Local superintendent tells state lawmakers tax deals hurt his schools

Policy Matters suggests ‘guardrails’ for tax agreements.

Credit: Bill Lackey

Credit: Bill Lackey

Ohio lawmakers considering changes to the state’s property tax valuation system last week heard testimony about another hot-button issue, what some groups have called the overuse of property tax abatements.

Jon Honeck, senior policy analyst for the County Commissioners Association of Ohio, testified previously that in 2014 local governments granted tax exemptions totaling $9.8 billion, a number that grew to $19.3 billion in 2022.

The most popular abatement is tax increment financing or TIF districts, which are an economic development tool many local governments use to encourage new investment in an area. A TIF district typically surrounds a parcel or group of parcels and enables the taxpayers within it to make payments into a special fund in an amount equal to their property tax liability for the life of the TIF. These payments in lieu of taxes are used by the local governments to retire debt incurred for the infrastructure improvements.

Zach Schiller, research director at Policy Matters Ohio, offered several recommendations for putting “guardrails” on TIFs. He said the general assembly could require voters approve TIFs over a certain size; limit their use to funding infrastructure, not to finance private development costs; “restrain” the use of TIFs for residential developments; or allow for dissolution of a TIF if it isn’t performing as it was designed, giving impacted entities like schools more input.

School districts often are made whole when TIFs are created, but Brian Kuhn, superintendent of the Clark-Shawnee Local School District in Clark County, said tax deals like these could cripple the district. There is a new 260-home development, and “we are only receiving 25% of the taxes we would otherwise be due but are required to educate 100% of the students coming from the development,” Kuhn testified.

Kuhn has battled with Springfield city officials and economic development officials about the Melody Parks project, which is a $400 million, 400-acre planned community that will combine restaurant and retail space with 1,200 housing units on the city’s east side along U.S. Route 40 near Bird Road.

Clark-Shawnee has filed two court cases involving decisions about Melody Parks. Those remain pending in Clark County Common Pleas Court.

In one case that alleged open meetings violations and improprieties involving the board that eventually approved a key step for Melody Parks, Clark-Shawnee last month filed an amended complaint detailing its allegations and asked a judge for an injunction to block the actions.

Springfield City Manager Bryan Heck previously called Melody Parks “one of the single largest projects in Springfield’s history,” and he said it will provide “a mix of commercial restaurant and retail as well as a variety of residential options that are needed in our community.”

Kuhn told state lawmakers last week: “There are in excess of 1,700 new homes coming to our district. We do not have space for these students or the resources to build a new facility because we will not even be receiving adequate funding from our local tax revenues to educate these students due to TIF and CRA (Community Reinvestment Area) provisions.

“Our district and board of education supports development, but not when the development is at the expense of the community it is designed to serve.”

Committee member Sen. George Lang, R-West Chester Twp., said he has a “much, much different perspective on TIFs,” saying they put a TIF on in the late 1990s when land was going for $50 an acre that’s worth $600,000 an acre now.

“So the valuation that we have built, the wealth that we have created, has been amazing,” he said.

Lang asked Kuhn if the schools would fare better if the legislature restricted the use of TIFs to commercial developments.

Kuhn said absolutely and added: “We know if we do a 100% tax abatement for 15 years for a company, whether it’s TIF or other sort of abatement, there is no cost to us right? As a district, we’re not seeing students coming to us to educate” from commercial projects.

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