Monday, August 27, 2012

North Canton Tax Abatements Fund European Vacations?

Prepared Comments Made to
August 27, 2012

     We have all heard the amusing elementary school kid’s explanation that “My dog ate it” when asked why he does not have his homework.
     A variation of that explanation was given to Council President Jon Snyder last week when Mr. Snyder queried Mr. Patrick J. Palonder as to why he failed to appear at an annual meeting in March of the Tax Incentive Review Council to explain his failure to comply with the terms of a tax abatement agreement.
     Mr. Palonder replied that he and his wife were out of the country vacationing in Europe. Mr. Palonder’s candid response prompts me to ask this question: Are North Canton tax abatements given to businesses being used instead to help fund European vacations?
     Mr. Snyder, as President of City Council, Chairman of the Finance Committee, and a member of the Tax Incentive Review Council (TIRC) who recommended the termination of the agreement, I heartily concur with the recommendation of the TIRC committee. Furthermore, I concur with your admonishment of Mr. Palonder when you suggested that Mr. Palonder should have notified the TIRC committee of his inability to appear at the annual meeting to review compliance of tax abatement agreements.
Mr. Cerreta, I must say I was dumbfounded with your suggestion that a modification of the tax abatement agreement for Mr. Palonder might be in order. As was explained by TIRC member Snyder, the TIRC exhaustively discussed the issue at their March meeting. The decision by the TIRC to terminate the agreement did not come without care and due diligence.
     Mr. Palonder further explained last Monday that there had been a parting of the ways with his business partner and that his former partner had taken away the very jobs that led to the creation of the tax abatement.
     Paragraph 2 of the agreement requires the hiring of 2 full-time positions and an increase in payroll of $50,000 per year. That is gone with the departure of the business partner. The Repository states that these requirements were not met for a portion of 2010 and all of 2011. On an annual basis, Mr. Palonder has failed to meet these requirements for the last two years.
     Why is it only now that this agreement is being scrutinized?
     Paragraph 3 of the agreement requires Mr. Palonder to alert the Community Reinvestment Area Housing Officer of any new tenant during the abatement period. Doesn’t it stand to reason that the Housing Officer would naturally be notified when a new tenant leaves the property as well?
     Mr. Snyder’s remarks last week detailing that one of Mr. Palonder’s employees was a 1099 contractor who had not paid all of the income taxes owed to the city also does not bode well as it undermines the sole purpose of the tax agreement, to increase tax revenue through increased payroll taxes.
     Mr. Palonder’s business partner was the key component of the job creation requirement for the tax abatement agreement and this individual left North Canton along with the jobs needed to qualify. Clearly, one cannot buy loyalty to the community with tax incentives.
     The tax incentives that this city has given out over the last ten years do not seriously factor into the decision of businesses to locate or stay in North Canton and yet they continue to be handed out. This flies in the face of the hundreds of other businesses who support the city and the school system by paying their fair share.
     Mr. Fox and Mrs. Kiesling, I also noticed that each of you were sympathetic to Mr. Cerreta’s suggestion of modifying the tax abatement agreement. I can only surmise that you want to make sure that Mr. Palonder is able to continue to take vacations in Europe at the expense of the North Canton City Schools. For it is their revenue you are giving away willy-nilly to individuals who appear not to need the money.
     On tonight’s agenda is Ordinance No. 68-12 authorizing the Mayor to enter into an Industrial and Commercial Retention Grant for Crowl, Montgomery &, Clark, Inc.
     An Industrial and Commercial Retention Grant is just another fancy name for corporate charity.
     The Community & Economic Development Committee, on June 4, 2012, tabled discussion of a Retention Grant for Crowl, Montgomery & Clark for the purchase of new furniture for their existing offices in North Canton on Wilbur Drive NE.
     According to a July 2, 2012, memo from Eric Bowles, Director of Permits and Development, the company has been in North Canton for a number of years. If Crowl, Montgomery & Clark had plans to upgrade their long-time office on Wilbur Drive NE, that would indicate they are happy staying in North Canton.
     We all talk about how great it is to live, work, and play in North Canton and yet city leaders feel compelled to pay businesses to come or stay in our community.
     The corporate charity that city leaders hand out is unfair to all the other businesses in North Canton who pay their fair share.
     I did not attend the ribbon cutting by Mayor Held for the new North Canton Dollar General that Mr. Bowles announced would take place this last Saturday but that store did not require incentives to bring them to North Canton.
     The owners of North Canton Collision on South Main Street have not asked for assistance to improve the appearance of their business on South Main. Why do we continue to provide handouts to a select few while other businesses pay their fair share to support our City Schools and maintain city services?
     Lastly, I would like to know if former Mayor Tom Rice, the seller of the property at 713 South Main Street that was purchased by Crowl, Montgomery & Clark had any bearing on the decision to enter into the Industrial and Commercial Retention Grant for this company. After all, assistance with property improvements would sweeten the sale for both the seller and the buyer, all at the expense of The North Canton City Schools and the City.
     I urge that this council terminate the tax abatement agreement with Patrick J. Palonder as recommended by the Tax Incentive Review Council and further urge this council to say NO to entering into an Industrial and Commercial Grant for Crowl, Montgomery & Grant as proposed in Ordinance 68-12.
     Threats by a business to leave the city if they do not get corporate handouts should not be the criteria for handing out tax incentives. Businesses either desire to locate here for viable business reasons or they do not.
     Revenue desperately needed for City Schools and City coffers should not facilitate lavish vacations in far off places for owners of select businesses in North Canton.
Thank you,
Chuck Osborne
City of North Canton