LORAIN — City Council voted Monday night against an agreement between Mayor Tony Krasienko and County Auditor Mark Stewart over a tax-exemption program created under former Mayor Craig Foltin.

At issue is the Community Reinvestment Area program, which gave properties in five areas of the city a 15-year, 100-percent property tax abatement in 2006 and made the legislation retroactive to 2000.

The agreement stipulated the $4,000 CRA application fees would be removed and that those who had paid the fees be reimbursed in full. It also agreed homes built in CRAs after April 2006 would get the full abatement while anything built before that would not.

Municipalities establish CRAs to encourage development in certain areas.

The county auditor said Monday night that City Council’s vote would cost the city.

“This is just going to be a much more expensive avenue for the city of Lorain,” Stewart said. “We all believe we’ve acted in good faith, and Council has let us down. It’s back to the courtroom and lawyers making more money over an agreed-upon settlement, and City Council has to bear the burden of that expense.”

Council’s failure to approve the agreement sends the issue back to the courtroom.

Council tied, with a 4-4 vote on the ordinance. While Council President Joel Arredondo voted in favor of the agreement, the 5-4 vote lacked the six “yes” votes needed to pass the legislation. Council members Dan Given, D-at large, Craig Snodgrass, D-8th Ward and Bret Schuster, D-4th Ward, abstained from voting because of conflicts of interest — leaving only eight voting Council members.

Schuster and Snodgrass work in the county auditor’s office, and Given lives in one of the CRAs and works for the developer Oster Homes, which owns land in CRAs.

Council members Anne Molnar, D-at large, Mitch Fallis, D-at large, Melanie Szabo, I-1st Ward, and Dennis Flores, D-2nd Ward, all voted against the legislation.

Fallis said he believes the existing CRA legislation is legal and hasn’t been given proof that it’s not. He also said he’d like to allow the appeals to determine if the CRA legislation is lawful or not.

Molnar voiced similar frustration that the issue hadn’t gone to the appeals court, citing she believed the city’s $500,000 in legal fees accrued during the past two years could have been lessened had the case gone to the apeals court instead of mediation. Krasienko corrected Molnar by pointing out the city has run up nearly $865,000 in legal fees.

“It’s an expensive disappointment,” Krasienko said after the meeting. “We will incur more legal fees.”

Council members Tim Howard, D-3rd Ward, Eddie Edwards, 5th Ward, Greg Holcomb, D-6th Ward, and Mickey Silecky, D-7th Ward, voted to approve the agreement.

“I maintain those who voted against this don’t understand it and never have and want to get out of dealing with it by passing the buck to the 9th District Court,” Holcomb said. “The only issue the appellate court can rule on is whether (Common Pleas Court) Judge (Mark) Betleski can hear it.”

That’s something Stewart confirmed Monday night, saying it’s “an impossibility” for the appellate court to decide whether the CRA legislation now on the books is legal.

“The case is assigned to Judge Betleski,” Stewart said. “You have to go to the local judge before you can to the appellate court.”

Holcomb said CRA legislation is good for a city, but regrets Monday’s vote essentially puts everyone back at square one.
“From the beginning, we’ve been arguing the illegalities of this issue, and I think the agreement brought us to a point to stop the bleeding and would have gotten us to the point of starting a legal program that would actually benefit the residents,” Holcomb said.

Krasienko said he’ll meet with Law Director Pat Riley today to “discuss the next step.”

In other business, council sent revised CRA legislation to the Federal Programs Committee.

Contact Alicia Castelli at 329-7144 or acastelli@chroniclet.com.

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