New details uncovered by the Dayton Daily News show that the operators of the racino under construction in Warren County are projected to get a $3.6 million sales tax break on construction materials by leasing the $175 million racetrack and gambling complex from Warren County.
“Miami Valley Gaming sought economic assistance as a result of the more competitive environment that will be created by the relocation of another gaming and racing venue to the region, ” spokeswoman Amanda Wurst said in a prepared statement Wednesday.
The racino moving into the region is the one planned in Dayton by Penn National, Wurst said. The Dayton racino, moved from Toledo, has sought no incentives from Dayton or Montgomery County, according to local officials.
Despite the tax break, local governments and schools will receive some additional property tax revenue from the project.
Warren County also plans to set aside almost $16.3 million of property taxes for road and other infrastructure improvements around the racino, according to county projections.
“As Miami Valley Gaming & Racing makes a direct investment of $175 million in the southwest Ohio economy, including the creation of 1,000 construction jobs and 700 permanent jobs, this partnership with local officials will help ensure the project’s overall success and job creation potential. Miami Valley Gaming & Racing wants to ensure that additional property taxes generated by its investment stay local and are invested in local roadways, increased economic development, and schools in the communities along Warren County’s I-75 corridor,” Wurst said.
The incentives are established through leases and other legal documents, part of a web of agreements designed to help ensure the racino’s success, said Martin Russell, economic development director for Warren County.
“Their success is important to our success,” he said.
Miami Valley Gaming also is expected to pay the port authority $800,000 that can be used in other economic development projects and $937,000 to the Ohio Department of Transportation for road improvements around the racino entrance on Ohio 63.
Already contractors have begun work on the 120-acre racino site at Union Road and Ohio 63 in Turtlecreek Twp., set to open in the first half of 2014. Penn National also has expressed hope the Dayton racino could open next year, but faces obstacles. The Scioto Downs racino is open outside Columbus. Next month, a racino is to open at Thistledown near Cleveland.
The Warren County racino is to feature an 188,000 square foot building for concessions and gambling, including 1,800 video lottery terminals; a 5/8-mile track, 28,000 square foot grandstand and 51,000 square foot barn and support structure; and a 3,000 space parking lot.
Miami Valley Gaming has estimated its total investment at $225 million: $50 million on state licenses, $175 million on the facility, including $65 million for furniture, fixtures and equipment, including the gambling machines.
Previously no property tax revenue was derived from the land, owned by the state of Ohio until a sale, closed in late December, to a holding company, Warren General Property, for $4.5 million, according to county records.
As part of the property tax deal, the Lebanon City Schools, Turtlecreek Twp., Warren County and its joint vocational school district are expected to collect about $5.4 million over 10 years - 25 percent of property tax on improvements.
The other 75 percent, valued at an estimated $16.3 million, will be set aside for road and other infrastructure. The complex will be located east of the Interstate 75 interchange at Ohio 63, near the Cincinnati Premium Outlets and the Trader’s World flea market.
By capping the portion diverted for tax incremental financing at 75 percent, the county avoided the need for approval by the Lebanon school district. After 10 years, all the property taxes will go to the school districts and local governments.
Miami Valley Gaming is expected to pay the Warren County Port Authority $800,000 as part of lease agreements leaving the port authority as the owner of the racino buildings for 10 years.
“It also allows the port authority to generate fees it can turn around and put back into future projects,” Russell said.
For example, the port authority could form a revolving loan fund for small businesses interested in moving to or expanding in Warren County, Russell said.
Without the exemption, the county would have collected about $550,000 in sales tax, with the state of Ohio collecting more than $3 million in tax, on the building materials, according to county estimates. While losing the sales tax, the state is to be paid $50 million for the racino licenses, Russell noted.
Miami Valley Gaming estimated the sales tax break at only $2.4 million, based on expectations that less of the materials purchased would qualify for the exemption, officials said.
This week, Miami Valley Gaming and the port authority are expected to sign land and project leases enabling the sales tax exemption. Miami Valley Gaming is also expected to pay legal fees and other expenses from the negotiations. The leases also leave open for Miami Valley Gaming the opportunity to build a hotel at the racino site, Russell said.
Still to be negotiated is division of funds from the tax incremental financing district setting aside property taxes from the inprovements for projects at the site.
Also, the city of Monroe and Turtlecreek Twp. are expected to form a joint economic development district to tax racinos workers.