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Economic development falls short, Finley says
By John Higgins
Beacon Journal staff writer
Published on Wednesday, Aug 15, 2007
Akron mayoral candidate Joe Finley chose the site of a failed downtown office building project next to the federal building to criticize Akron Mayor Don Plusquellic's economic development policies.
Last month, Plusquellic reached an agreement with federal judges that scrapped city plans to build a $20 million parking deck to support a new office building for Akron developer Anthony Manna.
Those plans went awry when federal judges complained that their security concerns were being ignored and threatened to move the federal court out of the city. The agreement left the door open for future development on the city-owned property.
When a council member complained that the mayor hadn't told the council about the security concerns before it voted in favor of it, Plusquellic said no one on council had asked about it.
''I can't explain that comment other than to say that it's an absurd response to that,'' Finley said Tuesday. ''The mayor was very dishonest in proposing that without alerting the council as to the federal judges' opposition.''
Plusquellic, however, also told the council that if they had asked, he wouldn't have been able to tell them much because federal authorities had asked everyone involved not to discuss security concerns publicly.
Finley also said that if he were mayor, he would use common economic development tools such as tax increment financing (TIF) and land banking sparingly and only for big projects, because, in his words, the city is ''broke'' and cannot afford any more debt.
Finley said voters overwhelmingly rejected Issue 17 this spring, a city income tax rate increase that would have raised an additional $18 million a year, because they didn't support Plusquellic's proposal to spend half of the additional revenue on economic development.
''The reason he came out with that is, we're broke,'' Finley said. ''It doesn't matter if I get elected or he gets elected, the city is still broke.''
The city is not broke, said city Finance Director Diane Miller-Dawson.
A review of city finances shows the total outstanding debt, as of the end of 2006, was $760,885,000. Of that, $208 million is what is called general obligation debt, which is repaid mostly through a combination of property and income taxes.
The rest of the debt has a dedicated revenue source, including utility debt and the $206 million remaining on the public school building construction project that Finley approved as a Ward 2 councilman.
Finley acknowledges the city is making its debt payments and has a good credit rating, but he said the city has reached its peak and cannot borrow any more.
Again not true, according to Miller-Dawson.
''We usually get glowing reviews (from bond-rating agencies) and no trouble asking for more,'' she said.
Standard and Poor's rates Akron as Double A, behind Columbus, which has the highest rating of Triple A, but the same as Cincinnati and ahead of Dayton and Toledo's single A, according to the city.
Finley also criticized the city's use of tax increment financing, a complicated but common economic development tool typically used to pay for street and utility improvements to prepare land for development.
Those costs normally would be paid by the business. But with this economic development tool, the city issues debt to make the improvements and recoups its investment by claiming the additional property taxes generated by the development.
The county continues to receive the base amount of property taxes it received on the land before it was developed, but the city gets the increase in taxes after development.
''A TIF means that (businesses) don't have to pay their taxes for 30 years, generally,'' Finley said.
However, businesses still pay the same amount owed in property taxes, whether they have a TIF or not. The difference is in how the money is distributed.
Finley is correct that Akron Public Schools do not fully benefit from that increased value. He said that schools should never have signed an agreement with the city waiving their right to challenge such tax arrangements in exchange for payments from the city.
The city pays a portion of what the schools would have received from property taxes in the first 10 years of a TIF deal; in the 11th year, the city makes the schools whole until the TIF expires and the schools receive the full tax value directly.
Finley said he also would use land banking the process of acquiring properties and assembling them into developable pieces of land sparingly and only for specific projects.
However, the city rarely knows in advance what a particular company's land needs are, said Robert Bowman, deputy mayor for economic development. So the city banks away land for a variety of uses, such as office parks, industrial parks, residential projects and downtown development.
''We have to have a variety of products to offer in order to compete for these projects,'' Bowman said.
The two Democrats face off in the Sept. 11 primary.
John Higgins can be reached at 330-996-3792, 800-777-7232 or jhiggins@thebeaconjournal.com.
Akron mayoral candidate Joe Finley chose the site of a failed downtown office building project next to the federal building to criticize Akron Mayor Don Plusquellic's economic development policies.
Get the full article here.
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