Tuesday, May 15, 2007

Council Contemplates Tax Abatement to Large Publicly Traded Company for Two Jobs While North Canton Taxpayers Brace For Higher Taxes

Prepared Comments Made to
May 14, 2007

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.

If everyone in this room believes North Canton is such a nice place to live, work, and play, why does this council body feel we have to pay a business to locate here or to remain here?

On tonight’s agenda is the second reading of Ordinance No. 51-07 which accepts the recommendations of the Tax Incentive Review Council (“TIRC”). The legislation is to continue four of the existing agreements granting exemptions and modify three existing CRA agreements. Two of the seven agreement holders received abatements of their 2006 taxes that are hardly worth the time and expense of the paperwork involved. One agreement involves an abatement of $241 and the other $177. Can anyone tell me with a straight face that an abatement of $241 or $177 convinced these two businesses to commit to North Canton?

The agreements for three of the businesses are being modified because they have not met the job creation requirements agreed to in their original abatement agreement. Furthermore, these three businesses have never complied with the job creation requirements of the agreement.

The options available to the TIRC when reviewing compliance with CRA agreements is to either continue the agreement, amend the agreement, or to terminate the agreement. I am sure most people would expect their elected official to terminate the tax abatement of a business that never complied with the terms of the abatement. But that does not seem to be the logical choice for North Canton politicians.

Would anyone in this room be surprised to hear that the recommended modification for two of the businesses is to simply reduce the job creation requirements of the original agreement? This will then bring these businesses into compliance. This will allow the exemption of their property taxes to continue.

If you cannot make the grade, just lower the standards. Is that how it works? Taxpayers can surely sympathize with the plight of the politician. We all know that no politician wants to alienate himself from prospective voters and campaign contributions from local businesses. That just would not be right would it?

One of the abatements up for modification is for Spee-D-Foods on South Main Street. This business also has never complied with the job creation requirements of its agreement. Spee-D-Foods has now admitted that it cannot comply with the terms without liquor sales. Their liquor option failed at the polls last fall and they cannot go back to the voters for four years.

In 2005, taxes totaling $1,731 were abated for Speed-D-Foods. For the tax year 2006, taxes totaling $2,353 were abated. Despite not meeting the job creation requirements, the abatement has continued. The modification being recommended for Spee-D-Foods is to continue the abatement for four years instead of the eight years remaining per the original agreement.

This is just a sampling of some of the tax abatements that have been approved by this council in the last few years and how they are kept alive when they should be ended.

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.

I would like to know if the taxpayers of North Canton are now expected to subsidize a public corporation, traded on the New York Stock Exchange with sales last year of $7.8 billion dollars with an exemption from property taxes. If this is seriously being considered, this council has sunk to a new low.

According to the Sherwin Williams Company’s 2006 annual report, the company opened 120 new stores last year. At year-end Sherwin Williams operated 3,046 stores in North America. They plan to open 100-plus new stores in 2007.

Do you think Sherwin Williams demands tax abatements before the company will open up a store in a community? If they do, I do not think they are a very good corporate citizen.

And I do not think that North Canton should give this request any consideration.

In the twenty-five minute presentation, the applicant stated that the North Canton location was the preferred location. What other incentive do you need? Why isn’t that enough?

How can this council seriously entertain the abatement of taxes for a retail business that promises two & 1/3 jobs? There is growth that has occurred in this city that has not necessitated the abatement of property taxes.

Applegrove Street offers a lot of amenities to a business wanting to locate in North Canton. Utilities are new and accessible. Traffic flow on a new four-lane modern road could not be better. North Canton has good police, fire and EMS services. And all of these services have a cost. And these costs should be shared by all businesses.

In recent months, weekly discussions continue to revolve around funding shortfalls and maintaining city services. How can you resolve the funding shortfalls in North Canton when you offer tax incentives such as these?

Why settle for collecting a portion of the property taxes when the city could collect all the taxes that are due. There are a lot of other businesses in this city paying their fair share and there are homeowners paying their fair share as well. 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
City of North Canton