North Canton CRA Property Tax Abatements Undermine Our Schools and Enrich Corporate Interests and Multi-millionaires

Prepared Comments Made to

NORTH CANTON CITY COUNCIL

May 23, 2016

           I would like to recite the children’s story of Chicken Little that we remember from our youth as a learning aid to the current discussion on the proposed expansion of the City’s CRA.

           Chicken Little woke up one morning and went for a walk in the town where she lived. While walking, an acorn from a tall oak tree fell and hit her on the head with a PLUNK!  

“The sky is falling, the sky is falling!” she yelled. “I must run and warn the King!”  

 

On the way, she ran into Henny Penny. “Chicken Little, what’s wrong?” asked Henny Penny. 

 

“The sky is falling, the sky is falling! We must run and warn the King!” cried Chicken Little…. 

 

“I will run with you!” said Henny Penny. So Chicken Little and Henny Penny ran together…. 

 

[And so on and so on] until Chicken Little, Henny Penny, Goosey Loosey, and Turkey Lurkey all ran together. Soon they ran into Foxy Loxy.  

 

“You will be safe in my den,” said clever Foxy Loxy. “You can hide in there. I will run and tell the king.” 

 

So Chicken Little, Henny Penny, Goosey Loosey, and Turkey Lurkey followed Foxy Loxy to his den. They were never seen or heard from again.

          The moral in this story is that when something happens, one should not believe

whatever first comes to one’s mind to be the cause or believe the first possible 
option to be true. 

          The story of Chicken Little teaches us to think before jumping to conclusions. 

          How can this Council conclude that North Canton is so blighted that the sky is falling? Investment in North Canton is not discouraged as the statute requires for the creation of a CRA. 

          The Main Street trailer park that has been described as blighted did not discourage investment in that area. This is evidenced by the fact that O-Reilley Auto Parts and CVS Pharmacy both built on property abutting the trailer park. 

          The property tax abatement given for North Ridge Place, the 40 unit apartment complex built on the former site of the trailer park was unconscionable. The abatement, 100% for fifteen years, amounts to $59,129, in 2015 dollars, per year, will total close to a million dollars over the term of fifteen years. 

          The property may be residential in nature, but it is investment property that will result in the diversion of needed funds to the North Canton City Schools. The North Canton library and several North Canton levies also will not receive the revenue earmarked for them in the distribution of property taxes.

          North Canton’s CRA is an affront to the taxpayers of the City as it is being administered to forgive taxes on properties owned by corporations and multi-millionaires. These individuals and entities are high net worth individuals who can easily absorb the payment of property taxes into their business activities. 

          I have a handout to leave with you that shows the unfortunate stakeholders in the loss of the property taxes you are abating. 

         The North Canton City Schools are the major loser in this expansion of the CRA program. Ordinance 32-2016 will bring riches to the rich, but financial decline to our City Schools. 

         Mr. Griffith, you have repeatedly stated that the schools will realize a boost in revenue when the terms of these abatements run their course. 

         Could you or anyone on this Council live without a raise in salary for the next 10 or 12 or 15 years? That is what you are asking the North Canton City Schools to live with. 

         Do not be a casualty like Chicken Little, Henny Penny, Goosey Loosey, or Turkey Lurkey. 

         The sky is not falling! If North Canton properties are not maintained, there are zoning codes on the books to deal with those issues. 

         You cannot give away the lifeblood of the City as you are doing to get homeowners to maintain their properties. 

Thank you,
Chuck Osborne

 

May 2, 2016 - North Canton Council of the Whole Meeting

North Canton Residents and Anyone Having Interest in the Business of North Canton City Government:

Pasted below is a link to a video of the North Canton Council of the Whole meeting held on Monday, May 2, 2016.

https://youtu.be/NsWm08pzIyo 
 

Description of Video: 

May 2, 2016, – North Canton Committee of the Whole Meeting: 
 

The video covers a North Canton Committee of the Whole meeting lasting just under an hour in length. The meeting is called to order approximately one minute into the video.  
 

Following roll call, Council President Peters calls for a vote to excuse Councilmember Marcia Kiesling as she was absent. This is Council-member Kiesling’s third meeting absence. Mrs. Kiesling has also failed to attend meetings of Council on February 8, 2016, and on March 7, 2016. 

          The agenda for the Committee of the Whole meeting consisted of the following for legislative action: 
 

          •         Emergency legislation to increase the salary and vacation allowance for of exempt employees. These are employees who work at the pleasure of either the Mayor or City Council. 
 

          •         Emergency Resolution authorizing the Mayor to enter into a Memorandum of Understanding (MOU) between the North Canton Police Department and the Stark County’s Sheriff’s Office to support the Stark County OVI Task Force. 
 

          •         A presentation on the City’s response to mitigate impact of flooding from the Zimber Ditch. 
 

          •         Legislation authorizing expenditure of $3,000 in donated funds for the purchase of trees. 

          1:50 minutes into the video, Council President Peters, as Chairperson of the Personnel and Safety Committee, introduces proposed legislation to increase the salaries and vacation allowances for the City’s exempt employees. The specific positions initially targeted for the increase in compensation levels are depicted in the following table.

 

 

          The discussion on the proposed increase in compensation levels ultimately was expanded to include all exempt employees. The Clerk of Council position was clearly one of the additional exempt positions mentioned but there are several other exempt positions in the City. It is my understanding that the two clerks in the Mayor’s office and the Director of Economic Development are exempt employees. 

 

I might add that any increase in salary would not reflect the added sixteen percent in pension contributions paid on behalf of the employee by the City. For example, an exempt employee making $100,000 annual actually receives $116,000 per year. The extra sixteen thousand dollars is the City’s contribution to that employee’s pension. 
 

In the Mayor’s State of the City presentation just a week ago, if memory serves me correctly, income tax collections for this year are down from last year.
 

With City Council’s plans to expand the City’s Community Reinvestment Areas (CRAs) thus increasing the number of tax abatements going to Corporations and multi-millionaires, one has to wonder how the City is going to survive financially.  
 

The proposed increases in compensation levels to employees who work at the pleasure of either the Mayor or City Council was the significant topic of the meeting. 
 

I might add that there was no mention of the nearly forty-four percent raise in the cards for North Canton Law Director Tim Fox. And I might add that Mr. Fox did not utter a word the entire night. Perhaps he did not want to bring any attention to his proposed hefty raise. 
 

16:20 minutes into the video, Chairperson Peters discusses the proposed Emergency Resolution noted earlier. 
 

17:25 minutes into the video, Ward 4 Councilperson, as Chairperson of Street and Alley makes a presentation an update to Council on the Zimber Ditch and the City’s flood mitigation efforts. Mr. Fonte concludes his presentation at 43:25 minutes. 
 

43:25 minutes into the video, Chairperson Dan Griffith discusses his proposal to authorize expenditure of $3,000 of donated funds for the purchase of ornamental trees. 
 

44:50 minutes into the video, Council President Peters asks to amend the agenda to allow Councilmember Cerreta to propose that the Dogwood tree serve as North Canton's official City tree. Mr. Cerreta made this proposal in anticipation of the upcoming 3^rd Reading next week to remove the North Canton tagline as “The Dogwood City” given that there was some citizen opposition to removing the "Dogwood City” tagline. 
 

47:20 minutes into the video, Chairman Peters again amended the agenda to allow Councilmember Foltz to update Council on Park and Recreation issues. 
 

57:20 minutes into the video, the Council meeting was concluded. 

The video ends at the one hour mark (1:00 minutes). 

 

Thank you,

Chuck Osborne

 

 

Failed Tax Abatements Had No Impact on Business Development in North Canton

Prepared Comments Made to

NORTH CANTON CITY COUNCIL

April 18, 2016  

The number of tax abatements to businesses that have been approved by North Canton City Council over the years but that ultimately were found to be unworkable, resulting in NO abatement of taxes, yet led to relocation or expansion in North Canton, should be cause for concern.  

Members of City Council should be asking themselves, “Were these abatements really necessary?” 

The oft-repeated argument in support of the abatement of taxes each and every time a request is made is that the business would relocate or expand elsewhere if the abatement were not provided.  

A memorable quote made by Mona Lisa Vito in the movie, My Cousin Vinny, seems appropriate here when she says, “Well, that plans moot.” Arguing that a business will relocate or expand elsewhere if a tax abatement is not given is unfounded. In other words, “That argument is moot!” 

Specific abatements, authorized by City Council, that proved unworkable and yet the businesses relocated or expanded in North Canton are the following:  

In 2006, legislation was before City Council for an abatement of taxes for Dr. Suglio. Despite the fact that I made Council aware of issues regarding this abatement, Council nonetheless approved the abatement only to pass additional legislation a month later rescinding the abatement. Dr. Suglio continued his investment on Main Street without an abatement of property taxes and later opened up his Gourmet Coffee Shop.  

Link to the January 9, 2006 remarks to City Council regarding the Suglio abatement is below:  

http://opengovernment4nc.blogspot.com/2006/01/tax-abatements-used-as-handouts-in.html

 

In 2007, there were discussions to approve an abatement of taxes for the construction of a Sherwin-Williams Paint Store on Applegrove. When I asked why a $28 billion a year company needed a tax abatement, this abatement was quashed before legislation came up for a vote. As we all know, there is a Sherwin-Williams Paint Store on Applegrove today, and amazingly, it did not require the loss of scarce tax dollars needed by the North Canton City Schools, the North Canton City Library, the Stark County Park District, or the City of North Canton. 

Link to the May 14, 2007 remarks to City Council regarding the Sherwin-Williams tax abatement is below: 

 http://opengovernment4nc.blogspot.com/2007/05/council-contemplates-tax-abatement-to_15.html

 

In 2009, following approval of a liquor option by voters, the Fred W. Albrecht Grocery Company announced that they were embarking on an expansion of the store’s Liquor Department as well as a remodel of the entire Acme Fresh Market Store on North Main Street.  

Link to the April 13, 2009 remarks to City Council regarding the Acme abatement is below:  

http://opengovernment4nc.blogspot.com/2009_04_13_archive.html

 

Amazingly, AFTER the announced expansion, North Canton’s Director of Economic Development, Eric Bowles, contacted Acme Fresh Market and offered a tax abatement.  

WHY??? 

And more astonishingly, this Council body approved the abatement with passage of Ordinance No. 33-09.  

Again, I ask, WHY? 

The Acme Fresh Market Store had been an anchor store for twenty-years in North Canton and their announcement to expand and remodel indicated their intention to remain in the City.  

This was not a prudent decision on the part of Mr. Bowles at that time. The recommendation from Mr. Bowles that Council should now expand the City’s CRA Program is equally ill-advised.  

In my recent conversations with the Stark County Auditor’s office, I have learned that the Fred W. Albrecht Grocery Company never actually received any abatement of property taxes as the store improvements never raised the appraised valuation of the property, yet the business has remained in North Canton. 

In 2011, City Council gave an Industrial and Commercial Occupancy grant to Ben Suarez for what was called Project Omega under Ordinance 53-11. The Suarez Corporation never met any of the requirements to qualify for any rebate of taxes.  

Link to the May 23, 2011 remarks to City Council regarding the grant to The Suarez Corp. 

http://opengovernment4nc.blogspot.com/2011_05_23_archive.html

 

In 2012, City Council approved an Industrial and Commercial Retention Grant for Crowl, Montgomery & Clark with the passage of Ordinance No. 68-12. This is a digital marketing firm that had operated out of office space on North Main Street for two decades and decided to relocate its offices to an old Victorian house on South Main Street.  

I am not sure how a digital marketing company fits the requirements of an Industrial and Commercial Grant and that may be why the business never executed a grant agreement. Crowl, Montgomery & Clark ultimately never received any tax dollars, yet they remained in North Canton. 

There is no one who could say that North Canton City Council doesn’t try hard to give away tax dollars needed by the North Canton City Schools, the Library, the Stark County Park District, or just the City of North Canton. The past history of the failed abatements seems to underscore that the abatements were not critical to the businesses as they are a part of our community despite NOT receiving the abatement. 

A summary of the Ohio Community Reinvestment Area Program states, “Ohio’s CRA Program was created to promote the revitalization of areas where investment has been discouraged….” 

Creation of CRAs in the City is not needed and declaring that any area of North Canton discourages investment is wholly untrue. Banks are still lending to creditworthy applicants who want to build or refurbish structures throughout the City of North Canton. 

In the future, voters will find it difficult to approve levies, school or not, knowing that City Council is handing out tax dollars to millionaires, corporations, and businesses that need no encouragement to stay and grow in North Canton. 

Thank you,

Chuck Osborne

Resident

City of North Canton

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

Prepared Comments Made to

NORTH CANTON CITY COUNCIL

April 11, 2016 

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

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

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

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

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

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

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

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

NO, it was NOT blighted.  

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

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

Six of the properties receiving tax abatements are corporations.  

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Thank you,

Chuck Osborne

Resident

City of North Canton