What are TIFs?
Tax Increment Financing districts are established in commercial areas throughout the township. Property owners within these districts volunteer to make “payment in lieu of taxes,” the same amount they would have paid in property taxes on appreciated values, to a TIF Fund. Money can be spent on infrastructure improvements, amenities and critical services directly impacting the district from which the funds were collected.
Where are TIFs?
Union Centre Boulevard: 30-year TIF established in 1990
Ohio 747: 30-year TIF established in 1998
Central Business District: 30-year TIF established in 2004
Tylersville Road: 30-year TIF established in 1999
Cincinnati Dayton Road: 30-year TIF established in 2004
By the numbers: West Chester Twp. TIFs
$5.4 million collected in 2004
$13.5 million collected in 2009
$22.2 million collected in 2010 (township officials say number is higher than usual and will be closer to $13 million in 2011)
$543,767 reimbursed to Lakota in 2004
$2.4 million reimbursed in 2009
$3.1 million reimbursed in 2010 * with higher than usual revenue
$69 million outstanding debt from all bonds
$80 million earned on TIF districts since 2004
$12 million given to Lakota since 2004
By Lindsey Hilty
Staff Writer
WEST CHESTER TWP. — To some people, it is like the chicken and egg question: Which came first, West Chester Twp. or the Union Centre Boulevard interchange?
Without Union Centre, the township might be a bunch of bean fields, housing developments and warehouses. Instead, the $24 million interchange, developed through a Tax Increment Financing District, has become what Trustee President Catherine Stoker has called the goose that lays golden eggs for West Chester Twp.
It is instrumental in creating billions of dollars in development, bringing in millions of dollars in revenue, and helping make it the largest township in the state.
But, resident Barry Galinger has repeatedly argued at public meetings that the prosperity, and what happened to the money earned from the rapid development, has contributed to the financial crisis facing the Lakota Local Schools. He wonders what would have happened to West Chester Twp. if special tax agreements had not been made to finance the development. Would the area have grown quite so rapidly?
“They built (Union Centre Boulevard) and people came,” he said. “The schools were overwhelmed.”
Lakota Local School District faces a $28 million negative cash balance in 2013.
Galinger has asked area leaders to amend TIF agreements, arguing that much of the profit earned from development should have been divvied out to Lakota and other service agencies that receive levied funds.
“I believe that it’s unethical,” he said. “I want to make sure the kids are getting everything they’re supposed to get.”
That goes for senior services and the Butler County Board of Developmental Disabilities too, he said.
The money, Stoker said, is committed for payments on construction loans to grow the commercial district, and the township legally cannot default on $69 million in bonds. Rewriting parts of the agreements, she said, would “kill the goose laying the golden eggs.”
“We see the best way for us as a township to benefit the schools is to grow our commercial property, because that creates dividends for the schools now, and even more in the future,” she said. “Everybody’s suffering. These are bad economic times. West Chester does not have the resources to bail out everybody else.
“We’re doing our very best to provide exceptional services as efficiently as we can,” Stoker said.
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Eyes begin to glaze over when the words Tax Increment Financing district surface, but several area residents say it is an issue worth watching.
For better or worse, these agreements made by community leaders from 1990 through 2004 have paid for $28.5 million in roadway improvements, realized $2.2 billion in new investment, developed 24 million square feet of new commercial construction and created 26,000 new jobs, according to Administrator Judi Boyko.
Resident Barry Galinger said the money from these agreements has been funneled into economic development projects, resulting in a loss in funds to service entities like Lakota, which needs money now. To make up for that loss, he said, the township should reimburse 100 percent of what police, fire, schools and other levied services would have received had the agreements not been made.
“I have nothing against the infrastructure and building,” he said. “What I am against is the source of funds ...If they’re going to involve taxpayers’ monies, the taxpayers should be allowed to approve it or disapprove it with a vote.”
What is a TIF?
In 1990, the township established the first of five areas it has set aside for commercial development. Those TIF districts legally are permitted to generate economic and commercial development and help keep tax dollars local for projects and improvements.
The idea is that school districts and other levied services continue to receive tax dollars based on the valuation of the land at the time of the agreement. As the land is developed and increases in value, the additional taxes collected go into a fund used for infrastructure and development.
The Union Centre Boulevard TIF was formed before 1994 when the law changed to allow schools to negotiate a share in the funding. Since then, officials said, Lakota receives 100 percent of its share from the 200-acre Central Business District TIF, which was created in part to compensate Lakota for what it wasn’t getting from the Union Centre TIF. Lakota also receives 27.72 percent of tax receipts from the Ohio 747 TIF and 100 percent of its share from the Cincinnati Dayton and Tylersville Road TIFs.
Why are there so many TIFs?
Trustee President Catherine Stoker said a majority of the TIF districts were formed during the time when former County Commissioner Mike Fox was trying to claim land in West Chester and Liberty townships for county projects, specifically to pay for Ohio 129.
“There was a virtual war going on between West Chester Twp. and Mike Fox,” she said. “... We were snatching (potential commercial land) out of Mike Fox’s hand so that we could control our own future.”
When West Chester created the commercial tax districts, it also sectioned off five Residential Incentive Districts to protect the developments from the county. None of those were activated.
Galinger said he understands why officials felt tax districts were needed at the time.
“My only thing was that they chose levied funds to do it from,” he said. “There’s got to be another tax base. My problem is that it’s going to go on for another 10 years at least before the schools are going to benefit. I’m just trying to get the TIFs amended to state that the schools get 100 percent of whatever they are supposed to get.”
TIF helps fund support services
Much of the funds used from TIF districts have gone to helping the schools, police and fire services and senior residents, officials said.
West Chester offers a facility and a funding stipend to the local senior citizens program, provides for senior transportation services, and by virtue of its size, populous and property valuations, contributes to all taxing entities, according to the township.
Stoker added that without TIF funds, the police and fire departments would have run out of levy funds sooner.
Because of TIF money, she said, the community has not had to fund the Square at Union Centre, the new West Chester Library, Muhlhauser Barn, the Port Union Bike path, the development of Beckett Park and the West Chester Baseball Complex.
No such thing as free money
Resident Bill Zerkle, who supports TIFs and tax incentives when they benefit the community as a whole, said some could argue the improvements made to the Union Centre Boulevard area do not benefit the public enough to merit the investment.
“It’s important that people understand that TIF money is not magic money, it’s not mystery money, it doesn’t fall from trees. It’s not a gift,” he said. “I think people should also recognize that it does provide a way to sidestep a vote on major capital improvements.”
The topic, is important to him, because he says it illustrates why the township needs to incorporate into a city.
As businesses redirect their share of property taxes for police, fire and other local services toward the repayment of development bonds, Zerkle said the cost of providing basic services in the TIF district must then be paid by someone else.
“If the end result is higher residential property taxes, then these tax incentives arguably have not served the overall community,” he said.
Once the interchange went in, much of the development would have happened anyway, he added. But, now that it is there, it means additional costs associated with maintenance and operation.
“Their money is going into the pot to pay off the loans that built the infrastructure, so who’s paying for the additional services that have been demanded over the past 15-20 years? It’s the local resident,” he said.
His solution, he said, is to make the township a city. Right now, he said, there is no earnings tax on the 80 percent of people he says work in the township, but don’t live there.
“We have become a host community,” he said.
By supporting the business development and the services it requires, he said people cannot afford more taxes to support the schools.
“We have gone overboard to incentivize business ...When we say ‘West Chester, where families grow and businesses prosper,’ we didn’t say ‘where families grow poor and businesses prosper.’ ”
Incorporation debate
Resident Chris Xeil Lyons, economic development professional with the LNE Group, said the TIF money has helped pay for public improvements without further taxing citizens or businesses.
“Money from the improvements are redirected to pay for infrastructure costs,” she said. “TIFs, when done correctly and fairly, are a great economic development tool for the area.”
Incorporating, she said, would make West Chester Twp. less attractive to businesses.
“I know that the companies that are in West Chester came to West Chester because they didn’t have to pay an income tax,” she said.
Surrounding communities also have TIF districts, she said, and West Chester needs to compete by bringing every advantage to the table.
“You look around, West Chester and Liberty townships are way out ahead of so many of the other communities surrounding us,” she said.
The goal is not to harm the schools, “But at the same time, the best supporters for the schools right now is the commercial tax base.”
Not only do they provide funding for the schools, but they take up space that otherwise might have been turned into a housing development, furthering the burden for Lakota, she said.
‘Fighting to stay alive’
Stoker said the schools have been “mortally wounded” by the state, which takes its funding to give to districts it deems less wealthy. But, the township cannot help.
“We’re like two starving dogs fighting over a dead carcass,” she said. “We’re fighting to stay alive ... One of the reasons we’re doing this is to provide current and future reimbursements for the school and other agencies.”
Both parties were in agreement on the TIFs, she said.
“Because of the TIFs Lakota is getting more from this land than they otherwise would have gotten now, and they will get a lot later when the TIFs mature and expire,” she said.
State funding changes things
School Board President Joan Powell said Lakota’s board values economic development.
Still, Galinger, she said, has a point. The district negotiated its share during a time when the state school funding formula ensured Lakota received all the money it was due.
“The local taxpayer wasn’t having to pay a dime extra for that TIF existing,” she said.
But, in 2006, that school funding formula changed.
Instead of getting the TIF money and then the difference from the state equal to what was collected from that property, now she said the calculation from the TIFs and what is received from the state don’t always yield the same amount as property is worth. The change to state funding, though, is not West Chester’s fault, she said.
“I can only look at this and feel like West Chester has been a great partner to us, and has always operated to compensate Lakota within the laws that existed at the time,” she said.
Where does Liberty Twp. fit in?
Economic Development Director Caroline McKinney said these tools have helped shape commercial development in the township, and they will help ensure its success in the future, especially during a time when state and federal funding is being reduced.
“Liberty Way wouldn’t be what it is without these tools,” she said.
Administrator Dina Minecci added, “This is a way for townships, cities and local governments to utilize tools that were given them through the Ohio Revised Code to help improve the quality of life for residents.”
A Tax Increment Financing district at Princeton Road and Ohio 747 formed in 2002 paid for the intersection expansion. Lakota receives 35 percent of its share until it expires after 20 years.
A county TIF surrounding Liberty Way incorporates land in Liberty and West Chester townships to fund the interchange project and infrastructure development around it, she said.
The township formed 11 Residential Incentive Districts in 2004 to channel funds into infrastructure development projects to ensure the funds remained in Liberty Twp. during a time when the county was looking at creating RIDs in the area, she said.
Four of those 30-year RIDs pay for the Liberty interchange, and Lakota gets 40 percent of its share until the project reserves reach a specific amount. Then, it is paid the 60 percent retroactively and receives 100 percent of its share moving forward. Minneci said she expects that to happen much sooner than originally forecasted.
Lakota gets 100 percent of its share on the rest of the seven RIDs. Of those, three are paying for the intersection expansion of Kyles Station and Ohio 747 as well as Firehouse 111.
Four RIDs have no debt, but are planned for projects like intersection improvements at Cincinnati-Dayton and Kyles Station roads as well as a future fire house.
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