The tax abatements — deals that decrease or eliminate property taxes as an incentive to bring businesses or residential properties to the city — are a tool for new commercial investment, but they bring in less than the full value a school district could receive. Dayton’s school board has already agreed to the deal, which would last for 10 years.
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Dayton City Manager Shelley Dickstein said the change is needed because Dayton is competing with other communities for investment, and the approval process for tax-increment financing (TIF) is too slow, which hurts the chances that a project will succeed.
“If you talk to developers, many of them will say, ‘Time kills all deals,’ because they are competing in a very sensitive market with financing,” Dickstein said.
Asked about the wisdom of giving up the school board’s vote on many abatement deals for 10 years, Superintendent Elizabeth Lolli said the city and school district will be partners.
“If the city can’t attract businesses and developers to come in and support the tax base, the school district doesn’t gain by that,” she said.
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Dayton City Commission will vote today on the deal, which involves 30-year tax-increment financing (TIF) and Community Reinvestment Areas (CRA) deals. The school district receives roughly two-thirds of all property taxes collected by the city, so an abatement is especially important to DPS.
Under the agreement, property taxes on new commercial projects in CRAs can be 100 percent abated for up to 15 years, but the school district during that time would receive an annual service payment worth 25 percent of the abated taxes.
In the second 15 years under TIF agreements, DPS would receive all of the property taxes it normally receives, but the rest of the taxes — which go to human services, libraries, Sinclair, the city and others — would continue to be abated and used instead for infrastructure work and other improvements benefiting the project.
The changes make the abatement process more predictable and responsive to developers, while ensuring the schools receive tax dollars they need, Dickstein said.
“We made a commitment several years ago that the schools would never go generations without kids benefiting from investment,” she said.
Projects seeking TIFs will not be approved automatically because city staff will still closely scrutinize them to ensure developers actually require financial assistance and their plans are feasible, Dickstein said. Developers or businesses that want an abatement will have to provide in-kind services or benefits to the school district.
Existing TIFs that affect Dayton Public Schools — for CareSource properties, the GE EPIScenter, part of TechTown and the Forest Park Plaza site in Harrison Twp. — resulted in $1.82 million in annual abated taxes, according to recent data from the Montgomery County Auditor’s office. About $1.22 million of that amount would have gone to the schools if the TIFs didn’t exist.
City officials did not immediately say whether all of those TIFs result in 25 percent compensation payments to DPS, as this new agreement would specify.
But Dickstein said in cases like the GE building, in which Dayton was competing with Vandalia for the project, the building (and therefore the potential tax revenue) wouldn’t exist if the city and schools hadn’t agreed to the tax abatement.
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Back in 2011, GE officials would not comment publicly about whether they would have done their project in Dayton without the 100 percent TIF they received.
Ohio law gives school boards the right to reject TIF agreements in which the tax exemption exceeds 75 percent. In 2011, Dayton’s school board approved the GE deal by a 4-3 vote after discussions about giving up roughly $9 million in property tax revenue over 30 years.
The half-dozen Enterprise Zone agreements within DPS boundaries accounted for another $352,000 in abated taxes that did not have to be paid, $241,000 of which would otherwise have gone to DPS, according to the auditor’s office. The largest deal is for the Courtyard by Marriott hotel near UD Arena.
Separate from TIFs, more than 300 residential properties recently received CRA-district tax abatements inside DPS boundaries, and the school board has no say in the matter. Those incentives totaled $1.06 million in abated taxes, $660,000 of which would otherwise go to DPS, according to the county auditor. Examples include abatements on the 47 First Place apartments downtown and 79 Twin Towers Crossing homes.
There are commercial CRA abatements as well. The three Water Street deals downtown account for another $743,000 in annual forgone taxes, according to the county auditor, with $509,000 of that otherwise going to DPS.
“The Water Street hotel is another example,” Dickstein said. “Hotels, as you can see, are not thriving in Dayton, so they had to be as competitive as possible (with incentives) to attract the hotel operator and investor.”
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