Monday, April 11, 2005

Financial Health of North Canton and Oster Property Well Field Put in Jeopardy with Proposed Funding of CIC

Prepared Comments Made to
April 11, 2005

At the conclusion of last week’s meeting of the Council of the Whole, Finance Chairman and President of City Council, Jon Snyder announced, what appeared to be, council’s proposed plans to fund the CIC.

I couldn’t help but notice that there were no comments from any council members on this proposal to funding the CIC. In fact, it appeared to me that many of you lowered your heads as if you could not face the public on hearing this announcement on the funding for the CIC.

The funding announcement for the CIC was presented as if it were a compromise. But was it a compromise after weeks of discussion?

The Chairman of Finance stated that council would provide $1.5 million to the CIC to be paid out in $100,000 increments over fifteen years instead of the immediate payment of $2 million that Mayor Rice had requested.

In addition, something new was added to this funding arrangement and that was the deeding of the Oster property to the CIC.

As a result of last week’s announcement by Mr. Jon Snyder, three pieces of legislation related to the CIC funding are on tonight’s agenda.

That legislation for the proposed funding of the CIC to the tune of $1.5 million and the added decision to deed the Oster property to the CIC will put the City of North Canton on the fast track to financial disaster and also will put the Oster property in grave danger.

The specific pieces of legislation regarding the funding for the CIC are Ordinances 66-05, 67-05 and 68-05.

Ordinance 66-05 transfers $1.5 million from the Income Tax Fund to the General Fund for current expenses for the fiscal year ending December 31, 2005.

The representation in last week’s announcement by the Chairman of the Finance Committee was that the city would fund the CIC at the rate of only $100,000 per year.

In fact, the entire $1.5 million will immediately be transferred out of the income tax fund if this is passed by council. This is not how it was represented last week by the Finance Chairman Jon Snyder and I would call this a deliberate attempt to deceive the public.

Ordinance 67-05 authorizes a transfer of $1.5 million into an escrow account that is to be paid out in increments of $100,000 annually for fifteen years to the CIC. The ordinance also states that the North Canton CIC can request additional funds from the escrow account not to exceed the remaining balance in that escrow account and not to exceed $1.5 million.

The described payout of $100,000 per year for fifteen years is a smokescreen as the full $1.5 million is immediately available on request by the CIC. Mayor Tom Rice has requested $2 million to fund the CIC and he has made it clear he wanted the money weeks ago.

Do you honestly believe he is going to take $1.5 million over fifteen years? Frankly, I just cannot picture Mayor Tom Rice waiting for his last $100,000 installment payment in the year 2020.

This dispersal of the $1.5 million also was not how it was presented last week by the Finance Chairman Jon Snyder to the public. Is there a pattern of misrepresentation going on here?

Is this a deliberate attempt to deceive the public?

Ordinance 68-05 states that the Oster property is “no longer needed for municipal purposes” and authorizes the transfer of the Oster property to the CIC.

It was just two years ago that North Canton began legislation to sell the Oster property for the second time and used those very same words in legislation to authorize a public auction of that property. And for anyone who does not remember what happened next, I will tell you that Plain Township did not waste any time alerting North Canton that it would take the Oster property by eminent domain from any prospective buyer.

I cannot understand why this city would want to jeopardize the county’s most prolific source of water. The water resources under the Oster property alone could supply this entire city’s raw water needs. Where else is the city going to turn for water after it brings the East Maple Street Well Field on line?

The East Maple Street Well Field has not even been brought on line yet and has not proven itself in quantity and quality of water. Why would you want to jeopardize the vast water resources at the Oster property that are owned by the City of North Canton?

Just a few months ago, the city administration used the argument that the city
had to buy the wetlands near the East Maple Street Well Field to protect the city’s water supply at the East Maple Street Well Field. Why doesn’t that same argument apply when it comes to talking about protecting North Canton’s water resources
under the Oster property?

Something is wrong here!

Something else is wrong here when over the course of the last few weeks, Jon Snyder, the Chairman of Finance and City Council President has made the following comments in this chamber in opposition to using taxpayer funds from the city treasury to fund the CIC and then, last Monday night, does an about face and proposes millions to fund the CIC.

At the March 7, 2005, Council of the Whole meeting, Mr. Snyder made the following statements in opposition to funding the CIC in this manner:

“Economic times are not the best…we are losing are largest employer.”

“…This is more than I can recommend as Chairman of Finance…This is more than we could possibly handle…

“…I have reservations about the amount, and reservations about doing it.”

“…I do not understand the principle of taking away from the City Council, the right to legislate is solely vested in the council itself. The people, who elect the council, elect the council to legislate, and to disburse the money.”

“…The CIC is normally funded with money it generates internally or with grants such as is done in Canton.”

Finance Chairman Snyder continued at that meeting with a discussion on the city’s unfunded pension fund obligations.

“…The Finance Director estimates income tax estimates of $4,214,465.

“…Another thing that North Canton has not budgeted for is employee retirements that are expected in the next few years. Our liability is great. Our liability in 2005 is $373,883.

Our long-term liability is $1,247,248. There is no movement, there is no appropriation. There is no line item to pay that. That money has to be paid in cash and that will reduce that $4 million down to less than $3 million and that leaves
us with less than $1 million.”

One of Mr. Snyder’s most telling statements at that March 7, 2005, meeting was:

“…The city is not in a position to do this….I am against using the liquidity of
the city.”

I have to ask you Mr. Snyder, have all your fears and concerns regarding this request to fund the CIC been resolved? Have you been able to find millions of taxpayer dollars stuffed away in a mattress some where?

At this same March 7, 2005, council meeting, Mr. Snyder asked Finance Director Julie Herr her thoughts on the requested $2 million for the CIC. The Finance Director made the following statements:

“…The figure that is floating around, $2 million, of course I have concerns over that. That is almost twenty percent of our carryover.”

“…I have not taken into consideration the change in personnel at Hoover. If we take $2 million out and Hoover ends up leaving, that’s $1 million in income tax gone.”

“…When I came to the city, the city carryover was $18 million.”

“…Are there potential uses for this seed money or is it going to sit there for six months? Are we going to see results this year?”

“…Is there any plan that might start seeing results of this seed money this year, next year, two years from now?”

“…If two or three years down the road, the results of that CIC are slower than what we expected, there might be some more difficult decisions to make down the road, because that $2.0 million is not going to be there.”

The $18.0 million that was in the bank when the Finance Director arrived here in North Canton just a few years ago is now down to $5.9 million.

Deduct the proposed $1.5 million funding for the CIC and now the city carryover is reduced to $4.5 million.

Where is North Canton going to find the millions needed to finish the Main Street Improvements that were started over ten years ago?

Mayor Rice, wouldn’t it make a lot more sense to lure merchants to a Main Street that has been completely dressed up? To a “Streetscape” that was finished? The improvements that have been completed are beginning to show signs of age before
you have even finished the rest of the Main Street.

Where is North Canton going to get the funds needed to repave the rising number of streets that are desperately in need of repair? The usual yearly budget amount of $250,000 for repaving city streets is not enough and it shows. All you have to do
is drive around town to see that.

The request to fund and utilize the CIC in this fashion is no more beneficial than buying snake oil from a snake oil salesman who tells you it will cure everything that ails you!

Where is North Canton going to get the millions needed to correct storm and sewer flooding issues?

Do you think spending millions at the request of a mayor with absolutely no plan for the survival of North Canton is the answer? I certainly hope not.

Does this council have to see the “whites of the eyes” of a funding shortfall before it realizes that a financial shortfall is coming up the front walk and is about to knock on the front door of North Canton?

I ask that all council members forget the politics and make decisions as if they themselves had suffered personal financial blows to their economic existence just as North Canton has suffered.

Do not jeopardize the financial future of the city and flitter away the remaining carryover funds.

They will be needed to tide the city over rough financial times in the very near future.

And do not place the Oster property in grave danger. It is an asset that is not replaceable at any price.

Thank you
Chuck Osborne
City of North Canton