8.9-million levy proposed to Kent City School District
May 2, 2013
Although the renovations are breathing new life into the downtown area, it comes at a cost for the Kent City School District, which is lobbying for an $8.9-million levy to stay in operation. The schools are receiving funding from the development, but not enough. The revenue does not keep up with the school’s necessary spending despite the $4.2 million in budget cuts the school board has made annually.
•From the downtown development the schools will receive 40 percent of property taxes from the tifs. Once completed, the schools will receive $215,000 from the tifs.
•The schools were receiving $39,000 a year on the old property, so it equals out to about $175,000 net increase in property taxes after the tif. (On downtown property only.)
•Since the Esplanade is expanding into downtown, the property that was demolished cut around $75,000 in property taxes. Since Kent State, a public entity, owns that property, it can’t be taxed, so subtract $75,000 from the $175,000 and the net gain in new taxes going to the schools is $100,000.
• The schools will also not receive taxes from the acorn alleys and corner due to an agreement those developers made with the city for an automatic 10-year tax abatement. The new transit center is a public entity so it does not have to pay property taxes, either.
• This combined with the $2.3 million in funding cut by the state last year creates a cash deficit of about $8.9 million.
(provided by Kent City School District treasurer, Deborah Krutz)
Some of the new developments, such as the Acorn Alleys and Acorn Corner, received an automatic 10-year tax abatement in the developer’s contract, which means they are exempt from paying property taxes for 10 years.
The other developments, such as the transit bus station and Esplanade expansion, which is owned by Kent State, are public entities and are not required by law to pay property taxes. The other properties such as the hotel and conference center, the Davey Tree and Ametex buildings, which own the corner property on DePeyster and Main Streets, are on a tax increment financing, or tif, system.
Deborah Krutz, treasurer of Kent City School District, explained that the tifs are subsidies from the city for redevelopment. For the next 30 years, the city will receive 60 percent of the property taxes on the new businesses to pay off bonds on the new infrastructures. Krutz said the schools will receive funding from the downtown area, but they won’t see the money until the following school year.
“From the downtown development, the schools will receive 40 percent of property taxes from the tifs, which amounts to $215,000 in net taxes from the tifs once construction is completed,” Krutz said. “We were getting $39,000 annually for the old property, so it’s a $175,000 net increase on the downtown property. However, the esplanade expansion is cutting approximately $75,000 in property taxes by demolishing houses, so it really amounts to $100,000 net gain of new taxes going to the schools.”
This combined with the $2.3 million in funding cut by the state last year creates a cash deficit of about $8.9 million.
“Downtown is very positive for Kent and the community, but I think people will be surprised that it won’t generate revenue for the schools,” Krutz said.
Contact Whitney Gibson at [email protected].
