By Rebecca Turman
The 105 property owners who expected to have their property assessed to help pay for a third of the cost to build the I-90 interchange at Nagel Road can breathe a little easier after Monday night’s Avon City Council work session.
After presenting the financial state of the city, including its debt profile, along with the city’s bond counsel and financial consultant Matt Stuczynski, Avon Mayor Jim Smith said the city of Avon can handle two-thirds of the debt from interchange project without assessing property owners near the soon to be built interchange.
The Jacobs Group has committed to paying one-third of the project, but City Council has yet to vote on a financing agreement with the developer.
“My recommendation to City Council would be no assessments,” Smith said. “As it stands, I see no reason to assess. A year ago I couldn’t tell you and six months ago I couldn’t tell you … no assessments whatsoever. We have $23 million on the conservative side. We have the money to do it.”
Smith’s recommendation to council was well received by the audience members with a round of applause in the packed Council Chambers of City Hall.
Smith said he’s taken a conservative approach from the start, and that’s why he wanted to warn the property owners that special assessments on their property could have been a possibility.
In May 2010, the 105 property owners were told they may be charged a special assessment on their land in order to pay for one third of the interchange because they will benefit from the interchange being built. At that time, the grand total of the assessments was $9 million.
“I apologize for scaring the hell out of people, but that’s my job,” Smith said.
City officials plan to pay for a portion of the interchange through tax increment financing (TIF), and at Monday night’s meeting, Smith said, “(We’re) beating expectations of TIF revenue by more than four years.”
Smith noted that once the project has started, there’s “no way we can assess later on.”
Following the announcement, many of the concerned property owners left the meeting with smiles on their faces.
Brian McKeown, owner of Rock Pile Garden Center on Nagel Road, said he was happy with the amount of work that went into coming to the final conclusion that assessments won’t be necessary.
On the other hand, he said, “(It) still leaves the city of Avon taxpayers paying two thirds (of the project).”
McKeown said the Jacobs Group should be paying for more than one third of the project since it will be “making millions and millions off of this (the interchange.)”
“To a city like this, it’s huge,” he said of the debt.
“I think that’s what it should of started out in the first place,” Avon resident George Bliss said of the mayor’s recommendation.
John Kahl, CEO of ShurTech Brands, shared his appreciation with council.
“Thank you for what I think is the right decision,” he said.
As part of the financial presentation, Stuczynski said the city has an Aa1 bond rating, which is the second highest rating Moody’s Investors Service gives out.
Moody’s is “very aware of the city’s plans (to build an interchange),” Stuczynski said.
“We are among the best of the best,” he said of the rating.
Stuczynski said based on conservative estimates, the city should be able to pay off two-thirds of the cost associated with the interchange project. That is a total of $23.75 million of debt, which accounts for a 5.5 percent interest rate for 25 years.
Based on estimates compiled by Stuczynski and city officials, the city could raise approximately $23.77 million through TIFs and income taxes to cover the cost.
Some of those estimates include a 1-percent growth rate in income taxes over the years.
“We haven’t grossly understated income growth,” Councilman Dennis McBride, Finance Committee chair said, adding he thought it was a conservative estimate.
He did note the estimates include overstated interest rates and understated TIF revenue.
Avon Finance Director Bill Logan said that last year’s income tax was up 2.5 percent from 2009, and this year through the month of May, income tax is up 2.6 percent from last year.
City officials project to receive $250,000 in income tax in 2012 from Cleveland Clinic. Each year thereafter, the city has budgeted $300,000 in income tax from Cleveland Clinic.
Stuczynski said the city is already exceeding the TIF revenues and the city is expected to see more than $1 million in revenue from TIF Nos. 1, 2 and 3 next year. That doesn’t include the Nagel district TIFs (4 through 11). From 2015 on, as part of the formula, city officials budgeted in $1.4 mill each year in revenue from those TIFS.
“Values have tripled since the end of 2007,” Logan said of TIF Nos. 1, 2 and 3.
“We don’t want to be too aggressive (with our estimates) in the early years,” Stuczynski said.
While the agreement with The Jacobs Group has yet to be approved by council, Stuczynski noted there is a provision that states the city can borrow from the group.
“Our goal is not to borrow from them,” he said.
Councilman Kevin Ward said he’d like to see current valuations on the Nagel area TIF zones.
During the meeting, council also reviewed several ordinances relating to Bond Anticipation Notes to be issued for the interchange project.
“(The) ODOT (Ohio Department of Transportation) timetable won’t allow it to go three readings,” Logan said.
June 20 is the latest council can vote on the ordinances to sell the notes in time. July 15 is when the money needs to be in the bank for ODOT purposes, he said.
Planning Coordinator Jim Piazza noted that ODOT’s bid process for the interchange starts June 15 and they award the bid for the project July 21.
During the Reports and Comments portion of the meeting, City Council members showed their support for the mayor’s recommendation.
“We were always in everybody’s corner,” Jensen said. “We were always trying to make sure we did what was best for everybody.”
Councilman Clint Pelfrey said the past few months have been a stressful time for residents and the mayor.
“The city has been in really good hands for a long time, so nice job, Mayor,” he said.
Councilman Dan Urban said he appreciates everybody’s patience.
“It took a lot of sleepless nights for a lot of people, I’m sure,” he said.
“We all want a greater Avon – a better Avon, “Councilman Dan Zegarac added.
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