Prepared Comments Made to
NORTH CANTON CITY COUNCIL
June 11, 2007
The trumpeted arrival of the Service and Support Administration of the Stark County Board of MRDD and its promised seventy jobs is not a windfall for the City of North Canton. All one has to do is simply crunch the numbers as supplied by North Canton Economic Development Director Eric Bowles in his presentation to the CIC Board of Trustees last Tuesday, June 5, 2007.
I should have known that this was a done deal as the prospect of MRDD moving its offices to the City of North Canton had already been announced on WHBC radio days before this CIC meeting.
At last weeks CIC meeting, the CIC Board of Trustees agreed to purchase ½ acre of property from McKinley Development, the owner of property abutting Abbott’s Bridal Shop on the north for $75,000. Mr. Lemmon, the owner of McKinley Development, stated to the CIC Board that the property is valued at $150,000 per acre. The valuation of the property was questioned in the meeting by a trustee.
Why was their no independent appraisal on the valuation of the property? Most attorneys would be on safe ground in suggesting an independent appraisal of real estate before making an offer to purchase.
The city’s Law Director who was in attendance at this meeting made no such suggestion.
While I watched the owner of Abbott’s Bridal Shop, Mr. Randall McNurlin, present his request for assistance to the CIC Board of Trustees, the obvious question to me was why didn’t the owner of Abbott’s Bridal Shop sit down and work out a business deal with Mr. Bill Lemmon, owner of McKinley Development? The property that the CIC will own is landlocked and is of no value to anyone except Bill Lemmon, and, for the moment, Randall McNurlin, who is in need of additional parking to accommodate the prospective tenant noted above.
The proposed development project that was presented to the CIC Board of Trustees was for the CIC to purchase the McKinley Development property for $75,000 and make improvements to the property (clear trees, install drainage and fill, and pave with asphalt) to create additional parking for the building containing Abbott’s Bridal Shop. The cost to the CIC was said to be an estimated $115,000, excluding engineering and other soft costs.
Given that development costs of the property are only estimates and that they do not include engineering and other soft costs, the final costs to the CIC could reasonably total $130,000.
The owner of Abbott’s Bridal Shop will have use of this parking lot for $1.00 per year for the entire term of the lease with no obligation to repay the CIC its costs.
In the initial four-year term of the lease, Mr. McNurlin told the CIC Board that he will receive net revenue of $7.79 per sq. ft. on his 11,000 sq. ft. of office space. This equates to $342,760 over four years.
The City of North Canton is expecting on average for 70 jobs, $34,500 per year in income taxes for a total of $138,000 over the four-year life of the lease with MRDD. The seventy jobs are only promised, not guaranteed.
To calculate the true benefits of this deal, the benefit of the CIC leaving the $130,000 in the bank must be factored into the financial analysis. In this case, if the CIC simply left the $130,000 in the bank for four-years, simple interest alone would increase these funds to $156,000.
Does it make economic sense for the CIC to expend or forgo $156,000 to generate $138,000 over a four-year period?
In addition to the above financial analysis, there is the added risk at the end of the four-year lease, when the owner of Abbott’s Bridal Shop may no longer need the added parking, that the CIC will own a non-marketable landlocked ½ acre parking lot and lose its entire investment in the property.
The bottom line is that the CIC will be out $156,000. This proposed development on behalf of the owner of Abbott’s not only fails to recoup the original costs borne by the CIC, but leaves the CIC owning a real estate asset with no resale value.
Apart from the financial aspect of this giveaway of former taxpayer funds, there are the limitations of the property itself. This property was never designed to accommodate this volume and density of traffic into and out of the property. It will be a horrendous traffic nightmare and compromises safety in every way.
The monies being used in this giveaway were removed from North Canton’s General Fund just two years ago by City Council.
Now these former tax dollars are being handed out, with no demand for repayment, to benefit private business and with no real benefit to the taxpayers of North Canton.
Former Mayor Tom Rice, a trustee on the CIC Board stated that he could not be Santa Claus and was the only trustee on the CIC board to vote NO on the request for financial assistance.
People with clearer minds need to rethink this deal.
We all know this is an election year and we all know that politicians want to provide the illusion that under their leadership positive things are happening in North Canton but at what price?
This is all smoke and mirrors under the guise of jobs for the city with politics thrown in to spin a giveaway of tax dollars into an illusion of progress.
As the old proverb says, “You cannot make a silk purse out of a sow’s ear.”
Financially and economically, there is no gain to the city. This deal simply enriches private business at the expense of the public and creates safety issues and traffic headaches that the public will have to bear.
City of North Canton