December 20, 2014

Elyria
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Lorain Council gives development keys to Port Authority

LORAIN — City and Lorain Port Authority leaders want the authority to handle deals financing infrastructure improvements designed to spur economic development.

Under a proposal discussed Monday by City Council’s Federal Programs Committee, the Port Authority would negotiate Lorain’s tax increment financing deals in return for a percentage of the taxes.

Tax increment financing involves future tax revenue being spent on infrastructure such as road improvements or installing water lines in designated areas.

Council reaffirmed the Port Authority’s role after a deal was criticized by the Board of Education in an April 7 letter to Council because it means less future tax revenue provided to schools during the life of the deals.

The nonprofit authority, formed by Council in 1964, promotes tourism on Lake Erie and helps fund economic development. Since 2009, the authority has issued about $19 million in bonds, according to Rich Novak, authority executive director.

Accomplishments include obtaining $3.83 million in federal stimulus money in 2010 to renovate the Mile Long Pier as well as a separate $1.4 million grant for passenger ferry service to the Lake Erie islands.

The authority in 2011 conveyed land for the city for construction of FirstEnergy Corp.’s Black River substation and last year conveyed land helping the Lorain Historical Society obtain money to renovate the Streator Building, a former Carnegie library.

Mayor Chase Ritenauer said Lorain could benefit from the authority’s expertise. He said the administration has found “a number of inconsistencies” in some previously negotiated financing deals.

Ritenauer wrote in an email after the meeting that most occurred in 2006 and 2007 during the administration of Mayor Craig Foltin and involved filings to the Ohio Department of Taxation. He said one of the errors could mean Lorain didn’t receive required revenue on one project, but city officials are still determining how much.

Ritenauer told committee members having the authority do financing would also free up Doug Rangel, executive director of the Lorain Development Corp. and Lorain’s private business consultant, to do other work.

“It’s more efficient,” Ritenauer said of the proposal.

Under the proposal, the authority would receive annual revenue of:

  • $3,000 on projects of up to $50,000;
  • 9 percent on projects between $50,000 and $250,000;
  • 7 percent on projects between $250,000 and $750,000;
  • 5 percent on projects exceeding $750,000.

Councilman Rick Lucente, D-6th Ward, said he’d like to see the fees lowered. Ritenauer said his administration would be willing to try to negotiate lower fees and bring back another proposal to the committee. The full Council would then have to approve the agreement.

Committee members were generally supportive of the proposal, including Councilman Dennis Flores, D-2nd Ward. However, Flores said the authority needs to be more transparent with Council.

The authority was criticized by developer Gary Davis, owner of the Gardens of Charleston, a 28-unit upscale apartment building at 610-630 Broadway and the Charleston Coffee House at 630 Broadway.

Davis said the authority needs to better integrate downtown development into waterfront promotion.

“We’ve got a downtown here that’s disastrous,” he said. “Every time the Port has a major event, we’re kind of left out.”

Novak said the authority, whose nine-member board is appointed by Ritenauer and Council, is transparent. He said it’s working with city officials to better connect downtown businesses to waterfront events. Novak said the proposal is an example of better collaboration.

“We need to turn this town around,” Novak said. “The only way we’re going to do that is to cooperate together.”

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