Here are my notes from last night’s city council meetings:
Seasons Road Business Center
As I mentioned in the past, we are excited about a new commercial development at the southeast corner of the Seasons Road/Route 8 interchange. Development in this area has been long overdue. There will be three different parcels and structures. The first is expected to cost $7.5MM and create 60 jobs. It is being done on a speculative basis (i.e., no tenant yet).
Here are some of the details about the incentives Stow is providing:
Construction of Water Line – The developer will pay more than $1MM in construction costs for the road that will provide access, but Stow agreed to pay $124,080 for the water line.
CRA tax incentive – Stow will abate the increase in property taxes for a period of 15 years. In other words: Ordinarily, the new development (and the resulting increase in property valuation) would lead to a very large step-up in property taxes, but Stow is delaying that step-up for 15 years.
If you ask me, it’s all worth it. We needed to get the fire started in that area, and I think this development could lead to others. If I were the mayor, I would have been proactively reaching out to these property owners with incentives years ago, not just waiting for developers to come to me.
We approved about $300K to purchase two new snow plows. This will allow us to avoid costly maintenance on the older vehicles.
We approved a measure to issue restructured 2015 notes. That, in itself, is not that interesting to the average resident. But residents should be aware of the great strides that city council has made in limiting new debt in the past 6-8 years. In 2008, the city’s note and bond debt was $33.6 million. In 2015, it will be about $20 million. (Compare and contrast this with the federal government.)
We approved a new union contract with AFSCME workers. They will receive 2% pay increases for each of the next three years. But their contribution to healthcare will rise from about $105/month to $165/month (for family coverage) over that time period.
Oh, and I’m getting married in eight days! Laura and I are very excited.
The hot topic on everyone’s mind right now is the possible sale of Fox Den Golf Course. As the person pushing hardest for this, I will use this post to explain why:
To talk about Fox Den, you have to start by talking about the city’s finances in general. As the chairman of the Finance Committee, I will tell you that the proposed 2015 budget will have a $1.1 million deficit. In other words, our expenses will exceed revenue by $1.1 million.
Why? Our revenue is flat and our costs are increasing. And things aren’t looking great on the horizon: We have large lawsuits from former employees hanging over our heads. Dozens of our neighborhood roads are rated “poor” or “very poor” and need substantial repairs. Two years ago, our mayor said we needed to hire about 14 more officers, and a levy was critical to fund that need. The levy failed, but we have no new plans to fund the hires. Perhaps most importantly, we have Stow residents whose houses are flooding on a regular basis because we have not been able to fund the required infrastructure improvements.
To the mayor’s and council’s credit, we have reduced our expenditures. Our employee census is down since I joined council. We have cut debt substantially. We are implementing a LEAN program. But, at this point, we have picked all of the low-hanging fruit. There are few easy cuts remaining, yet we are still $1.1 million in the red. This is not a sustainable or responsible plan. … I take it back; there is no plan.
So let’s shift to Fox Den. We financed the purchase of Fox Den for $5.5 million in 2005. Since then we have paid $350,000 per year on that debt, and we will continue to do so until year 2032. That does not include the net income or losses of running the course. Some years we lost money; some years we made money. Over the past 9 years, Fox Den has cost taxpayers a total of $2,846,940.03, which is $316,326 per year. The newspapers published some numbers, but they were way off. In fact, the revenue had an extra zero — and then some.
Given our $1.1 million deficit, and given that there is no long-term plan to eliminate it, it is now time to address whether we can afford to keep owning Fox Den. I liken it to a vacation house. In good times, it’s a nice thing to have. In bad times, you aren’t going to keep it, while at the same time struggling to pay the mortgage on your primary residence. While we all enjoy having the greenspace, and no one wants to replace a golf course with housing, our expenditures at Fox Den are not justifiable. The $316,326 spent on Fox Den every year would go a long way toward reducing deficits, fixing roads, hiring cops, and stopping people’s basements from flooding. Namely, it is enough to hire four full time police officers, pave 4 lane miles of road, or tackle several storm-water projects.
The plan with Fox Den has three stages. Last night was the first stage. By a 4-3 vote (Costello, Pribonic and D’Antonio voted “no”), council passed legislation to seek bids to sell Fox Den to a golf course operator. By the same vote, council passed legislation to seek bids to sell Fox Den — without the golf course restriction. The mayor signed both pieces of legislation.
Let me be crystal clear about two things:
1) If we sell it as a golf course, it will remain one—or, at worst, it will become greenspace. But if a buyer seeks to buy as a golf course and breaks that promise, then the property will automatically revert to our ownership.
2) Last night, we only discussed whether we wanted to test the market. We did not commit the city to anything whatsoever.
The second stage will come a few months from now, when council will decide whether any of the bids is worth considering. If council answers “yes,” then the third stage will be the voters of Stow deciding whether to follow through with the sale. The residents will have the final say. If the voters approve it, then we will sell. If not, the issue is dead.
There are a lot of people with special interests who opposed even looking for bids. I suspect they will also oppose any effort to let the people decide. Many of them are former Fox Den shareholders, who made a huge profit selling the course to the city at a 200% markup, and who also play free golf for life at Fox Den. They have a lot to lose personally. So do the politicians who paid the 200% markup.
Instead, I’m concerned about the future of our city—its people, its roads, its storm water infrastructure, and its police force. I struggle to compare someone’s preference for a certain piece of property that they do not own to be greenspace, when there are residents whose basements are flooding and the city is without the financial means to stop it. Exploring this issue is about standing up for the average taxpayer and doing our due diligence for the future of the city.
Other notes from last night:
Incentive for businesses staying put – If a business is seeking to leave Stow, we currently have no financial incentive to keep them here. Last night, that changed. Council approved a payroll-tax grant program, whereby the city will abate payroll tax collections by 25% for either 3 or 5 years for any business that was seeking to leave but opts to stay. There are currently 10 businesses of the requisite payroll size of $5MM+ that could someday qualify. At least one of these businesses is actively exploring leaving town as I type this. The most obvious concern is that we don’t want our tax revenues to fall because we succumbed to empty threats by employers who never intended to leave in the first place. The legislation gives a few examples of situations that would constitute adequate proof of a bona fide intention to leave Stow, including an expiring lease, change in ownership, or expansion beyond the current facility’s walls. I think this is a terrific program, and I’m glad we are going to be proactive in a meaningful way in protecting our tax base.
2015 operating budget – For the first time since I was elected five years ago, I voted “yes” for the annual appropriations ordinance. Why? It’s not because the budget is good. It’s quite awful. Rather, it’s because I compromised. If we are able to reduce debt relating to Fox Den, then it will propel us in the right direction. I was willing to accept a bad budget in the short-term in exchange for a brighter financial standing in the long-term. This is something I wish they would do in Washington. Of course, special interests and hard-liners get in the way of that.
25 Under 35 – Tonight, I will be honored to receive an award as one of the “25 Under 35″ who are “Movers and Shakers” in the Cleveland area. I appreciate the Cleveland 20/30 Club thinking of me.
Next meeting – Council will meet next on April 9, 2015.