Dayton school board rejects tax abatement plan for second phase of Arcade

Agreement would have provided district with payment per year in lieu of property taxes.

Dayton Public Schools’ Board of Education voted down a proposed compensation agreement between the district and the Dayton Arcade developers by a 4-3 margin, which could derail the project’s second phase.

The agreement would have given the Arcade, which is in a Community Reinvestment Area, a 100% property tax exemption for 15 years. That would directly impact the school district because it uses property tax funding to pay for items like teacher salaries, utilities and other expenses.

The Arcade developers, in return for the real estate income tax exemption, would have given the district $50,000 per year as a payment in lieu of taxes, and the Arcade would have tried to hire five DPS students at entry-level positions.

DPS and the Arcade already are parties to a previous CRA agreement (2018) from the first phase of the Arcade project, which calls for 100% abatement of property taxes on that phase for 15 years, in exchange for a $190,000 annual payment in lieu of taxes.

After hearing complaints from school board members who felt DPS wasn’t getting enough out of the new proposal, Arcade developer Dave Williams said at a March 14 school board meeting that he wanted to sit down and talk about what the district and developers could work on together.

Williams said during that meeting that he wanted to have the agreement in place to close on the North Arcade by April 10 and apply for historic tax credits by April 17, which would allow the sources of funding to go forward on the project. The focus of the $40 million North Arcade work is a new hotel.

When school board member Dion Sampson asked Williams what would happen if DPS did not approve the agreement, Williams said, “I think the ultimate affect, it might basically stop the closing, which would then lose our sources.”

Williams did not respond to requests for further comment on Thursday.

CRA agreements that call for more than 50% abatement of property taxes require school district approval, because schools are the largest recipients of property taxes in Ohio.

Dayton City Commission also had been scheduled to vote on this CRA compensation agreement Wednesday, but it was pulled from the meeting agenda after DPS rejected the deal.

Those voting against the CRA were school board members Jocelyn Spencer Rhynard, Dion Sampson, Chrisondra Goodwine and Joe Lacey. Those who voted for it were Karen Wick-Gagnet, Will Smith and Gabriela Pickett.

“These in-kind agreements and CRA agreements just really are not enforceable. I don’t know if we get anything from them, or from any of our CRA agreements,” Lacey said.

Lacey pointed out that by not taxing these properties, the district does take a hit, because the state’s formula for funding schools accounts for all taxable property, not just what districts are actually getting.

This is an ongoing issue for school districts in general. Cities often use property tax abatements to get companies or developers to their area, but those abatements mean that the school districts, who are heavily reliant on property taxes, often get less money.

Lacey, who lives downtown, said that Beavercreek City Schools turned down a CRA with The Greene because the development would have happened with or without the agreement.

“I don’t think that the Arcade is going to be abandoned,” Lacey said. “But I think we needed to do it under a different agreement.”

Wick-Gagnet, who owns Coco’s Bistro and has been involved in redevelopment in South Park, pointed out that there is a lot of competition to attract development.

“You all know that in the last six years you’ve seen tremendous growth,” Wick-Gagnet said. “I mean, the city feels the way it’s not felt in a long time. In order to do that, it’s a very competitive market though.”

Goodwine, an attorney, said the school district was not involved in crafting the CRA compensation agreement that the board voted on this week.

Since the pandemic began, Montgomery County has also reassessed property values upward. Wick-Gagnet noted the district’s revenues from property taxes are up, but said the district needs to do additional work to make sure any tax abatement agreements are held to and the district is benefiting from them.

About the Author