Tuesday, October 10, 2006

North Canton Council Oblivious to Appearances of Impropriety Regarding Nepotism

Prepared Comments Made to
October 9, 2006

“N. Canton Council says no to ban on family hires.” That was the Repository’s lead in the paper last week. Are these really the actions of city leaders working on behalf of the citizens of North Canton?

Unfortunately, that does not appear to be the case.

What it does appear to be is politicians circling the wagons to wage an escalating war with the mayor which ultimately serves no one?

I was present at last week’s council discussion of the proposed legislation by the mayor to ban the hiring of elected officials’ relatives to city jobs and it was anything but a discussion of the proposed legislation. The Repository described the nepotism discussion as “heated.”

I believe council’s reception to the proposed legislation regarding nepotism was more like an ambush followed by an absence of professionalism and sincerity. There was no honest debate on the merits of the proposed legislation to ban the hiring of elected officials’ relatives to city jobs.

The question I have to each and every one of you is if you are actually a representative of the people and you want the public to maintain confidence in their government, how could you oppose legislation to ban nepotism in North Canton’s hiring practices?

Why not embrace Ohio’s Ethics laws regarding the hiring of family members of elected officials? If you don’t, you are only opening the door to problems for the city.

What were the reasons North Canton’s elected leaders chose to defeat the nepotism legislation?

Council President Doug Foltz believes the practice of hiring relatives of elected officials can work just fine and that having generations from the same family working for the city adds vast knowledge and expertise. If that line of thinking were the norm, Mr. Foltz, the pool of applicants for a city job would be narrowed down to merely the relatives of the existing employees already on the payroll. Furthermore, think of the problems you are creating when parents, spouses and siblings register their complaints as to how their little Johnny or Susie is being mistreated in the department.

Where is it written that if there were a choice between hiring your child or my child that just because you are already an employee of the city that your child already has more knowledge or expertise than my child for a city job?

Chairperson of the Personnel & Safety committee, Susie Hines, cited a list of cities from her prepared remarks on this topic noting that some municipalities prohibit the practice of nepotism and some municipalities do not prohibit the practice. From that, Chairman Hines somehow concluded that since there are still communities that do not prohibit the practice of nepotism that North Canton should also not prohibit the practice of nepotism.

Chairman Hines failed to mention that Summit County, the only county government in the state organized under its own charter has been exposed for abuses in the hiring of relatives of elected or appointed officials in numerous articles in the Beacon Journal throughout this year.

What do you think the public thinks when they see nepotism activity in their local government?

I believe I can safely say that the practice of nepotism in filling government jobs does not inspire confidence in the government nor does it inspire respect for the elected official and their relative who benefits in the hiring.

The Vice Chairperson of the Personnel & Safety committee, Pat DeOrio, stated that the proposed legislation to ban the hiring of elected officials’ relatives to city jobs was not a particularly good piece of legislation.

Mr. DeOrio, the proposed legislation simply reaffirms a very important restriction imposed by the State of Ohio on the hiring of family members. Apparently you do not believe that Ohio’s ethics laws regarding the hiring of family members is a good piece of legislation either. I am very sorry that you feel that way.

Councilmember Kathy Magel, the third member of the Personnel & Safety committee obviously does not believe that a city council meeting is the proper venue to discuss and debate issues of importance to the public. Mrs. Magel, your actions in displaying a picture of a STOP sign to the mayor as he began to present legislation for discussion by this body is beyond comprehension.

I believe that you owe an apology to the mayor, to the public, and to this council body for unprofessional conduct.

I hope I never see anyone in this chamber attempt to stifle or quash open and honest discussion of issues before this council body ever again.

Councilmember Jon Snyder, you provided your input on the proposed legislation and quite frankly, after listening to your comments at last week’s council meeting and reading a verbatim transcript of your comments, I can only guess that you were preparing for next year’s election a little early. In your comments regarding the proposed anti-nepotism legislation, you proclaimed “…We should be proud of the fact that there are very few elected officials in the country today that can stand as proud as the seven members of Council and the mayor and the Administration….”

What do comments such as these have to do with the proposed legislation to ban the hiring of relatives of elected officials to city jobs?

Councilmember Jim Repace, your bitterness and your anger on this issue rings loud and clear. The situation that you now find yourself in clearly has obliterated your ability to see this issue from the vantage point of your constituents and it appears that you are unable to vote on this issue as a representative for the public because of it.

If North Canton City Council had already enacted anti-nepotism legislation years ago when it was first discussed by prior councils, this council would not now have to choose whether or not to support one of its members and Mr. Repace would not now find himself retaliating against the mayor.

The circumstance this council now finds itself in is a perfect example of why North Canton City Council should embrace the proposed anti-nepotism legislation.

Mr. Repace, if you truly desire to make a difference in the City of North Canton as you stated last week, your personal disdain for the present Mayor of North Canton will have to be left at the door.

Mr. Repace, your strong-arm tactics and intimidation anytime you are unhappy with the actions of others is not what people expect from city leaders.

I would like to suggest to members of this council body that the proposed legislation to ban the hiring of elected officials’ relatives to city jobs should have been discussed utilizing what is termed the “appearance of impropriety” standard.

“Appearance of impropriety”, according to Wikipedia, is a term used in reference to a situation where ethics are deemed questionable. In other words, a layperson, without knowledge of the facts, would assume that something he/she saw or heard was inappropriate or a violation of a rule/regulation.

The impropriety standard at the turn of the twentieth century was termed the “appearance of evil” doctrine. The appearance of impropriety standard was later adopted by the Model Code of Professional Conduct which has served as ethics rules for lawyers.

The impropriety standard has long been a part of ethics rules for lawyers and judges. And it is intertwined into the ethics laws of the State of Ohio.

Why not embrace these laws and show the citizens whom you represent that you are working on their behalf and not for yourselves?

Ethical standards in government promote public confidence in the integrity of government.

When ethical standards are not implemented at all levels of government, there is the risk of disservice to the public interest.

Simply put, nepotism is not good for the City of North Canton and the city’s elected officials should recognize that without hesitation.

Thank you
Chuck Osborne
City of North Canton

Tuesday, September 12, 2006

North Canton Council Indecision on Application for State GrantsFor City Infrastructure Improvements Is Unreasonable

Prepared Comments Made to
September 11, 2006

It is apparent to me and I believe to anyone else who has followed the North Canton Council debate to apply or not apply for state grants over the last few weeks that this body has taken leave of its senses.

The lengthy discussions by this body have been on-going at no less than two Council of the Whole meetings and one regular council meeting over the last three weeks. The Repository’s report for North Canton City Council business for the last two weeks reads like the movie Groundhog Day.

The first report covering the August 28, 2006, North Canton City Council meeting was titled “N. Canton Council debates applying for state grants.” Two weeks later, The Repository report for the September 5, 2006, meeting was titled “North Canton still debates applying for state money.”

Council first began discussions on this issue at its Council of the Whole meeting on August 21, 2006. The Repository briefly reported that council wanted more information about the projects.

What information Councilmember Magel or Councilmember DeOrio were looking for is beyond me.

This was a simple request for authorization to apply for grants from the State of Ohio through the Ohio Public Works Commission for infrastructure improvements that the city can ill afford to do itself.

Without the assistance of grant funds for the 2007 Joint City/County Paving Project, many streets would go unpaved. Without the assistance of grant funds for the East Maple Street Safety Improvements Project, the city would be hard-pressed to accomplish the needed safety improvements. Without the assistance of no-interest loans, the city would have to bear a greater financial burden of replacing aging water mains in preparation for future road improvements to Applegrove Road.

How much clearer does this request have to be to each of you city leaders? If you cannot comprehend that fact, then maybe one should find other ways in which to pass the time than at city hall on Monday evenings.

I would like to ask everyone here on this council, what is there to debate? This is FREE money, simply for the asking.

Is this typical North Canton politics? What is to be gained with these kinds of political games?

And if it is not games, the only thing that comes to mind is stupidity!

These are grants made available by the state to communities for infrastructure improvements. An 80/20 match with the local communities paying only 20 percent of the project cost.

How can you go wrong? How much more information do you need? City Engineer Jim Benekos spelled everything out for you publicly and the information was in your packet.

The grant for the Joint City/County Paving project would allow for the paving of many streets throughout the city, for a fraction of the project’s estimated $1.3 million cost. North Canton taxpayers would receive a 10 to 1 return for the expenditure of their tax dollars with the award of grants from the Ohio Public Works Commission.

Where can you go wrong? Repeated comments from certain members of council that not enough information was made available to council are not the least bit valid.

The grant for the East Maple Street Safety Improvements would allow for safety improvements on a major east/west corridor that runs between Washington Square and Walsh University. Here again, grant funds would result in significant savings to taxpayers, improved traffic flow and safety for pedestrians.

Where can you go wrong? Repeated comments from certain members of council that not enough information was made available to council are not the least bit valid.

I believe it was very sad that Walsh University President Richard Jusseaume had to appear before this council last week to ask this body to reconsider its position not to apply for state infrastructure funds for the East Maple Street Safety Improvement project.

City Engineer Jim Benekos pointed out in his request to council for permission to apply for state grants that there was no commitment, no cost, no anything. Mr. Benekos simply asked that he be allowed to apply for state assistance to fund projects that will make this city a better place.

Mr. Benekos knows the smart thing to do is to take advantage of state resources designed to help communities make needed infrastructure improvements. Mr. Benekos simply wanted North Canton to compete for its share of FREE money from the state that undoubtedly would benefit this city and its residents.

For council, and in particular, council members Magel, DeOrio and Repace, I do not know on whose behalf you are speaking when you debate, delay and question ad nauseam anyone’s efforts to improve this city through grants from the state.

If you think this is your fifteen minutes of fame to exercise your power plays and showboat, I can only say that it exactly what it looks like.

The sad thing about all of this is that you have the balance of this council sitting up there seemingly buying into this mindless debate with no one fighting to make North Canton better.

For a better future for North Canton and its residents, this council must do better than this!

Thank you
Chuck Osborne
City of North Canton

Monday, July 10, 2006

Aqua Ohio Water Agreement Unfair & Detrimental to the Future of North Canton

Prepared Comments Made to
July 10, 2006

A few weeks ago, I spoke to this body about how difficult it is to sit in the audience and observe city leaders conduct the public’s business with little or no regard for the taxpayers of this community or for the future welfare of North Canton.

On June 12, 2006, I spoke of the CEDA that this council passed in 2003, without my vote, which provided something for Plain Township and something for the developer of the Sanctuary but nothing for North Canton. That CEDA agreement put North Canton on the path it is on today regarding the loss of the water distribution rights for the Sanctuary, now part of North Canton.

On February 28, 2005, city council rushed through, on an emergency, an agreement with a water competitor that is extremely burdensome and unfair to this city. The agreement allows profits to be generated by that company squarely on the backs of the taxpayers of North Canton.

This agreement places the City of North Canton on a path that jeopardizes North Canton’s future.

That water agreement was made with Aqua Ohio, Inc., and received unanimous approval by council as Ordinance No. 49-05. Several current members of this council were on council then and voted their approval. They include council members Snyder, Foltz and Lane.

Did anyone bother to read this agreement?

I am told by the administration that Michael Miller, the former City Administrator who negotiated this unfair agreement, did not consult the city’s water superintendent for his input. The finance director has also told me that she was not asked for her thoughts on the agreement.

North Canton now has a water agreement that lacked needed input from key city officials in North Canton City government. This is an agreement that was rushed through city council with unanimous affirmation that desperately needs to be voided.

I strongly believe that if a judge saw the terms of this agreement that he or she would void this agreement in a New York minute.

Before I get into the shortcomings of the agreement, I want to tell you a little about Aqua Ohio, Inc.

Aqua Ohio, Inc. is Ohio’s largest investor owned water utility. It provides drinking water and wastewater services to nearly 84,000 customers (nearly 250,000 people) in five counties from surface and groundwater supplies.

Aqua Ohio was most recently known as Consumers Ohio Water Company until it merged with Philadelphia Suburban Corporation (PSC) in 1999. PSC was renamed Aqua America, Inc., in 2004, and Consumers Ohio Water Company became Aqua Ohio.

Aqua America, Inc. is the nation’s largest U.S. based publicly-traded water company. Aqua America is a holding company for regulated utilities providing water or wastewater services in thirteen states.

Do you think Aqua America, Inc. would like to acquire the North Canton Water Treatment Plant?

Consider the following statements gleaned from the latest annual report (Form 10K) of Aqua America, Inc.:

“…Part of our strategy to meet the industry challenges is to actively explore opportunities to expand our utility operations through acquisitions of water and wastewater utilities either in areas adjacent to our existing service areas or in new service areas…”

“…. Because of the fragmented nature of the water and wastewater utility industries, we believe that there are many potential water and wastewater system acquisition candidates throughout the United States…”

“… We are actively exploring other opportunities to expand our water and wastewater utility operations through acquisitions or otherwise. We intend to continue to pursue acquisitions of municipally-owned and investor-owned water and wastewater systems of all sizes that provide services in areas adjacent to our existing service territories or in new service areas….”

Aqua America believes that one of the reasons driving the consolidation of these systems is the need for capital investment and that is where I believe this entanglement with Aqua Ohio is taking the City of North Canton.

The rush to sell the increased water processing capacity of the North Canton Water Treatment Plant (WTP) is going to require further expansion of the WTP long before North Canton has paid down the $12 million owed for the recent expansion.

The water agreement with Aqua Ohio requires that North Canton make available 2 million of the total three million gallon increased water processing capacity that has just been completed. And very soon, North Canton will find itself exhausting it’s newly acquired water processing capacity and will not have sufficient borrowing capacity to expand its facilities for a second time.

The Aqua Ohio water agreement, to put it mildly, is grossly unfair to the City of North Canton and I cite the following.

The agreement states water prices to Aqua Ohio “…may be adjusted by the City by a percentage equal to the percentage by which rates for residential customers within the City are adjusted, not to exceed a five (5) percent annual increase for the first twenty-four months of this Agreement.”

Does anybody realize that planned water rate increases passed in Ordinance No. 156-04 that set water rates for the City of North Canton mandate water rate increases for residential customers as high as 7.1 percent?

The ordinance (Ordinance No. 49-05) approving the Aqua Ohio water agreement conflicts with Ordinance No. 156-04 which set annual increases in North Canton water rates through the year 2009.

Do you think you can increase residential customer’s water rates at a higher annual percentage than what you increase Aqua Ohio’s water rates?

Is this fair? Is this legal?

Conversely, the City of North Canton is required to approve water rates set by Aqua Ohio without question.

In regards to billing and payment, the agreement states “Aqua agrees to pay monthly within thirty (30) days after receipt of the bill; all bills not paid by the thirtieth (30th) day after receipt will be subject to a late penalty of one percent (1%) per month.”

The City of North Canton’s policy regarding payment of water bills is that payment is due by the 15th of the month after receipt of the water bill which arrives on the first of the month. North Canton charges interest of 5 percent for late payments. Here again is a conflict between how Aqua is being treated and how all other water customers are being treated.

The agreement states that “If during the agreement, additional facilities are necessary for sale of water hereunder, such facilities will be constructed by the City.” What does this entail for North Canton? I would say that this is quite open-ended and obviously require additional expenditures by the City of North Canton.

The agreement states that Aqua Ohio will make available to North Canton an emergency supply of water subject to Aqua’s availability of supply and availability of engineering and equipment with prior notice and the availability shall be subject to Aqua’s prior consent.

Conversely, under the section titled Continuity of Service, the agreement reads that “In the event of disruptions or interruptions of service, the City shall not give preference or priority to customers other than Aqua…”

It sounds to me that North Canton water customers, other than Aqua, must go to the back of the line if there are water shortages or interruptions of service.

Under this agreement, it appears that North Canton must provide emergency water to Aqua but Aqua is not required to provide the same level of emergency water to North Canton.

The Aqua Ohio water agreement severely compromises any chances of North Canton’s expanding water service to areas not presently served by the City of North Canton. The agreement also requires the city to purchase the water distribution rights to the Sanctuary if the city wants to service that development.

The agreement sets the term of the agreement for 20 years with automatic renewal for up to four, 5-year terms and requires a 12-month notice to terminate the agreement. Trumbull County is presently in litigation with Aqua Ohio in an attempt to force automatic renewal of its water contract with Trumbull County.

It appears to me that once Aqua Ohio gets a foothold anywhere, it does not want to let go.

This appears to be the case upon any termination of the agreement. The agreement states that “Upon any termination, Aqua shall retain the right to purchase water from the City’s water system for ten (10) years…”

The Aqua Ohio water agreement is so patently unfair as to be nearly criminal!

The agreement states that “Aqua is hereby permitted to extend Aqua-constructed and owned water distribution facilities from points of connection with the City’s distribution system designated by Aqua in order for Aqua to serve customers outside of the City’s service…”

Allowing Aqua to tap North Canton water lines and extend water lines to service areas outside the city severely diminishes North Canton's chances to expand its water service area in the future. Clearly, this does not bode well for North Canton.

Aqua can tap North Canton water lines and extend water lines to service areas outside the city. What do you think that does for future growth of the North Canton water system?

There are other shortcomings to the water agreement with Aqua Ohio but I will not belabor them at this time.

But, I would like to add that I believe that the agreement is not valid for the following reasons:

First, the agreement states, “This Agreement is attached to and incorporated with the City’s Ordinance No 49-05 and the City represents that all actions of the City, including the actions of city council and administrative officers concerning and relating to the passage of said ordinance were adopted in open meetings of council in compliance with Ohio Revised Code §121.22, and that such legislation was not passed as an emergency measure [emphasis added], but was subject to a thirty (30) day period before taking effect….”

This legislation was passed on an emergency and it will have serious consequences for the City of North Canton.

Clearly, it appears that no council member ever seriously read this agreement. If they had, first of all, it would not have been passed on an emergency. Secondly, hopefully some city leader who cares about this city and its future would have stood up and said NO to this agreement.

Second, this legislation is in conflict with legislation passed in 2004 (Ordinance No. 156-04) which set water rates for the City of North Canton through 2009.

Third, this legislation violates fairness in the setting of water rates. How can you set one water rate structure for one water customer and then set a different water rate structure for other water customers.

I have shown this disparity in water rates in Chart One. The Aqua Ohio water agreement has opened a can of worms for anyone wanting to challenge the disparity in water rates for North Canton water customers.

Fourth, the Aqua Ohio water agreement appears to totally ignore the City of North Canton’s production costs and how they are allocated. The water production costs data for the City of North Canton were created for a reason and they continue to be utilized to structure the city’s water rates.

In each of the price points for water consumption for water customers billed under the city’s water rates, charges for water more than cover North Canton’s water production costs. This can be seen in Chart Three.

Why would this cost structure be totally ignored in the setting of water rates for Aqua Ohio?

The purchase of 60 million gallons of water a month by Aqua Ohio from the City of North Canton results in an average cost of $1.28 per 1,000 gallons for Aqua.

This is 35% below the city’s water treatment costs which are the city’s barebones cost of water production.

The same quantity of water (60 million gallons) purchased by outside business water customers results in an average cost of $5.25 per 1,000 gallons under North Canton’s present water rate structure. This is more than 400% higher than the rate being charged to Aqua Ohio. This is shown in Chart Two.

In Chart Four, one can see the shortfall in revenue from water sold to Aqua Ohio compared to North Canton’s water production costs.

The purchase of 2 million gallons in one day, which is what North Canton is required to provide to Aqua per the agreement, results in revenue shortfall of $7,254.57 a day. This shortfall would be slightly higher considering that Aqua Ohio’s effective average cost per 1,000 gallons drops from $1.39 per 1,000 gallons for the purchase of 2 million gallons to $1.28 per 1,000 gallons with the purchase of 60 million gallons over the course of 30 days.

Why would city leaders vote to approve such an agreement that is unfair to the city and taxpayers?

Why would city leaders vote to approve such an agreement without expert advice and study?

Why do city leaders not provide a system of checks & balances amongst themselves that is built into our form of government?

There are seven council members on city council for a reason.

Are city council members working for the electorate, feathering their own futures or are they just grossly inept?

I have seen many unanimous votes on this council which are clearly votes of lemmings.

This city council, Mayor David Held, City Administrator Earl Wise, and Finance Director Julie Herr must work aggressively and vigorously with Law Director Randy McFarren to void this agreement.

If you do not, North Canton residents will be consuming water purchased from Aqua Ohio at water rates far above the water rates you are charging Aqua Ohio and far above the water rates everyone in this room is paying today.

And North Canton will have more to lament than just the loss of the Hoover Company.

Thank you
Chuck Osborne
City of North Canton

Tuesday, June 13, 2006

Annexation of Sanctuary Results in Hidden, Unbudgeted Costs for North Canton

Prepared Comments Made to
June 12, 2006

Last Monday night, June 5, 2006, I sat in this chamber as a spectator to observe the actions of the North Canton City Council. I have attended council meetings regularly since serving as an at-Large councilman myself in 2002 term. I would like to tell this council publicly, that it is getting more and more difficult to sit in the audience and watch as agreements are made and funds are expended with no regard or concern for the taxpayers of the City of North Canton.

Last Monday, I heard the other shoe drop as Councilman Jon Snyder revealed his plan to purchase the water distribution rights for the Sanctuary for a price “a little south of $500,000.” And Mr. Snyder wants to rush this plan through council on “an emergency.”

Councilmember Snyder is the former President of Council under whom not one but two pieces of legislation were passed that has put this city in this very predicament. Why would council consider following this course of action? Three wrongs do not make a right!

The genesis of the circumstances allowing the Sanctuary to be served water by a competing water provider is found in legislation passed in 2003. It is Ordinance No. 49-03 and had council approval as the Community and Economic Development Agreement, commonly referred to by the acronym, CEDA.

I was a member of the council body at that time and I was the lone council member to vote against the CEDA. I had many reasons for voting against the CEDA and one of those reasons is that there was nothing “economic” about the agreement that was hailed as a great step forward for North Canton’s first CEDA agreement.

Plain Township negotiated a moratorium on future annexations in the CEDA agreement.

The developers of the Sanctuary, McKinley Development, Ltd., who by the way drafted the agreement, negotiated terms in the agreement in their favor.

What did the City of North Canton negotiate on behalf of the city and its citizens? NOTHING!

Passage of legislation approving the very first CEDA for the City of North Canton was all the glory the supporters of that piece of legislation needed when the CEDA was passed on council on May 12, 2003.

Unfortunately, the CEDA legislation put this city at a disadvantage!

But council, again under the leadership of Council President Jon Snyder apparently wanted to make a bad deal worse with approval of another bad deal. This was passage of Ordinance No. 183-05 on September 12, 2005.

This was a contract agreement to sell water to Aqua Ohio, the competing water provider, who in turn would be selling water inside the city limits to North Canton residents.

The legislation approving the water agreement with Aqua Ohio put this city at an even greater disadvantage!

Earlier, I referred to the fact that last week “I heard the other shoe drop.” This probably needs an explanation.

Three years ago, when council passed legislation approving the CEDA, there was no indication that annexation of the Sanctuary would require the expenditure of taxpayer funds in excess of one million dollars. Not one word. Not a hint that annexation would result in the need for the expenditure of monies by the City of North Canton on behalf of the development of the Sanctuary.

Last year the City of North Canton passed Ordinance No. 183-05 authorizing the expenditure of $1,200,000 for the construction of the Marquardt Sanitary Sewer project. Of that total, the Metropolitan Sewer District contributed $290,000, the developer, McKinley Development, Ltd., contributed $265,000. The balance of the costs, $645,000 was borne by the City of North Canton. This was the first shoe dropping.

The other shoe that is about to drop is the proposed expenditure of what Councilmember Jon Snyder described as “a little south of $500,000” to purchase the water rights to the Sanctuary.

If that expenditure is approved by this council, that will result in a cumulative expenditure of $1,145,000 by the City of North Canton on behalf of the development of the Sanctuary.

My exact comments from the council minutes of May12, 2003, regarding the CEDA were: “This CEDA is a community economic development agreement and there are no economies shared in this between Plain Township and North Canton… they’re all developer issues.”

Well, it looks like the developer issues I referred to in 2003 have become “BIG” dollar issues for the City of North Canton. I wonder why?

What was the motive for the inept legislation that council has passed, not once but twice regarding the development of the Sanctuary? I ask that this council not cure past missteps of council with another expenditure of city funds.

There is another option for the city which was discussed in a May 15, 2006, public meeting with representatives of Aqua Ohio. I urge this council to pursue that avenue.

According to a Repository report on April 7, 2006, regarding Mayor David Held’s State of the City address, the City of North Canton has outspent its revenue for the last three years. Continued expenditures that are unbudgeted such as the proposed expenditures for a little south of $500,000 will make this a fourth year of reckless spending.

How many more years can this city continue to outspend its revenue?

How many more failed council actions such as passage of the CEDA or passage of the Aqua Water agreement can the City of North Canton survive?

I ask you to solve this issue without paying out hundreds of thousands of dollars as recommended by Councilmember Jon Snyder.

Thank you
Chuck Osborne
City of North Canton

Monday, April 10, 2006

Tax Abatements Continue Unabated in North Canton While Schools Seek More Funding From Taxpayers at the Polls

Prepared Comments Made to
April 10, 2006

On the agenda this evening, are two pieces of legislation that I would like to address. The first is Ordinance No. 59-06 which is legislation from the Community & Economic Development Committee.

Tonight’s agenda for this piece of legislation reads: “An ordinance authorizing an agreement with Patrick J. & Georgeann Palonder for a project and real property tax exemption pursuant to the Ohio Community Reinvestment Area program, and declaring the same to be an emergency.”

First of all, I have to ask why is this on emergency? Emergency legislation according to Section 2.05 of the North Canton City Charter is legislation necessary for the immediate preservation of public peace, health or safety. Where is the emergency?

Fast-tracking legislation limits public comment. Corporate charity in the name of tax abatements is a topic that the public should be allowed to address.

Three readings would allow taxpayers notice of this legislation and give them a chance to comment.

The abatement of taxes for businesses that in exchange merely offer the businesses presence in the community might be a topic of interest to the taxpayers of this city who must continue to pay taxes without benefit of personal abatements.

The business requesting the abatement of taxes is the Pat Joyce Insurance Agency which has operated in North Canton since 1980. Mr. Palonder states on the application [that] “… without the tax incentive we will sell the property and build in Jackson Township.” The operative word here is incentive.

The property, according to the Stark County Auditor’s Web site was purchased September 9, 2005.

The purchase of this property on North Main Street, next to the former Bank One building evidently did not require an incentive so how can this be termed an incentive. The decision to purchase the property was made with plans to build on the property.

Since that purchase decision was made over seven months ago, any abatement of taxes is no longer an incentive but simply a handout at the expense of the North Canton City Schools.

An incentive by definition is “something that encourages someone to action.” The purchase of property on North Main Street has already happened. Seven months in the past.

Investment in Main Street properties is happening. It is happening without handouts that come at the expense of the taxpayers of the city and at the expense of the North Canton City Schools. Free-market forces are alive and well on Main Street and those free-market forces will continue to work unless disturbed with demands for more corporate welfare.

The application by the Pat Joyce Insurance Agency states that it will add two full-time jobs within one year. I do not want to play down any job creation in North Canton by any business but with the small numbers of businesses in North Canton, the abatement of taxes reduces the tax base. Furthermore, it places more of the tax burden on homeowners and directly impacts the North Canton City Schools.

City services can be supported best when tax revenue is derived from a broad tax base of residential, retail, commercial, and industrial properties. The tax base for North Canton is being whittled down with the loss of manufacturing and industrial property tax base from the Hoover Company and now ever so slowly, from the abatement of taxes on the few commercial properties that make up North Canton’s commercial tax base.

What remains are residential property owners supporting both the rising costs of city government and the increasing costs of the North Canton City Schools.

To quote Repository columnist, Michael Hanke, in today’s paper, “Do economic development supporters really believe real-estate tax abatement is more important than a good school system to prospective employers?”

To paraphrase Mr. Hanke, does this council believe that approving revenue cuts to the strongest asset that the City of North Canton has going for it, its city schools, is a good idea? I hope in my heart that you do not believe that!

And that brings to mind the timing of this requested abatement. I do hope that this council is aware that the North Canton City Schools do have a levy on the ballot for next month.

How can you stand up here one week and tell the public that you support the school levy and then the very next week give away revenue desperately needed to support the great school system that residents proudly enjoy.

In light of the plight of the city’s financial picture revealed in Mayor David Held’s state of the city speech just last week and in consideration of the voters who are being asked to vote for the North Canton City School levy in just a few weeks, I ask that this council seriously reconsider any plans to approve this tax abatement request.

The second piece of legislation I want to speak to is Ordinance No. 60-06 which is legislation from the Finance & Property Committee.

This legislation reads “An ordinance accepting the recommendations of the City of North Canton Tax Incentive Review Council (“TIRC”), concerning the agreements granting exemptions from property taxation, to continue the existing eight (8) Community Reinvestment Area (”CRA”) agreements.”

This piece of legislation is not scheduled for passage on emergency, but for everyone in this room tonight, we all know that this will be amended to pass on an emergency. How sad that legislation such as this will be fast-tracked before interested taxpayers can comment publicly.

I attended the meeting of the North Canton Tax Incentive Review Council (TIRC) on March 22, 2006, and I must say that the name of this group should be changed to the North Canton Corporate Welfare Review Council.

Three of the eight tax abatements that were reviewed have not met their promise of new or retained jobs as contracted when the abatement was granted

A member of that TIRC and also a member of city council, Mr. Jon Snyder appropriately described several of the troubling tax abatements that were reviewed at last week’s Council of the Whole meeting.

The tax abatements that Mr. Snyder described last week were indeed, troubling, and yet they were continued.

And to make a mockery of the review process, it was made clear by the representatives from each of the three companies that there was a high probability that they would not achieve their promised goals in the foreseeable future.

Why were the abatements of these companies not cancelled outright? At the very least three companies should have been put on probation?

The other companies reviewed only marginally met the requirements for their abatements as well.

As I sat and listened to each of the three companies explain their plight, I could only think that this process of so-called tax incentives had degenerated further from corporate charity to corporate welfare.

My last comment on the TIRC is in regards to the membership of the committee. The practice of appointing council members to serve on the TIRC undermines the system of checks and balances so important in our system of government.

When a council member also serves on the TIRC, that council member is quite possibly reviewing tax abatements that he or she approved as a council member. This runs counter to the checks and balances so vital to the process of government.

The practice of individuals’ serving as both council members and as members of the TIRC should end.

In the same Repository column today that I referred to earlier, Michael Hanke states that “It seems that the only greater anti-schoolchildren group is the City of Green, which never met a tax abatement it didn’t like….” I fear North Canton is running a close second.

I urge you not to seek to earn that sort of reputation. It will only harm our schools and our city.

Thank you
Chuck Osborne
City of North Canton

Monday, March 13, 2006

Taxpayers Receive Nothing for Expenditure of $6,000; Action Must Begin to Recover Illegal & Unauthorized Expenditure

Prepared Comments Made to
March 13, 2006

It is the role of this council to control the expenditures of all monies expended by the City of North Canton. The relatively simple process of applying for, accepting, and utilizing grant money is also controlled through council. This process is provided for in both the North Canton City Charter and in Ohio State law.

Through council’s control of public funds, whether the funds were received from tax receipts or through grants, the public is assured that public funds are spent wisely and fairly and that taxpayers will receive some value for their tax dollars.

In a Council of the Whole meeting on February 22, 2005, former City Administrator, Michael Miller, revealed that he had expended $6,000 three months earlier toward the purchase of approximately 24 acres of property known as the Crowder property.

The signed option agreement, dated November 22, 2004, was done without the consultation or knowledge of the North Canton City Council.

This was a direct violation of Section 3.01 (4) of the North Canton City Charter. This section states in part:

“The mayor shall sign, on behalf of the municipality, all contracts, conveyances of indebtedness and all other instruments to which the municipality is a party.”

The agreement was a six-month option to purchase 24 acres of property from Mr. David Crowder for $540,000. The $6,000 option payment was to be credited toward the final purchase price of the property. In fact, the agreement was an integral part of a purchase of property which would have required the knowledge and approval of council through legislation.

Council did not have knowledge as a public body of the option agreement nor did council have knowledge as a public body of the expenditure of the $6,000 toward the purchase of the Crowder property.

The activities of former City Administrator Michael Miller were that of a rogue city official with a plan and agenda of his own who was acting beyond his authority and separate from the final approving authority, which is this council body.

The purchase price of the property listed in the option agreement was far in excess of the $25,000 spending limit under North Canton’s city charter and Ohio state law and required approval by the Board of Control and the North Canton City Council.

Thus, for Mr. Miller to enter into the option agreement without council approval in a deal that ultimately required council approval for a $540,000 purchase price was totally irresponsible and a direct violation of the spending limit established by the North Canton City Charter Section 4.05 and Ohio Revised Code §735.05.

Why Mr. Miller waited for nearly half of the six-months of the option agreement to lapse before advising the North Canton City Council of his actions pertaining to the purchase of the Crowder property has never been explained.

On February 28, 2005, a week after former City Administrator Michael Miller revealed his actions to council regarding the option agreement and $6,000 expenditure; I presented comments to council regarding my concerns. Those comments are in the record and they detail, as Mr. Miller himself describes it, the “convoluted” deal that he, Miller, fashioned in secrecy.

Ultimately, Council refused to purchase the Crowder property after further discussions on May 16, 2005, and on June 6, 2005. On August 29, 2005, council returned the $180,000 grant that Mr. Miller had secured toward the purchase of the property from District 19 of the National Resource Assistance Council (NRAC).

The bottom line is that $6,000 of taxpayer funds were spent with the city and taxpayers getting absolutely nothing in return for the expenditure. The unmitigated loss of $6,000 of taxpayer funds is due entirely to the actions of former City Administrator Michael Miller.

I believe laws have been broken and the taxpayers of North Canton have suffered a loss that needs to be recouped.

Many times we question the validity of government expenditures but at the very least, taxpayers are left with something to show for the expenditures made by their government. But in this instance, taxpayers received absolutely nothing in return for the $6,000.

The previous council seemed to look the other way. It was an election year. No sense in rocking the boat in an election year.

I hope that this new council is as outraged as I am at the failure to follow the system of checks and balances in the expenditure of public funds.

I am asking that this council to recover the loss of $6,000 and return the money to the general fund.

Since Mr. Miller did not have the authority to sign and obligate the city to the purchase of real estate for $540,000, it could be argued that the agreement with Mr. David Crowder is not valid and that Mr. Crowder should return the $6,000.

Given that Mr. Miller exceeded his authority in fashioning a deal outside the public knowledge and approval of council, maybe Mr. Miller should reimburse the city for the loss of $6,000.

In the event that this council fails to take immediate action to recover the misspent funds, I must advise this council that I will be compelled to seek recovery of the funds through other means available to me as a taxpayer of the City of North Canton.

I ask you, please, to show the taxpayers of North Canton that this body is truly a watchdog and a conservator of city monies and also of the individuals who spend our tax dollars.

Thank you
Chuck Osborne
City of North Canton

Monday, February 13, 2006

Council Actions Ignore Voters, Limit Access to Public Business & Create Anxiety for City Employees

Prepared Comments Made to
February 13, 2006

The new membership of the North Canton City Council has been in office for seventy-five days as of today. In this short time, there have been certain actions by this council that are not in the best interest of the residents of North Canton.

City Council actions which ignore the wishes of the electorate, limit the public’s access to public business, and create anxiety for key city employees are not what the public expects.

At the council meeting of January 23, 2006, Councilwoman Susie Hines nominated former Mayor Tom Rice to serve as a member of the CIC.

To make this appointment with the knowledge of the acrimony the City of North Canton endured under former Mayor Tom Rice and of Mayor Rice’s treatment of former City Administrator David Held, now Mayor, flies in the face of the mandate of the voters.

This appointment was noticed by the Repository editorial board in an editorial on Thursday, January 26, 2006. The editorial referred to the appointment as a “provocative choice.” Many people, including myself, would describe it as a repudiation of the wishes of the voters.

I applaud Councilmember Jon Snyder’s vote against this appointment.

Another recent action of this new City Council is the decision to close out the public from the council office. Last week, the door to the council office was closed to the public and in its place, a window was installed.

This action had been rumored for weeks and no one seems to know the reasoning for this action.

I find it quite interesting that former Mayor Tom Rice kept the doors to the Mayor’s office locked and now, to use a term from the Repository editorial noted earlier, that a “ pro-Rice Council” is elected, the doors to the council office are closed.

I might add that with the election of a new mayor, the door to the mayor’s office is now open again. It looks like musical locked doors at North Canton City Hall depending on one’s political affiliation.

The doors to the council chamber have been open to the public for as long as I remember. This is where citizens come to meet their elected representatives. They do not expect to stand at a window in a wall in a hallway next to the copier machine to ask questions from their elected officials regarding the public’s business.

And where is this window to the council office? It is behind a closed door that leads back to the finance department. And next to the council window is the now closed council office door.

The installation of this barrier to the public, I mean window, resulted in the expenditure of $375 and the reconfiguration of City Hall to suit the whims of someone on city council.

The funny thing is I have been unable to find out who requested the installation of the council window.

I was assured by the mayor’s office several weeks ago that this request would be discussed publicly in council. Unfortunately, that never happened.

I spoke to councilmember Jon Snyder and he had no knowledge of the plans to install a window in the council office. Former councilwoman Marcia Kiesling has relayed to me that Councilmember Pat DeOrio does not know who signed the invoices authorizing the installation of the council window.

By chance, I spoke to Councilwoman Susie Hines coming out of the council office last Monday regarding the council window and she did not know who authorized the council window either. Her response was that the council window would “increase efficiency.”

I will let you ponder the “efficiency” response yourself. It went right over my head and out the council window!

My last concern is the anxiety that this council has brought on our city government by delaying the appointments of two key city officials for weeks. In the past, the finance director and law director have been reappointed at council’s organizational meeting on December 1.

After a delay of six weeks, the city’s law director announced publicly on January 9, 2006, that he would
leave the position he had held since September 2003.

On January 23, 2006, after a delay of nearly two months this newly elected council did confirm the appointment of the finance director who has held this position for four years.

Both of these individuals have served this city with the highest degree of competence and professionalism. Each is vital to the day-to-day business of this city.

Is this anyway to treat employees of this caliber? I hope you know the answer to that question.

Why have these appointments been handled in this manner?

What is this council’s agenda?

Many of you on this council are brand-new to North Canton City government.

What direct knowledge did you have that caused you to doubt the job performance and professionalism of the current Finance Director and Law Director?

Your actions have created needless anxiety for these vital city employees, the people who work with them, and the stable process of city government that has been ongoing here in North Canton for many years.

Now, the city finds itself looking for a new law director.

In your search for a new law director, I believe you are abusing the privilege of calling “executive sessions under Ohio’s Open Meetings Act.

Invoking the subject of Personnel is a valid exception under the Open Meeting’s Act but it cannot be a catch-all for any and all personnel issues under Ohio’s Open Meetings Act and I believe that is what is happening in your search for a new law director.

Three years ago in the search for a law director, executive sessions were limited and the time in executive session used effectively.

The present Personnel Committee has invoked no fewer than five executive sessions, each lasting several hours and two more executive sessions are planned later this week.

The Personnel Committee has taken on the task of interviewing all twenty-two applicants for the position of law director.

To me, you are giving false hope to all the applicants and failing to effectively utilize your time.

Putting in a window to the council office may be someone’s idea of efficiency but interviewing all 22 applicants for the law director position is certainly not my idea of efficiency.

In a review of the resumes of all the applicants, I did not see any applicant who was as qualified as the present North Canton Law Director. Mr. Pusateri has almost three years experience on the job and has served this city well.

It is too bad that your politics have led you to now need to reinvent the wheel.

It is a shame we are losing the knowledge and experience that the present law director has attained here in North Canton!

The City of North Canton at present has a new Mayor, a new City Administrator, and the majority of the members of the present city council are new.

With this lack of experience and depth of knowledge spread through all three branches of North Canton City government, it does not make much sense to let Mr. Pusateri’s knowledge and experience leave our government.

I trust that this pro-Rice Council will surprise us all and be a pro-North Canton Council in all of its decisions, now and in the future.

Thank you,
Chuck Osborne
City of North Canton

Monday, January 09, 2006

Tax Abatements Used as Handouts in North Canton

Prepared Comments Made to
January 9, 2006

First, I would like to say that I was very gratified by this council’s close scrutiny last month to the 2006 budget. Given the economic uncertainty that North Canton is now facing, I hope that this scrutiny of expenditures becomes the norm for this legislative body.

Beyond controlling expenditures, there is another part of the financial equation that must be managed and that is revenues. And this is what I want to address tonight.

At the January 3, 2006, Council of the Whole meeting, Economic Development Committee Chairman Jim Repace presented to this body proposed legislation to authorize a twelve-year tax abatement for Dr. Suglio. It is on your agenda tonight to be voted on as Ordinance 1-06.

In the past, I have spoken about two tax abatements, specifically, the abatements granted to Reed Funeral Home and to Spee D Foods.

Tax abatements for business are to be given as an incentive. They should not be given simply for the asking. A tax abatement is appropriate when it is needed to make something happen that would otherwise not happen.

The City of North Canton is giving tax abatements when none are needed and, furthermore, getting little or nothing in return for the abatement.

The Ohio Department of Development (ODOD) has a three page summary titled Ohio Community Reinvestment Area Program at http://www.odod.state.oh.us/edd/cra/crasummary.pdf and I would like to highlight some remarks from that summary.

“…This program permits municipalities or counties to designate areas where investment has been discouraged as a CRA to encourage revitalization of the existing housing stock (emphasis added) and the development of new structures.”

I do not believe that the Main Street of North Canton is a place where investment has been discouraged.

The recent purchase of nearby property for construction of a bank shows that investment on Main Street of North Canton is alive and well. Legacy Bank, next door to Dr. Suglio’s newly acquired property has made a substantial investment on Main Street with the construction of a new bank, and no incentives were needed.

Legacy Bank is one of several new banks to locate in the city in the past year and according to a recent report in the Repository, North Canton now has thirteen banks with most of them on Main Street.

The financial investment on the main street of North Canton by business clearly shows that investment on Main Street is not discouraged and that tax incentives are not needed to stimulate this kind of activity.

Another source of information that clearly defines the primary focus of a CRA as the revitalization of housing stock comes from the legislative comments regarding House Bill 754 of the 108th General Assembly.

The legislative comments regarding CRAs, state the following:

“…the incomes of residents generally in the area are such that taxes on property substantially affect the ability of residents or owners of housing to make expenditures for repair or rehabilitation of housing.”

It is the homeowner who ultimately bears the burden of taxes in the community and the abatement of taxes under the CRA Program was created to provide an incentive to invest in the revitalization of their homes.

Giving tax abatements to businesses that need no incentive to remain in North Canton is unfair to homeowners who bear the bulk of the burden of taxes in the community. It also undermines the beneficiaries of these taxes. They are the following: the North Canton City Schools, the North Canton City Library, the Stark County Park District, Stark County government, and the City of North Canton.

Tax abatements such as those recently given distort and pervert the true purpose of the Ohio Community Reinvestment Area Program.

The CRA summary from the Ohio Department of Development also states “…the exemption percentage and term are to be negotiated between the property owner and the local legislative authority.” The North Canton legislation creating the Main Street CRA, Ordinance No. 22-99, uses similar language stating “…improvements to commercial and industrial real property and the period of those exemptions shall be negotiated on a case-by-case basis…”

What sort of negotiations are taking place? From the seats here in the audience at last week’s council meeting, what I heard is that there was a request for a 12-year tax abatement in exchange for two part-time jobs and that this requested abatement of taxes should proceed.

Does anyone really sit down and evaluate the requested tax abatement to determine if it is a fair and equitable request that is truly needed and provides something to the city in return?

The ODOD CRA summary also addresses the fact that along with the creation of a CRA program, the local legislative authority must create a Tax Incentive Review Council to review performance on all agreements and projects. I believe the operative word here is “Incentive.”

Is this requested tax abatement a needed incentive to make this investment in the community a reality? That does not appear to be the case.

In the minutes of the Community Reinvestment Area Council meeting of November 29, 2005, that met specifically to discuss this tax abatement request, one of the members remarks “…that it looks like he is going ahead with this project whether or not he gets the tax incentive or not. There is nothing that says the project is contingent upon receiving the incentive.”

Also noted in these CRA Council meeting minutes is the following “because so many of his patients are local, he purchased the building for approximately $150,000. Apparently a good value since the County Auditor’s market value is listed at $229,000.”

It appears that the acquisition cost for the property abutting Dr. Suglio’s current dental practice was the incentive for Mr. Suglio to expand his dental practice on Main Street here in North Canton.

Clearly, tax abatements are not an incentive in this case. Dr. Suglio, as a wise businessman, saw an opportunity and took advantage of it. This is an example of free-market forces at work and free-market forces are alive and well on Main Street.

This request for a tax abatement is similar to the abatements given to Spee D Foods on South Main Street in January, 2004, and to Reed Funeral Home just off Pittsburgh Road in June of the same year.

No incentive was needed to secure these investments in the community and yet tax abatements were approved by North Canton City Council.

The approval of the tax abatements for Spee D Foods and for Reed Funeral Home simply discounted the tax liability for each of these businesses and now we are facing another similar request here in Ordinance 1-06.

I guess it gets council members a few extra votes at the next election and persuades people to like you more than they otherwise would. The tradeoff is that that the remaining taxpayers pick up the tax burden and the school district collects less revenue.

There is something a little unique in this tax abatement request that I would like to bring to your attention and this is the fact that this requested tax abatement appears to violate state and local law regarding when commencement of construction or remodeling can begin.

ORC §3735.671 (A) states the following: “If construction or remodeling of commercial or industrial property is to be exempted from taxation pursuant to section 3735.67 of the Revised Code, the legislative authority and the owner of the property, prior to the commencement of construction or remodeling (emphasis added), shall enter into an agreement, binding on both parties for a period of time that does not end prior to the end of the period of the exemption, that includes all of the information and statements prescribed by this section.”

A reference to this section in the ORC is also described in the ODOD CRA summary that I have referred to earlier.

This same information is repeated in an Ohio Attorney General Opinion (OAG 96-030), dated, May 29, 1996, in a response to a question from a Wood County Prosecuting Attorney.

The OAG opinion states in part: “…Commercial and industrial applicants must apply prior to beginning a project and negotiate with local legislative authorities for an exemption. R.C. 3735.66-.671.”

This same requirement is also posted on the North Canton Web site at http://www.northcantonohio.com/content/main-st-cra.htm.

Item 5 on this Web page, in bold print, states the following:

“Once Council has adopted legislation approving the abatement and all parties have signed the CRA agreement, construction of project can begin.

A memo from Eric Bowles, Director of Economic Development, dated November 28, 2005, documents the fact that remodeling work on the Suglio property was underway as early as October, 2005.

I have confirmed this with an onsite visit to the property. I was told by one individual that construction has been ongoing for well over six-months, and I observed that plumbing and electrical work are substantially complete. Many areas of the new office are complete with wall board and will soon be ready for paint.

It is public knowledge that construction and remodeling have been underway for some time.

I ask that this council seriously reconsider any plans to approve this tax abatement request and any similar request. This request is not made with any ill-intentions to Dr. Suglio.

This council must do everything in its power to insure that taxes are collected to support all the governmental bodies that rely on these funds.

The City of North Canton is facing some very difficult times ahead and funds will indeed be scarce. The Hoover Company is a ghost of itself, the Maytag Company is soon to be non-existent, and Whirlpool is not here to pull anyone out of an economic death spiral.

Thank you,

Chuck Osborne
City of North Canton