With TIF, St. Robert purchase makes sense
Before explaining TIF, I would like to address those residents who feel that funds for the building of new schools and the $674,000 purchase of St. Robert church come out the same property tax pot, and conclude there must have been money in there before they started charging homeowners for trash pickup. Please carefully read the following words.
The school board, not the city council, put the property tax increase for building four new schools on [last November’s] the ballot. The voters approved the increase by a narrow margin. If you are one of the many against the building of the schools who did not get out to vote, you must shoulder part of the blame.
Trash pickup, along with police, fire and city employee salaries and the expenses for the wide range of services have always been paid for from the Euclid general fund. That fund comes mostly from the 2.38 percent city income tax and about 9 percent of your property taxes.
Currently, the property tax you and all Euclid homeowners and businesses pay is divided in this manner: Euclid City Schools’ share is about 65 percent; Cuyahoga County receives about 20 percent; Cuyahoga County Library System receives about 4 percent; Cleveland Metropark System’s share is about 2 percent; and the City of Euclid’s share is about 9 percent. This means 91 percent of the property tax dollars you pay goes to others, rather than the City of Euclid’s general fund.
Due to the recession, general fund tax revenues have decreased. The mayor convinced most of city council to approve the trash fees to help make up the revenue shortages. This is not a permanent fee. He will have to ask approval again next year. Let your councilperson know how you feel [about this trash fee].
The funding for the St. Robert’s purchase does not come out of the general fund. The funding is borrowed and becomes part of the capital improvement fund of the city. If the city finds a responsible developer to buy the property, the debt is wiped out.
Tax increment financing (TIF) is a state-approved incentive program allowing tax advantages to cities to encourage development. Once the city declares a certain area as a TIF zone, the city must plan and construct an improvement that will benefit those who live within the zone and in some cases the entire city. Taxes generated from any new private construction within the zone are split 25 percent for Euclid schools and a whopping 75 percent used by the city to pay for the planned improvement within the TIF zone.
Currently, the area north of Lakeshore Boulevard, from Sims Park to E. 248 Street, has been designated as a TIF zone. The planned improvement is a magnificent waterfront rehabilitation with public access and parking for all residents to enjoy the lakefront. It includes walking and bicycle paths, beaches, fishing and picnicking areas, plus a boardwalk and piers overlooking a 250-slip marina and a restaurant. The 75 percent of property taxes generated by the marina and all new private lakefront construction will be used to pay for the waterfront rehabilitation. A major portion of the improvement cost is expected to come from federal, state and private grants.
Assume the St. Robert property can be added to the lakefront TIF zone. Let’s further assume a responsible buyer constructs a five million dollar development there. I calculate the property taxes will be close to $100,000 annually. Under TIF, the tax share would be $75,000 for the improvement and $25,000 for Euclid schools. It can be argued that resident owners within this additional zone, located south of Lakeshore Boulevard, will have full access to the benefits of the waterfront improvement.
This purchase gives the city control of the future use of the large site. City planners can refuse to let it go for another church or charter school, as both would be property tax exempt. It [this purchase] will prohibit fast-buck developers from constructing high density rental housing. Upscale housing will attract new residents with more disposable income to our city.
St. Roberts has been a tax-free facility for the past 58 years. With or without TIF, the property can now be a jobs and tax revenue producer for our city and an attractive addition to our housing stock. The purchase makes sense.