Deputy Mayor Fonda Williams
Tax Incentive Financing
MAYOR WILLIAM J. HEALY, II
Note: The video was made available to the general public on YouTube "courtesy of Deloris Angeli from Plant Et Art and the Sadie M. Angeli Foundation." The SCPR encourages readers to pause and view the video.The project is billed on the YouTube site as being the "Historic Onesto Loffs Renovation - 2008."
According to Coon in the video, he paid $100,000 to acquire the building.
When he gets done, according to an "independent" audit ordered and paid for by the City of Canton, it will be worth $10.8 million when completed.
But if his optimism and projected occupancy rate of the 45 apartments that comprise the project prove accurate (93% in the first year, according to local media reports), it seems to the SCPR that Coon will net over $1 million yearly by 2020 and accordingly and seemingly will recover his personal and his company's funding/underwriting of the heavily taxpayer subsidized project in just a few years.
Coon, who has been restoring historic buildings for over 30 years, back in 2012 completed what appears to be a similar restoration in Hamilton, Ohio.
Along the way in proceeding on the Onesto project, Coon and his company will have had a lot of taxpayer support at the federal, state and local government levels.
So far, it appears (from local media reports) to the SCPR that he has received some $4.05 million in federal and state grants including a $1 million Clean Ohio grant for asbestos removal.
Coon specifically mentioned the Clean Ohio subsidy in the video referred to above.
And it looks like Canton is going to kick in:
- perhaps as much as another $2 million or so in the form of a proposed Tax Incentive Financing (TIF),
- 75% of property taxes returned to Coon's enterprise; 25% to local government entities for a 10 year period of time,
- as well as guaranteeing - in effect - via a city issued bond, a $2 million loan
- with the risk that the project does not pan out and the city might be left "holding the bag" or some portion thereof.
If he is correct and a majority of his council fellows join him in voting down the proposed TIF, then Canton and various other Stark County political subdivisions could have the benefit of a $10.8 million fair market value property to draw $300,000, more or less, upon in property taxes annually to be divided accordingly a formula (effective tax rate) shown in a SCPR generated spreadsheet published later on in this blog.
If council approves the TIF, which is highly likely, then Stark's political subdivision by the SCPR's analysis see them only having about $70,000, more or less, annually to divide up.
While the SCPR agrees with Ward 1 Councilman Greg Hawk "in theory" it is better to get 25% of something, rather than 100% of nothing."
The "reality" seems to be that the Onesto rehab is likely "a done deal" in terms of going forward to completion - "no matter what," and consequently Canton's legislature may be giving Steve Coon and his enterprises "something (vitally needed taxpayer dollars to support vital local government services) for nothing."
The "reality" may be that the Onesto TIF is unnecessary and therefore to the tax revenue detriment of:
- Stark County government,
- Canton city government itsef,
- the Canton Joint Recreation District
- the Stark Parks,
- the Stark County District Library, and
- various mental health agencies and
- children services.
DEPUTY MAYOR FONDA WILLIAMS
Williams opens the discussion chaired by Ward 4 Councilwoman Chris Smith.
He describes and summarizes the general terms of the TIF and answers questions posed by council members.
COUNCILMAN BILL SMUCKLER
Does the "Urban Redevelopment TIF" include the adjacent Bliss Tower and attendant parking garage?
COUNCILMAN JIMMY BABCOCK
Is the Onesto project being treated differently than the hotel that was recently constructed alongside of Interstate 77 south of Canton.
COUNCILMAN KEVIN FISHER
(CONTENDED BY COUNCILMEN HAWK & SMUCKLER on getting into matter of developer/union negotiations)
Does Canton have a history of doing TIFs?
How is that Mr. Coon terms the project as being "residential" when it comes to dealing with union wage rates (commercial mandating higher wages) but then "commercial"when it comes to a TIF inasmuch as residential properties are not eligible for TIF status?
COUNCILMAN FRANK MORRIS
(Councilman West joined-in on matter of improving "core" downtown Canton beyond one building)
Morris: Why is Canton abiding a millionaire coming to council for a tax break after Canton government having already provided for a $2 million loan to his company on the same project?
COUNCILMAN JOHN MARIOL
COUNCILMAN JOHN MARIOL
Isn't it important to approve the Onesto TIF in order to enhance Coon's ability to repay the $2 million loan already provided to his company by Canton City Council?
COUNCIL PRESIDENT ALLEN SCHULMAN
Isn't the key in approving the Onesto TIF to protect the $2 million loan investment already agreed to and to forward council's commitment to improving downtown Canton?
COUNCILMAN JIMMY BABOCK
(a former Stark County auditor's office employee)
Is the high appraisal designed to provide more taxpayer dollars to Coon's company?
LAW DIRECTOR JOE MARTUCCIO
Explains the steps involved in approving the Onesto TIF.
COUNCILMAN GREG HAWK
(chairman of CCC Finance Committee)
Makes the point that 25% of something is far better than 100% of nothing, Mayor Healy agrees with him.
How about that!
MAYOR WILLIAM J. HEALY (his part in video)
SCPR question: If council does not approve Onesto TIF, is it "a deal killer?"
Says a few councilpersons will join him in voting "no" on Onesto TIF.
If council would reject the TIF, the Onesto project will still go forward to completion.
As the SCPR understands TIFs (be sure to take a look at this explanatory LINK) of this variety, Coon's company will receive 75% of property tax receipts calculated on the Canton City School District (CCSD, 00020) rate to spend on the restoration over the next 10 years. Assuming the Stark County auditor deems the independent appraisal ordered and paid for by Canton government to be an accurate "fair market value" statement of value, here is what the SCPR calculation looks like:
So, by the SCPR's calculation, the TIF could generate over $2 million additional for the Onesto restoration. On other side of the equation is how much in terms of absolute dollars (25% of the 35% taxable value assuming a fair market value of $10.8 million) remains to be distributed over the next 10 years to other Stark County political subdivisions (CCSD) recipients of property tax revenues. Here is the SCPR "projection" (note emphasis on "projection"):
- Right now, these local governments get next to nothing.
- As Ward 1 Councilman Gregory Hawk said in last Monday's council work session: "25% of something is better that 100% of nothing." And Mayor William J. Healy, II agrees with him.
- Morris did vote with the rest of council back on September 15, 2014 (a 12 to 0 vote) in agreeing to the issuance of a bond to provide Historic Onesto, LLC (a Coon company) with a $2,000,000 loan to use in completing the Onesto Loffs, to wit:
The Director of Public Service, on behalf of the City of Canton, is authorized and directed to enter into an interest bearing loan agreement in a principal amount not to exceed $2,000,000.00 with Historic Onesto, LLC in order to provide gap financing for Phase One of the Historic Onesto, LLC Redevelopment Project.
The execution of said loan agreement is contingent upon passage of pending supplemental legislation which shall provide for the initial designated capital funding, the creation of loan fund(s), with necessary appropriations, and the issuance of bond anticipation notes.
It appears to the SCPR that the TIF will pass, but Morris says he will not be among those voting "aye."The interest rate shall be determined based on what rate the city shall be obligated to pay plus costs, and basis points. The final interest rate shall be defined and will be included in all supplemental legislation
- Morris' point of how well the entrepreneural class does at the public trough appeals to the SCPR in that one that the SCPR thinks deserves very careful consideration.
- Council should approve the Onesto TIF:
- if BUT FOR the TIF, the Onesto project will not be completed, then
- Should a councilperson be satisfied that BUT FOR is NOT the case, he/she needs to go one step further (before approving the TIF) and consider:
- the number, quality of and duration of jobs the project will generate,
- the degree of aesthetic enhancement to downtown Canton, and
- the value in putting the Onesto back on the property tax rolls beyond 2025 at 100% of the revenues goong to the political subdivision beneficiaries
- the risk of the possibility that the project might fail and the city loses upwards of $2 million on a loan gone bad, and
- the additional loss of some $2 million plus in a TIF that would be better spent on other projects (i.e. "the opportunity cost."
Undoubtedly, Stark County taxpayers think it is hunky-dory for council persons to give away taxpayer money either when unasked for or not a difference maker as to whether a economic development project goes forward.
Maybe Canton's council persons who are about to approve the Onesto transaction (assuming it would go forward without the TIF) relate to former North Canton councilman (in fact, council president at the time) Daryl Revoldt's "we want them to feel loved" sentiment?
There is of course one important difference between the North Canton situation and the Canton one. Steve Coon very much wants the TIF. And he has some very important and powerful people in Canton government who support his quest.
Of course, these are taxpayer dollars; not the personal dollars of the decision making government officials involved.
Go figure! no?
And that is the role of Stark County auditor Alan Harold.
The auditor's office will make the determination of what the fair market value of a restored Onesto will be.
This is how Harold put it in an e-mail to the SCPR's question about the process, posed on Friday:
Martin - thanks for the note. I have not seen an appraisal so I don't want to opine on its purpose or any of its conclusions.So, what's the point?
As to what the values we will assign to the parcel, the staff is still completing its work (and, coincidentally, had a site visit today). The next value we set will be for 1/1/2015 and that will be made available sometime mid-summer.
Well, Harold, not that many years ago worked for Steve Coon's company.
Harold had worked at Huntington Bank.
In 2007/2008, he got the itch to run for Stark County treasurer.
In hindsight, there are undoubtedly many Stark County officials (including Democratic officials) who wished that he would have run in 2008 and won.
But, as the SCPR has written in prior blogs, it appears that political pressure was brought to bear on Harold in 2008 (a staunch Republican) by high up Huntington Bank officials to condition Harold's continuing employment with the bank on his not taking on the-then treasurer Gary D. Zeigler.
Of course, we all know the rest of the story.
For those readers who are new to the SCPR or new to Stark County, here is a LINK for you to catch up on 2009 through 2011 developments in the Stark County treasurer's office)
Nobody can blame Harold for backing out in face of the Huntington Bank hierarchy's edict.
Interesting enough, Harold decided to move on from Huntington and went to work for Coon's company.
As events from what local attorney and civic activist Craig T. Conley coined as being "Zeiglergate" unfolded, Harold decided to run against one-time Zeigler political pal Kim Perez for county auditor.
And in November, 2010 he was elected as county auditor.
The Report thinks very highly of Harold.
However, nobody gets by the scrutiny of The Stark County Political Report.
In view of the past employment connection between Harold and Coon's company, the SCPR thinks Harold should recuse his office from the Onesto valuation process.
He should ask another highly competent by reputation county auditor office with no connection whatsoever, past or present. with Coon or his commercial enterprises to make the determination of the fair market value of a fully restored Onesto.
Whatever value is assigned to the Onesto property must be constructed to stand the test of time and challenge.
Councilman Babcock, the SCPR thinks, implied in his line of question last Monday that it is in Coon's interest to have a "high" appraisal now so that he gets a return of more taxpayer dollars from the 75% TIF.
In ten years, the entire "taxable" (the 35% figure) valuation will revert to Stark County political subdivisions and the work done in 2015 needs to be well-founded enough that the increase inures to the benefit of those subdivisions.
Understandably, Coon or a successor business, playing the astute businessperson, might want to challenge the 2015 valuation a few years down the road.
And that's every taxpayer's right under the law of Ohio.
Accordingly, the work done now must be absolutely solid and not vulnerable to attack.
Again, the SCPR thinks Harold is a public official of very high character and would insist on thoroughgoing and documented standards being implemented in the Onesto fair market value determination process.
However, in view of his past Coon connection (chief of financial operations), his office should farm out the Onesto fair market value determination process.