JEDD tax revenues through 2011
Butler-Dayton $99,289
Butler-Vandalia $59,763
Wright Brothers $557,599 Airport (2009-2011)
Dayton Mall $636,763
Liberty-Mason $2,815,090
West Chester- $2,885,355 Fairfield
These figures show income tax revenues collected by six of the area's most established joint economic development districts. These and others recently set in motion are expected to raise much more in coming years.
Source: Local governments
Employees in the Dayton region not otherwise subject to local income tax have paid $7.1 million from their paychecks because they work in a joint economic development district.
The income taxes are assessed by economic development districts, created by elected officials from a township, county government and at least one municipality, rather than after approval of an additional levy by local voters in an election.
How the tax revenues are spent — as well as the tax rate, who is taxed and for how long — is decided through contracts subject to approval by elected officials. A Dayton Daily News analysis of area districts showed revenues not spent on maintenance or operating expenses typically go into local government general funds.
“This is really just good planning for the future. It’s going to help us for years to come,” Miamisburg Vice Mayor Charlie Case said Tuesday after the City Council voted to expand the boundaries of a district formed around Dayton Mall.
Economic development districts operate based on powers — usually reserved for cities and villages — granted in townships through state law passed in 1999 and last revised in 2008.
The law allows townships, otherwise reliant on property taxes, to tax the earnings of workers in their community.
“This is the one option they have,” said James Durham, a law professor at University of Dayton.
Districts operate differently
Every one of about 2,200 workers at 85 businesses already operating in the 600-acre district established around the new Liberty Way interchange in Butler County is subject to the district’s 1.5 percent income tax. District officials collected signatures from the majority of land and business owners, including Cincinnati Children’s Medical Center, preventing any from blocking their inclusion.
“If you work in this area. You pay it,” Dina Minneci, administrator in Liberty Twp., said.
In other districts, such as around the mixed-use development off the new Austin Boulevard interchange in Montgomery County, only workers in retail, entertainment and hospitality businesses are being taxed, after negotiations with developer RG Properties.
“Basically it’s a partnership. Forcing people in does not create a partnership,” said Greg Hanahan, administrator in Miami Twp., the site of three of six joint economic development districts formed in Montgomery County.
“We can force people in. We generally don’t do that,” Hanahan said, adding the office workers could be added as the development progressed.
Big money to come
The tax revenues should grow exponentially. Existing districts, such as in the Dayton Mall area, are expanding. More workers should begin paying into others, such as Austin Landing. New districts, as one formed last year by Montgomery County, Vandalia and Butler Twp. along Miller Lane, also are coming on-line. Hotels and stores, including a Walmart and Sam’s Club, are in the Vandalia-Butler Twp. district.
“We’re talking to everyone on Miller Lane,” said Jeff Bothwell, development director in Butler Twp. and treasurer for this JEDD and one with the city of Dayton around the Dayton International Airport.
Funds yet to go toward more development
So far, area districts have yet to spend the tax revenues on projects laying the groundwork for additional economic development.
The Liberty Twp.-Mason district has collected about $2.9 million during the past five years. None has been reinvested in new projects. Instead, the funds are securing $42 million owed on bonds sold to finance the new interchange, Minneci said. Middletown has been paid a 7 percent share for collecting the tax, Mason 15 percent for improvements west of the interchange.
Within two years, the local governments collaborating to fund the interchange expect to have repaid enough of the bond debt to free up the township’s portion of the income tax revenues.
“Then we’ll be able to use those JEDD dollars,” Minecci said.
More development is expected off Liberty Way. Steiner & Associates, developers of The Greene mixed-used development in Beavercreek, owns 100 acres within the district.
Montgomery County, Miami Twp. and Miamisburg, partners in the district around the Dayton Mall, have a plan to improve the corridor along Ohio 741 with tax revenues. So far none of the money has been spent for this or other economic development projects, officials said.
The members are in the process of adding a new Menards store, two neighboring stores and two fire stations to an economic development district created in 2009. Already, workers in the district, from stores including the Walmart south of the mall, have paid in more than $600,000. Other businesses in and around the mall and in Miami Twp. will remain outside the district, not subject to the tax.
In 2011, the district paid out $64,894 to the township and $27,811 to Miamisburg, as well as $5,500 for insurance and $404 for miscellaneous expenses, according to financial records obtained by the Dayton Daily News.
The governments deposited their shares in general coffers. So far none of the remaining revenue has gone toward economic development projects.
Officials said they planned to hire consultants to develop a corridor plan along Ohio 741 leading to the mall.
While also true in the Miller Lane case, revenues put into Butler Twp.’s general fund wind up supporting services, primarily police responses, needed in the district, Bothwell said.
“Any money that goes to the general fund is going to the police department,” Bothwell said.
The county, township and Miamisburg, along with Springboro, recently set the boundaries of the Austin Landing district to include all retail, hospitality and entertainment businesses, but excluding office uses in the development.
Before spending any of the taxes on economic development projects or maintenance, the local governments are expected to recoup their shares of $170,000 in start-up funds invested while waiting for revenues to begin rolling in.
“We’ve been talking about this for so long. It’s just good to see something positive being produced,” Springboro City Manager Chris Thompson said.
The district also has discussed reducing speed limit and paying for maintenance with district revenues, but has no master plan yet.
Other uses for JEDDs
Most districts are established to encourage economic development. In Xenia and Xenia Twp. and Springboro and Clearcreek Twp., districts were formed around new schools.
In 2006, Clearcreek Twp. and Springboro formed a district for a 50-acre elementary school campus off Lytle-Five Points Road, in a fast-growing area of the school district outside city limits. School staff are subject to the 1.5 percent income tax — the same rate charged in Springboro — for 100 years, with a renewal clause, according to the contract. Financial records were unavailable last week.
Last May, the city of Xenia and Xenia Twp. formed a district for Tecumseh Elementary School. Through February, school staff and contractors subject to the 2.25 percent income tax, also levied in the city, had paid $30,748.08 in tax, according to district financial records. So far, $2,210.20 has been distributed to Xenia Twp. and $179.09 to the township.
In addition to funding development, the districts eliminate pay inequity issues for governmental entities crossing municipal boundaries. For example, in the Dayton Mall district, workers at an elementary and middle school in the Miamisburg school district and a new joint fire district will be subject to the same 2.25 percent income tax levied in the city, through 2039, according to the contract.
Shifting tax burden
By creating an economic development district, officials from township and other governments joining forces raise additional revenues without a local vote or increasing taxes for residents. The tax burden is shifted from residents to workers in the districts.
“It’s still a vote by public officials in a public meeting,” said Durham, who represented developers in California before being hired as a professor at the University of Dayton. “They all are subject to being held accountable at the next election.”
This is true only for township residents who also work in an economic development district. Otherwise, the elected officials are unaccountable at the ballot box to the workers paying the new tax.
The implications vary for workers. Municipal income tax rates vary from 1.5 percent to 2.25 percent in the Dayton area, except in Beavercreek, which has no income tax. Most area cities grant reciprocity to residents paying income tax where they work. For example, a Lebanon resident working in Dayton only pays 2.25 percent to Dayton and nothing to their place of residence, a sore point for bedroom communities.
The tax rates within the districts also vary: from 1.0 percent in a district formed by West Chester, Fairfield and the city of Fairfield in Butler County; to 1.75 percent assessed to workers in the district at the Dayton Wright Brothers Airport; to 2.25 percent at the Dayton Mall and Austin districts.
For a Walmart worker in the Dayton Mall district and living in a township, “it works out to be a net pay reduction,” Durham said.
But boundaries recently set in the Austin Landing district exclude workers like RG Properties President Randy Gunlock who works from one of the office buildings excluded from the district and lives in nearby Clearcreek Twp. The district also excludes office workers living in the development’s residential village, but construction workers are to be taxed.
Durham acknowledged excluding RG itself and other tenants, such as Teradata, failed to capitalize on taxation of the higher wages earned and larger staffs working in the office buildings.
“On the whole, they are going to be paid more. It’s certainly imperfect,” he said.
Cooperative effort
Beyond the revenue potential, Hanahan said the districts encourage regional cooperation, rather than battles for businesses coming to the area.
In Warren County, Administrator Dave Gully said division over issues like annexation have prevented the formation of joint economic development districts there.
In Montgomery County, government partners have also formed a land use advisory group for development around the Austin interchange.
“You don’t compete against each other,” Hanahan said. “For a township it takes away the pressure of annexation.”
Contact this reporter at (937) 225-2261 or lbudd@DaytonDailyNews.com.
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