December 17, 2014

Elyria
Cloudy
29°F
test

Lorain school board protests city tax deal

LORAIN — The improvement of relations between City Council and the Board of Education was one of the goals of Mayor Chase Ritenauer when he took office in 2012, but a tax dispute has soured relations.

Council on Monday passed two 10-year tax increment financing infrastructure projects that will reduce future taxes to Lorain Schools. The $617,000 project at 3671 Oberlin Ave., where a Taco Bell is to be located. The $450,000 project at 5320 Oberlin Ave., is where a GenFed Federal Credit Union is located.

Tax increment financing involves using a portion of future taxes on properties in areas designated as blighted for infrastructure improvements. It is designed to increase economic development and property taxes. But the financing means less money for schools and other entities, such as libraries.

The school district, which would’ve received about 75 percent of future taxes paid by the businesses, receives about 25 percent while Lorain receives 75 percent. Board member Jim Smith said in a Tuesday email that the projects will cost Lorain Schools, which has about a $90 million annual budget, $112,150 over 10 years. Lorain, which has a $31.6 million annual budget, gains $158,390. Smith acknowledged that Ohio law gives Council the right to do the financing.

“Is there a difference between what one has the right to do and the right thing to do?” Smith wrote. “I believe there is.”

After the vote, Councilman Joshua Thornsberry, I-8th Ward, urged Ritenauer to “reach out” to the board.

“Sometimes you reach out a hand and it gets cut off, but you’ve got another one to reach out,” said Thornsberry, a Lakewood Schools teacher. “We certainly don’t want an adversarial relationship with the school board, them feeling as though we’re taking money away from the children.”

But that’s how board members said they feel. In a Tuesday letter to Council, board members denounced Payment in Lieu of Taxes programs. They said the programs thwart the will of voters who approve levies. The letter said the board has a “legal and moral obligation to secure, protect and defend the dollars that the citizens of Lorain have designated to fund the education of children through the voting process.”

Other entities such as Lorain County Community College and the Lorain Public Library System will lose a combined $46,240. Tracy Green, a college spokeswoman, said LCCC doesn’t have a position on the financing, but said the college recognizes there is a difficult balance between funding education and economic development.

Joanne Eldridge, library director, said she has mixed feelings about the financing.

“I’m hoping one day to see and benefit from it, but, short-term, it’s going to hurt us,” she said.

Ritenauer wrote in a Tuesday email that the financing has been used for successful projects such as the Deerfield housing development on Oak Point Road, the HarborWalk development at Black River landing and the widening of Jaeger Road. Ritenauer said with the Legislature cutting local government funding to pay for tax cuts, tax increment financing is a harder sell. Nonetheless, he said schools are not losing money.

“They are gaining,” he wrote. “Just not at the full percentage of the increased value.”

However, Greg LeRoy, executive director of Good Jobs First, a liberal, non-profit corporate watchdog, said financing for a Taco Bell or financing approved in December for a Family Dollar doesn’t make sense. Leroy said restaurants and retail stores don’t pay well and, unlike financing for an auto assembly plant or a high tech robotics factory, retail doesn’t have a ripple effect in creating more area jobs.

LeRoy — author of “The Great American Jobs Scam,” a 2005 book about the negative effects of corporate tax breaks —said the tension between Council and the board over the financing is typical.

He said similar disputes are occurring in Illinois, Iowa, Minnesota and Missouri.

“It’s a huge, huge unresolved issue,” Leroy said. “It’s so corrosive to school revenue.”

Contact Evan Goodenow at 329-7129 or egoodenow@chroniclet.com.