Prepared Comments Made to
NORTH CANTON CITY COUNCIL
September 29, 2008
At last Monday night’s Committee of the Whole, I witnessed actions that I have never witnessed in my many years of attendance at North Canton City Council meetings. What I witnessed was an awakening of how government should function when there is honest, independent input from all participants who are truly working on behalf of the citizens of North Canton.
Last week, there was an item on the agenda to waive the water tap-on fee for residents in the city who have water well. Although this proposal was headlined under the Water, Sewer & Rubbish Committee chaired by my councilman, Jeff Davies, Councilmember Marcia Kiesling appeared to be the proponent of this initiative and she led the discussions.
Although this was a magnanimous gesture on the part of Council Member Kiesling, I am disturbed that a proposal such as this would go beyond a heartfelt expression of sympathy to those families who lose access to water in a power outage. I expect that all families who choose to remain on a well are mindful of this potential problem for themselves when electrical power is disrupted.
I know how much this public body enjoys hearing praise from admirers, especially after anyone dares question its actions but I would like to switch roles tonight and heap praise on the following individuals for providing honest discussion against the proposal to waive water tap-on fees. I know first-hand that critical comment on actions of public officials conducting the public’s business is not encouraged by this council but that is democracy at its finest.
City Engineer Jim Benekos and Superintendent of Permits & Inspection Tom Hampton certainly deserve recognition for leading the way in providing honest input on the downside of the waiver of water tap-on fees. Input on a proposed legislation such as this is sorely needed and is vital to providing checks and balances to all actions of government.
I would also like to commend the four council members who also spoke against the proposal. Council members Pat DeOrio, Doug Foltz, David Wright, and Jeff Davies also merit recognition. I applaud each of you for recognizing the pitfalls of the proposal.
The pitfalls of such a proposal are so numerous that it is hard to understand how a proposal such as this could have been placed on the agenda.
Equity and fairness first come to mind. Thousands of present day city water customers have contributed to the cost of the city water system through the collection of tap-on fees. Why would anyone want to subsidize new water users at the expense of water users who have contributed their fair share to connect to the city water system? This is patently unfair and could lead to hard feelings and possible legal challenges.
Did the supporters of this proposal forget the fact that the city is projecting a budget deficit for 2009? Council President Revoldt and Finance Committee Chairman Snyder were in support of this proposal. There was no economical basis for supporting this proposal so I must conclude that your support for Council Member Kiesling’s proposal was political in nature and that is a shame.
The legislative process depends on independent thought and deliberation from all seven members of this council, not on blind political support.
This proposal was one vote away from receiving enough support to be legislation on tonight’s agenda. Thankfully, the proposed legislation did not survive last week for a legislative vote on tonight’s agenda.
Mr. Snyder, the current fee for water tap-on fees was increased in 2006 under your Chairmanship of the Ordinance, Rules & Claims Committee. The minutes show that you supported Ordinance No. 82-06, on June 12, 2006. In the minutes of that meeting, the increase in tap-on fees passed council with unanimous support.
Mr. Snyder, in your recommendation for passage of the legislation you are quoted as saying:
“[it was an effort] to go through every revenue source that the city has and bring them in line with present-day costs…[and]…would bring in additional revenue to the Water Department as the costs of the tap and the labor to install it has increased….”
The legislation to increase the water tap-on fees in 2006 was passed on an emergency.
Mr. Snyder, I do not understand your change of heart on this issue. If the legislation required passage on emergency two years ago while the city was more financially sound, why when the city today faces budget deficits, would you have any inclination to waive needed revenue? It makes no difference whether the tap fees are paid into the water fund or the general fund. The city still faces extreme financial difficulties.
Mr. Snyder, your attempt to salvage the proposal to waive the tap-on fees when support for it waned last week defies your position two years ago as the Chairman of the committee who supported the rate increase. Your support for the proposal also flies in the face of your present position as Chairman of the Finance Committee while the city faces budget deficits.
What would council have done with this proposal without input from two courageous city employees? Thankfully, city residents will not have to find out.
Ironically, after council discussed the feasibility of waiving potential revenue for the water fund, council discussed where to find needed savings to bridge the $654,000 projected budget deficit for 2009. Unfortunately, council spent more time last week discussing how to give away revenue than time spent discussing where to cut $650,000 from next year’s budget.
I do hope that every member of this council, the mayor, the administration, and city employees are allowed and encouraged to speak freely on issues so that decisions are made for business reasons and not political ones.
With the loss of revenues that the city has experienced and continues to experience, bad decisions can no longer be masked by excess revenues as they were in past years.
Thank you,
Chuck Osborne
Resident,
City of North Canton
Tuesday, September 30, 2008
Monday, June 09, 2008
North Canton Proposes Corporate Welfare at Taxpayers' Expense
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
June 9, 2008
On tonight’s agenda there is proposed legislation to appropriate $143,000 from the unappropriated balance of the North Canton CIC Escrow Fund to the North Canton CIC. It is to be voted on as Ordinance No. 61-08. The movement of these funds is an accelerated payment ahead of the payment schedule set forth three years ago in previous legislation. That legislation provided for annual payments of $100,000 to the North Canton CIC for fifteen years totaling $1.5 million dollars in taxpayer funds. These are funds that were paid in good faith by taxpayers to fund city operations.
Tonight’s proposed legislation will also put into jeopardy an initiative petition which is presently being circulated that seeks to allow voters the opportunity to choose whether to cease annual payments from the North Canton Escrow Fund and a return of the remaining balance of $1.1 million dollars to the General Fund. The City of North Canton was duly served notice of the initiative petition on May 28, 2008, when it was provided a certified copy of the proposed legislation.
Tonight’s proposed legislation is also corporate charity raised to a new high, even by North Canton standards.
At least week’s brief discussion on the benefits of bringing Myers Controlled Power Corporation to North Canton from the City of Massillon, the facts regarding employment levels and tax collections seemed to escalate each time someone spoke on the topic.
Former President Ronald Reagan followed a policy in his dealings with the Russians that many of you might remember – Trust but verify. Has anyone on this council bothered to verify the so-called facts regarding the benefits of paying $440,000 to assist in the relocation of Myers Controlled Power Corporation to North Canton?
Based on council’s discussion last week, it is clear that this body is running with what is termed in the finance world as “imperfect information.”
After providing many members of this council body with documents I have obtained from the City of Massillon, I hope to hear a more factual discussion tonight on the possible relocation of Myers Controlled Power Corporation to North Canton. And the discussion should be free of the hype and sales pitches I heard last week. This should not be a political decision that results in a sound byte or photo opportunity for politicians.
The documents show the following facts: Controlled Power Corporation relocated back to Massillon in 2000 from Canton Township to the very facility from where it began its operation in 1966. In a letter to the Mayor Massillon, dated January 18, 2000, Controlled Power Corporation asked for relocation assistance in the amount of $25,000 with the promise that Controlled Power would relocate its seventy employees to Massillon and increase employment to over 100 people by early 2001.
These are the very same 100 jobs that North Canton now proposes to pay $440,000 for. Apparently, Myers Controlled Power believes they have found the yellow brick road leading to North Canton and that the Wizard of Oz will grant them their wish.
I hope that this council and the trustees of the CIC realize how financially unsound this proposal is. It is amazing that this plan of action has even been seriously discussed publicly. If anyone does not think this proposal for corporate welfare is financially unwise then I would suggest that before further consideration of this proposal they make the same request of the Wizard of Oz that the Scarecrow made.
Along with the relocation assistance of $25,000, the City of Massillon abated personal property taxes on equipment which, I am told, amounted to approximately $21,000 per year. Given that personal property taxes for business are being phased out by the state of Ohio and end in 2008. Apparently, Myers has no financial incentive to remain in Massillon.
Controlled Power Corporation met promised employment levels for the first four years of the ten-year abatement period. In 2005, Controlled Power Corporation was purchased by Myers Power Products and employment was slashed to 58 people where it remained for two years. In an October 9, 2007, letter, Massillon’s Community Development Director advised Myers that the Tax Incentive Review Committee recommended to Massillon City Council that Myers Controlled Power be placed on probation for failing to meet the promised level of 100 jobs. Presently, Meyers remains on probation.
Statements were made at last week’s council meeting that first year income tax collection for the City of North Canton from Myers, based on current payrolls, would be around $93,000 annually. Someone else stated income tax collection would top $100,000 the first year and $139,000 in the second year. Does anyone know factually? Shouldn’t there be a minimum dollar amount of income tax collections that are guaranteed regardless of employment fluctuations? Or is this simply a promise that if not kept North Canton will simply slap their wrist and put them on probation as is the norm when companies do not keep their promises for corporate welfare?
Income tax collections in the City of Massillon, with an income tax rate of 1.8%, from Myers totaled approximately $56,000 in 2007, and lower still in the two previous years. This is a far cry from the promised $100,000 and more that has been suggested in presentations before this body. With North Canton’s lower tax rate of 1.5%, will North Canton truly collect the levels of income tax we are being told in this sales pitch to try to justify doing this deal? Does anybody know for sure?
Wasn’t the North Canton CIC supposed to operate on a revolving loan basis? How can the city’s economic development continue if the CIC does not recoup loaned funds? I remember the sales pitch three years ago when the idea of using $1.5 million of taxpayer funds to fund the CIC was discussed. We were all told that the taxpayer-funded CIC will work as a revolving loan fund allowing the CIC to be self-supporting? Giving the funds away and owning landlocked property with little or no value and owning used crane equipment installed at great expense in a private facility is not recouping funds needed to help the next business.
How is North Canton going to lure the next company to the city if you proceed with this extravagant example of corporate welfare? The next company is going to expect equal or better treatment. They will follow the yellow brick road to North Canton because they know there is a pot of gold waiting for them. And if the Wizard of Oz refuses their request, they will not care whether the City of North Canton will be a good fit for their company. For these companies, you will have poisoned the well when you refuse their request, either because you have exhausted your limited supply of funds or you realize that you are giving away the farm, and your efforts to attract more companies will be much harder.
If this proposal gets the green light, communities across the county and the state will wonder what possessed the leaders of North Canton to pay $440,000 for the guarantee of the same 100 jobs for which Massillon paid $25,000. People can only come to one of two conclusions: sheer desperation or sheer ignorance.
I urge fiscal responsibility and common sense. To give hundreds of thousands of dollars to a business and also before the year is out cut city services will result in a great deal of citizen discontent and ultimately harm to the City of North Canton.
Thank you,
Chuck Osborne
Resident,
City of North Canton
NORTH CANTON CITY COUNCIL
June 9, 2008
On tonight’s agenda there is proposed legislation to appropriate $143,000 from the unappropriated balance of the North Canton CIC Escrow Fund to the North Canton CIC. It is to be voted on as Ordinance No. 61-08. The movement of these funds is an accelerated payment ahead of the payment schedule set forth three years ago in previous legislation. That legislation provided for annual payments of $100,000 to the North Canton CIC for fifteen years totaling $1.5 million dollars in taxpayer funds. These are funds that were paid in good faith by taxpayers to fund city operations.
Tonight’s proposed legislation will also put into jeopardy an initiative petition which is presently being circulated that seeks to allow voters the opportunity to choose whether to cease annual payments from the North Canton Escrow Fund and a return of the remaining balance of $1.1 million dollars to the General Fund. The City of North Canton was duly served notice of the initiative petition on May 28, 2008, when it was provided a certified copy of the proposed legislation.
Tonight’s proposed legislation is also corporate charity raised to a new high, even by North Canton standards.
At least week’s brief discussion on the benefits of bringing Myers Controlled Power Corporation to North Canton from the City of Massillon, the facts regarding employment levels and tax collections seemed to escalate each time someone spoke on the topic.
Former President Ronald Reagan followed a policy in his dealings with the Russians that many of you might remember – Trust but verify. Has anyone on this council bothered to verify the so-called facts regarding the benefits of paying $440,000 to assist in the relocation of Myers Controlled Power Corporation to North Canton?
Based on council’s discussion last week, it is clear that this body is running with what is termed in the finance world as “imperfect information.”
After providing many members of this council body with documents I have obtained from the City of Massillon, I hope to hear a more factual discussion tonight on the possible relocation of Myers Controlled Power Corporation to North Canton. And the discussion should be free of the hype and sales pitches I heard last week. This should not be a political decision that results in a sound byte or photo opportunity for politicians.
The documents show the following facts: Controlled Power Corporation relocated back to Massillon in 2000 from Canton Township to the very facility from where it began its operation in 1966. In a letter to the Mayor Massillon, dated January 18, 2000, Controlled Power Corporation asked for relocation assistance in the amount of $25,000 with the promise that Controlled Power would relocate its seventy employees to Massillon and increase employment to over 100 people by early 2001.
These are the very same 100 jobs that North Canton now proposes to pay $440,000 for. Apparently, Myers Controlled Power believes they have found the yellow brick road leading to North Canton and that the Wizard of Oz will grant them their wish.
I hope that this council and the trustees of the CIC realize how financially unsound this proposal is. It is amazing that this plan of action has even been seriously discussed publicly. If anyone does not think this proposal for corporate welfare is financially unwise then I would suggest that before further consideration of this proposal they make the same request of the Wizard of Oz that the Scarecrow made.
Along with the relocation assistance of $25,000, the City of Massillon abated personal property taxes on equipment which, I am told, amounted to approximately $21,000 per year. Given that personal property taxes for business are being phased out by the state of Ohio and end in 2008. Apparently, Myers has no financial incentive to remain in Massillon.
Controlled Power Corporation met promised employment levels for the first four years of the ten-year abatement period. In 2005, Controlled Power Corporation was purchased by Myers Power Products and employment was slashed to 58 people where it remained for two years. In an October 9, 2007, letter, Massillon’s Community Development Director advised Myers that the Tax Incentive Review Committee recommended to Massillon City Council that Myers Controlled Power be placed on probation for failing to meet the promised level of 100 jobs. Presently, Meyers remains on probation.
Statements were made at last week’s council meeting that first year income tax collection for the City of North Canton from Myers, based on current payrolls, would be around $93,000 annually. Someone else stated income tax collection would top $100,000 the first year and $139,000 in the second year. Does anyone know factually? Shouldn’t there be a minimum dollar amount of income tax collections that are guaranteed regardless of employment fluctuations? Or is this simply a promise that if not kept North Canton will simply slap their wrist and put them on probation as is the norm when companies do not keep their promises for corporate welfare?
Income tax collections in the City of Massillon, with an income tax rate of 1.8%, from Myers totaled approximately $56,000 in 2007, and lower still in the two previous years. This is a far cry from the promised $100,000 and more that has been suggested in presentations before this body. With North Canton’s lower tax rate of 1.5%, will North Canton truly collect the levels of income tax we are being told in this sales pitch to try to justify doing this deal? Does anybody know for sure?
Wasn’t the North Canton CIC supposed to operate on a revolving loan basis? How can the city’s economic development continue if the CIC does not recoup loaned funds? I remember the sales pitch three years ago when the idea of using $1.5 million of taxpayer funds to fund the CIC was discussed. We were all told that the taxpayer-funded CIC will work as a revolving loan fund allowing the CIC to be self-supporting? Giving the funds away and owning landlocked property with little or no value and owning used crane equipment installed at great expense in a private facility is not recouping funds needed to help the next business.
How is North Canton going to lure the next company to the city if you proceed with this extravagant example of corporate welfare? The next company is going to expect equal or better treatment. They will follow the yellow brick road to North Canton because they know there is a pot of gold waiting for them. And if the Wizard of Oz refuses their request, they will not care whether the City of North Canton will be a good fit for their company. For these companies, you will have poisoned the well when you refuse their request, either because you have exhausted your limited supply of funds or you realize that you are giving away the farm, and your efforts to attract more companies will be much harder.
If this proposal gets the green light, communities across the county and the state will wonder what possessed the leaders of North Canton to pay $440,000 for the guarantee of the same 100 jobs for which Massillon paid $25,000. People can only come to one of two conclusions: sheer desperation or sheer ignorance.
I urge fiscal responsibility and common sense. To give hundreds of thousands of dollars to a business and also before the year is out cut city services will result in a great deal of citizen discontent and ultimately harm to the City of North Canton.
Thank you,
Chuck Osborne
Resident,
City of North Canton
Monday, April 28, 2008
North Canton's Purchase of Arrowhead Golf Course A Disastrous Financial Decision
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
April 28, 2008
Today is the fifth anniversary of North Canton City Council’s 3rd and final vote to purchase the former Arrowhead golf course. While we generally celebrate past events that positively affect our lives, the purchase of Arrowhead is not one of them as is quite evident for many reasons.
The purchase of Arrowhead golf course was not a course of action I supported as a member of city council five years ago and my opposition to the purchase for $4.2 million is well documented in minutes of three sessions of city council held on April 14th, 21st, and 28th of 2003.
Five years ago, legislation to purchase Arrowhead was fast-tracked through council with three readings on three successive Mondays. Can you imagine expediting the expenditure of $4.2 million dollars that was not anticipated in the city’s budget for fiscal year 2003? Council expedited the three readings over a two week period by holding a special council meeting that was not discussed or agreed to by council in its first reading of the Arrowhead legislation. The notice of the intervening special council meeting was announced the Thursday before a Friday in which city hall was to be closed for a three-day weekend. Do you think there were forces working behind the scenes to manipulate this legislative process?
I did not stand alone in my opposition to spending $4.2 million for the purchase of Arrowhead. In the minutes of the first reading to purchase Arrowhead on April 14, 2003, Finance Director Julie Herr stated:
“…I’m not overly excited to spend 4 million dollars on something that we’re not going to see a return [on] ... With the current economic situations and the fact that next year we’re going to have to budget for at least a 2 million dollar payment for [the] Hoover Company – because of the settlement agreement, that’s something that we’re going to have to address in the budget next year. And with paying back 4 million dollars, that debt service is just money that’s going to come off the top of capital projects. So that means less money to do different projects within the city….this is going to have a financial impact down the road. I just want to make everyone aware that there is going to be a financial impact for the city for the next year and years to come.”
Finance Director Herr’s comments were quite prophetic even though the city ultimately only financed one half of the purchase price. The city paid half of the purchase price in cash from city’s reserves. That $2.1 million in cash would come in very handy at the present time.
For the entire term of the Arrowhead lease, lease payments to the city have been far short of debt service and it is robbing the city of needed funds just as the city’s finance director warned. Even with debt service requirements for Arrowhead that are one half what was anticipated, debt service has still greatly exceeded lease revenue.
In 2004, the first year of the lease, Arrowhead debt service was $326,177 while lease revenue, including a $50,000 infrastructure payment, totaled $145,000, a shortfall of $181,177.
In 2006, Arrowhead debt service was $358,338 while lease revenue, including a $50,000 infrastructure payment totaled $159,500, a shortfall of $198,838.
In 2007, Arrowhead debt service was $389,002 while lease revenue including a $50,000 infrastructure payment totaled $159,500, a shortfall of $229,502.
For 2008, the finance director anticipates debt service of $362,825 while lease revenue totals $159,500, a shortfall of $203,325. There was no shortfall in 2005 because the city did not make a principal payment on the outstanding bonds that year.
Over the five years of the Arrowhead lease, debt service on the bonds to finance merely half the purchase price of Arrowhead has exceeded revenues from the lease by $721,422.
If one were to add the lost interest on the $2.1 million cash that was removed from the general fund, called opportunity cost, there is an additional loss to the city of $334,476.
The cumulative burden on the city for Arrowhead over the past five years of the lease totals $1,055,898.
There is a reason why debt service exceeds revenue from the lease at Arrowhead golf course and it boils down to the fact that the current lease calls for lease payments far below market lease rates. According to respected life-long operators of upscale public golf facilities, a fair market lease rate for Arrowhead golf course is ten percent of the valuation of the property. The purchase of Arrowhead golf course for $4.2 million would require a fair market lease rate of $420,000 per year. I tried to make that point in comments to council on January 29, 2007, and my message fell on deaf ears.
After this year’s $300,000 principal payment on the Arrowhead bonds, the city will still owe $900,000 on the debt. Can the city continue to subsidize The Fairways golf course under the current lease rate and payment schedule? This will result in a continued burden on the city in excess of a half a million dollars over a three-year period.
Five years ago, professional operators of golf courses advised me that facilities such as Arrowhead golf course were valued at two and one half times their gross revenues. In spite of being refused the financial records for Arrowhead, I was able to conclude from collecting financial records from Good Park in Akron, the Legends in Massillon and other golf courses that Arrowhead generated around one million dollars in annual revenue, thus a fair market value for the purchase of the property would have been approximately $2.5 million dollars. Bob-O-Link golf course, nearly identical in size, had recently sold for development for $2.45 million.
Unfortunately, the huge overpayment paid by the city for the Arrowhead property has come home to roost and the situation has continued to deteriorate.
In spite of lease rates that are substantially below market rates for an asset that cost the taxpayers of North Canton $4.2 million, Mr. Kevin Larizza, the lessee of the golf course, renamed The Fairways of North Canton, advised the city in a letter received November 2, 2007, that he wants to cut his losses and terminate his lease with the City of North Canton effective November 1, 2007. Mr. Larizza states that the golfing industry across Ohio and across the state has seen a decline over the past few years.
In the minutes of the April 21, 2003, meeting, the second reading to purchase the golf course property, I read into the record from the April, 2003 PGA Magazine, titled Wake Up Call, excerpts from the article that reported the golf industry was in a decline and that this translated to a “loss of revenue across the board – green fees, lesson and caddy fees, golf cart revenue, ball equipment and merchandise sales, food and beverage, hotel rooms at golf destinations, etc.” This independent information from the golf industry also fell on deaf ears.
In a November 2, 2007, Mr. Larizza’s new management team, Golf Pro Scott DeMuesy and Course Manager Rob Purcell, describe in a letter to the city that The Fairways was “in dire need of a strong management Team…” when they met with Mr. Larizza early last year to discuss a management agreement.
In a subsequent letter, dated November 9, 2007, DeMuesy and Purcell advise city council that “…Mr. Larizza has essentially ceased financial support of the entire operation, leaving the business in a day to day turmoil.”
In the same letter is a list of items that DeMuesy and Purcell feel need to be addressed, presumably in the very near future. The list includes a need for golf course equipment, a repair of the clubhouse roof, a need to replace the clubhouse carpet for safety reasons, a need to lease new golf carts and fertilizer & chemicals to improve the appearance of the golf course marked with a disease called Dollar Spot.
A tally of these needed expenditures approaches $400,000. There was no mention of what it might cost to repave the parking lot or replace the sprinkler system which was a problem before the city took over the property, or the many other infrastructure improvements that may need attention.
Can the City of North Canton continue to fund a facility such as this and continue to drain city coffers that have already run dry? Should the City fund a facility that is such a huge drain on very limited resources?
At the present time, not only is the city leasing a facility far below market rates that continues to drain away funds needed for basic city services, the city is also now financing the operations of The Fairways. The lessee of The Fairways, Mr. Kevin Larizza, who is operating the golf course for commercial gain, has failed to render to the city, per the lease, his January 1, 2008, lease payment of $110,000.
North Canton’s purchase of the Arrowhead golf course was a disastrous financial decision that has burdened the city from the beginning and has accelerated the city’s financial decline. It cannot be blamed on the loss of the Hoover Company.
The City of North Canton must relieve itself of the financial burden as continued ownership is beyond the budget of city taxpayers.
Five years ago, I urged that the city simply purchase the development rights to the property to prevent unwanted development. That course of action was not followed. Today, continued ownership of the golf course by a city with projected budget shortfalls for as far into the future as anyone dares to look is not prudent and is patently unfair to taxpayers who rightly expect services for their tax dollars, not subsidies for a golf course.
I urge that the city sell the golf course property but withhold the development rights to the property. The city will have paid much more for those development rights than it would have five years ago, but at least it will come away with something to show taxpayers that the purchase was not entirely in vain.
Thank you,
Chuck Osborne
Resident,
City of North Canton
NORTH CANTON CITY COUNCIL
April 28, 2008
Today is the fifth anniversary of North Canton City Council’s 3rd and final vote to purchase the former Arrowhead golf course. While we generally celebrate past events that positively affect our lives, the purchase of Arrowhead is not one of them as is quite evident for many reasons.
The purchase of Arrowhead golf course was not a course of action I supported as a member of city council five years ago and my opposition to the purchase for $4.2 million is well documented in minutes of three sessions of city council held on April 14th, 21st, and 28th of 2003.
Five years ago, legislation to purchase Arrowhead was fast-tracked through council with three readings on three successive Mondays. Can you imagine expediting the expenditure of $4.2 million dollars that was not anticipated in the city’s budget for fiscal year 2003? Council expedited the three readings over a two week period by holding a special council meeting that was not discussed or agreed to by council in its first reading of the Arrowhead legislation. The notice of the intervening special council meeting was announced the Thursday before a Friday in which city hall was to be closed for a three-day weekend. Do you think there were forces working behind the scenes to manipulate this legislative process?
I did not stand alone in my opposition to spending $4.2 million for the purchase of Arrowhead. In the minutes of the first reading to purchase Arrowhead on April 14, 2003, Finance Director Julie Herr stated:
“…I’m not overly excited to spend 4 million dollars on something that we’re not going to see a return [on] ... With the current economic situations and the fact that next year we’re going to have to budget for at least a 2 million dollar payment for [the] Hoover Company – because of the settlement agreement, that’s something that we’re going to have to address in the budget next year. And with paying back 4 million dollars, that debt service is just money that’s going to come off the top of capital projects. So that means less money to do different projects within the city….this is going to have a financial impact down the road. I just want to make everyone aware that there is going to be a financial impact for the city for the next year and years to come.”
Finance Director Herr’s comments were quite prophetic even though the city ultimately only financed one half of the purchase price. The city paid half of the purchase price in cash from city’s reserves. That $2.1 million in cash would come in very handy at the present time.
For the entire term of the Arrowhead lease, lease payments to the city have been far short of debt service and it is robbing the city of needed funds just as the city’s finance director warned. Even with debt service requirements for Arrowhead that are one half what was anticipated, debt service has still greatly exceeded lease revenue.
In 2004, the first year of the lease, Arrowhead debt service was $326,177 while lease revenue, including a $50,000 infrastructure payment, totaled $145,000, a shortfall of $181,177.
In 2006, Arrowhead debt service was $358,338 while lease revenue, including a $50,000 infrastructure payment totaled $159,500, a shortfall of $198,838.
In 2007, Arrowhead debt service was $389,002 while lease revenue including a $50,000 infrastructure payment totaled $159,500, a shortfall of $229,502.
For 2008, the finance director anticipates debt service of $362,825 while lease revenue totals $159,500, a shortfall of $203,325. There was no shortfall in 2005 because the city did not make a principal payment on the outstanding bonds that year.
Over the five years of the Arrowhead lease, debt service on the bonds to finance merely half the purchase price of Arrowhead has exceeded revenues from the lease by $721,422.
If one were to add the lost interest on the $2.1 million cash that was removed from the general fund, called opportunity cost, there is an additional loss to the city of $334,476.
The cumulative burden on the city for Arrowhead over the past five years of the lease totals $1,055,898.
There is a reason why debt service exceeds revenue from the lease at Arrowhead golf course and it boils down to the fact that the current lease calls for lease payments far below market lease rates. According to respected life-long operators of upscale public golf facilities, a fair market lease rate for Arrowhead golf course is ten percent of the valuation of the property. The purchase of Arrowhead golf course for $4.2 million would require a fair market lease rate of $420,000 per year. I tried to make that point in comments to council on January 29, 2007, and my message fell on deaf ears.
After this year’s $300,000 principal payment on the Arrowhead bonds, the city will still owe $900,000 on the debt. Can the city continue to subsidize The Fairways golf course under the current lease rate and payment schedule? This will result in a continued burden on the city in excess of a half a million dollars over a three-year period.
Five years ago, professional operators of golf courses advised me that facilities such as Arrowhead golf course were valued at two and one half times their gross revenues. In spite of being refused the financial records for Arrowhead, I was able to conclude from collecting financial records from Good Park in Akron, the Legends in Massillon and other golf courses that Arrowhead generated around one million dollars in annual revenue, thus a fair market value for the purchase of the property would have been approximately $2.5 million dollars. Bob-O-Link golf course, nearly identical in size, had recently sold for development for $2.45 million.
Unfortunately, the huge overpayment paid by the city for the Arrowhead property has come home to roost and the situation has continued to deteriorate.
In spite of lease rates that are substantially below market rates for an asset that cost the taxpayers of North Canton $4.2 million, Mr. Kevin Larizza, the lessee of the golf course, renamed The Fairways of North Canton, advised the city in a letter received November 2, 2007, that he wants to cut his losses and terminate his lease with the City of North Canton effective November 1, 2007. Mr. Larizza states that the golfing industry across Ohio and across the state has seen a decline over the past few years.
In the minutes of the April 21, 2003, meeting, the second reading to purchase the golf course property, I read into the record from the April, 2003 PGA Magazine, titled Wake Up Call, excerpts from the article that reported the golf industry was in a decline and that this translated to a “loss of revenue across the board – green fees, lesson and caddy fees, golf cart revenue, ball equipment and merchandise sales, food and beverage, hotel rooms at golf destinations, etc.” This independent information from the golf industry also fell on deaf ears.
In a November 2, 2007, Mr. Larizza’s new management team, Golf Pro Scott DeMuesy and Course Manager Rob Purcell, describe in a letter to the city that The Fairways was “in dire need of a strong management Team…” when they met with Mr. Larizza early last year to discuss a management agreement.
In a subsequent letter, dated November 9, 2007, DeMuesy and Purcell advise city council that “…Mr. Larizza has essentially ceased financial support of the entire operation, leaving the business in a day to day turmoil.”
In the same letter is a list of items that DeMuesy and Purcell feel need to be addressed, presumably in the very near future. The list includes a need for golf course equipment, a repair of the clubhouse roof, a need to replace the clubhouse carpet for safety reasons, a need to lease new golf carts and fertilizer & chemicals to improve the appearance of the golf course marked with a disease called Dollar Spot.
A tally of these needed expenditures approaches $400,000. There was no mention of what it might cost to repave the parking lot or replace the sprinkler system which was a problem before the city took over the property, or the many other infrastructure improvements that may need attention.
Can the City of North Canton continue to fund a facility such as this and continue to drain city coffers that have already run dry? Should the City fund a facility that is such a huge drain on very limited resources?
At the present time, not only is the city leasing a facility far below market rates that continues to drain away funds needed for basic city services, the city is also now financing the operations of The Fairways. The lessee of The Fairways, Mr. Kevin Larizza, who is operating the golf course for commercial gain, has failed to render to the city, per the lease, his January 1, 2008, lease payment of $110,000.
North Canton’s purchase of the Arrowhead golf course was a disastrous financial decision that has burdened the city from the beginning and has accelerated the city’s financial decline. It cannot be blamed on the loss of the Hoover Company.
The City of North Canton must relieve itself of the financial burden as continued ownership is beyond the budget of city taxpayers.
Five years ago, I urged that the city simply purchase the development rights to the property to prevent unwanted development. That course of action was not followed. Today, continued ownership of the golf course by a city with projected budget shortfalls for as far into the future as anyone dares to look is not prudent and is patently unfair to taxpayers who rightly expect services for their tax dollars, not subsidies for a golf course.
I urge that the city sell the golf course property but withhold the development rights to the property. The city will have paid much more for those development rights than it would have five years ago, but at least it will come away with something to show taxpayers that the purchase was not entirely in vain.
Thank you,
Chuck Osborne
Resident,
City of North Canton
Thursday, March 27, 2008
Short Sighted Thinking Thwarts North Canton City Council's Progress
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
March 24, 2008
Given that this new city council has completed its first one-hundred days in office, today being day one-hundred fifteen, and in keeping to this council’s interests in performance audits, I thought I would provide an audit of what I have observed of this body. My audit of council’s performance comes free of charge.
My first observation of this council is that despite efforts to ensure that there is a free flow of public discussion on the issues, in recent council meetings this has not occurred. On March 10, 2008, North Canton Mayor David Held was abruptly cut off when the council meeting was gaveled closed by the council president. The rules of parliamentary procedure were not even followed as there was not a motion and a second to close the meeting. Failure to allow the mayor to speak two weeks ago was followed by a denial to allow public comments at last week’s council meeting.
I hope the two occasions cited above are an oversight and are not a predictor of future actions by this council to limit discussion on public business before this body.
Although my first comments were less than glowing, I would like to offer some positive comments for Mr. Revoldt’s actions as a leader of this body. President Revoldt, I believe your efforts to lead this council to passage of legislation on a number of issues was sound in judgment, well thought out and certainly in the best interest of the city. I would like to commend you on the following legislative efforts:
Your first proposal was that the city extend the deadline for compliance with nonconforming signs by businesses. Unfortunately, your recommendation came after Community and Economic Development Chairman Kiesling had already embraced discussions to simply remove the entire section of the zoning code regarding compliance with nonconforming signs.
Extending the deadline should have been every politician’s knee-jerk reaction. The issue is resolved and the politician is off the hot seat. This city paid a Cleveland firm over fifty thousand dollars to draft the zoning regulations and many of the members on this council voted to codify that zoning in 2003. The issue of nonconforming signs needs to be addressed. Most communities that are current in their zoning regulations deal with this issue in a more responsible manner than simply sticking their heads in the sand and stripping the language from their zoning code.
I would like to add that having the Community Economic Development Committee handling zoning issues is inherently a conflict of interest. Issues with regard to zoning and issues of economic development have diametrically opposing goals.
This council can offer relief to business owners at this time by simply leaving the legislation on the books as it is and extending the deadline for compliance. I urge you to embrace President Revoldt’s recommendation and do just that.
President Revoldt, I commend you and support your recommendation that council implement legislation dealing with nepotism. It is inconceivable how anyone on this council can argue in support of maintaining a practice that is so detrimental to good government. There is no way to hide or contain the problems that arise from hiring practices that permit nepotism.
Nepotism instantaneously creates problems of perception for the public and the city. President Revoldt framed this issue very eloquently and succinctly. It is a problem of management.
Hiring relatives creates a minefield of problems. Whenever any decision is made by a manager responsible for a relative in an organization, the first thought that comes to mind, consciously or unconsciously, is that the employee is related to the mayor, a city council person, the city administrator, or a department head. It is human nature. And due to the nature of that kinship there will be a natural tendency to treat that employee as family. And even if there is no bias, there is no way to convince someone that there is no preferential treatment. It will exist if someone feels slighted or if one’s relative is not hired or simply if it is believed by citizens. Nepotism undermines good government and good management practices.
Why should anyone apply for a position in North Canton when it is common knowledge that relatives are favored over non-relatives?
On a Web site from Santa Clara University’s Markkula Center for Applied Ethics, there is the following: “…because favoritism is often covert (few elected officials are foolish enough to show open partiality to friends, and family), this practice undercuts the transparency that should be part of governmental hiring and contracting processes.” The Web site is titled Favoritism, Cronyism, and Nepotism.
Clearly, the council members who spoke last week in opposition to legislation regarding nepotism are not acting on behalf of their constituents or in the best interests of the city. And the most vocal critic of the nepotism legislation was Council member Foltz who argued that the ownership of the Hoover Company, a private corporation, by multiple family members was a good example in support of nepotism.
I do not think that argument has any connection to the issue at hand. Ownership of a private corporation by related family members has no relation to hiring and management practices of city government that is responsible to the public.
Lastly, I would like to commend Council member DeOrio for his research in disproving the existence of a council policy for construction of sidewalks. Council member Foltz has argued against the construction of city sidewalks for many years citing the existence of council policy to support his position. Even if such policy did exist, that does not mean successive city councils are bound by it for eternity.
There is nothing more important for bringing citizens together than sidewalks. Sidewalks provide a path to your neighbor’s house. Sidewalks take children to school. Sidewalks allow citizens to exercise and explore their city. Sidewalks can also allow citizens a path to their city parks.
Last week, Mr. Foltz argued against the construction of a sidewalk that would allow citizens’ access to Price Park without having to walk down Glenwood Street and across a narrow bridge that carries traffic in to the city from Belden Village and The Strip. What is the rationale for supporting the spending of thousands of city funds for construction of park trails and upwards of $150,000 for a bridge on park trails in the middle of the woods and not supporting spending of city funds for sidewalks? There really is no logic just as there is no council policy against enhancing the quality of life in this city with funding for city sidewalks.
In spite of the position taken by Mr. Foltz against the construction of sidewalks, I do hope this council realizes that it only takes four votes to move legislation through council. Legislation before this council does not require a unanimous vote. Your membership on this council requires putting the citizens first and not your fellow council members.
I realize that this council seldom listens to my comments but I do hope you follow the recommendations of your council president for dealing with the deadline for nonconforming signs, the need for nepotism legislation, and the construction of sidewalks on the south entrance to Price Park.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
March 24, 2008
Given that this new city council has completed its first one-hundred days in office, today being day one-hundred fifteen, and in keeping to this council’s interests in performance audits, I thought I would provide an audit of what I have observed of this body. My audit of council’s performance comes free of charge.
My first observation of this council is that despite efforts to ensure that there is a free flow of public discussion on the issues, in recent council meetings this has not occurred. On March 10, 2008, North Canton Mayor David Held was abruptly cut off when the council meeting was gaveled closed by the council president. The rules of parliamentary procedure were not even followed as there was not a motion and a second to close the meeting. Failure to allow the mayor to speak two weeks ago was followed by a denial to allow public comments at last week’s council meeting.
I hope the two occasions cited above are an oversight and are not a predictor of future actions by this council to limit discussion on public business before this body.
Although my first comments were less than glowing, I would like to offer some positive comments for Mr. Revoldt’s actions as a leader of this body. President Revoldt, I believe your efforts to lead this council to passage of legislation on a number of issues was sound in judgment, well thought out and certainly in the best interest of the city. I would like to commend you on the following legislative efforts:
Your first proposal was that the city extend the deadline for compliance with nonconforming signs by businesses. Unfortunately, your recommendation came after Community and Economic Development Chairman Kiesling had already embraced discussions to simply remove the entire section of the zoning code regarding compliance with nonconforming signs.
Extending the deadline should have been every politician’s knee-jerk reaction. The issue is resolved and the politician is off the hot seat. This city paid a Cleveland firm over fifty thousand dollars to draft the zoning regulations and many of the members on this council voted to codify that zoning in 2003. The issue of nonconforming signs needs to be addressed. Most communities that are current in their zoning regulations deal with this issue in a more responsible manner than simply sticking their heads in the sand and stripping the language from their zoning code.
I would like to add that having the Community Economic Development Committee handling zoning issues is inherently a conflict of interest. Issues with regard to zoning and issues of economic development have diametrically opposing goals.
This council can offer relief to business owners at this time by simply leaving the legislation on the books as it is and extending the deadline for compliance. I urge you to embrace President Revoldt’s recommendation and do just that.
President Revoldt, I commend you and support your recommendation that council implement legislation dealing with nepotism. It is inconceivable how anyone on this council can argue in support of maintaining a practice that is so detrimental to good government. There is no way to hide or contain the problems that arise from hiring practices that permit nepotism.
Nepotism instantaneously creates problems of perception for the public and the city. President Revoldt framed this issue very eloquently and succinctly. It is a problem of management.
Hiring relatives creates a minefield of problems. Whenever any decision is made by a manager responsible for a relative in an organization, the first thought that comes to mind, consciously or unconsciously, is that the employee is related to the mayor, a city council person, the city administrator, or a department head. It is human nature. And due to the nature of that kinship there will be a natural tendency to treat that employee as family. And even if there is no bias, there is no way to convince someone that there is no preferential treatment. It will exist if someone feels slighted or if one’s relative is not hired or simply if it is believed by citizens. Nepotism undermines good government and good management practices.
Why should anyone apply for a position in North Canton when it is common knowledge that relatives are favored over non-relatives?
On a Web site from Santa Clara University’s Markkula Center for Applied Ethics, there is the following: “…because favoritism is often covert (few elected officials are foolish enough to show open partiality to friends, and family), this practice undercuts the transparency that should be part of governmental hiring and contracting processes.” The Web site is titled Favoritism, Cronyism, and Nepotism.
Clearly, the council members who spoke last week in opposition to legislation regarding nepotism are not acting on behalf of their constituents or in the best interests of the city. And the most vocal critic of the nepotism legislation was Council member Foltz who argued that the ownership of the Hoover Company, a private corporation, by multiple family members was a good example in support of nepotism.
I do not think that argument has any connection to the issue at hand. Ownership of a private corporation by related family members has no relation to hiring and management practices of city government that is responsible to the public.
Lastly, I would like to commend Council member DeOrio for his research in disproving the existence of a council policy for construction of sidewalks. Council member Foltz has argued against the construction of city sidewalks for many years citing the existence of council policy to support his position. Even if such policy did exist, that does not mean successive city councils are bound by it for eternity.
There is nothing more important for bringing citizens together than sidewalks. Sidewalks provide a path to your neighbor’s house. Sidewalks take children to school. Sidewalks allow citizens to exercise and explore their city. Sidewalks can also allow citizens a path to their city parks.
Last week, Mr. Foltz argued against the construction of a sidewalk that would allow citizens’ access to Price Park without having to walk down Glenwood Street and across a narrow bridge that carries traffic in to the city from Belden Village and The Strip. What is the rationale for supporting the spending of thousands of city funds for construction of park trails and upwards of $150,000 for a bridge on park trails in the middle of the woods and not supporting spending of city funds for sidewalks? There really is no logic just as there is no council policy against enhancing the quality of life in this city with funding for city sidewalks.
In spite of the position taken by Mr. Foltz against the construction of sidewalks, I do hope this council realizes that it only takes four votes to move legislation through council. Legislation before this council does not require a unanimous vote. Your membership on this council requires putting the citizens first and not your fellow council members.
I realize that this council seldom listens to my comments but I do hope you follow the recommendations of your council president for dealing with the deadline for nonconforming signs, the need for nepotism legislation, and the construction of sidewalks on the south entrance to Price Park.
Thank you,
Chuck Osborne
Resident
City of North Canton
North Canton CIC In Violation Of Its Plan And The Ohio Constitution
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
July 9, 2007 & February 25, 2008
In the spring of 2005, this council body authorized the removal of $1,500,000 from the city’s income tax fund and deposited the funds into an escrow fund from which annual payments of $100,000 are being paid to the North Canton Community Improvement Corporation (CIC). As of June 15, 2007, the account balance controlled by the North Canton CIC totaled $300,000. Payments by the city to the North Canton CIC will continue annually with the last payment being paid out on June 15, 2019.
Week after week I, as well as others, sit in the audience and hear council discuss how to deal with declining revenues and funding shortfalls for needed infrastructure improvements and yet the funds set aside for the CIC are left untouched.
I have addressed this issue on several occasions before this body and yet each of you on council chooses to allow these taxpayer funds to be used for purposes other than for support of city services as intended.
My message to you tonight is to provide notice that; one, the North Canton CIC is operating in violation of its own Agreement and Plan and; two, the financial support that is being provided to the owner of Abbott’s Bridal Shop violates Section 6, Article VIII of the Ohio Constitution.
I have addressed these issues in a letter to the Ohio Attorney General with a request that any and all financial transactions of the North Canton CIC be frozen until such time as these violations are investigated.
The North Canton CIC is in violation of its own Agreement and Plan because it is currently using funding sources never anticipated when the CIC was set up twenty-seven years ago.
The present CIC Agreement and Plan was drawn up in 1980 by the Cleveland Law Firm of Squire, Sanders & Dempsey and was crafted in anticipation of the issuance of Industrial Development Bonds (IDB). St. Luke’s took advantage of this bond financing on two occasions. The use of industrial bonds imposed no expense to North Canton or to the taxpayers and was a valuable economic development tool for the city. Sadly, city leaders have abandoned the use of bond financing as a tool for economic development in favor of using taxpayer funds. This was a costly move for taxpayers and the city.
The use of taxpayer monies to fund a CIC under the present Agreement and Plan is not adequate and actually puts the city in violation of state statute as Chapter 1724.10 (A) requires that a CIC prepare a viable plan that is approved by council.
In an OAG opinion, 67-056, the Ohio Attorney General states: “…that a political subdivision may not appropriate monies derived from tax action to provide for the maintenance or operating expenses of a community improvement corporation.”
The state statute regarding Community Improvement Corporations, (Section 1724.10 (A)) has a similar statement. “Any such debt shall be solely that of the corporation and shall not be secured by the pledge of any moneys received or to be received from any political subdivision.”
Taxpayer monies have been pledged from the City of North Canton and continue to be received by the North Canton CIC. These taxpayer funds were paid to the city to maintain city services and now have been diverted for a purpose other than which they were to be used.
Additionally, the Agreement and Plan of the North Canton CIC is being violated in other ways.
First, there is nothing in the Agreement and Plan of the North Canton CIC that allows for the promotion of retail development. The Preamble of the “Agreement and Plan” states:
“The Corporation and Municipality desire to incorporate the terms and provisions of the Plan into this Agreement so that this Agreement embody and constitute the plan of industrial, commercial, distribution and research development…”(emphasis added).
Providing added parking to benefit a private retail business does not meet any of the requirements delineated in the CIC Agreement and Plan.
Second, the Agreement and Plan clearly states that taxpayer funds are not to be provided to the CIC.
In Article III, paragraph (2), the CIC Agreement and Plan states:
“The municipality shall not be required to make any financial contributions to the Corporation and nothing in this Agreement and Plan shall be construed as permitting the Corporation to obligate the Municipality except as expressly set forth in this Agreement and Plan” (emphasis added).
In Article III, paragraph (3) the CIC Agreement and Plan continues with:
“All costs of the Corporation shall be paid solely from the funds of the Corporation and the Municipality need not contribute any moneys to the Corporation to meets its costs. In no event shall any moneys raised by taxation be obligated or pledged for the payment of any bonds or other obligations issued or guarantees made pursuant to this Agreement and Plan” (emphasis added).
In Article II, paragraph 5(b), the CIC Agreement and Plan has similar language:
“[The Corporation may] …acquire sites…for lease or sale by the Corporation, provided that any such debt shall be solely that of the Corporation and shall not be secured by the pledge of any moneys received or to be received from the Municipality, State of Ohio, or any political subdivision thereof” (emphasis added).
The requirements of Article II, paragraph 5(c) were ignored by the trustees of the North Canton CIC when approving the application for financial assistance from the owner of Abbott’s Bridal Shop. This section of the North Canton CIC says:
“[The Corporation may] make loans to any person, firm partnership, corporation …and may establish and regulate the terms and conditions with respect to any such loans; provided the Corporation shall not approve any application for loan unless and until the person applying for said loan shows that he has applied for the loan through ordinary banking or commercial channels and that the loan has been refused by at least one bank or other financial institution” (emphasis added).
The trustees of the North Canton CIC never required the owner of Abbot’s Bridal Shop to pursue financial assistance through ordinary banking or commercial channels before seeking financial assistance from the North Canton CIC.
The specifics with regard to violation of the Ohio Constitution arise as well from the North Canton CIC’s decision to provide financial assistance to the owner of Abbott’s Bridal Shop. In the court case of C.I.V.I.C. v. City of Warren, the Ohio Supreme Court ruled that municipalities taking action “to raise money for” and “loan its credit to, or in aid of” private corporations violates Section 6, Article VIII of the Ohio Constitution. The North Canton CIC is an agency of the city and by extension this is what is taking place between the North Canton CIC and the owner of Abbott’s Bridal Shop.
In a OAG opinion, 71-044; the Ohio Attorney General states that a “municipality may not make an outright, unrestricted gift of funds to a nongovernmental organization, regardless of whether or not such organization may be generally engaged in performing a beneficial, public purpose.”
There are grave concerns with regard to the present operation and funding of the North Canton CIC. The Corporation must get its house in order before it can serve the City of North Canton. A twenty-seven year old document crafted for industrial bond financing of economic development projects clearly will not work, legally or otherwise if you are using other sources of funding for the North Canton CIC.
Using public monies to benefit private interests in violation of The Ohio Constitution and state law should raise a concern to North Canton elected officials.
This is not a legacy any of you wishes to leave behind given the financial difficulties North Canton is facing today.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
July 9, 2007 & February 25, 2008
In the spring of 2005, this council body authorized the removal of $1,500,000 from the city’s income tax fund and deposited the funds into an escrow fund from which annual payments of $100,000 are being paid to the North Canton Community Improvement Corporation (CIC). As of June 15, 2007, the account balance controlled by the North Canton CIC totaled $300,000. Payments by the city to the North Canton CIC will continue annually with the last payment being paid out on June 15, 2019.
Week after week I, as well as others, sit in the audience and hear council discuss how to deal with declining revenues and funding shortfalls for needed infrastructure improvements and yet the funds set aside for the CIC are left untouched.
I have addressed this issue on several occasions before this body and yet each of you on council chooses to allow these taxpayer funds to be used for purposes other than for support of city services as intended.
My message to you tonight is to provide notice that; one, the North Canton CIC is operating in violation of its own Agreement and Plan and; two, the financial support that is being provided to the owner of Abbott’s Bridal Shop violates Section 6, Article VIII of the Ohio Constitution.
I have addressed these issues in a letter to the Ohio Attorney General with a request that any and all financial transactions of the North Canton CIC be frozen until such time as these violations are investigated.
The North Canton CIC is in violation of its own Agreement and Plan because it is currently using funding sources never anticipated when the CIC was set up twenty-seven years ago.
The present CIC Agreement and Plan was drawn up in 1980 by the Cleveland Law Firm of Squire, Sanders & Dempsey and was crafted in anticipation of the issuance of Industrial Development Bonds (IDB). St. Luke’s took advantage of this bond financing on two occasions. The use of industrial bonds imposed no expense to North Canton or to the taxpayers and was a valuable economic development tool for the city. Sadly, city leaders have abandoned the use of bond financing as a tool for economic development in favor of using taxpayer funds. This was a costly move for taxpayers and the city.
The use of taxpayer monies to fund a CIC under the present Agreement and Plan is not adequate and actually puts the city in violation of state statute as Chapter 1724.10 (A) requires that a CIC prepare a viable plan that is approved by council.
In an OAG opinion, 67-056, the Ohio Attorney General states: “…that a political subdivision may not appropriate monies derived from tax action to provide for the maintenance or operating expenses of a community improvement corporation.”
The state statute regarding Community Improvement Corporations, (Section 1724.10 (A)) has a similar statement. “Any such debt shall be solely that of the corporation and shall not be secured by the pledge of any moneys received or to be received from any political subdivision.”
Taxpayer monies have been pledged from the City of North Canton and continue to be received by the North Canton CIC. These taxpayer funds were paid to the city to maintain city services and now have been diverted for a purpose other than which they were to be used.
Additionally, the Agreement and Plan of the North Canton CIC is being violated in other ways.
First, there is nothing in the Agreement and Plan of the North Canton CIC that allows for the promotion of retail development. The Preamble of the “Agreement and Plan” states:
“The Corporation and Municipality desire to incorporate the terms and provisions of the Plan into this Agreement so that this Agreement embody and constitute the plan of industrial, commercial, distribution and research development…”(emphasis added).
Providing added parking to benefit a private retail business does not meet any of the requirements delineated in the CIC Agreement and Plan.
Second, the Agreement and Plan clearly states that taxpayer funds are not to be provided to the CIC.
In Article III, paragraph (2), the CIC Agreement and Plan states:
“The municipality shall not be required to make any financial contributions to the Corporation and nothing in this Agreement and Plan shall be construed as permitting the Corporation to obligate the Municipality except as expressly set forth in this Agreement and Plan” (emphasis added).
In Article III, paragraph (3) the CIC Agreement and Plan continues with:
“All costs of the Corporation shall be paid solely from the funds of the Corporation and the Municipality need not contribute any moneys to the Corporation to meets its costs. In no event shall any moneys raised by taxation be obligated or pledged for the payment of any bonds or other obligations issued or guarantees made pursuant to this Agreement and Plan” (emphasis added).
In Article II, paragraph 5(b), the CIC Agreement and Plan has similar language:
“[The Corporation may] …acquire sites…for lease or sale by the Corporation, provided that any such debt shall be solely that of the Corporation and shall not be secured by the pledge of any moneys received or to be received from the Municipality, State of Ohio, or any political subdivision thereof” (emphasis added).
The requirements of Article II, paragraph 5(c) were ignored by the trustees of the North Canton CIC when approving the application for financial assistance from the owner of Abbott’s Bridal Shop. This section of the North Canton CIC says:
“[The Corporation may] make loans to any person, firm partnership, corporation …and may establish and regulate the terms and conditions with respect to any such loans; provided the Corporation shall not approve any application for loan unless and until the person applying for said loan shows that he has applied for the loan through ordinary banking or commercial channels and that the loan has been refused by at least one bank or other financial institution” (emphasis added).
The trustees of the North Canton CIC never required the owner of Abbot’s Bridal Shop to pursue financial assistance through ordinary banking or commercial channels before seeking financial assistance from the North Canton CIC.
The specifics with regard to violation of the Ohio Constitution arise as well from the North Canton CIC’s decision to provide financial assistance to the owner of Abbott’s Bridal Shop. In the court case of C.I.V.I.C. v. City of Warren, the Ohio Supreme Court ruled that municipalities taking action “to raise money for” and “loan its credit to, or in aid of” private corporations violates Section 6, Article VIII of the Ohio Constitution. The North Canton CIC is an agency of the city and by extension this is what is taking place between the North Canton CIC and the owner of Abbott’s Bridal Shop.
In a OAG opinion, 71-044; the Ohio Attorney General states that a “municipality may not make an outright, unrestricted gift of funds to a nongovernmental organization, regardless of whether or not such organization may be generally engaged in performing a beneficial, public purpose.”
There are grave concerns with regard to the present operation and funding of the North Canton CIC. The Corporation must get its house in order before it can serve the City of North Canton. A twenty-seven year old document crafted for industrial bond financing of economic development projects clearly will not work, legally or otherwise if you are using other sources of funding for the North Canton CIC.
Using public monies to benefit private interests in violation of The Ohio Constitution and state law should raise a concern to North Canton elected officials.
This is not a legacy any of you wishes to leave behind given the financial difficulties North Canton is facing today.
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, February 11, 2008
Wasted Expenditures Continue In North Canton Despite Budget Woes
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
February 11, 2008
On tonight’s agenda, as in the past, there is legislation authorizing expenditure of taxpayer funds that continue to drain city coffers while providing little if any benefit to the city and its citizens. As the council and the administration have continued to grapple with an uncertain future for the city, I believe it is timely to think about expenditures and the mentality that have contributed to the city’s financial distress.
I would like to start with some of the legislation that is on the agenda for tonight. Ordinance No. 12-08, authorizing payment to David Crowder brings to mind an option to purchase 24 acres of wetland from Mr. Crowder in November of 2004, for which former City Administrator, Michael Miller, paid Mr. Crowder $6,300.
I have a letter from the Director of the Ohio Public Works Commission, Mr. W. Laurence Bicking, in which he notes that several of the terms of the option agreement “raised questions with respect to the science supporting the necessity for constructing ponds on the site as would the lease back provisions. These concerns would have been raised with the City and most likely referred back to the District 19 Natural Resources Assistance Council for their consideration.”
In effect, the six-month purchase option was not acceptable to the State of Ohio and was of no use to the city. In addition to the $6,300 that was paid to Mr. Crowder for the six-month purchase option, former Administrator Miller also expended an additional $4, 550 for an appraisal and survey of the property. All of these expenditures were made without the knowledge or approval of council. Two members of that council have confirmed to me that council was not aware of former Administrator Miller’s expenditures to acquire the property.
When I hear the name Crowder I can only think of the expenditure of a minimum of $10, 850 for which taxpayers received absolutely nothing in return and Mr. Crowder receiving $6,300 for a purchase option with terms that were wholly unacceptable to the State of Ohio and thus not worth the price of the paper they were printed on. And now Mr. Crowder is coming to the city for an additional payment of $2,965 of taxpayer funds.
Ordinance No. 14-08 is legislation authorizing expenditure of $18,000 to a former city employee who was terminated from his employment with the city. It is not unusual for an employee to be terminated for cause, whether they are employed in the public or private sector. If this employee’s employment history had been properly documented over time there would be no reason for a financial settlement upon this release from employment. Wholly unacceptable employee conduct should not be rewarded with a nice big check as the employee is released from his employment. The employment of this individual came about under Mayor Tom Rice.
The mention of former Mayor Tom Rice brings to mind the removal hearings in 2004 and the sudden suspension of those hearings because elected officials put politics ahead of their duty to the citizens and suspended the hearings. For that lack of intestinal fortitude, the citizens of North Canton were asked three years later in 2007 to compensate former Mayor Rice and his attorney to the tune of $31,000.
The expenditure of $40,000 late in 2004 under the former Rice Administration for a sign at the airport was another waste of taxpayer dollars. The $40,000 includes rental space at the airport for a term of sixty months at $300 per month. I expect that if the world has ever heard of a Hoover vacuum cleaner, that they also have heard of North Canton.
Ordinance No. 10-08 authorizing the expenditure of $64,500 for a performance audit raises concerns of wasteful spending. How is it that department heads with decades of experience are not utilizing city resources to the utmost even after budget cutbacks that have been ongoing for several years?
I would expect that the most obvious areas for increasing efficiency have already been arrived at long ago but that there is no elected official who will step forward and initiate the needed action. We have seen at the county level discussions to centralize radio dispatch of safety forces. We have all discussed combining safety forces in some fashion to increase efficiency. Why is it that you must spend $64,500 to tell you what you already know?
How long will it take you to recoup the $64,500 spent for the performance audit? Are there savings to be had that will allow the city to continue much as it has in the past or will you be spending much needed funds to simply find out that this is the end of the line for life as we have known it to be in North Canton?
The expenditures noted above total $167,315. These wasted dollars add up quickly. That would have more than covered the $150,000 Mayor Held requested last week for engineering and design for North Main Street which would have allowed the city to apply for construction grants.
Increased labor negotiation costs are another waste of city funds that have occurred. For many years, a local labor attorney would charge the city $10-13,000 for negotiating city labor contracts every three years. In 2003, former Mayor Rice hired a labor attorney from Cleveland that cost the city $55,000.
While the city has returned to using a local labor attorney, the word is apparently is out in the legal community that the City of North Canton will pay big-city hourly rates for a labor attorney. In 2006 North Canton City Council authorized up to $30,000 for labor negotiations expenses. A savings of $25,000 over fees paid in 2003 but now double over the traditional fees charged up to and including the year 2000.
Had North Canton continued to use a local attorney for labor negotiations, the city would more than likely have saved in excess of $55,000 in fees for labor negotiations in 2003 and 2006.
The wasted expenditures of city funds noted above are just a short tally of small-time expenditures that I can recall. There is a major waste of city funds totaling $5.7 million dollars that would soften the financial stress for the city had those funds not been expended.
The first is the removal of $1.5 million dollars to fund the North Canton CIC in 2005. That expenditure was not budgeted by the city in its annual budget. At least $123,700 of those former city funds have been spent for the financial benefit of private business interests with no obligation for repayment to the CIC.
The expenditure of $4.2 million dollars for purchase of the former Arrowhead Golf Course in 2003 is another example of a major expenditure that was unbudgeted in the city’s annual budget. This expenditure by far has brought North Canton to its day of financial reckoning sooner rather than later. North Canton can soon match a recent Repository news story titled: Legends is costing Massillon big bucks.” Only the headlines will read: “The Fairways is costing North Canton big bucks.”
These expenditures have not benefited the taxpayer and that is, unfortunately, the bottom line.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
February 11, 2008
On tonight’s agenda, as in the past, there is legislation authorizing expenditure of taxpayer funds that continue to drain city coffers while providing little if any benefit to the city and its citizens. As the council and the administration have continued to grapple with an uncertain future for the city, I believe it is timely to think about expenditures and the mentality that have contributed to the city’s financial distress.
I would like to start with some of the legislation that is on the agenda for tonight. Ordinance No. 12-08, authorizing payment to David Crowder brings to mind an option to purchase 24 acres of wetland from Mr. Crowder in November of 2004, for which former City Administrator, Michael Miller, paid Mr. Crowder $6,300.
I have a letter from the Director of the Ohio Public Works Commission, Mr. W. Laurence Bicking, in which he notes that several of the terms of the option agreement “raised questions with respect to the science supporting the necessity for constructing ponds on the site as would the lease back provisions. These concerns would have been raised with the City and most likely referred back to the District 19 Natural Resources Assistance Council for their consideration.”
In effect, the six-month purchase option was not acceptable to the State of Ohio and was of no use to the city. In addition to the $6,300 that was paid to Mr. Crowder for the six-month purchase option, former Administrator Miller also expended an additional $4, 550 for an appraisal and survey of the property. All of these expenditures were made without the knowledge or approval of council. Two members of that council have confirmed to me that council was not aware of former Administrator Miller’s expenditures to acquire the property.
When I hear the name Crowder I can only think of the expenditure of a minimum of $10, 850 for which taxpayers received absolutely nothing in return and Mr. Crowder receiving $6,300 for a purchase option with terms that were wholly unacceptable to the State of Ohio and thus not worth the price of the paper they were printed on. And now Mr. Crowder is coming to the city for an additional payment of $2,965 of taxpayer funds.
Ordinance No. 14-08 is legislation authorizing expenditure of $18,000 to a former city employee who was terminated from his employment with the city. It is not unusual for an employee to be terminated for cause, whether they are employed in the public or private sector. If this employee’s employment history had been properly documented over time there would be no reason for a financial settlement upon this release from employment. Wholly unacceptable employee conduct should not be rewarded with a nice big check as the employee is released from his employment. The employment of this individual came about under Mayor Tom Rice.
The mention of former Mayor Tom Rice brings to mind the removal hearings in 2004 and the sudden suspension of those hearings because elected officials put politics ahead of their duty to the citizens and suspended the hearings. For that lack of intestinal fortitude, the citizens of North Canton were asked three years later in 2007 to compensate former Mayor Rice and his attorney to the tune of $31,000.
The expenditure of $40,000 late in 2004 under the former Rice Administration for a sign at the airport was another waste of taxpayer dollars. The $40,000 includes rental space at the airport for a term of sixty months at $300 per month. I expect that if the world has ever heard of a Hoover vacuum cleaner, that they also have heard of North Canton.
Ordinance No. 10-08 authorizing the expenditure of $64,500 for a performance audit raises concerns of wasteful spending. How is it that department heads with decades of experience are not utilizing city resources to the utmost even after budget cutbacks that have been ongoing for several years?
I would expect that the most obvious areas for increasing efficiency have already been arrived at long ago but that there is no elected official who will step forward and initiate the needed action. We have seen at the county level discussions to centralize radio dispatch of safety forces. We have all discussed combining safety forces in some fashion to increase efficiency. Why is it that you must spend $64,500 to tell you what you already know?
How long will it take you to recoup the $64,500 spent for the performance audit? Are there savings to be had that will allow the city to continue much as it has in the past or will you be spending much needed funds to simply find out that this is the end of the line for life as we have known it to be in North Canton?
The expenditures noted above total $167,315. These wasted dollars add up quickly. That would have more than covered the $150,000 Mayor Held requested last week for engineering and design for North Main Street which would have allowed the city to apply for construction grants.
Increased labor negotiation costs are another waste of city funds that have occurred. For many years, a local labor attorney would charge the city $10-13,000 for negotiating city labor contracts every three years. In 2003, former Mayor Rice hired a labor attorney from Cleveland that cost the city $55,000.
While the city has returned to using a local labor attorney, the word is apparently is out in the legal community that the City of North Canton will pay big-city hourly rates for a labor attorney. In 2006 North Canton City Council authorized up to $30,000 for labor negotiations expenses. A savings of $25,000 over fees paid in 2003 but now double over the traditional fees charged up to and including the year 2000.
Had North Canton continued to use a local attorney for labor negotiations, the city would more than likely have saved in excess of $55,000 in fees for labor negotiations in 2003 and 2006.
The wasted expenditures of city funds noted above are just a short tally of small-time expenditures that I can recall. There is a major waste of city funds totaling $5.7 million dollars that would soften the financial stress for the city had those funds not been expended.
The first is the removal of $1.5 million dollars to fund the North Canton CIC in 2005. That expenditure was not budgeted by the city in its annual budget. At least $123,700 of those former city funds have been spent for the financial benefit of private business interests with no obligation for repayment to the CIC.
The expenditure of $4.2 million dollars for purchase of the former Arrowhead Golf Course in 2003 is another example of a major expenditure that was unbudgeted in the city’s annual budget. This expenditure by far has brought North Canton to its day of financial reckoning sooner rather than later. North Canton can soon match a recent Repository news story titled: Legends is costing Massillon big bucks.” Only the headlines will read: “The Fairways is costing North Canton big bucks.”
These expenditures have not benefited the taxpayer and that is, unfortunately, the bottom line.
Thank you,
Chuck Osborne
Resident
City of North Canton
Wednesday, January 30, 2008
Public Speaks at North Canton Council Meetings Encouraged Citizen Participation For 46 Years
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
January 28, 2008
For forty-six years, North Canton residents have had the opportunity to address their elected leaders, publicly, on the record, at city council meetings. All of that changed with the last term of council. Very early in their term in February of 2006, council discussed implementing a time limit for visitors’ comments. That effort was stopped in its tracks after the Repository weighed in with an editorial on February 15, 2006, titled, “Messy, tedious – that’s democracy.”
The editorial suggested a simple test for men and women who have been elected to public office: “Before proposing something that will affect the people who put you in office, take your idea for a mental test drive. Imagine you’re back on the campaign trail, knocking on doors. Tell the people who answer the door what you’re thinking. Maybe frame your idea as a campaign promise.
“Imagine, for example, telling Ms. North Canton Voter: ‘Vote for me and I promise I won’t let you or your neighbors speak to City Council for more than five minutes.’”
That editorial seemed to discourage any efforts to limit public speaks for the remainder of 2006 but in 2007, council resurrected the idea and placed a time limit on public speaks at council meetings with the passage of Ordinance No. 15-07.
At last week’s council meeting I listened to the new City Council President Daryl Revoldt proposes a modification to the Recognition of Visitors portion of council meetings. When asked for his input, former Council President Doug Foltz defended the legislation that had been enacted under his leadership in the previous council term.
Mr. Foltz stated that he was pleased with the present legislation restricting public speaks of citizens who speak at North Canton council meetings. Mr. Foltz further noted that similar restrictions are imposed in other communities.
The City of North Canton has allowed unrestricted public speaks on any issue that is important to its citizens since its incorporation as a city in 1961. That is over 46 years, nearly a half a century. That is an excellent legacy to our democracy. Why did that end?
Former Council President Foltz detailed the requirements imposed in other communities on public speaks as his reason for imposing the new restrictions in North Canton. Who cares what is standard practice for public speaks in Louisville, Canton, Canal Fulton, or Massillon?
When we were children we have all at one time or another used the argument with our parents that so and so is doing this or that to which our parents would reply, “If the neighbors jumped off a bridge, would you jump off a bridge too?”
Many years ago, communities in the south would require African Americans to ride in the back of buses and they segregated the use of public restrooms and water fountains for “whites” only. Thankfully, cities throughout America did not adopt these practices just because they were the law in another community.
We all live in a community that reflects our beliefs and choose a government that respects us as citizens. The City of North Canton has its own government and its own laws for a reason. What is acceptable in one community is not necessarily acceptable in another community.
This council should be happy that the few citizens who do attend council meetings are interested in their city government; otherwise, you would be playing before an empty house. Maybe that is what some council members would prefer. I hope that is not the case.
Former Council President Foltz also stated that he was prompted to propose the limit on public speaks at the suggestion of one constituent. To sum up former President Foltz’s reasons for last year’s legislation restricting public speaks, other communities were doing it and one constituent suggested the idea.
These are not very strong reasons for implementing legislation that restrains the democratic process for citizens in our community. The system was not broken. The citizens of North Canton enjoyed speaking at council meetings for 46 years.
There is ample authority in Robert’s Rules of Order under which council conducts its meetings to give the council president authority to control the meeting.
President Revoldt, I do appreciate your efforts to soften the restrictions on public speaks and I fully realize that, with you as council president, in effect, there will be little or no restrictions to public speaks.
On the other hand, I believe that you would have the votes to repeal Ordinance No. 15-07 if the members of this council would vote with their hearts and minds instead of following the crowd. The time-honored practice of voting as a fellow council member votes on issues and legislation is not how the system is supposed to work.
The citizens of North Canton do vote for seven council members every two years for a reason. It is quite unnerving to watch council after council, year after year, pass every piece of legislation that comes before it with a unanimous vote.
Either there are some unexplained phenomena that possess every council body or cloning of humans was discovered long ago in North Canton and no one has alerted the scientific community.
The amendment to Ordinance No. 15-07 that you are proposing for passage tonight, in effect, waters down the restrictions previously imposed on public speaks, thus making that ordinance rather useless and worthy of repeal.
Furthermore, between you President Revoldt and former Council President Jon Snyder, there are 10 years of tenure as President of the North Canton City Council. Thankfully, neither of you used legislation in your terms as president of this council to limit or hinder public debate on issues that come before this council body. Ordinance No. 15-07 was politically motivated and I ask that you dispose of that legislation rather than make this new council become a part of the legacy of the previous council.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
January 28, 2008
For forty-six years, North Canton residents have had the opportunity to address their elected leaders, publicly, on the record, at city council meetings. All of that changed with the last term of council. Very early in their term in February of 2006, council discussed implementing a time limit for visitors’ comments. That effort was stopped in its tracks after the Repository weighed in with an editorial on February 15, 2006, titled, “Messy, tedious – that’s democracy.”
The editorial suggested a simple test for men and women who have been elected to public office: “Before proposing something that will affect the people who put you in office, take your idea for a mental test drive. Imagine you’re back on the campaign trail, knocking on doors. Tell the people who answer the door what you’re thinking. Maybe frame your idea as a campaign promise.
“Imagine, for example, telling Ms. North Canton Voter: ‘Vote for me and I promise I won’t let you or your neighbors speak to City Council for more than five minutes.’”
That editorial seemed to discourage any efforts to limit public speaks for the remainder of 2006 but in 2007, council resurrected the idea and placed a time limit on public speaks at council meetings with the passage of Ordinance No. 15-07.
At last week’s council meeting I listened to the new City Council President Daryl Revoldt proposes a modification to the Recognition of Visitors portion of council meetings. When asked for his input, former Council President Doug Foltz defended the legislation that had been enacted under his leadership in the previous council term.
Mr. Foltz stated that he was pleased with the present legislation restricting public speaks of citizens who speak at North Canton council meetings. Mr. Foltz further noted that similar restrictions are imposed in other communities.
The City of North Canton has allowed unrestricted public speaks on any issue that is important to its citizens since its incorporation as a city in 1961. That is over 46 years, nearly a half a century. That is an excellent legacy to our democracy. Why did that end?
Former Council President Foltz detailed the requirements imposed in other communities on public speaks as his reason for imposing the new restrictions in North Canton. Who cares what is standard practice for public speaks in Louisville, Canton, Canal Fulton, or Massillon?
When we were children we have all at one time or another used the argument with our parents that so and so is doing this or that to which our parents would reply, “If the neighbors jumped off a bridge, would you jump off a bridge too?”
Many years ago, communities in the south would require African Americans to ride in the back of buses and they segregated the use of public restrooms and water fountains for “whites” only. Thankfully, cities throughout America did not adopt these practices just because they were the law in another community.
We all live in a community that reflects our beliefs and choose a government that respects us as citizens. The City of North Canton has its own government and its own laws for a reason. What is acceptable in one community is not necessarily acceptable in another community.
This council should be happy that the few citizens who do attend council meetings are interested in their city government; otherwise, you would be playing before an empty house. Maybe that is what some council members would prefer. I hope that is not the case.
Former Council President Foltz also stated that he was prompted to propose the limit on public speaks at the suggestion of one constituent. To sum up former President Foltz’s reasons for last year’s legislation restricting public speaks, other communities were doing it and one constituent suggested the idea.
These are not very strong reasons for implementing legislation that restrains the democratic process for citizens in our community. The system was not broken. The citizens of North Canton enjoyed speaking at council meetings for 46 years.
There is ample authority in Robert’s Rules of Order under which council conducts its meetings to give the council president authority to control the meeting.
President Revoldt, I do appreciate your efforts to soften the restrictions on public speaks and I fully realize that, with you as council president, in effect, there will be little or no restrictions to public speaks.
On the other hand, I believe that you would have the votes to repeal Ordinance No. 15-07 if the members of this council would vote with their hearts and minds instead of following the crowd. The time-honored practice of voting as a fellow council member votes on issues and legislation is not how the system is supposed to work.
The citizens of North Canton do vote for seven council members every two years for a reason. It is quite unnerving to watch council after council, year after year, pass every piece of legislation that comes before it with a unanimous vote.
Either there are some unexplained phenomena that possess every council body or cloning of humans was discovered long ago in North Canton and no one has alerted the scientific community.
The amendment to Ordinance No. 15-07 that you are proposing for passage tonight, in effect, waters down the restrictions previously imposed on public speaks, thus making that ordinance rather useless and worthy of repeal.
Furthermore, between you President Revoldt and former Council President Jon Snyder, there are 10 years of tenure as President of the North Canton City Council. Thankfully, neither of you used legislation in your terms as president of this council to limit or hinder public debate on issues that come before this council body. Ordinance No. 15-07 was politically motivated and I ask that you dispose of that legislation rather than make this new council become a part of the legacy of the previous council.
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, November 26, 2007
North Canton's Outgoing Council Muzzled Citizens Commentary On Public Business
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
November 26, 2007
Every two years the citizens of North Canton elect a new city council. As this current membership of council completes its term in office, it is customary to write into the history books the accomplishments and shortcomings of this council and its members.
Given that politicians continually lavish praise and congratulations on each other as they conduct the public’s business and wield power given to them by the electorate, there is no reason for me to add to that chorus.
What I will do is talk about how these outgoing members of council have wielded power, in my opinion, to the detriment of the public during their term in office.
First of all, I feel that the public has not been served by this council with the limitations it has imposed on the public when one wishes to address council in its public sessions. The public wants to address council on the record and not after the meeting or in the parking lot or on the telephone.
This council continues to prohibit public input at Council of the Whole meetings when proposed legislation is being discussed. Why do you fear citizens that you are sworn to represent, from speaking in a public forum on issues that are important to them and the community? Earlier this year, this council further limited public comment by citizens at regular council meetings by instituting a five-minute speaking limit. As a result, citizens can only address this body while everyone watches the clock.
In a concurring opinion from a well known 1964 U. S. Supreme Court case, New York Times v. Sullivan, Justice Hugo Black joined by Justice William O. Douglas stated the following:
“…a representative democracy ceases to exist the moment that the public functionaries are by any means absolved from their responsibility to their constituents; and this happens whenever the constituent can be restrained in any manner from speaking, writing, or publishing his opinion upon any public measure, or upon the conduct of those who may advise or execute it. An unconditional right to say what one pleases about public affairs is what I consider to be the minimum guarantee of the First Amendment.”
I feel that this council has not served the public in another way and that is by failing to provide a conducive atmosphere in which good government can function. This council has repeatedly turned a blind eye to the actions of one of its members and at many times even supported this councilman as this councilman openly and boldly displayed his disdain for the mayor and city administrator of the City of North Canton.
The mayor’s refusal to relent on laws of nepotism last year only fueled the animosity of this member of council. What did this council body do regarding the allegations of nepotism against this fellow member of council last year? This council body did more than just sit idly by and do nothing. This council body united together against the mayor and refused to address the issue of nepotism.
This same councilmember has also designated himself as the city’s sole negotiator and undertaken to negotiate agreements with adjoining townships while publicly telling the administration that they were not welcome in the negotiations.
Why has this council not reigned in a councilmember who is clearly exceeding his authority in placing himself in these meetings?
Why are council members not concerned that many of these meetings have been behind closed doors and in violation of state law?
And this evening, at this council’s last meeting, this council member is attempting to persuade this council to adopt agreements that are highly beneficial to both Plain and Jackson Townships and very detrimental to the City of North Canton. Politics is being placed before good policy if these agreements are implemented and North Canton’s future growth is in jeopardy while other communities grow their boundaries.
If this council’s memory is a little short, let me remind you that the officials from Plain and Jackson Township who are pushing for this agreement negotiated by North Canton’s rogue council member were the same officials who were here in this chamber speaking in opposition to the recall of this council member earlier this year. Are council members blind to what is happening before their eyes?
The North Canton council member who was the subject of a recall earlier this year responded with a defamation lawsuit. This action was not only a detriment to me but to all citizens who comment on the actions of their public officials in the performance of their public duties.
I cannot fault this council body for the actions of this council member regarding the lawsuit. What I can do is quote the concurring opinion of U.S. Supreme Court Justice Joseph Goldberg and Justice William O. Douglas in New York Times v. Sullivan.
"In my view, the First and Fourteenth Amendments to the Constitution afford to the citizen and to the press an absolute, unconditional privilege to criticize official conduct despite the harm which may flow from excesses and abuses. The prized American right "to speak one's mind," about public officials and affairs needs "breathing space to survive..." The right should not depend upon a probing by the jury of the motivation of the citizen or press. The theory of our Constitution is that every citizen may speak his mind and every newspaper express its view on matters of public concern and may not be barred from speaking or publishing because those in control of government think that what is said or written is unwise, unfair, false, or malicious. In a democratic society, one who assumes to act for the citizens in an executive, legislative, or judicial capacity must expect that his official acts will be commented upon and criticized. Such criticism cannot, in my opinion, be muzzled or deterred by the courts at the instance of public officials under the label of libel."
U.S. Supreme Court Justice Louis Brandeis, in Whitney v. California said “Those who won our independence believed…that public discussion is a political duty…”
My hope is that elected leaders would do their duty.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
November 26, 2007
Every two years the citizens of North Canton elect a new city council. As this current membership of council completes its term in office, it is customary to write into the history books the accomplishments and shortcomings of this council and its members.
Given that politicians continually lavish praise and congratulations on each other as they conduct the public’s business and wield power given to them by the electorate, there is no reason for me to add to that chorus.
What I will do is talk about how these outgoing members of council have wielded power, in my opinion, to the detriment of the public during their term in office.
First of all, I feel that the public has not been served by this council with the limitations it has imposed on the public when one wishes to address council in its public sessions. The public wants to address council on the record and not after the meeting or in the parking lot or on the telephone.
This council continues to prohibit public input at Council of the Whole meetings when proposed legislation is being discussed. Why do you fear citizens that you are sworn to represent, from speaking in a public forum on issues that are important to them and the community? Earlier this year, this council further limited public comment by citizens at regular council meetings by instituting a five-minute speaking limit. As a result, citizens can only address this body while everyone watches the clock.
In a concurring opinion from a well known 1964 U. S. Supreme Court case, New York Times v. Sullivan, Justice Hugo Black joined by Justice William O. Douglas stated the following:
“…a representative democracy ceases to exist the moment that the public functionaries are by any means absolved from their responsibility to their constituents; and this happens whenever the constituent can be restrained in any manner from speaking, writing, or publishing his opinion upon any public measure, or upon the conduct of those who may advise or execute it. An unconditional right to say what one pleases about public affairs is what I consider to be the minimum guarantee of the First Amendment.”
I feel that this council has not served the public in another way and that is by failing to provide a conducive atmosphere in which good government can function. This council has repeatedly turned a blind eye to the actions of one of its members and at many times even supported this councilman as this councilman openly and boldly displayed his disdain for the mayor and city administrator of the City of North Canton.
The mayor’s refusal to relent on laws of nepotism last year only fueled the animosity of this member of council. What did this council body do regarding the allegations of nepotism against this fellow member of council last year? This council body did more than just sit idly by and do nothing. This council body united together against the mayor and refused to address the issue of nepotism.
This same councilmember has also designated himself as the city’s sole negotiator and undertaken to negotiate agreements with adjoining townships while publicly telling the administration that they were not welcome in the negotiations.
Why has this council not reigned in a councilmember who is clearly exceeding his authority in placing himself in these meetings?
Why are council members not concerned that many of these meetings have been behind closed doors and in violation of state law?
And this evening, at this council’s last meeting, this council member is attempting to persuade this council to adopt agreements that are highly beneficial to both Plain and Jackson Townships and very detrimental to the City of North Canton. Politics is being placed before good policy if these agreements are implemented and North Canton’s future growth is in jeopardy while other communities grow their boundaries.
If this council’s memory is a little short, let me remind you that the officials from Plain and Jackson Township who are pushing for this agreement negotiated by North Canton’s rogue council member were the same officials who were here in this chamber speaking in opposition to the recall of this council member earlier this year. Are council members blind to what is happening before their eyes?
The North Canton council member who was the subject of a recall earlier this year responded with a defamation lawsuit. This action was not only a detriment to me but to all citizens who comment on the actions of their public officials in the performance of their public duties.
I cannot fault this council body for the actions of this council member regarding the lawsuit. What I can do is quote the concurring opinion of U.S. Supreme Court Justice Joseph Goldberg and Justice William O. Douglas in New York Times v. Sullivan.
"In my view, the First and Fourteenth Amendments to the Constitution afford to the citizen and to the press an absolute, unconditional privilege to criticize official conduct despite the harm which may flow from excesses and abuses. The prized American right "to speak one's mind," about public officials and affairs needs "breathing space to survive..." The right should not depend upon a probing by the jury of the motivation of the citizen or press. The theory of our Constitution is that every citizen may speak his mind and every newspaper express its view on matters of public concern and may not be barred from speaking or publishing because those in control of government think that what is said or written is unwise, unfair, false, or malicious. In a democratic society, one who assumes to act for the citizens in an executive, legislative, or judicial capacity must expect that his official acts will be commented upon and criticized. Such criticism cannot, in my opinion, be muzzled or deterred by the courts at the instance of public officials under the label of libel."
U.S. Supreme Court Justice Louis Brandeis, in Whitney v. California said “Those who won our independence believed…that public discussion is a political duty…”
My hope is that elected leaders would do their duty.
Thank you,
Chuck Osborne
Resident
City of North Canton
Tuesday, November 13, 2007
Development Costs Shouldered By Taxpayers Benefit Developer of Waterside Park
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
October 22, 2007
Although I have not attended city council meetings since council came back from their summer recess, I have followed news reports of council meetings and, as in the past, it is clear that council will continue to spend declining public funds wherever it is politically expedient.
Never mind that over the last two years, this council has seen fit to forego staffing positions in the city’s police department as well as other departments in the city. Never mind that citizens have come before this council body asking for needed infrastructure improvements in their neighborhoods. All of those needs were left unfilled as council repeatedly said that the city did not have the funds.
But miraculously, this council has come up with funds to benefit and enrich private interests using the pretext that they are bringing jobs to the city. I am talking about the planned expenditure of $275,000 of public money to assist McKinley Development in the development of Waterside Technology Center Park on South Main Street.
A recent newspaper article stated that Council member Kathy Magel had concerns because infrastructure costs of the project had risen from $600,000 to $951,000. According to press reports, others on council also expressed concerns on the city’s participation in this project. I believe those concerns are just the tip of the iceberg.
How is it that the city could budget $125,000 for commercial development of Waterside Park and then state on numerous occasions publicly all year long that funds were not available to maintain city services or make desperately needed residential infrastructure improvements?
And now, not only can council budget $125,000 to provide assistance to a developer in times of declining city revenues, it can more than double that budgeted financial assistance to the tune of $275,000.
I have concerns about these expenditures. It is on you agenda tonight as Ordinance 126-07 and of course it is an emergency. Clearly council does not want to allow the public the time to discuss the pros and cons of this decision.
I would like to know what additional costs the taxpayers of North Canton are going to have to shoulder to assist the developers of this property. There is a new light signal that has been promised at South Main and Mississippi to accommodate an alternate access to the Waterside Technology Center Park. I suspect that will require more than $100,000 from the city. Further improvements will be needed on Mississippi where the road for Waterside Center Technology center will intersect. Would $200,000 cover that expense?
The public monies going to assist in the development of the Waterside project have now risen to $575,000. Did anyone on this council discuss or acknowledge any further costs the city might have to incur for this project that are incidental to this development?
The grant requires that a majority of jobs in the Waterside Technology Center Park be in the high tech/research and development field. If this commitment is not met, the grant funds must be returned.
The City of North Canton is clearly at risk in this arrangement and could be expected to repay the grant funds back to the Ohio Department of Development. That is a liability to the city of $350,000. Is there anything in writing requiring the developer to reimburse the City of North Canton for repayment of the grant funds if the project fails to generate the required number of technology jobs?
The City of North Canton’s financial obligations for Waterside Technology Center Park are conceivably at least $925,000. This is equal to, if not more than, the stated infrastructure cost of the entire project. Why are taxpayer’s funds being utilized in this fashion?
Revenues for North Canton are dwindling and yet this council continues to pledge taxpayer funds that further the well-being of private individuals. In a related expenditure of public funds a few months ago, the city’s CIC authorized expenditures to purchase a half acre of Waterside Technology Center Park property to expand parking for Abbott’s Bridal Shop.
As you all know, Abbott’s Bridal Shop is the abutting property to the south of Waterside Technology Center Park. Abbott’s Bridal Shop is private business and yet the expanded parking is to be paid for by the North Canton CIC with funds removed from North Canton’s general fund.
McKinley Development, the owner of Waterside Technology Center Park is also a private business and it, too, is receiving assistance at the expense of North Canton taxpayers.
Waterside Park, as it’s been known for years, fronts right on South Main Street. The property has been promoted and marketed for development for years. If the State of Ohio will provide $350,000 in grant funds, why isn’t that enough of an incentive to develop the property.
The City of North Canton does not need and cannot afford to bear the development risks of this property. Developers are duly compensated in the marketplace for the development risks they take. Free market forces must be allowed to play out. Citizens pay their taxes to fund city services, not to have those funds risked for the gain of individuals.
I ask that you limit the City of North Canton’s participation in the development of the Waterside property by assisting in securing the $350,000 grant from the state and that McKinley Development assume all risks regarding compliance with the requirements of the grant.
Financial assistance from the State of Ohio covering one-third of the infrastructure costs for Waterside Park is quite a windfall for any developer. If that is not enough of an incentive to develop the property, then it is not a good risk under any circumstances for anybody.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
October 22, 2007
Although I have not attended city council meetings since council came back from their summer recess, I have followed news reports of council meetings and, as in the past, it is clear that council will continue to spend declining public funds wherever it is politically expedient.
Never mind that over the last two years, this council has seen fit to forego staffing positions in the city’s police department as well as other departments in the city. Never mind that citizens have come before this council body asking for needed infrastructure improvements in their neighborhoods. All of those needs were left unfilled as council repeatedly said that the city did not have the funds.
But miraculously, this council has come up with funds to benefit and enrich private interests using the pretext that they are bringing jobs to the city. I am talking about the planned expenditure of $275,000 of public money to assist McKinley Development in the development of Waterside Technology Center Park on South Main Street.
A recent newspaper article stated that Council member Kathy Magel had concerns because infrastructure costs of the project had risen from $600,000 to $951,000. According to press reports, others on council also expressed concerns on the city’s participation in this project. I believe those concerns are just the tip of the iceberg.
How is it that the city could budget $125,000 for commercial development of Waterside Park and then state on numerous occasions publicly all year long that funds were not available to maintain city services or make desperately needed residential infrastructure improvements?
And now, not only can council budget $125,000 to provide assistance to a developer in times of declining city revenues, it can more than double that budgeted financial assistance to the tune of $275,000.
I have concerns about these expenditures. It is on you agenda tonight as Ordinance 126-07 and of course it is an emergency. Clearly council does not want to allow the public the time to discuss the pros and cons of this decision.
I would like to know what additional costs the taxpayers of North Canton are going to have to shoulder to assist the developers of this property. There is a new light signal that has been promised at South Main and Mississippi to accommodate an alternate access to the Waterside Technology Center Park. I suspect that will require more than $100,000 from the city. Further improvements will be needed on Mississippi where the road for Waterside Center Technology center will intersect. Would $200,000 cover that expense?
The public monies going to assist in the development of the Waterside project have now risen to $575,000. Did anyone on this council discuss or acknowledge any further costs the city might have to incur for this project that are incidental to this development?
The grant requires that a majority of jobs in the Waterside Technology Center Park be in the high tech/research and development field. If this commitment is not met, the grant funds must be returned.
The City of North Canton is clearly at risk in this arrangement and could be expected to repay the grant funds back to the Ohio Department of Development. That is a liability to the city of $350,000. Is there anything in writing requiring the developer to reimburse the City of North Canton for repayment of the grant funds if the project fails to generate the required number of technology jobs?
The City of North Canton’s financial obligations for Waterside Technology Center Park are conceivably at least $925,000. This is equal to, if not more than, the stated infrastructure cost of the entire project. Why are taxpayer’s funds being utilized in this fashion?
Revenues for North Canton are dwindling and yet this council continues to pledge taxpayer funds that further the well-being of private individuals. In a related expenditure of public funds a few months ago, the city’s CIC authorized expenditures to purchase a half acre of Waterside Technology Center Park property to expand parking for Abbott’s Bridal Shop.
As you all know, Abbott’s Bridal Shop is the abutting property to the south of Waterside Technology Center Park. Abbott’s Bridal Shop is private business and yet the expanded parking is to be paid for by the North Canton CIC with funds removed from North Canton’s general fund.
McKinley Development, the owner of Waterside Technology Center Park is also a private business and it, too, is receiving assistance at the expense of North Canton taxpayers.
Waterside Park, as it’s been known for years, fronts right on South Main Street. The property has been promoted and marketed for development for years. If the State of Ohio will provide $350,000 in grant funds, why isn’t that enough of an incentive to develop the property.
The City of North Canton does not need and cannot afford to bear the development risks of this property. Developers are duly compensated in the marketplace for the development risks they take. Free market forces must be allowed to play out. Citizens pay their taxes to fund city services, not to have those funds risked for the gain of individuals.
I ask that you limit the City of North Canton’s participation in the development of the Waterside property by assisting in securing the $350,000 grant from the state and that McKinley Development assume all risks regarding compliance with the requirements of the grant.
Financial assistance from the State of Ohio covering one-third of the infrastructure costs for Waterside Park is quite a windfall for any developer. If that is not enough of an incentive to develop the property, then it is not a good risk under any circumstances for anybody.
Thank you,
Chuck Osborne
Resident
City of North Canton
Tuesday, July 10, 2007
North Canton CIC in Violation of its Plan and the Ohio Constitution
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
July 9, 2007
In the spring of 2005, this council body authorized the removal of $1,500,000 from the city’s income tax fund and deposited the funds into an escrow fund from which annual payments of $100,000 are being paid to the North Canton Community Improvement Corporation (CIC). As of June 15, 2007, the account balance controlled by the North Canton CIC totaled $300,000. Payments by the city to the North Canton CIC will continue annually with the last payment being paid out on June 15, 2019.
Week after week I, as well as others, sit in the audience and hear council discuss how to deal with declining revenues and funding shortfalls for needed infrastructure improvements and yet the funds set aside for the CIC are left untouched.
I have addressed this issue on several occasions before this body and yet each of you on council chooses to allow these taxpayer funds to be used for purposes other than for support of city services as intended.
My message to you tonight is to provide notice that; one, the North Canton CIC is operating in violation of its own Agreement and Plan and; two, the financial support that is being provided to the owner of Abbott’s Bridal Shop violates Section 6, Article VIII of the Ohio Constitution.
I have addressed these issues in a letter to the Ohio Attorney General with a request that any and all financial transactions of the North Canton CIC be frozen until such time as these violations are investigated.
The North Canton CIC is in violation of its own Agreement and Plan because it is currently using funding sources never anticipated when the CIC was set up twenty-seven years ago.
The present CIC Agreement and Plan was drawn up in 1980 by the Cleveland Law Firm of Squire, Sanders & Dempsey and was crafted in anticipation of the issuance of Industrial Development Bonds (IDB). St. Luke’s took advantage of this bond financing on two occasions. The use of industrial bonds imposed no expense to North Canton or to the taxpayers and was a valuable economic development tool for the city. Sadly, city leaders have abandoned the use of bond financing as a tool for economic development in favor of using taxpayer funds. This was a costly move for taxpayers and the city.
The use of taxpayer monies to fund a CIC under the present Agreement and Plan is not adequate and actually puts the city in violation of state statute as Chapter 1724.10 (A) requires that a CIC prepare a viable plan that is approved by council.
In an OAG opinion, 67-056, the Ohio Attorney General states: “…that a political subdivision may not appropriate monies derived from tax action to provide for the maintenance or operating expenses of a community improvement corporation.”
The state statute regarding Community Improvement Corporations, (Section 1724.10 (A)) has a similar statement. “Any such debt shall be solely that of the corporation and shall not be secured by the pledge of any moneys received or to be received from any political subdivision.”
Taxpayer monies have been pledged from the City of North Canton and continue to be received by the North Canton CIC. These taxpayer funds were paid to the city to maintain city services and now have been diverted for a purpose other than which they were to be used.
Additionally, the Agreement and Plan of the North Canton CIC is being violated in other ways.
First, there is nothing in the Agreement and Plan of the North Canton CIC that allows for the promotion of retail development. The Preamble of the “Agreement and Plan” states:
“The Corporation and Municipality desire to incorporate the terms and provisions of the Plan into this Agreement so that this Agreement embody and constitute the plan of industrial, commercial, distribution and research development…”(emphasis added).
Providing added parking to benefit a private retail business does not meet any of the requirements delineated in the CIC Agreement and Plan.
Second, the Agreement and Plan clearly states that taxpayer funds are not to be provided to the CIC.
In Article III, paragraph (2), the CIC Agreement and Plan states:
“The municipality shall not be required to make any financial contributions to the Corporation and nothing in this Agreement and Plan shall be construed as permitting the Corporation to obligate the Municipality except as expressly set forth in this Agreement and Plan” (emphasis added).
In Article III, paragraph (3) the CIC Agreement and Plan continues with:
“All costs of the Corporation shall be paid solely from the funds of the Corporation and the Municipality need not contribute any moneys to the Corporation to meets its costs. In no event shall any moneys raised by taxation be obligated or pledged for the payment of any bonds or other obligations issued or guarantees made pursuant to this Agreement and Plan” (emphasis added).
In Article II, paragraph 5(b), the CIC Agreement and Plan has similar language:
“[The Corporation may] …acquire sites…for lease or sale by the Corporation, provided that any such debt shall be solely that of the Corporation and shall not
be secured by the pledge of any moneys received or to be received from the Municipality, State of Ohio, or any political subdivision thereof” (emphasis added).
The requirements of Article II, paragraph 5(c) were ignored by the trustees of the North Canton CIC when approving the application for financial assistance from the owner of Abbott’s Bridal Shop. This section of the North Canton CIC says:
“[The Corporation may] make loans to any person, firm partnership, corporation …and may establish and regulate the terms and conditions with respect to any such loans; provided the Corporation shall not approve any application for loan unless and until the person applying for said loan shows that he has applied for the loan through ordinary banking or commercial channels and that the loan has been refused by at least one bank or other financial institution” (emphasis added).
The trustees of the North Canton CIC never required the owner of Abbot’s Bridal Shop to pursue financial assistance through ordinary banking or commercial channels before seeking financial assistance from the North Canton CIC.
The specifics with regard to violation of the Ohio Constitution arise as well from the North Canton CIC’s decision to provide financial assistance to the owner of Abbott’s Bridal Shop. In the court case of C.I.V.I.C. v. City of Warren, the Ohio Supreme Court ruled that municipalities taking action “to raise money for” and “loan its credit to, or in aid of” private corporations violates Section 6, Article VIII of the Ohio Constitution. The North Canton CIC is an agency of the city and by extension this is what is taking place between the North Canton CIC and the owner of Abbott’s Bridal Shop.
In a OAG opinion, 71-044; the Ohio Attorney General states a that “municipality may not make an outright, unrestricted gift of funds to a nongovernmental organization, regardless of whether or not such organization may be generally engaged in performing a beneficial, public purpose.”
There are grave concerns with regard to the present operation and funding of the North Canton CIC. The Corporation must get its house in order before it can serve the City of North Canton. A twenty-seven year old document crafted for industrial bond financing of economic development projects clearly will not work, legally or otherwise if you are using other sources of funding for the North Canton CIC.
Using public monies to benefit private interests in violation of The Ohio Constitution and state law should raise a concern to North Canton elected officials.
This is not a legacy any of you wishes to leave behind given the financial difficulties North Canton is facing today.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
July 9, 2007
In the spring of 2005, this council body authorized the removal of $1,500,000 from the city’s income tax fund and deposited the funds into an escrow fund from which annual payments of $100,000 are being paid to the North Canton Community Improvement Corporation (CIC). As of June 15, 2007, the account balance controlled by the North Canton CIC totaled $300,000. Payments by the city to the North Canton CIC will continue annually with the last payment being paid out on June 15, 2019.
Week after week I, as well as others, sit in the audience and hear council discuss how to deal with declining revenues and funding shortfalls for needed infrastructure improvements and yet the funds set aside for the CIC are left untouched.
I have addressed this issue on several occasions before this body and yet each of you on council chooses to allow these taxpayer funds to be used for purposes other than for support of city services as intended.
My message to you tonight is to provide notice that; one, the North Canton CIC is operating in violation of its own Agreement and Plan and; two, the financial support that is being provided to the owner of Abbott’s Bridal Shop violates Section 6, Article VIII of the Ohio Constitution.
I have addressed these issues in a letter to the Ohio Attorney General with a request that any and all financial transactions of the North Canton CIC be frozen until such time as these violations are investigated.
The North Canton CIC is in violation of its own Agreement and Plan because it is currently using funding sources never anticipated when the CIC was set up twenty-seven years ago.
The present CIC Agreement and Plan was drawn up in 1980 by the Cleveland Law Firm of Squire, Sanders & Dempsey and was crafted in anticipation of the issuance of Industrial Development Bonds (IDB). St. Luke’s took advantage of this bond financing on two occasions. The use of industrial bonds imposed no expense to North Canton or to the taxpayers and was a valuable economic development tool for the city. Sadly, city leaders have abandoned the use of bond financing as a tool for economic development in favor of using taxpayer funds. This was a costly move for taxpayers and the city.
The use of taxpayer monies to fund a CIC under the present Agreement and Plan is not adequate and actually puts the city in violation of state statute as Chapter 1724.10 (A) requires that a CIC prepare a viable plan that is approved by council.
In an OAG opinion, 67-056, the Ohio Attorney General states: “…that a political subdivision may not appropriate monies derived from tax action to provide for the maintenance or operating expenses of a community improvement corporation.”
The state statute regarding Community Improvement Corporations, (Section 1724.10 (A)) has a similar statement. “Any such debt shall be solely that of the corporation and shall not be secured by the pledge of any moneys received or to be received from any political subdivision.”
Taxpayer monies have been pledged from the City of North Canton and continue to be received by the North Canton CIC. These taxpayer funds were paid to the city to maintain city services and now have been diverted for a purpose other than which they were to be used.
Additionally, the Agreement and Plan of the North Canton CIC is being violated in other ways.
First, there is nothing in the Agreement and Plan of the North Canton CIC that allows for the promotion of retail development. The Preamble of the “Agreement and Plan” states:
“The Corporation and Municipality desire to incorporate the terms and provisions of the Plan into this Agreement so that this Agreement embody and constitute the plan of industrial, commercial, distribution and research development…”(emphasis added).
Providing added parking to benefit a private retail business does not meet any of the requirements delineated in the CIC Agreement and Plan.
Second, the Agreement and Plan clearly states that taxpayer funds are not to be provided to the CIC.
In Article III, paragraph (2), the CIC Agreement and Plan states:
“The municipality shall not be required to make any financial contributions to the Corporation and nothing in this Agreement and Plan shall be construed as permitting the Corporation to obligate the Municipality except as expressly set forth in this Agreement and Plan” (emphasis added).
In Article III, paragraph (3) the CIC Agreement and Plan continues with:
“All costs of the Corporation shall be paid solely from the funds of the Corporation and the Municipality need not contribute any moneys to the Corporation to meets its costs. In no event shall any moneys raised by taxation be obligated or pledged for the payment of any bonds or other obligations issued or guarantees made pursuant to this Agreement and Plan” (emphasis added).
In Article II, paragraph 5(b), the CIC Agreement and Plan has similar language:
“[The Corporation may] …acquire sites…for lease or sale by the Corporation, provided that any such debt shall be solely that of the Corporation and shall not
be secured by the pledge of any moneys received or to be received from the Municipality, State of Ohio, or any political subdivision thereof” (emphasis added).
The requirements of Article II, paragraph 5(c) were ignored by the trustees of the North Canton CIC when approving the application for financial assistance from the owner of Abbott’s Bridal Shop. This section of the North Canton CIC says:
“[The Corporation may] make loans to any person, firm partnership, corporation …and may establish and regulate the terms and conditions with respect to any such loans; provided the Corporation shall not approve any application for loan unless and until the person applying for said loan shows that he has applied for the loan through ordinary banking or commercial channels and that the loan has been refused by at least one bank or other financial institution” (emphasis added).
The trustees of the North Canton CIC never required the owner of Abbot’s Bridal Shop to pursue financial assistance through ordinary banking or commercial channels before seeking financial assistance from the North Canton CIC.
The specifics with regard to violation of the Ohio Constitution arise as well from the North Canton CIC’s decision to provide financial assistance to the owner of Abbott’s Bridal Shop. In the court case of C.I.V.I.C. v. City of Warren, the Ohio Supreme Court ruled that municipalities taking action “to raise money for” and “loan its credit to, or in aid of” private corporations violates Section 6, Article VIII of the Ohio Constitution. The North Canton CIC is an agency of the city and by extension this is what is taking place between the North Canton CIC and the owner of Abbott’s Bridal Shop.
In a OAG opinion, 71-044; the Ohio Attorney General states a that “municipality may not make an outright, unrestricted gift of funds to a nongovernmental organization, regardless of whether or not such organization may be generally engaged in performing a beneficial, public purpose.”
There are grave concerns with regard to the present operation and funding of the North Canton CIC. The Corporation must get its house in order before it can serve the City of North Canton. A twenty-seven year old document crafted for industrial bond financing of economic development projects clearly will not work, legally or otherwise if you are using other sources of funding for the North Canton CIC.
Using public monies to benefit private interests in violation of The Ohio Constitution and state law should raise a concern to North Canton elected officials.
This is not a legacy any of you wishes to leave behind given the financial difficulties North Canton is facing today.
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, June 25, 2007
North Canton Tax Dollars Benefit Private Business for the Second Time
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
June 25, 2007
Two weeks ago on June 11, 2007, I questioned before this council the decision of the North Canton CIC to purchase a ½ acre property abutting the rear parking lot of Abbott’s Bridal Shop for additional parking needs to benefit private business. The need for expanded parking at the rear of Abbott’s is the only hurdle to the property owner for leasing 11,000 sq, ft. of office space to the Service and Support Administration of the Stark County Board of MRDD and bringing 70 jobs to the city.
The four-year lease, with an on option to renew for one year will generate $428,450 for Mr. Randall McNurlin. In Mr. McNurlin’s own words before the CIC, this was net revenue. The CIC will be expending $115,000, not including engineering and other soft costs, for the purchase and development of the ½ acre parking lot. These are funds that were removed from North Canton’s General fund and given to the CIC. The CIC will recoup from Mr. McNurlin $1.00 per year over the five-year span of the lease and be left owning a landlocked parking lot with no value at the end of the lease.
This handout of what was once taxpayer dollars to benefit the private business interests of Mr. McNurlin is not the first time the owner of Abbott’s Bridal Shop has benefited from taxpayer assistance.
I call it a part of the city’s genealogical history. Paul Harvey would call it “The Rest of the Story.”
I have learned the following from a search of city records: In 1998, the City of North Canton purchased the property on which Abbott’s Bridal Shop is now located for $180,000 and paid $9,600 to clear several structures from the property. These figures do not include appraisal costs, survey costs and other soft costs required in the purchase of the property. The property consisted of 1.51 acres. The city subsequently sold 1.26 acres to Mr. McNurlin and carried a no-interest note on the sale of the property for him.
The North Canton City Council passed the legislation to sell the property on “an emergency” on December 14, 1998. In city council minutes from the meeting Council member Jon Snyder is quoted as saying “…it’s a win, win situation for the city. And my compliments to Mr. Sumser for putting it together.”
After months of delays on the part of Mr. McNurlin to finalize the purchase of the property, the following comment were made by council members in a council meeting held on May 10, 1999. Council member Tim Morrow stated “…We have—you know there’s a valuable piece of Main Street property…we spent taxpayer dollars to tear this down…."
Mr. McNurlin subsequently finalized the purchase of the property on July 14, 1999.
After Mr. McNurlin received a “moving credit” of $65,000 from the city for business moving expenses, his net cost for the purchase of the property was $50,000. Mr. McNurlin became owner of a “valuable piece of main Street property” for a fraction of its true costs at the expense of North Canton taxpayers.
At the May 10, 1999, council meeting, Council member Doug Foltz is quoted as saying “…It’s a sweetheart deal for him….” The vote by council, “on an emergency,” to sell the property to Mr. McNurlin was unanimous. Is that any surprise?
Yes, Mr. Foltz, it indeed was a sweetheart deal.
How many other business owners would like to acquire frontage on Main Street for a fraction of its costs?
The city used the rear portion of the property, approximately ¼ of an acre, to locate a water storage tank that water distribution studies have identified as a less than an ideal location for a water storage tank.
The poor location for this South Main Street Water Storage tank is due to low ground elevations that have been acknowledged only recently by this administration. I thank Mr. Wise for his candor in this regard as past city administrations have denied there are problems.
As we all know from grade school, water does not flow uphill. Why city council approved this location for construction of a water storage tank does not speak well for their grasp of basic principles of physics. The construction of the water storage tank at this location received unanimous approval from City Council.
The owner of Abbott’s also received waivers for sewer frontage fees and water tap-in fees totaling $5,021.00. Additional zoning variances were given including reduced parking size requirements.
In 1999, the City of North Canton gave Mr. McNurlin a five-year, fifty percent abatement of taxes on the Abbott Bridal Shop property. Unfortunately, the city was not able to provide any documentation as to the amount of taxes that were abated. From the outset, it appears from the records that Mr. McNurlin failed to comply with the terms of the original five-year tax abatement. That abatement was amended to a three-year, fifty percent abatement of taxes. I was unable to determine whether the terms of the amended tax abatement were ever met as well, but as we have seen from ongoing tax abatements, the tax exemption continues whether there is compliance with the terms of the agreement or not.
It is interesting to note that the city also could not provide any kind of estimate in terms of income taxes that have been collected from business activity from this property yet the city was quick to provide estimates of the income tax that would be collected if MRDD relocated to the office space located below Abbott’s Bridal Shop.
In summary, the assistance to the owner of Abbott’s Bridal Shop has ranged from “sweetheart” deals to outright giveaways at taxpayer expense. These actions, past and present, are a blatant slap in the face for North Canton taxpayers who are subsidizing financial gain for private interests. Furthermore, other business interests throughout the city do not receive the same corporate charity that has been lavishly showered on Mr. Randall McNurlin.
At 1280 South Main Street, the business owner has received the following: deep discounts for purchase of Main Street property, waivers of fees, no interest loans at taxpayer expense, exemption of property taxes on commercial property despite noncompliance with terms of the agreements, free use of property and property improvements at the expense of others. All of these giveaways are at taxpayer expense and create unfair advantage between businesses that operate without handouts. None of this speaks well of city leaders who promote the city in this manner.
It is a sad thing to watch the abuse of public monies in this manner.
This is North Canton’s past practice and it continues today. Something is wrong!!
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
June 25, 2007
Two weeks ago on June 11, 2007, I questioned before this council the decision of the North Canton CIC to purchase a ½ acre property abutting the rear parking lot of Abbott’s Bridal Shop for additional parking needs to benefit private business. The need for expanded parking at the rear of Abbott’s is the only hurdle to the property owner for leasing 11,000 sq, ft. of office space to the Service and Support Administration of the Stark County Board of MRDD and bringing 70 jobs to the city.
The four-year lease, with an on option to renew for one year will generate $428,450 for Mr. Randall McNurlin. In Mr. McNurlin’s own words before the CIC, this was net revenue. The CIC will be expending $115,000, not including engineering and other soft costs, for the purchase and development of the ½ acre parking lot. These are funds that were removed from North Canton’s General fund and given to the CIC. The CIC will recoup from Mr. McNurlin $1.00 per year over the five-year span of the lease and be left owning a landlocked parking lot with no value at the end of the lease.
This handout of what was once taxpayer dollars to benefit the private business interests of Mr. McNurlin is not the first time the owner of Abbott’s Bridal Shop has benefited from taxpayer assistance.
I call it a part of the city’s genealogical history. Paul Harvey would call it “The Rest of the Story.”
I have learned the following from a search of city records: In 1998, the City of North Canton purchased the property on which Abbott’s Bridal Shop is now located for $180,000 and paid $9,600 to clear several structures from the property. These figures do not include appraisal costs, survey costs and other soft costs required in the purchase of the property. The property consisted of 1.51 acres. The city subsequently sold 1.26 acres to Mr. McNurlin and carried a no-interest note on the sale of the property for him.
The North Canton City Council passed the legislation to sell the property on “an emergency” on December 14, 1998. In city council minutes from the meeting Council member Jon Snyder is quoted as saying “…it’s a win, win situation for the city. And my compliments to Mr. Sumser for putting it together.”
After months of delays on the part of Mr. McNurlin to finalize the purchase of the property, the following comment were made by council members in a council meeting held on May 10, 1999. Council member Tim Morrow stated “…We have—you know there’s a valuable piece of Main Street property…we spent taxpayer dollars to tear this down…."
Mr. McNurlin subsequently finalized the purchase of the property on July 14, 1999.
After Mr. McNurlin received a “moving credit” of $65,000 from the city for business moving expenses, his net cost for the purchase of the property was $50,000. Mr. McNurlin became owner of a “valuable piece of main Street property” for a fraction of its true costs at the expense of North Canton taxpayers.
At the May 10, 1999, council meeting, Council member Doug Foltz is quoted as saying “…It’s a sweetheart deal for him….” The vote by council, “on an emergency,” to sell the property to Mr. McNurlin was unanimous. Is that any surprise?
Yes, Mr. Foltz, it indeed was a sweetheart deal.
How many other business owners would like to acquire frontage on Main Street for a fraction of its costs?
The city used the rear portion of the property, approximately ¼ of an acre, to locate a water storage tank that water distribution studies have identified as a less than an ideal location for a water storage tank.
The poor location for this South Main Street Water Storage tank is due to low ground elevations that have been acknowledged only recently by this administration. I thank Mr. Wise for his candor in this regard as past city administrations have denied there are problems.
As we all know from grade school, water does not flow uphill. Why city council approved this location for construction of a water storage tank does not speak well for their grasp of basic principles of physics. The construction of the water storage tank at this location received unanimous approval from City Council.
The owner of Abbott’s also received waivers for sewer frontage fees and water tap-in fees totaling $5,021.00. Additional zoning variances were given including reduced parking size requirements.
In 1999, the City of North Canton gave Mr. McNurlin a five-year, fifty percent abatement of taxes on the Abbott Bridal Shop property. Unfortunately, the city was not able to provide any documentation as to the amount of taxes that were abated. From the outset, it appears from the records that Mr. McNurlin failed to comply with the terms of the original five-year tax abatement. That abatement was amended to a three-year, fifty percent abatement of taxes. I was unable to determine whether the terms of the amended tax abatement were ever met as well, but as we have seen from ongoing tax abatements, the tax exemption continues whether there is compliance with the terms of the agreement or not.
It is interesting to note that the city also could not provide any kind of estimate in terms of income taxes that have been collected from business activity from this property yet the city was quick to provide estimates of the income tax that would be collected if MRDD relocated to the office space located below Abbott’s Bridal Shop.
In summary, the assistance to the owner of Abbott’s Bridal Shop has ranged from “sweetheart” deals to outright giveaways at taxpayer expense. These actions, past and present, are a blatant slap in the face for North Canton taxpayers who are subsidizing financial gain for private interests. Furthermore, other business interests throughout the city do not receive the same corporate charity that has been lavishly showered on Mr. Randall McNurlin.
At 1280 South Main Street, the business owner has received the following: deep discounts for purchase of Main Street property, waivers of fees, no interest loans at taxpayer expense, exemption of property taxes on commercial property despite noncompliance with terms of the agreements, free use of property and property improvements at the expense of others. All of these giveaways are at taxpayer expense and create unfair advantage between businesses that operate without handouts. None of this speaks well of city leaders who promote the city in this manner.
It is a sad thing to watch the abuse of public monies in this manner.
This is North Canton’s past practice and it continues today. Something is wrong!!
Thank you,
Chuck Osborne
Resident
City of North Canton
Monday, June 11, 2007
North Canton CIC Provides Illusion of Great Benefits
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.
Thank you,
Chuck Osborne
Resident
City of North Canton
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.
Thank you,
Chuck Osborne
Resident
City of North Canton
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
NORTH CANTON CITY COUNCIL
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
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
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
Resident
City of North Canton
Tuesday, March 27, 2007
Negotiated Agreement With Plain Township by Councilman Repace Raises Questions
Prepared Comments Made to
NORTH CANTON CITY COUNCIL
March 26, 2007
I would like to know where in our North Canton City Charter Council Member Jim Repace believes he is authorized to serve as the city’s negotiator in meetings with other local governments or agencies?
This question has perplexed and unnerved me ever since Mr. Repace revealed last summer at a council meeting that he and Council Member Pat DeOrio had been meeting for months in closed door meetings with Jackson Township trustees.
At least one council member was similarly perplexed at a council meeting last summer when Mr. Repace reported that he had been holding discussions with Jackson Township trustees. According to the minutes of the July 10, 2006, meeting, Council Member Lane naturally thought that other members of North Canton City government would be included in the discussions when he stated “…the Administration would have to get involved and so would the Law Director…”
Council Member Jim Repace replied “No… I’m gonna do the negotiating” and then quickly added “with Pat’s help”
Mr. Repace followed this proclamation by stating “[the] Administration is not going to do any negotiating.”
Clearly Council member Lane thought something was a little amiss as he continued his line of commentary on Mr. Repace’s bravado by stating “...I would think, what I am trying to say is, that side of the fence has to be represented as well, I would think.”
Obviously, one member of this council was questioning the role Mr. Repace was defining for himself. It is unfortunate that other members of council did not speak to this issue as well.
Apparently Mr. Repace is confused as to what his role is as a council member because Mr. Repace at this same council meeting stated that his closed door meetings with Jackson Township was “…something that former Mayor Tom Rice had started working on and I just kind of inherited this thing.”
Councilmember Repace, it may come as a surprise to you but you are not the mayor and you are outside your authority in negotiating any agreements for the City of North Canton. Your position as the President of the Hoover labor union does not give you negotiating privileges for the city. That is not your role as a councilman.
Quite frankly, I am more than surprised that remaining members of this council, City Administrator Earl Wise and Mayor David Held have all sat idly by while Mr. Repace overstepped his authority as a member of council and pursued closed-door negotiations with Jackson Township last year.
Does anyone in this room believe for one second that former Mayor Tom Rice, or any previous mayor or city administrator would have allowed a member of council to proclaim themselves as the city’s negotiator? Would any previous mayor or city administrator allow a council member to be the exclusive representative in negotiations with other local governments or county agencies? Not for a minute!
A few on this council have proffered charges against a council member before. This occurred just a few years ago. Why did council show so much concern years ago with that councilmember? Why is there no concern today for a council member who by self-proclamation takes a role that is clearly outside his authority? How can this kind of conduct be overlooked?
Now, after last summer’s failed attempt by Mr. Repace to have city council approve an agreement with Jackson Township that was highly unfavorable to North Canton, Mr. Repace is pushing a similar agreement with Plain Township.
The Repository reported in a June 30, 2006, article titled, “Officials spar over hiring family;” stated “The younger Repace has a job as a general laborer with Plain Township. He started in April.”
Mr. Repace, I am glad your son was successful in securing employment with Plain Township but it does raise questions given the close relationship you have with certain Plain Township officials.
And now, by all appearances citizens would now have to ask if Mr. Repace is now expected to return a favor to Plain Township by pushing a legislative agreement through council that is highly desired by Plain Township and detrimental to North Canton.
The presence of Plain Township Trustee Louis Giavasis at numerous North Canton City Council meetings over the last few months shows how eager Plain Township is to see the agreement passed by North Canton City Council.
Mr. Giavasis has been available in the audience at council meetings to assist Council Member Repace every time this legislation has been discussed. Apparently, Mr. Giavasis is now an adjunct member of North Canton City Council when legislation beneficial to Plain Township is on the agenda.
In a North Canton City Council meeting on January 16, 2007, Mr. Giavasis stated “…the reason why Plain Township is cooperating with North Canton right now is solely because of Jim Repace.”
The public’s business should be conducted in an arms-length manner. The fact that both Mr. Repace and Mr. Giavasis are Democrats and the fact that they are friends should not be the basis for any agreement passed by North Canton City Council.
Lastly, I would like to say that I was dismayed by the appearance of numerous Democrats at a North Canton City Council meeting on January 16, 2007. The list of Democrats included two Jackson Township Trustees, one Plain Township Trustee, the Stark County Treasurer, the Stark County Auditor, and others. These individuals were elected to serve the public not their party cronies. A city council meeting should not be turned into a political rally.
The purpose of a council meeting is to discuss the public’s business. Party politics does not belong in a city council meeting. It is not a place where partisan politics should be staged for the benefit of Democrats or Republicans.
The appearance of the Jackson Township trustees at the January North Canton City Council meeting turned political rally for Council Member Repace makes one wonder if their presence was payback for Council Member Repace’s effort to push a legislative agreement through council last summer that was highly favorable to Jackson Township but equally detrimental to North Canton.
City council scuttled the proposed agreement with Jackson Township last summer.
I urge this council to scuttle the proposed agreement with Plain Township that is before you now. The agreement has been pursued by a council member acting outside his authority. Furthermore, I believe the agreement furthers friendships and not the future of the City of North Canton.
Thank you,
Chuck Osborne
Resident
City of North Canton
NORTH CANTON CITY COUNCIL
March 26, 2007
I would like to know where in our North Canton City Charter Council Member Jim Repace believes he is authorized to serve as the city’s negotiator in meetings with other local governments or agencies?
This question has perplexed and unnerved me ever since Mr. Repace revealed last summer at a council meeting that he and Council Member Pat DeOrio had been meeting for months in closed door meetings with Jackson Township trustees.
At least one council member was similarly perplexed at a council meeting last summer when Mr. Repace reported that he had been holding discussions with Jackson Township trustees. According to the minutes of the July 10, 2006, meeting, Council Member Lane naturally thought that other members of North Canton City government would be included in the discussions when he stated “…the Administration would have to get involved and so would the Law Director…”
Council Member Jim Repace replied “No… I’m gonna do the negotiating” and then quickly added “with Pat’s help”
Mr. Repace followed this proclamation by stating “[the] Administration is not going to do any negotiating.”
Clearly Council member Lane thought something was a little amiss as he continued his line of commentary on Mr. Repace’s bravado by stating “...I would think, what I am trying to say is, that side of the fence has to be represented as well, I would think.”
Obviously, one member of this council was questioning the role Mr. Repace was defining for himself. It is unfortunate that other members of council did not speak to this issue as well.
Apparently Mr. Repace is confused as to what his role is as a council member because Mr. Repace at this same council meeting stated that his closed door meetings with Jackson Township was “…something that former Mayor Tom Rice had started working on and I just kind of inherited this thing.”
Councilmember Repace, it may come as a surprise to you but you are not the mayor and you are outside your authority in negotiating any agreements for the City of North Canton. Your position as the President of the Hoover labor union does not give you negotiating privileges for the city. That is not your role as a councilman.
Quite frankly, I am more than surprised that remaining members of this council, City Administrator Earl Wise and Mayor David Held have all sat idly by while Mr. Repace overstepped his authority as a member of council and pursued closed-door negotiations with Jackson Township last year.
Does anyone in this room believe for one second that former Mayor Tom Rice, or any previous mayor or city administrator would have allowed a member of council to proclaim themselves as the city’s negotiator? Would any previous mayor or city administrator allow a council member to be the exclusive representative in negotiations with other local governments or county agencies? Not for a minute!
A few on this council have proffered charges against a council member before. This occurred just a few years ago. Why did council show so much concern years ago with that councilmember? Why is there no concern today for a council member who by self-proclamation takes a role that is clearly outside his authority? How can this kind of conduct be overlooked?
Now, after last summer’s failed attempt by Mr. Repace to have city council approve an agreement with Jackson Township that was highly unfavorable to North Canton, Mr. Repace is pushing a similar agreement with Plain Township.
The Repository reported in a June 30, 2006, article titled, “Officials spar over hiring family;” stated “The younger Repace has a job as a general laborer with Plain Township. He started in April.”
Mr. Repace, I am glad your son was successful in securing employment with Plain Township but it does raise questions given the close relationship you have with certain Plain Township officials.
And now, by all appearances citizens would now have to ask if Mr. Repace is now expected to return a favor to Plain Township by pushing a legislative agreement through council that is highly desired by Plain Township and detrimental to North Canton.
The presence of Plain Township Trustee Louis Giavasis at numerous North Canton City Council meetings over the last few months shows how eager Plain Township is to see the agreement passed by North Canton City Council.
Mr. Giavasis has been available in the audience at council meetings to assist Council Member Repace every time this legislation has been discussed. Apparently, Mr. Giavasis is now an adjunct member of North Canton City Council when legislation beneficial to Plain Township is on the agenda.
In a North Canton City Council meeting on January 16, 2007, Mr. Giavasis stated “…the reason why Plain Township is cooperating with North Canton right now is solely because of Jim Repace.”
The public’s business should be conducted in an arms-length manner. The fact that both Mr. Repace and Mr. Giavasis are Democrats and the fact that they are friends should not be the basis for any agreement passed by North Canton City Council.
Lastly, I would like to say that I was dismayed by the appearance of numerous Democrats at a North Canton City Council meeting on January 16, 2007. The list of Democrats included two Jackson Township Trustees, one Plain Township Trustee, the Stark County Treasurer, the Stark County Auditor, and others. These individuals were elected to serve the public not their party cronies. A city council meeting should not be turned into a political rally.
The purpose of a council meeting is to discuss the public’s business. Party politics does not belong in a city council meeting. It is not a place where partisan politics should be staged for the benefit of Democrats or Republicans.
The appearance of the Jackson Township trustees at the January North Canton City Council meeting turned political rally for Council Member Repace makes one wonder if their presence was payback for Council Member Repace’s effort to push a legislative agreement through council last summer that was highly favorable to Jackson Township but equally detrimental to North Canton.
City council scuttled the proposed agreement with Jackson Township last summer.
I urge this council to scuttle the proposed agreement with Plain Township that is before you now. The agreement has been pursued by a council member acting outside his authority. Furthermore, I believe the agreement furthers friendships and not the future of the City of North Canton.
Thank you,
Chuck Osborne
Resident
City of North Canton
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