Tuesday, April 12, 2016

North Canton CRA Tax Abatements Raise Serious Practical and Moral Questions for Taxpayers and Our Local School District

Prepared Comments Made to
April 11, 2016 

It is pretty well accepted in case law that the courts will rarely meddle in the legislative actions and decisions made by elected bodies of city governments as there is the presumption that representative governments are acting on behalf of their constituency. 

In 2005, while in the midst of a major renovation to our home, my wife and I became aware of legislation working its way through City Council modifying or expanding an existing program called a Community Reinvestment Area (CRA). The program provided an abatement of taxes on the increased valuation of the property resulting from improvements to existing housing stock in the City. 

Mindful that $150,000 in improvements to our home was a substantial investment and that we were indeed making improvements to the City’s existing housing stock, my wife and I enrolled in City’s CRA program. The program, first implemented in 1999, was a legislative action of our elected representatives.  

Who were we to question the legislative actions of North Canton City Council? 

Does anyone on City Council believe the program has served our Community in a positive manner over the seventeen years the CRA program has existed in North Canton? 

And now this Council wants to expand the CRA and make it a City-wide program.  

I do not believe this program is serving the City and has not since its inception. 

 Was my home blighted and deserving of a tax abatement for after all, that was the purpose of the program? 

NO, it was NOT blighted.  

Did my wife and I need a financial incentive to improve our property eleven years ago? Again, the answer is NO! 

There are seven other participants currently receiving tax abatements in the City’s CRA program and I can say without hesitation that they also did not need a financial incentive for the investments they made in their properties.  

Six of the properties receiving tax abatements are corporations.  

Five of the eight properties receiving tax abatement are for new construction. 

Two of the property owners receiving tax abatements are well-known individuals who are multi-millionaires in our community.  

North Canton’s CRA program is nothing but a tax giveaway pure and simple. The taxes that you are abating are revenue desperately needed by the North Canton City School District. 

On Sunday, April 3, 2016, the Repository ran a front page story titled “REBUILDING THE VIKINGS’ COFFERS.” This story is a prelude to what is looming for the North Canton City Schools. 

The abatement of property taxes for improvements, at most, should be limited to existing housing structures as was the original purpose of the program.  

And with only two homeowners in seventeen years utilizing the program to improve existing housing, with neither owner needing an incentive to do so, it is quite obvious that the entire program is an utter failure.  

In the spread sheet that I have passed around, I have tallied up the costs of the abatement to the City and the School District. For 2015, there has been a loss of nearly $100,000 in tax collections; two- thirds of that total would have gone to the schools.  

A tally of the forgone taxes over the full term of each of the eight abatements totals $1,346,345. This loss will rise as property valuations increase over the years. 

The CRA is nothing more than a tax dodge that has predominately benefited corporate interests and millionaires, all to the detriment of the North Canton City School District. 

Lastly, I want to call to your attention the abatement of taxes for the construction of a 40-unit apartment complex, called North Ridge Place, LTD at 1303 N. Main St. 

This abatement is immoral and possibly illegal. It is also unfair to the taxpayers of North Canton. It is highly detrimental to the North Canton City Schools, and backlash on this abatement could very well lead to the defeat of the next school levy. 

I have looked for a record of any Council action on this abatement and have found none.  

Mayor Held, the terms for this particular CRA abatement have resulted in forgone property taxes in 2015 of $59,129. Over the fifteen-year term of this abatement, the City and the North Canton City School District will have forgone over ONE MILLION DOLLARS in revenue on this one abatement alone.  

If your Director of Permits & Inspection, Mr. Bowles, made the unilateral decision to approve this abatement, and it appears he did, you should ask for his resignation. 

This loss of public funds on this abatement is unconscionable and can only result from malfeasance, misfeasance or nonfeasance on the part of Mr. Bowles. 

Further, I ask that this Council reexamine many of the CRA abatements currently outstanding and terminate all the tax abatements that do not result in rehabilitation of existing housing structures in the City. 

Thank you,
Chuck Osborne
City of North Canton