million previously set aside for the North Canton CIC.
I would also urge city leaders to pursue efforts to undue the advantages that townships have now been afforded in fighting annexations recently enacted into state law. I do not believe that the legislature envisioned the collusion that is now occurring between Plain and Jackson townships and the City of Canton that effectively ends the growth of small cities such as the City of North Canton. That law is also counterproductive to increased efficiencies that can be achieved as cities increase in size with consolidation of services and bureaucracies that can better serve the public. I urge North Canton to pursue changes to the annexation laws, both through the courts and through the state legislature.
My concern tonight is the history of North Canton’s annexation policy regarding use of city water as a tool for annexation over the last decade and a half and how it has or has not been used and most importantly why that policy flip flops every few years.
Research shows that North Canton first began requiring nonresidents to agree to annex into the city in exchange for city water with the passage of Ordinance No. 118-93. Council member Tim Watkins, Chairman of the Water, Sewer & Rubbish committee at the time this legislation was passed is quoted from city council minutes of December 20, 1993, as stating: “…this is probably going to be one of the single most effective tools that exists that we currently have to promote and increase our viability as a city and a city of growth.”
Ordinance No. 118-93 passed unanimously with votes from Greg Wernet, Paul Blohm, Rick McLaughlin, Daryl Revoldt, Tim Watkins and Gary Wechter. The legislation was immediately signed by Mayor William Hines.
In a Repository news report titled, “Canal Fulton wants to grow through annexation,” dated November 9, 2001, Mayor Shawn Kenney tells Canal Fulton City Council “A city that doesn’t expand is a dead city.”
In another Repository news report titled “City pushes annexations,” dated October 15, 2006, the report states “The population of the state capital now exceeds that of Cleveland. And one big way Columbus did it was through annexation, using water to lure property owners into the city limits.”
The same news article reports that the City of Canton had annexed roughly 2,500 acres in the previous decade and that the City of Massillon had doubled in size since 1974. The article goes on to quote Canton Council Majority Leader Donald Casar who states “Without annexation, we’re going to die on the vine…we have to grow to survive.”
North Canton was put on the proper path for growth with the passage of Ordinance 118-93 in 1993 using water as a tool to requiring annexation into the city.
Unfortunately, this policy was changed under the administration of former Mayor Tom Rice and City Administrator Michael Miller with Ordinance No. 132-04. Under that ordinance, North Canton City Council removed the annexation requirement for nonresidents who receive city water as a precondition for those services.
Marcia Kiesling, Chairwoman of Community & Economic Development headed the committee to amend the annexation requirement with passage of Ordinance No. 132-04. Council members voting to remove the annexation requirement were Dave Lindower, Jeff Peters, Greg Sarbach, Jon Snyder, Doug Foltz, and Marcia Kiesling.
The reason given for removing the requirement according to a Repository report on October 5, 2004, titled “Annexation clause removed from water pacts,” was that “[the requirement] had outlived its usefulness and hoped that it would make the city more competitive with other water companies.”
Well apparently that requirement is useful after all as North Canton City Council has reinstituted the annexation requirement with the passage of Ordinance No. 13-09. This latest legislation was passed on an expedited schedule with Marcia Kiesling, Jeff Peters, Daryl Revoldt, Jon Snyder, and Jeff Davies supporting final passage on February 2. Council members Doug Foltz and Pat DeOrio abstained due to conflicts of interest.
I am a little unnerved to observe my elected leaders pass whatever legislation is placed before them without great care and deliberation. Shouldn’t there be more debate on issues?
Shouldn’t each council member come to his/her own conclusion on passage of legislation instead of acting like lemmings? For council members Peters, Snyder, and Kiesling, your vote for Ordinance No. 13-09 reinstating the annexation requirement was in direct opposition to legislation you supported when you voted on Ordinance No. 132-04 removing the annexation requirement.
Former City Administrator Miller’s recommendation to Council to remove the annexation requirement was noted in an Email dated September 9, 2004. Mr. Miller stated that when he was employed with the City of Canton “[he] found that the requirement of North Canton to annex in exchange for water service to be an advantage to Canton in extending its water.”
Has anyone given any thought to the fact that Canton under state law can require annexation into the City of Canton when providing Canton water to nonresidents?
Any municipality that provides services such as sewer and water outside its borders can require a property owner to annex into the municipality providing those services. That is per the Ohio Supreme Court in Bakies v. Perrysburg, 2006-Ohio-1190.
Maybe the City of Canton is playing the game a little smarter than North Canton by not stating its intentions for annexation as a precursor to receiving those services. North Canton is upfront with its intentions of annexation when it supplies city water to nonresidents.
Who knows what the City of Canton may require in the future after it extends water to nonresidents? Bakies v. Perrysburg certainly raises the possibility that the City of Canton could require annexation to Canton at some point in the future for its nonresident water customers.
That possibility should be pointed out to all prospective North Canton water customers when annexation opportunities arise for North Canton and potential customers believe that Canton is a viable choice without the upfront requirement to annex into Canton. That requirement is supported by state law and not pointed out by Canton when it extends its water lines.
The City of North Canton is not asking any more than what Canton or any other community would ask for when it extends city services.
Without annexations, municipalities die on the vine. Canton Council Member Mr. Casar had that exactly right. North Canton will die on the vine if it does not pursue annexations.
North Canton must embark on an aggressive annexation policy. Municipalities came into existence with annexations and they do not stay vibrant without continued growth of city boundaries through annexations. Water is a tool for annexations and should not be given away. For far too long North Canton has given away the store and not asked for anything in return.
Good quality water is a service we can provide for our residents and should not be used to build a water system that grows far beyond what the city needs or what the city can operate effectively. We have a municipal water system for the city and its residents. It should be nothing more.
If North Canton continues to play water provider to the world it will only create a system it cannot manage and the city will lose in the end. And along the way, North Canton will have lost opportunities to grow the city.
Thank you,
Chuck Osborne
Resident,
City of North Canton
NORTH CANTON CITY COUNCIL
February 9, 2009
I would like to begin by commending City Council as well as Mayor Held in the city’s newfound efforts to expand the city’s borders through annexation of 22 acres of property belonging to Dan Fosnaught. City leaders should follow through at all costs to make this annexation a reality for North Canton. If required, the city can fund the annexation efforts with the $973,000 remaining of the $1.5 million previously set aside for the North Canton CIC.
I would also urge city leaders to pursue efforts to undue the advantages that townships have now been afforded in fighting annexations recently enacted into state law. I do not believe that the legislature envisioned the collusion that is now occurring between Plain and Jackson townships and the City of Canton that effectively ends the growth of small cities such as the City of North Canton. That law is also counterproductive to increased efficiencies that can be achieved as cities increase in size with consolidation of services and bureaucracies that can better serve the public. I urge North Canton to pursue changes to the annexation laws, both through the courts and through the state legislature.
My concern tonight is the history of North Canton’s annexation policy regarding use of city water as a tool for annexation over the last decade and a half and how it has or has not been used and most importantly why that policy flip flops every few years.
Research shows that North Canton first began requiring nonresidents to agree to annex into the city in exchange for city water with the passage of Ordinance No. 118-93. Council member Tim Watkins, Chairman of the Water, Sewer & Rubbish committee at the time this legislation was passed is quoted from city council minutes of December 20, 1993, as stating: “…this is probably going to be one of the single most effective tools that exists that we currently have to promote and increase our viability as a city and a city of growth.”
Ordinance No. 118-93 passed unanimously with votes from Greg Wernet, Paul Blohm, Rick McLaughlin, Daryl Revoldt, Tim Watkins and Gary Wechter. The legislation was immediately signed by Mayor William Hines.
In a Repository news report titled, “Canal Fulton wants to grow through annexation,” dated November 9, 2001, Mayor Shawn Kenney tells Canal Fulton City Council “A city that doesn’t expand is a dead city.”
In another Repository news report titled “City pushes annexations,” dated October 15, 2006, the report states “The population of the state capital now exceeds that of Cleveland. And one big way Columbus did it was through annexation, using water to lure property owners into the city limits.”
The same news article reports that the City of Canton had annexed roughly 2,500 acres in the previous decade and that the City of Massillon had doubled in size since 1974. The article goes on to quote Canton Council Majority Leader Donald Casar who states “Without annexation, we’re going to die on the vine…we have to grow to survive.”
North Canton was put on the proper path for growth with the passage of Ordinance 118-93 in 1993 using water as a tool to requiring annexation into the city.
Unfortunately, this policy was changed under the administration of former Mayor Tom Rice and City Administrator Michael Miller with Ordinance No. 132-04. Under that ordinance, North Canton City Council removed the annexation requirement for nonresidents who receive city water as a precondition for those services.
Marcia Kiesling, Chairwoman of Community & Economic Development headed the committee to amend the annexation requirement with passage of Ordinance No. 132-04. Council members voting to remove the annexation requirement were Dave Lindower, Jeff Peters, Greg Sarbach, Jon Snyder, Doug Foltz, and Marcia Kiesling.
The reason given for removing the requirement according to a Repository report on October 5, 2004, titled “Annexation clause removed from water pacts,” was that “[the requirement] had outlived its usefulness and hoped that it would make the city more competitive with other water companies.”
Well apparently that requirement is useful after all as North Canton City Council has reinstituted the annexation requirement with the passage of Ordinance No. 13-09. This latest legislation was passed on an expedited schedule with Marcia Kiesling, Jeff Peters, Daryl Revoldt, Jon Snyder, and Jeff Davies supporting final passage on February 2. Council members Doug Foltz and Pat DeOrio abstained due to conflicts of interest.
I am a little unnerved to observe my elected leaders pass whatever legislation is placed before them without great care and deliberation. Shouldn’t there be more debate on issues?
Shouldn’t each council member come to his/her own conclusion on passage of legislation instead of acting like lemmings? For council members Peters, Snyder, and Kiesling, your vote for Ordinance No. 13-09 reinstating the annexation requirement was in direct opposition to legislation you supported when you voted on Ordinance No. 132-04 removing the annexation requirement.
Former City Administrator Miller’s recommendation to Council to remove the annexation requirement was noted in an Email dated September 9, 2004. Mr. Miller stated that when he was employed with the City of Canton “[he] found that the requirement of North Canton to annex in exchange for water service to be an advantage to Canton in extending its water.”
Has anyone given any thought to the fact that Canton under state law can require annexation into the City of Canton when providing Canton water to nonresidents?
Any municipality that provides services such as sewer and water outside its borders can require a property owner to annex into the municipality providing those services. That is per the Ohio Supreme Court in Bakies v. Perrysburg, 2006-Ohio-1190.
Maybe the City of Canton is playing the game a little smarter than North Canton by not stating its intentions for annexation as a precursor to receiving those services. North Canton is upfront with its intentions of annexation when it supplies city water to nonresidents.
Who knows what the City of Canton may require in the future after it extends water to nonresidents? Bakies v. Perrysburg certainly raises the possibility that the City of Canton could require annexation to Canton at some point in the future for its nonresident water customers.
That possibility should be pointed out to all prospective North Canton water customers when annexation opportunities arise for North Canton and potential customers believe that Canton is a viable choice without the upfront requirement to annex into Canton. That requirement is supported by state law and not pointed out by Canton when it extends its water lines.
The City of North Canton is not asking any more than what Canton or any other community would ask for when it extends city services.
Without annexations, municipalities die on the vine. Canton Council Member Mr. Casar had that exactly right. North Canton will die on the vine if it does not pursue annexations.
North Canton must embark on an aggressive annexation policy. Municipalities came into existence with annexations and they do not stay vibrant without continued growth of city boundaries through annexations. Water is a tool for annexations and should not be given away. For far too long North Canton has given away the store and not asked for anything in return.
Good quality water is a service we can provide for our residents and should not be used to build a water system that grows far beyond what the city needs or what the city can operate effectively. We have a municipal water system for the city and its residents. It should be nothing more.
If North Canton continues to play water provider to the world it will only create a system it cannot manage and the city will lose in the end. And along the way, North Canton will have lost opportunities to grow the city.
Thank you,
Chuck Osborne
Resident,
City of North Canton
Monday, January 12, 2009
Fairways Lease Credits Private Business Expenses Toward Capital Improvements
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
January 12, 2009
On December 8, 2008, this council body voted on legislation authorizing a lease of The Fairways of North Canton to R & S Properties, Inc. The legislation, Ordinance No. 119-08, was passed on “an emergency” and passed with a unanimous vote of council.
The original term of the lease with R & S Properties was for a three year period with provisions to extend the lease for two three-year periods. Under the terms of the lease, the lessee is to pay rent totaling $100,000 per year as well as monthly payments to the city to cover annual property taxes totaling $49,311.74.
The lease also requires for the Lessee to pay a Benchmark of $80,000 per year of capital improvement investment pursuant to Exhibit B. My comments tonight are in regards to line items detailed in Exhibit B.
Exhibit B details seventeen areas for capital expenditures and is a budget for capital expenditures over each year of the nine years of the lease. The areas listed for capital improvements itemized in Exhibit B are the following: Carpet, Paint, Bar and Flooring, Tee Program, Air Conditioning & Heating, Cart Paths, Kitchen Equipment & Coolers, Clubhouse Roof Repair, Out Buildings Roofing, Parking Lot, Pool Paint, Fence & Gas Tanks, Pavilion Removal, Basketball Courts, Sidewalks, Course Equipment, and Golf Carts. There is a dollar amount budgeted for the various areas over the term of the lease.
Expenditures for many of the areas noted above are worthwhile capital improvements and are certainly needed given that capital improvements were ignored by the previous lessee. Two of the areas listed in Exhibit B are highly questionable.
I am at a loss as to how Course Equipment and Golf Carts can be considered capital improvements. The budgeted amount for Course Equipment and Golf Carts represents seventy-two percent of the total $89,000 budgeted for capital improvements for 2009. If one were to recalculate the percentage each of those two line items represent using the Benchmark of $80,000 required by Article 4.1.1 of the lease, the percentage increases to nearly eighty percent of the required Benchmark.
Why there is a conflict within the lease itself is unexplainable. Exhibit B details an annual capital improvement budget figure averaging $89,000 per year while Article 4.1.1 of the lease mandates an $80,000 Benchmark figure. The conflict between the budgeted figures in Exhibit B and the stipulated Benchmark figure stated in the lease introduces confusion and ambiguity.
It is not very hard to satisfy the required Benchmark of $80,000 per year of capital improvement investment when one includes business expenses of the lessee in the tally of expenditures. Allowing credit for business expenses toward the Benchmark of $80,000 per year of capital improvement investment pursuant to Exhibit B undermines the very purpose of requiring the lessee to make capital improvements while in possession of the property.
A footnote included in Exhibit B describes the capital improvements listed in Exhibit B as “…the ongoing commitment for modification and improvements made by the lessee for the benefit of the lessor.”
How are the profit motivated business expenditures of a private business of any benefit to the taxpayers of North Canton?
Article 1.6 of The Fairways lease defines “Capital Improvement” as “…the addition of a permanent structural improvement or the restoration of some aspect of a property that either enhances the property’s overall value or increases its useful life as recognized under generally accepted accounting principles.”
Crediting lease payments for Course Equipment at $24,500 per year and lease payments for Golf Carts at $39,000 per year as “Capital Improvement” does not satisfy the very definition stated in Article 1.6 in The Fairways lease.
In year nine of the lease, the budgeted expenditure of $75,000 for Course Equipment and Golf Carts is eighty-five percent of the average yearly expenditure of $89,000 budgeted in Exhibit B. If one calculates the budgeted expenditure of $75,000 in year nine of the lease for Course Equipment and Golf Carts against the Benchmark of $80,000 per year of capital improvement investment pursuant to Exhibit B, those two expenditures alone qualify for nearly ninety-four percent of the required “Benchmark” required by the lease.
In other words, those two business expenditures alone, which are not capital expenditures, will qualify for nearly all the capital improvements required by the lease with no actual capital improvements being made on the property.
What was the purpose in creating this illusion that the City of North Canton is actually receiving $80,000 of “Capital Improvements” when in reality it is all smoke and mirrors and puffery. The true level of capital improvements made under the budget figures detailed in Exhibit B is about $20,000 per year.
Why not report the actual capital improvements that the lessee would be required to make under the lease? Capital improvements that meet the very definition under the lease? Capital improvements that truly address maintenance of the facility and the infrastructure.
In news coverage of The Fairways lease, the press has reported that R & S Golf Properties is to spend at least $80,000 per year on capital improvements to the property. City officials who have given this information to the press have used the media to mislead the public. How sad for the taxpayers of North Canton.
The cat is out of the bag. The citizens of North Canton know that the purchase of Arrowhead was not a prudent decision. Ownership of Arrowhead is a financial burden on the city. No amount of spin or misinformation will change that. Was there a deliberate plan to dress up this new lease and make something appear that really is not there? Who is responsible for misrepresenting the merits of the lease?
Maybe council members should have looked over Exhibit B and questioned whether leasing Course Equipment and leasing Golf Carts qualify as capital improvements.
Oh, I forgot, the legislation had to be passed on an “emergency.” I guess there was no time for questions since council and the administration was dealing with an “emergency.” But there was time for fabricating creative financing of capital improvements by city leaders.
Taxpayers and the public can only hope city leaders will do better on the next piece of legislation passed on an “emergency.”
Thank you,
Chuck Osborne
Resident,
City of North Canton
NORTH CANTON CITY COUNCIL
January 12, 2009
On December 8, 2008, this council body voted on legislation authorizing a lease of The Fairways of North Canton to R & S Properties, Inc. The legislation, Ordinance No. 119-08, was passed on “an emergency” and passed with a unanimous vote of council.
The original term of the lease with R & S Properties was for a three year period with provisions to extend the lease for two three-year periods. Under the terms of the lease, the lessee is to pay rent totaling $100,000 per year as well as monthly payments to the city to cover annual property taxes totaling $49,311.74.
The lease also requires for the Lessee to pay a Benchmark of $80,000 per year of capital improvement investment pursuant to Exhibit B. My comments tonight are in regards to line items detailed in Exhibit B.
Exhibit B details seventeen areas for capital expenditures and is a budget for capital expenditures over each year of the nine years of the lease. The areas listed for capital improvements itemized in Exhibit B are the following: Carpet, Paint, Bar and Flooring, Tee Program, Air Conditioning & Heating, Cart Paths, Kitchen Equipment & Coolers, Clubhouse Roof Repair, Out Buildings Roofing, Parking Lot, Pool Paint, Fence & Gas Tanks, Pavilion Removal, Basketball Courts, Sidewalks, Course Equipment, and Golf Carts. There is a dollar amount budgeted for the various areas over the term of the lease.
Expenditures for many of the areas noted above are worthwhile capital improvements and are certainly needed given that capital improvements were ignored by the previous lessee. Two of the areas listed in Exhibit B are highly questionable.
I am at a loss as to how Course Equipment and Golf Carts can be considered capital improvements. The budgeted amount for Course Equipment and Golf Carts represents seventy-two percent of the total $89,000 budgeted for capital improvements for 2009. If one were to recalculate the percentage each of those two line items represent using the Benchmark of $80,000 required by Article 4.1.1 of the lease, the percentage increases to nearly eighty percent of the required Benchmark.
Why there is a conflict within the lease itself is unexplainable. Exhibit B details an annual capital improvement budget figure averaging $89,000 per year while Article 4.1.1 of the lease mandates an $80,000 Benchmark figure. The conflict between the budgeted figures in Exhibit B and the stipulated Benchmark figure stated in the lease introduces confusion and ambiguity.
It is not very hard to satisfy the required Benchmark of $80,000 per year of capital improvement investment when one includes business expenses of the lessee in the tally of expenditures. Allowing credit for business expenses toward the Benchmark of $80,000 per year of capital improvement investment pursuant to Exhibit B undermines the very purpose of requiring the lessee to make capital improvements while in possession of the property.
A footnote included in Exhibit B describes the capital improvements listed in Exhibit B as “…the ongoing commitment for modification and improvements made by the lessee for the benefit of the lessor.”
How are the profit motivated business expenditures of a private business of any benefit to the taxpayers of North Canton?
Article 1.6 of The Fairways lease defines “Capital Improvement” as “…the addition of a permanent structural improvement or the restoration of some aspect of a property that either enhances the property’s overall value or increases its useful life as recognized under generally accepted accounting principles.”
Crediting lease payments for Course Equipment at $24,500 per year and lease payments for Golf Carts at $39,000 per year as “Capital Improvement” does not satisfy the very definition stated in Article 1.6 in The Fairways lease.
In year nine of the lease, the budgeted expenditure of $75,000 for Course Equipment and Golf Carts is eighty-five percent of the average yearly expenditure of $89,000 budgeted in Exhibit B. If one calculates the budgeted expenditure of $75,000 in year nine of the lease for Course Equipment and Golf Carts against the Benchmark of $80,000 per year of capital improvement investment pursuant to Exhibit B, those two expenditures alone qualify for nearly ninety-four percent of the required “Benchmark” required by the lease.
In other words, those two business expenditures alone, which are not capital expenditures, will qualify for nearly all the capital improvements required by the lease with no actual capital improvements being made on the property.
What was the purpose in creating this illusion that the City of North Canton is actually receiving $80,000 of “Capital Improvements” when in reality it is all smoke and mirrors and puffery. The true level of capital improvements made under the budget figures detailed in Exhibit B is about $20,000 per year.
Why not report the actual capital improvements that the lessee would be required to make under the lease? Capital improvements that meet the very definition under the lease? Capital improvements that truly address maintenance of the facility and the infrastructure.
In news coverage of The Fairways lease, the press has reported that R & S Golf Properties is to spend at least $80,000 per year on capital improvements to the property. City officials who have given this information to the press have used the media to mislead the public. How sad for the taxpayers of North Canton.
The cat is out of the bag. The citizens of North Canton know that the purchase of Arrowhead was not a prudent decision. Ownership of Arrowhead is a financial burden on the city. No amount of spin or misinformation will change that. Was there a deliberate plan to dress up this new lease and make something appear that really is not there? Who is responsible for misrepresenting the merits of the lease?
Maybe council members should have looked over Exhibit B and questioned whether leasing Course Equipment and leasing Golf Carts qualify as capital improvements.
Oh, I forgot, the legislation had to be passed on an “emergency.” I guess there was no time for questions since council and the administration was dealing with an “emergency.” But there was time for fabricating creative financing of capital improvements by city leaders.
Taxpayers and the public can only hope city leaders will do better on the next piece of legislation passed on an “emergency.”
Thank you,
Chuck Osborne
Resident,
City of North Canton
Tuesday, December 09, 2008
North Canton Leaders Ignore Signs Leading To Financial Calamity
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
December 8, 2008
On Monday, December 9, 2002, eight years ago, almost to the day of tonight’s meeting, I sat on this council. One of the items on the agenda was the 2003 budget which was titled as Ordinance No. 124-02. Prior to passage of the budget that night, I presented information to council pointing out that the city’s General Fund was going to be down twenty-five percent from the previous year in that 2003 budget while proposed expenditures for 2003 had spiked over the previous year. I also remarked on the practice of passing the city’s annual budget on an emergency as many other pieces of legislation get passed. The Repository reported my comments the next day in an article titled “N. Canton Council OKs $44 million budget.”
The observations I provided that night were quickly rebuffed by Finance Chairman Jon Snyder. Mr. Snyder countered that the city had $18.0 million in the bank and that citizens “…pay taxes for purposes of services. And that it is incumbent on the administration and the elected officials of council to provide services whether it be a fine EMS service, whether it be repair of your streets, or police department.”
Well, council did indeed spend down the reserves. The $18.0 million in reserve funds that Finance Chairman Snyder referred to that night have been spent in just five years. But not all of the millions were spent on providing services for city residents. Before the remaining weeks of 2002, were finished, I received a phone call from Council President Snyder who advised me that Arrowhead Golf Course was for sale. We all know how that story played out and continues to this day. A single expenditure for $4.2 million totally unbudgeted. I might add that the 2003 budget approved only weeks earlier did not include a line item for acquisition of property for $4.2 million, nor did it include all the other costs associated with the acquisition of Arrowhead Golf Course.
In late 2001, North Canton City Council agreed to repay the Maytag Corporation an overpayment of taxes that amounted to over $3.1 million dollars. The city made payments back to Maytag in 2001, 2002 and 2003 that amounted to nearly $1.1 million. Over the course of a year in 2005 and stretching into early 2006, the city made further payments of nearly $2.1 million dollars to Maytag, again refunding overpayment of taxes.
I suspect that the $1.5 million removed from the General Fund in 2005, for the funding of the CIC was totally unbudgeted as well.
Did the leaders of North Canton ignore all the signs that have brought the city to the precipice of financial distress that you face in your budget for 2009 and beyond?
Adding up the expenditures noted above accounts for nearly $9.0 million of the $18.0 million Finance Chairman Snyder talked about six years ago. It is obvious that one half of the $18.0 million in reserves was not spent for services as Finance Chairman stated those funds should be spent.
Have city leaders been prudent over the course of the last six years while reserves were being drained and revenues continued to decline? Where is the remaining $9.0 million of the $18.0 million that the city had in reserves?
According to information from Mayor Held’s state of the city PowerPoint presentation titled Income Tax Collections vs. General Fund Expenditures 1990-2007, North Canton General Fund Expenditures have outspent Income Tax Collections every year since 2001. How does one outspend revenue for seven straight years and not know there is a reckoning some day in the future?
Why would a community continue to outspend its income tax collections while there were repeated signals and warnings that it was about to lose its largest employer? One only had to have read the newspaper to have seen the handwriting on the wall on the fate of the Hoover Company.
A March 30, 2000, news story titled “Hoover workers ponder future” reported some Hoover Company salaried workers were worried that they might lose their jobs. The fear became reality less than three years later when Maytag moved the headquarters of The Hoover Company to Iowa and 500 salaried jobs were lost. The stories are numerous of the slow death of The Hoover Company in North Canton and yet expenditures increased.
The City of North Canton has had ample opportunity through the years to prepare for the financial calamity it is now facing and yet for some unknown reason its leaders have chosen to ignore all the warnings.
It does not take long time to blow through $18.0 million in reserves when you outspend your revenues year after year.
In an October 25, 2001, news report in the Repository, incumbent Council Member Greg Sarbach running for re-election remarked “…the most important issue in the next two years is the decreasing tax revenue because of Maytag Corp.’s restructuring of how its subsidiary, Hoover Co., pays its taxes.” On the same date in 2001, incumbent Council Member Marcia Kiesling as well as myself and another candidate for council were quoted as saying the most important issue facing North Canton “…is how council will deal with reduced tax revenue.” Council has dealt with the reduced tax revenue by accelerating expenditures and exhausting $18.0 million in reserves in the span of six years.
As this council prepares to vote tonight on the 2009 budget, I believe one could say that city leaders have come up short in taking meaningful steps to reduce expenditures and have actually compounded the financial crisis facing the city tonight.
I do have some recommendations at this late stage in the financial crisis facing the city and they are recommendations I have made to Mayor Held, but unfortunately he has failed to take action.
Mayor Held, I must dispute your rebuttal to my comments of October 27, 2008, regarding the residency status of your city administrator. You and I have only discussed the residency of your administrator on one occasion. That discussion took place about six-months into your first term as mayor, over two years ago. We have not had at least a dozen conversations regarding the residency status of your city administrator as you stated in your rebuttal remarks that evening to council.
There is one topic that I have discussed with you on many occasions, probably a dozen times, over the last three years and that is a recommendation that you look around the state of Ohio for communities that participate in a combined Fire/EMS District and then implement a plan such as that for North Canton.
After more than two years of inaction by the administration on this topic, I encourage this council to pursue this course of action. Due to the city’s deteriorating financial condition, this is a course of action that the city will be forced to pursue and implement.
Furthermore, I would investigate, as the City of Akron is doing at this time, the creation of regional policing for the City of North Canton. This is not a course of action I would suggest at this time but the city must do its homework and be prepared to act if the city’s financial condition continues to deteriorate.
Thank you,
Chuck Osborne
Resident,
City of North Canton
NORTH CANTON CITY COUNCIL
December 8, 2008
On Monday, December 9, 2002, eight years ago, almost to the day of tonight’s meeting, I sat on this council. One of the items on the agenda was the 2003 budget which was titled as Ordinance No. 124-02. Prior to passage of the budget that night, I presented information to council pointing out that the city’s General Fund was going to be down twenty-five percent from the previous year in that 2003 budget while proposed expenditures for 2003 had spiked over the previous year. I also remarked on the practice of passing the city’s annual budget on an emergency as many other pieces of legislation get passed. The Repository reported my comments the next day in an article titled “N. Canton Council OKs $44 million budget.”
The observations I provided that night were quickly rebuffed by Finance Chairman Jon Snyder. Mr. Snyder countered that the city had $18.0 million in the bank and that citizens “…pay taxes for purposes of services. And that it is incumbent on the administration and the elected officials of council to provide services whether it be a fine EMS service, whether it be repair of your streets, or police department.”
Well, council did indeed spend down the reserves. The $18.0 million in reserve funds that Finance Chairman Snyder referred to that night have been spent in just five years. But not all of the millions were spent on providing services for city residents. Before the remaining weeks of 2002, were finished, I received a phone call from Council President Snyder who advised me that Arrowhead Golf Course was for sale. We all know how that story played out and continues to this day. A single expenditure for $4.2 million totally unbudgeted. I might add that the 2003 budget approved only weeks earlier did not include a line item for acquisition of property for $4.2 million, nor did it include all the other costs associated with the acquisition of Arrowhead Golf Course.
In late 2001, North Canton City Council agreed to repay the Maytag Corporation an overpayment of taxes that amounted to over $3.1 million dollars. The city made payments back to Maytag in 2001, 2002 and 2003 that amounted to nearly $1.1 million. Over the course of a year in 2005 and stretching into early 2006, the city made further payments of nearly $2.1 million dollars to Maytag, again refunding overpayment of taxes.
I suspect that the $1.5 million removed from the General Fund in 2005, for the funding of the CIC was totally unbudgeted as well.
Did the leaders of North Canton ignore all the signs that have brought the city to the precipice of financial distress that you face in your budget for 2009 and beyond?
Adding up the expenditures noted above accounts for nearly $9.0 million of the $18.0 million Finance Chairman Snyder talked about six years ago. It is obvious that one half of the $18.0 million in reserves was not spent for services as Finance Chairman stated those funds should be spent.
Have city leaders been prudent over the course of the last six years while reserves were being drained and revenues continued to decline? Where is the remaining $9.0 million of the $18.0 million that the city had in reserves?
According to information from Mayor Held’s state of the city PowerPoint presentation titled Income Tax Collections vs. General Fund Expenditures 1990-2007, North Canton General Fund Expenditures have outspent Income Tax Collections every year since 2001. How does one outspend revenue for seven straight years and not know there is a reckoning some day in the future?
Why would a community continue to outspend its income tax collections while there were repeated signals and warnings that it was about to lose its largest employer? One only had to have read the newspaper to have seen the handwriting on the wall on the fate of the Hoover Company.
A March 30, 2000, news story titled “Hoover workers ponder future” reported some Hoover Company salaried workers were worried that they might lose their jobs. The fear became reality less than three years later when Maytag moved the headquarters of The Hoover Company to Iowa and 500 salaried jobs were lost. The stories are numerous of the slow death of The Hoover Company in North Canton and yet expenditures increased.
The City of North Canton has had ample opportunity through the years to prepare for the financial calamity it is now facing and yet for some unknown reason its leaders have chosen to ignore all the warnings.
It does not take long time to blow through $18.0 million in reserves when you outspend your revenues year after year.
In an October 25, 2001, news report in the Repository, incumbent Council Member Greg Sarbach running for re-election remarked “…the most important issue in the next two years is the decreasing tax revenue because of Maytag Corp.’s restructuring of how its subsidiary, Hoover Co., pays its taxes.” On the same date in 2001, incumbent Council Member Marcia Kiesling as well as myself and another candidate for council were quoted as saying the most important issue facing North Canton “…is how council will deal with reduced tax revenue.” Council has dealt with the reduced tax revenue by accelerating expenditures and exhausting $18.0 million in reserves in the span of six years.
As this council prepares to vote tonight on the 2009 budget, I believe one could say that city leaders have come up short in taking meaningful steps to reduce expenditures and have actually compounded the financial crisis facing the city tonight.
I do have some recommendations at this late stage in the financial crisis facing the city and they are recommendations I have made to Mayor Held, but unfortunately he has failed to take action.
Mayor Held, I must dispute your rebuttal to my comments of October 27, 2008, regarding the residency status of your city administrator. You and I have only discussed the residency of your administrator on one occasion. That discussion took place about six-months into your first term as mayor, over two years ago. We have not had at least a dozen conversations regarding the residency status of your city administrator as you stated in your rebuttal remarks that evening to council.
There is one topic that I have discussed with you on many occasions, probably a dozen times, over the last three years and that is a recommendation that you look around the state of Ohio for communities that participate in a combined Fire/EMS District and then implement a plan such as that for North Canton.
After more than two years of inaction by the administration on this topic, I encourage this council to pursue this course of action. Due to the city’s deteriorating financial condition, this is a course of action that the city will be forced to pursue and implement.
Furthermore, I would investigate, as the City of Akron is doing at this time, the creation of regional policing for the City of North Canton. This is not a course of action I would suggest at this time but the city must do its homework and be prepared to act if the city’s financial condition continues to deteriorate.
Thank you,
Chuck Osborne
Resident,
City of North Canton
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