Mayor Rice Requests $2 Million with No Economic Study and No Plan in Place

Prepared Comments Made to
NORTH CANTON CITY COUNCIL
March 14, 2005


I would like to address my comments tonight to Mayor Tom Rice’s request that council appropriate $2 million to resurrect and fund the Community Improvement Corporation (CIC).

I would like to start by saying that Mayor Rice has no basis on which to make such a request without first doing an objective economic analysis of the city and second completing an economic development plan based on the conclusions learned from an economic analysis.

Neither one of these steps has been taken. There is no current economic study and there is no economic plan from Mayor Rice for North Canton!

The “Imagine North Canton” program is but a small part of an overall economic analysis study that must be done by an independent consultant with expertise in creating custom economic strategies.

Cities who are truly interested in addressing the economic uncertainty facing their communities know there must be an honest assessment of a community before decisions such as these can be made.

North Canton must know its strengths and weaknesses before it can tackle the economic realities that the city is now facing. Economic opportunities must be defined. Threats to the economic future of this city must be acknowledged and any action that the city takes to minimize those threats must be real, not window dressing.

Mayor Rice, I believe all you are providing in your request for $2 million is window dressing.

Buying up vacant properties and putting a sign up that says for sale by the City of North Canton is not economic development. And spending millions of dollars from dwindling city funds to bring in an upscale restaurant whose employees work for tips is not economically equivalent to the salaried jobs that North Canton has lost and continues to lose.

Mayor Rice, I also believe you do not truly understand the purpose of the CIC (Community Improvement Corporation) and how it should be used.

The Community Improvement Corporation here in Ohio derives from Chapter 1724 of the Ohio Revised Code. This chapter states in part that a CIC is organized “for the sole purpose of advancing, encouraging, and promoting the industrial, economic, commercial, and civic development of a community or area….to acquire improved or unimproved real estate for the purpose of constructing industrial plants or other business establishments thereon…or otherwise dispose of industrial plants or other business establishments.”

Land banking land for retail development is not the purpose of the CIC. The CIC is a tool created for facilitating industrial and commercial development that brings with it meaningful numbers of well-paying jobs. Not mere handfuls of minimum wage jobs that you describe in your quest to bring restaurants or book stores to Main Street.

We all want to see a vibrant exciting retail area up and down our Main Street but the effort and expense to bring that to North Canton must be matched with the reality of the income tax that will be generated from the kinds of jobs that retail brings with it.

And those jobs in retail are on the extreme low end of the pay scale. Can you justify risking millions of dollars of taxpayer dollars to bring a handful of minimum wage jobs to North Canton?

Furthermore, funding for a CIC was most certainly not expected to come from city coffers. The Ohio state statute regarding CICs, Section 1724.10 (A) states “…Any such debt shall be solely that of the corporation and shall not be secured by the pledge of any monies received or to be received from any political corporation.”

This research seems to reveal that municipalities do not use taxpayer dollars to fund the CIC but that they use the CIC to issue bonds and guarantee loans secured from banks made to businesses. Little if any public monies are actually tied up for funding a CIC.

This is how North Canton assisted in the construction of St. Luke’s nursing facility nearly twenty-five years ago. The North Canton Community Improvement Corporation simply provided the mechanism by which tax-free municipal bonds could be issued and no taxpayer funds were needed.

The CIC of Lake County, Ohio, is used just as North Canton used it nearly twenty-five years ago and that is to assist in the financing of industrial and commercial expansion through the issuance of industrial revenue bonds (IRB), which are exempt from Federal Income taxation. Under Ohio law, manufacturing, distribution, commercial or research facilities are eligible.

The City of Westlake, Ohio, uses its CIC to accomplish the same thing. No community would jeopardize the financial health of its city by funding its CIC with taxpayer dollars.

City officials should be asking themselves why we cannot keep the businesses that we have. Why did Spitzer Chevrolet leave North Canton? I can name a number of other businesses this city has lost just in the last year or two. Why can North Canton not keep the business that it already has?

The same section of the statute referred to earlier regarding CICs also states the following: “…the community improvement corporation shall prepare a plan for the political subdivision of industrial, commercial, distribution, and research development, and such plan shall provide therein the extent to which the community improvement corporation shall participate as the agency of the political subdivision in carrying out such a plan.”

And with that, I would like to ask you, Mayor Rice, where is your economic plan?

On Wednesday, March 9, 2005, I presented to your office a written request for a copy of your economic plan. I went to your office two days later, on Friday, March 11, 2005, to secure a copy, and was told that there was nothing available to give me.

Mayor Rice, I do not understand how you expect to come to this council with a request for $2 million when you have no economic plan.

In your letter to Council President, Jon Snyder, dated February 7, 2005, you proposed the expenditure of two million dollars but you provided no mention of a plan. On what basis is Mr. Snyder supposed to make any judgment on your request for millions of taxpayer dollars? Mr. Snyder is not only the council president but also the Chairman of the Finance Committee.

Mayor Rice, in the March edition of Our Town, that came out to the public earlier this month, you state that “the CIC would allow North Canton to proactively respond to property developments within our business areas through a more timely and efficient process than the normal city legislative process.” How quickly must you respond?

If you were by chance flying an aircraft and there was a mechanical emergency, I could certainly understand the need to respond quickly. What I cannot understand is how this council could not direct its energies and act in a prompt fashion given the need to do so. I believe that council could act with all due speed if an opportunity presented itself to the
city.

This city had no trouble coming up with $4.2 million that had not been budgeted when it wanted to purchase Arrowhead Country Club two years ago even though it was a purchase against the recommendation of the Director of Finance.

Mayor Rice, your request that council appropriate $2 million of taxpayer dollars for some vague purpose, the specifics of which are unknown to this council, in reality is a request from you that this council abdicate its responsibility to the citizens of this community.

Furthermore, your request to place $2 million of the city’s operating funds into the CIC is an attempt to bypass the public scrutiny that is afforded the public when public monies are expended in this council.

Mayor Rice, you have no independent economic study on which to base an economic plan and you have no economic plan.

I ask that council members proceed in a prudent manner in their decision whether or not to fund the CIC in this manner. As council members, you must represent the public in all matters as your office prescribes and it must be done with realistic expectations for success.


Thank you

Chuck Osborne
Resident
City of North Canton