The agreement provides a 75% tax exemption on improvements planned for the two vacant north Arcade buildings for 15 years.
The Arcade consists of nine buildings, and the first, $90 million phase of the rehab project focused on seven buildings south of an alley that runs through the interconnected complex.
The second phase of the project targets the two buildings north of the alley: The Third Street Arcade building and the Gibbons Annex. Developers plan to invest about $41 million to convert the buildings into a 94-room Hilton Garden Inn hotel and a retail center.
Credit: Tom Gilliam
Credit: Tom Gilliam
A 100% tax abatement request the Arcade developers sought for the second phase of the project was voted down by the Dayton Board of Education last month.
But under recent changes to state law, Community Reinvestment Area tax exemption agreements do not require school board approval if they abate 75% or less of the value of project improvements.
School district issues
City Commissioners Darryl Fairchild and Shenise Turner-Sloss a week ago said they had reservations about approving a tax abatement agreement that seemed to circumvent the wishes of the school district.
Turner-Sloss said Wednesday that she decided to support the agreement because the Arcade project will generate income tax revenue that can help the city make investments that improve residents’ quality of life. Nearly three-fourths of Dayton’s general fund revenue comes from income taxes.
“This decision did not come easy,” Turner-Sloss said.
Turner-Sloss also said the Arcade will provide employment and internship opportunities, and the school district will benefit from the project.
Developers say the hotel will employ about 25 people and they plan to prioritize hiring Dayton residents. They also said the hotel will have a hospitality apprenticeship program, in partnership with Sinclair Community College, and they committed to hiring Dayton Public Schools students.
Public feedback
Before the vote, about nine members of the public spoke during the city commission meeting in favor of the agreement, while one person voiced opposition to the ordinance
Chris Kershner, president of the Dayton Area Chamber of Commerce, said the Arcade project will have a huge direct and indirect impact on other downtown projects, as well as on the business and arts communities.
He said the reactivation of the Arcade will help the redevelopment of Courthouse Square, which is across the street, and the overhaul of the nearby Dayton Convention Center.
Joseph Abrams, a Dayton resident, told the city commission he does not understand why the Arcade developers are so intent on avoiding paying property taxes that mainly benefit the school district.
Commission Fairchild said the city has made a “good faith start” to improve its relationship with the school district and its leaders.
He said about 12,000 Dayton residents are students with Dayton Public Schools, adding, “I personally feel like they are my children.”
Dayton Public Schools students deserve the same passion and commitment that community leaders are displaying for the Dayton Arcade, Fairchild said.
“We’ve got to be creative and tenacious because right now we’re not doing our best for our students,” he said.
Turner-Sloss said the community leaders who advocated for the Arcade project hopefully will bring the same energy, passion and enthusiasm to future efforts to improve the city’s struggling neighborhoods.
‘100% of nothing’
The city commission has five members, but Commissioner Chris Shaw abstained from voting on the tax abatement agreement and loan proposal because his company does business with the hotel operator that will be in charge of the new Arcade hotel property.
That meant if Turner-Sloss and Fairchild voted against the proposals, they would have failed.
Dayton Mayor Jeffrey Mims Jr. said the north Arcade is a “monumental” project that continues to build on the $1.5 billion that has been invested in downtown Dayton since 2010.
Credit: Tom Gilliam
Credit: Tom Gilliam
Mims also argued the tax abatement agreement is not really a loss to the school district.
“For 30 years, they were receiving 100% of nothing,” he said. “Now they are getting 25% of something, plus in-kind services.”
Commissioner Matt Joseph suggested the city is making a pretty modest contribution to the second phase of the Arcade project, compared to the amount of private investment that it will leverage.
“There’s a lot of private money coming in, and the tax dollars that come in off of that help us to provide quality services to our residents,” Joseph said. “It’s a historic day here in Dayton.”
Four years ago, the city approved Community Reinvestment Area agreements for the south Arcade buildings worth 100% of the increased assessed value of the properties.
Based on appraisal values, the south Arcade buildings would have owed the Dayton school district about $210,000 in property taxes if there were no tax abatement agreements, said Dayton City Manager Shelley Dickstein.
But under the agreements, the Arcade developers paid the school district a flat payment of about $190,000 and $10,000 in arts festival funding, according to data from the city manager.
“The schools are being kept whole,” she said.
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