Dayton’s school board approved a significant property tax abatement framework with the city on Monday, with the board waiving certain voting rights and rights to legal notice.
The language of the agreement says Dayton Public Schools will exempt 100 percent of taxes via any tax increment financing agreements (TIFs) or Community Reinvestment Area agreements (CRAs) reached on commercial property during the next 10 years.
But the agreement calls for “compensation payments” where property owners who receive a tax abatement via a CRA must pay the school district 25 percent of the property taxes they would have otherwise owed. Superintendent Elizabeth Lolli said the only way TIF agreements would qualify under this new deal is if they are within defined Community Reinvestment Areas of the city. That language is not totally clear in the agreement.
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No city officials were present at the school board meeting Monday. Ariel Walker, director of Dayton’s city commission office, said the city will vote on the deal at its 6 p.m. Wednesday meeting. As of Tuesday afternoon, the agreement was not on the city’s meeting agenda.
The school board’s vote was 6-1, with Sheila Taylor voting no.
“(The city) wants to allow CRA areas designated for commercial redevelopment to have a faster review of those tax incentives, those TIF agreements, that boards of education must approve,” Lolli said. “We get about 25 percent of the expected tax revenue back through this agreement from the company … as opposed to zero percent, which some TIFs and abatements provide to school districts.”
According to Ohio Development Services Agency documents, a school board has the right to reject any CRA abatement deal where the tax exemption exceeds 50 percent. And schools have the right to reject any TIF agreement where the tax exemption exceeds 75 percent, although schools sometimes approve deals at higher abatements.
In 2011, Dayton’s school board narrowly approved a TIF for the GE EPISCenter building near the Dayton Marriott, sacrificing roughly $9 million in estimated property tax revenue over 30 years to help the city ensure the facility would be built here.
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The new agreement says the city and DPS “desire to encourage the creation of new businesses and employment opportunities in the city,” and they seek to “provide more certainty and increase competitiveness regarding economic development.”
There was some confusion from school board members about what the agreement guaranteed for DPS. Board Vice President John McManus repeatedly asked whether the school board would retain the right to vote for or against the tax abatements in question.
DPS attorney Jyllian Bradshaw at first said the board would only be waiving legal notice requirements under this deal. Of course, if the city is no longer required to notify the board of these deals, it is unclear how the board would know about a deal to vote on it.
When McManus asked again — “Is the full board going to be voting in the future? Yes or no?” – Bradshaw replied, “I don’t believe so, unless (the abatements) exceed the statutory percentage that’s allowable.”
There are at least 22 Community Reinvestment Areas in Dayton according to ODSA, including large swaths of west Dayton, northeast Dayton and downtown.
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Lolli also said DPS and city officials have agreed that a subcommittee of three school board members, treasurer Hiwot Abraha and Lolli herself will be included in discussions of new tax abatement agreements under this deal. That language does not appear in the agreement.
The deal says the city will perform the due diligence work to ensure that “proposed projects are viable and incentives are essential.” The deal says the city will brief Lolli or her designee about that due diligence “as appropriate and allowable to maintain business confidentiality.”
The deal does say that companies are only eligible for the tax abatements if they provide tangible in-kind services or other benefits to DPS, although there is no dollar minimum. Lolli said deals could include a company agreeing to foot the bill for the district’s annual science fair, or providing discounts for DPS employees.
Taylor said it was irresponsible for the board to agree to the deal for 10 years, locking future school boards into the same terms. She also opposed giving up the school board’s ability to negotiate directly with companies seeking abatements.
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School board member Karen Wick-Gagnet responded to Taylor by urging the rest of the board to trust city officials’ efforts to redevelop the community.
“Our city leadership … ultimately wants what’s best for Dayton Public Schools,” Wick-Gagnet said. “I have to think they have our best interests in mind.” Asked later if that was a safe approach given her fiduciary duty to protect the school district’s interests, Wick-Gagnet said yes.
Taylor and McManus were upset the issue was brought up at a special meeting called just days earlier, with little time for discussion or review of the plan.
“I certainly appreciate the need for efficiency,” said McManus, who eventually voted in favor of the deal. “But I’m going to say this one time. If there is a document of this importance in front of this board, I will receive a phone call. This is an enormous responsibility placed on the members of this board. Any time we’re asked to weigh taxes, that is a decision that weighs upon the seven of us tremendously. I do not want to be surprised like this again.”
PATH FORWARD: The broad effort to improve Dayton schools