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Summit County Port Authority tells Twinsburg Twp. to pay up by Friday or get out
By Rick Armon
Beacon Journal staff writer
Published on Wednesday, Mar 12, 2008
TWINSBURG TWP.: The Summit County Port Authority is evicting Twinsburg Township from its own town hall for failing to pay rent.
The economic development agency ordered the local government to pay up by Friday or get out.
Township trustees decided earlier this year to break a 20-year lease with the authority after only two years, saying the 68,303-square-foot, former manufacturing facility purchased and renovated with port authority money is too big and expensive for their small community. The township had sought the authority's help several years ago to finance the project.
One trustee, who was not on the board at the time of the deal, calls the port authority-owned building an extreme waste of money.
Meanwhile, the authority says it's unprecedented for a local government to make a financial commitment and then back out because it's unhappy.
The two sides have been trying to resolve the dispute. Both the township and port authority say they have been working in good faith on an amicable settlement, but the other side hasn't been cooperating.
Port Authority Executive Director Christopher Burnham pledged to change the locks on the building if an agreement can't be worked out.
The township, which hasn't paid the $39,724 monthly lease for February or March, was notified Monday that it was being evicted.
''I understand that they don't like (the building) and it's not in keeping where they want to go,'' Burnham said. ''And I'm willing to work with them to get out of it. I just want it to be in an orderly fashion so that neither one of us is hurt. And so far, I don't feel like they've been working in that direction.''
Trustee Carol Gasper, a longtime critic of the town hall project, said the township is trying to determine how to respond to the eviction notice.
''It's unnecessary and unfortunate,'' she said. ''I think it speaks more to their failure to look at this idea and realize that . . . they should have never expended the funds.''
The far-reaching dispute may jeopardize future projects financed through the authority, damage the township's relationship with the county and have a chilling effect statewide on how municipalities receive financial help for building projects, experts said.
Background
The port authority issued $5.6 million worth of bonds in late 2005 to help the township buy and renovate the former National Artcraft building along state Route 91 into a town hall. The township, which invested $550,000 of its own money, had been using a small facility in downtown Twinsburg.
In exchange for the bond issue, the township agreed to make monthly lease payments of more than $39,000 for a 20-year period. However, the township is required to appropriate the money on an annual basis, meaning it has the ability to terminate the lease each year, according to a 2006 opinion from the county prosecutor's office.
The agreement was structured so the township, a community of about 2,300 people in northern Summit County, wouldn't have to take on debt for the project. At the end of the deal, the township could buy the building for $1.
Similar lease agreements are made throughout the state and country. For example, Ohio used a similar arrangement with the Ohio Building Authority to construct the Ocasek Government Building in Akron and Lausche State Office Building in Cleveland.
At the time, the Twinsburg trustees envisioned growing into the facility — turning one area into a joint fire station with Reminderville or Twinsburg, and possibly another into a community center. That hasn't happened.
And two of the trustees who approved the deal are no longer on the board. The two new trustees, Gasper and Jim Balogh, who was elected last year, opted in January to break the lease.
The township remains in the building — along with a Summit County Sheriff's Office outpost.
If a deal can't be worked out, the Sheriff's Office also has to move, since it uses space provided by the township.
''If we're required to be out by Friday, we'll be out by Friday,'' said Christine Croce, counsel for the sheriff.
Vacant space
The building is massive, with numerous unused offices and vacant storage space. Every township vehicle can be, and is, housed inside the facility.
Gasper estimated that the township uses only 30,555 square feet — less than half of the overall space available. And the total annual bill, including utilities, comes to about $700,000 — about $100,000 per township employee who works there, she said.
''It's extreme government waste,'' Gasper said. ''There's no other way for me to look at it.''
Balogh said in an e-mail Monday that he was too busy to respond immediately to a Beacon Journal request for comment.
Gasper has complained that the agreement never should have been made or done without a public vote. She claimed the deal was made quietly and away from the public eye to avoid scrutiny — something the port authority and former trustees deny.
''The Port Authority does a lot of good things for Summit County and no one wants to see them hurt,'' Gasper said. ''We want to work something out, but my obligation is to the people in my township and I feel compelled to right the wrong.''
State auditors are investigating the township's alleged effort to circumvent voter approval for the project and whether the trustees failed to obtain competitive bids for the renovation work, said Jack Morrison Jr., the township's attorney. However, a spokesman for the state auditor's office said the auditor is not investigating.
The offers
Last month, the township offered to pay 20.5 percent of the total rental payments and 20.5 percent of the utilities for two years and use only a portion of the building. The authority countered by asking the township to make the monthly interest payments of $25,563 and to pay utilities, with the authority paying the rest.
The township then offered to pay $15,000 a month for two years and 35 percent of the utilities with the authority paying the rest.
''We're trying to be as reasonable with them as possible,'' Morrison said, adding that the township has the option of moving back into its town hall in Twinsburg.
The authority has rejected the township's latest offer.
''We didn't ask for this deal. They did,'' Burnham said. ''We gave them something they wanted. We gave them something of real value . . . We really need them to understand we made a reasonable offer. I really don't know what more I can say.''
Attention-getter
The township's decision has pushed the Port Authority — an agency that typically stays out of the media spotlight — into the news. The Bond Buyer newspaper, read by investors and bankers, featured a lengthy article about the dispute, bringing unwanted negative attention.
The good news is that Fitch Ratings, a group that rates bond issues, reported that the port authority has enough money in reserves to handle the losses created by taking over the monthly payments for the town hall.
''We're not concerned in that regard,'' analyst Adrienne Booker said.
But any money used to repay the town hall bond issue is money that isn't being invested in other projects.
The bond and investment industry is concerned about the township's decision.
''Buyers look at this and say, 'Political subdivisions don't do this. They don't walk away. They make these payments,' '' said Timothy Long, managing director of Robert W. Baird & Co. in Columbus, which worked with the authority on the agreement. ''So if they do walk away from this for these reasons, it could have an impact on the ability of other municipalities in Ohio and throughout the country to use this structure.
''Others will see it as a risky venture . . . It's never happened before. No one has ever seen this before.''
Deals have soured because of an inability to pay, Long said. But the township has plenty of money available. Trustees estimate that the township receives about $2 million a year alone from a Joint Economic Development District with Reminderville.
Gasper called it the township's ''golden goose.''
''I just feel it's a lottery winner squandering the prize,'' she said.
Thomas Schmidt, the only trustee on the three-member board from when the deal was made, defended the original decision to renovate the structure.
''The mind-set was that the building was bigger than what we needed at the time and that we would grow into it,'' he said. ''And there certainly is a lot of empty space right now. When we entered into the agreement, we envisioned fire and EMS service out of that building that would use a significant portion of the vacant space and we also envisioned a community type area for senior citizens and possibly some agencies of Summit County renting or leasing space from us.''
The fire station idea turned out to be more costly than expected, he added.
''I'm old-fashioned enough that once you make an agreement with somebody, you make it,'' Schmidt said. ''I need to cooperate with my new board, but I also don't feel good about a situation where the Summit County Port Authority or Summit County could be negatively impacted by something that Twinsburg Township might do or is doing.''
Rick Armon can be reached at 330-996-3569 or rarmon@thebeaconjournal.com.
TWINSBURG TWP.: The Summit County Port Authority is evicting Twinsburg Township from its own town hall for failing to pay rent.
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