Council hears Downtown Redevelopment District plan; opposes state budget proposal
Tuesday, March 14, 2017 4:29 AM
An economic development consulting firm presented a proposed plan for a Downtown Redevelopment District that could be implemented within five months at an initial cost of $20,000 during the regular Hillsboro City Council meeting, Monday night.
Nate Green of the Montrose Group, LLC discusses a proposal for a Downtown Redevelopment District in uptown Hillsboro. Also pictured are Hillsboro mayor Drew Hastings and interim safety and service director Gary Silcott. (HCP Photo/Caitlin Forsha)
Montrose Group, LLC Proposal
The Montrose Group, LLC
A Proposal for the Development of a Downtown Redevelopment District Plan for Hillsboro, Ohio
Background: Hillsboro, Ohio has several historic structures in its downtown, and the City is considering the creation of a Downtown Redevelopment District (DRD) for the redevelopment of several historic properties. Ohio municipal corporations can create DRDs to promote rehab of historic buildings if a city has a certified historic structure, creates a district as large as 10 continuous acres around that historic structure and develops a DRD economic development plan. The DRD can gain revenue from up to a 70-percent property tax exemption and redevelopment charges of all property in the DRD to fund historic and non-historic building rehab, historic district economic development corporation operation and public infrastructure. The Montrose Group proposes a six-step process to Hillsboro to redevelop historic properties using DRDs, including:
1. Identifying and/or certifying an historic building;
2. Creating a DRD economic development plan;
3. Adopting a DRD financial model;
4. Adopting a municipal DRD ordinance following a public hearing and then filing annual reports with the Ohio Development Services Agency; and
5. Negotiating DRD agreements with building owners, school board and other funders.
Hillsboro, Ohio has asked the Montrose Group, LLC (Montrose) for a scope of work to provide the City of Hillsboro with a DRD economic development plan.
DRD Economic Development Plan Scope of Work: The Montrose Group, LLC plans to provide a DRD economic development plan following their traditional Learn, Listen and Do approach to economic development planning.
• Learn. The first step to create a DRD economic development plan is to define exactly who a community is through research from primary data sources to determine the assets and liabilities of a community. “Learn” elements include:
• Identify area historic structures.
• Define one or more DRDs up to 10 acres in Hillsboro by developing a DRD site plan.
• Research potential project ideas around historic structures in the DRD based upon a community economic development SWOT analysis.
• Identify the DRD project costs including the historic and non-historic building rehab, district operational and infrastructure costs.
• Research potential revenues gained from up to a 70-percent property tax exemption for 10 and 30 years and redevelopment charges for district property owners.
• Research other sources of public financing for historic preservation including New Market Tax Credits, Historic Tax Credits, state capital budget community project funding and other funding sources.
• Recommend a DRD financial model where costs are met by various revenue streams.
• Outline local government process for creating DRD.
• Listen. The second step is to listen to community, political and business leaders and property owners to determine potential investments in historic structures and determine the direction the community wants to proceed with DRD revenues. “Listen” elements include: one-on-one interviews; focus groups; and public meetings.
• Do. Finally, mixing the learn and listen phases into a concrete plan for economic success in the Downtown Redevelopment District. “Do” elements include: defining and mapping the DRD parcels to include drafting municipal legislation, conducting a public hearing, notifying schools of the DRD, developing a plan for the use of DRD revenues, developing an operational structure for the DRD, developing a business development and marketing plan for the DRD and outlining the activity that is likely to occur in the DRD.
• Fee proposal: Montrose estimates this work for the DRD Economic Development Plan will be done over a four-five-month time frame and proposes to to provide these services for a set fee of $20,000 payable in five $4,000 monthly payments. This fee does not include the services of any architects, engineering or law firms the city may need to engage to determine building costs or draft legal documents such as bond documents and related agreements, but Montrose would be glad to arrange those services for the city through a separate proposal.
Nate Green, director of economic development with The Montrose Group, LLC of Columbus, presented the proposal for a Downtown Redevelopment District in Hillsboro. Green said that The Montrose Group recently finished such projects in Circleville, Utica and Portsmouth.
Hillsboro mayor Drew Hastings first brought the idea of such a district before council at their November meeting after attending the Ohio Municipal League’s annual conference, telling council that the uptown area is “perfectly suited for this sort of thing.”
“It’s a historic preservation tool,” Green said. “We like to call it a super-TIF, a super-Tax Increment Financing district.
“It allows municipalities to put in place a Downtown Redevelopment District in an historic area to essentially renovate, rehab, preserve those historic buildings.”
Green said that while a TIF “basically takes an increase in property taxes and redirects it into funding infrastructure,” a DRD “allows you to take that new increase in property taxes and redirect into the preservation of historic buildings.”
“You can also use it for loans to buildings in a DRD that aren’t historic,” Green said.
The “strategic plan” of the firm is “Learn, Listen and Do,” Green said. (For a complete breakdown of those three processes, see the article’s sidebar.)
The estimated fee included in the proposal is $20,000, which includes “setting up and getting the legislation in place,” according to Green.
“There are other pieces to this,” Green told council. “Once you set up a DRD, you can do individual development agreements with building owners. That is something that we do as well. My business partner is an attorney and has a law firm. We can do that, but that’s not contemplated in here because that’s kind of step two. That would obviously be an additional fee.”
Among the first steps of the plan is to “research potential revenues gained from up to a 70-percent property tax emption for 10 and 30 years and redevelopment charges for district property owners.” Hastings asked Green to clarify the “specified term length” of a DRD.
“You can do a 70-percent, 10-year DRD without school board approval,” Green said. “You can’t do anything more than 70-percent, whether it’s 10 years or 30 years. If you go anywhere over 10 years, you have to get school board approval. That’s one consideration – are they going to be amenable to this?
“When we talk through that listening session, that’s what we figure out. Do you want to do 10 years, do you want to do 20, do you want to do 30? What are we going to use the money for? That helps determine whether it’s 10 years or 30 years.”
Council member Ann Morris asked if the group has seen “a lot of success and people jumping on board” in other municipalities they’ve worked with.
“This is new legislation,” Green said. “It became effective in September. So the success we’ve seen is really the excitement. The money in each of those hasn’t started to flow yet, just because they’re so new.”
Morris asked if it would be “easier for us to obtain grants for if we had something like this.”
“It always is,” Green said. “Most government agencies, state and federal, if you have a plan in place and you can say ‘we’re applying for this grant because it’s part of our plan,’ you’re more likely to get it.”
No action was taken on Green’s proposal Monday night.
• • •
Council voted 6-0 to suspend the three-reading rule and to approve a resolution introduced by the mayor to “strongly oppose Governor John Kasich’s proposed 2017-18 budget, which proposes centralized collection of net profit tax returns.”
The resolution states that this proposal “will cause a substantial loss of revenue needed to support the health, safety, welfare and economic development efforts of Ohio municipalities.”
The idea “to institute a state operated program for the centralized collection of Ohio Municipal Income Tax … is a clear attack on the home rule powers granted to municipal corporations by the Ohio Constitution,” according to the resolution.
The legislation also points out that “the recent reduction in the Local Government Fund, elimination of estate tax and accelerated phase-out of promised reimbursement for loss of revenues due to the repeal of the Tangible Personal Property Tax have all resulted in a loss of revenue of $308,000 annually.”
“The municipal income tax is the single largest revenue source, which provides essential municipal services, promoting a positive quality of life that residents and businesses alike rely upon, and any forced reduction in this revenue will have a negative impact on residents and businesses, creating an environment detrimental to retaining and attracting business in Ohio,” the resolution said.
The resolution asks the Ohio General Assembly to “request the immediate removal of all language pertaining the municipal income tax collection and administration” and to “promote upcoming changes to the Ohio Business Gateway as a solution for businesses to file municipal income tax returns in a more simple efficient manner.”
Council president Lee Koogler, who said that he is “certainly opposed to” the proposal in Kasich’s budget, asked city administrators to comment on the legislation.
“This is just the state getting their foot more and more into the door,” city auditor Gary Lewis said. “They started with their revamping of the earning tax, the income tax issue last year, and they’re now going with the collection of the business tax. You can rest assured that next year it will be all earnings taxes.
“It’s absolutely ridiculous.”
Hastings said that “local communities are best able to allocate their funds to handle the collection and disbursement of funds.”
Lewis said that Hastings should send the resolution “to our representatives, both in the Senate and the House, in addition to the governor’s office and tax commissioner Joe Testa.”
• • •
In his report, Hastings said that he has been in talks with Paint Creek “regarding the sale of the firehouse property.”
“I think the city has determined that this is the time to resolve this issue, and I should have some news for you on this a little later this week,” Hastings said.
As previously reported in The Highland County Press, Paint Creek Joint EMS/Fire District has a special meeting scheduled for Tuesday night, with an executive session planned to “discuss the sale or purchase of property.”
Hastings reported that the city’s “first case in court for blight went well,” with the city hoping to have a West Walnut Street property torn down. The city’s code enforcement officer, Phillip Lutton, is “working with the police department to cite people with some hefty tickets on some of these blight issues to speed things along as necessary,” the mayor said.
Hastings announced that current deputy tax commissioner Sherry Davis will replace city income tax commissioner Peggy Gard later this spring upon Gard’s retirement. Tasha Gregory, who is currently a clerk in the water office, will take over as deputy commissioner, Hastings said.
Hastings also told council that the “strip of brick” exposed on West Main Street will be paved over soon, after the city received negative feedback from citizens.
In the Hillsboro Planning Commission report, Hastings said that the commission voted to deny a request for a variance for a dog boarding kennel on North East Street and will be taking a month to determine whether they will approve a variance to fabricate metal on West Main Street.
At the end of the meeting, Hastings asked council to look into the implementation of “city-wide trash collection,” which Koogler placed in the utilities committee. The mayor also said that there has been a proposal for a “really viable commercial use” for the old water plant property and asked for it to be put in a committee to meet with this business owner. Koogler placed the matter in the property maintenance and restoration committee.
• • •
In his first city council meeting as interim safety and service director, Gary Silcott outlined some of the work he’s overseen in the past “roughly two months,” including inspection of blighted structures; bi-weekly department head meetings as well as meeting with council members; preparing the Colony Theatre for bids for demolition, with an asbestos inspection scheduled this week; and conducting income surveys to apply for grants.
Silcott said that he and water/sewer/street maintenance supervisor Shawn Adkins are “working on a micro-monitoring study of the sanitary sewers.” The study will help identify problem areas “so we only fix where the problem’s at.”
The city is also “reviewing funding options to develop water and sewer along the newly constructed Hobart [Drive] extension to allow for development in the area.”
“There’s some funding out there we may be able to get to help pay for that,” Silcott said.
• • •
The Hillsboro street and safety committee met prior to Monday night’s council meeting to discuss a “problem” with FRS Transportation that Hastings presented at the February council meeting.
At that meeting, Hastings spoke against the nonprofit organization’s lack of communication on a shuttle route, which is funded by the Highland County Healthier Buckeye Council grant, that runs between the Rocky Fork Lake area and Hillsboro twice daily. Hastings proposed that because FRS has “a fee structure,” they might fall under the city’s taxi regulations.
Harsha said that he had met with several administrators, including FRS Counseling CEO Roger Cheesbro and president Joe Adray and Highland County Community Action Organization executive director Julia Wise and program assistant Clinton Davis, regarding the transportation route between Hillsboro and Rocky Fork Lake.
“I really hesitate to do anything about FRS,” Harsha told the committee. “I feel that they are providing a transportation service that otherwise people wouldn’t have available to them.”
The other two members of the street and safety committee, Tracy Aranyos and Morris, said that they agreed.
“I don’t see any reason to mess with something that’s working,” Morris said.
Silcott said that it would be helpful if, in the future, FRS came before council to seek a “resolution of support” before implementing such projects.
“If we did a resolution of support, that way everyone knows we’re in the loop and we do support it,” Silcott said.
The committee voted 3-0 to draft a resolution supporting FRS and their services.
• • •
Utilities committee chair Rebecca Wilkin reported that her committee met with Minish Patel of the Greystone Motel, who came before council at their February meeting to ask to have his water and sewer rate lowered. The committee voted “to take no action in regard to the rates.”
“He’s going to look into perhaps annexing into the city,” Wilkin said.
The utilities committee also introduced an ordinance to amend City Code Section 50.25 to provide for a surcharge replacement fee for storm water improvement. The change applies to section (F), which states that an “annual audit of the sewer service charges and the revenue generated therefrom shall be performed annually to determine that sufficient revenue is generated to cover the cost of operation, maintenance and replacement of the sewer system.”
The current legislation says that the “auditor shall designate 54 percent of the first $8 of the minimum charge as and for sewer plant upgrade debt retirement, and the balance of the first $8, being 46 percent of the minimum charge, as and for sewage improvement and repair expenses.”
The new legislation presented Monday night changes this to “(1) 40.5 percent of the first $8 of the minimum charge as and for sewer plant upgrade debt retirement, (2) 34.5 percent of the first $8 of the minimum charge as and for sewage improvement and repair expenses and (3) the balance of the first $8, being 25 percent of the minimum charge, as and for storm sewer improvement and repair expenses. The City Auditor is authorized and directed to establish a fund wherein proceeds for storm sewer improvement and repair shall be deposited.”
Council voted 6-0 to suspend the three-reading rule and to approve the ordinance.
• • •
The property maintenance and restoration committee met to discuss increased enforcement of “rules that are already on the books” regarding vacant properties after part of an uptown building collapsed last week.
“For the safety of everybody in the city, we need to start enforcing the vacant property ordinances,” committee chair Morris said.
Although one member of the committee, Dick Donley, was absent, Morris and Harsha discussed the need for clearer language in the ordinance with city law director Fred Beery and Hastings. Morris encouraged the city to send “some form letters out” to get properties cleaned up. The committee plans to meet again this month for further discussion.
• • •
Following the ordinance’s third reading, council voted 6-0 to approve an ordinance to amend Section 35.90 of the Hillsboro Code of Ordinances to modify the distribution of funds.
The ordinance was presented by Hastings at the January council meeting and proposes that “50 percent of all receipts from lodging tax reserved to the general fund of the city shall be distributed to the Highland County Visitors Bureau, subject to review annually by City Council.”
At the February meeting, council voted to amend the proposed ordinance to state that “in the event that council does not review and approve this funding annually, the same shall continue as in the previous year,” instead of the required annual review.
There was no discussion of the legislation prior to the vote.
• • •
Council voted 6-0 to suspend the three-reading rule and to approve a resolution to lease/purchase equipment (new dump truck with snow plow) in the amount of $167,149.78 over four years at an interest rate of 3.853 percent. Lewis pointed out that the purchase “has already been budgeted for” and that it will replace equipment from 1996 that “has reached the end of its useful life.”
• • •
Council voted 6-0 to suspend the three-reading rule and to approve a resolution authorizing the mayor to enter into a joint partnership agreement with Highland County for the Community Housing Impact & Preservation (CHIP) program.
• • •
Several local Cub Scouts from Webelos Pack 37 visited the council meeting Monday evening with their den leaders. After leading council members in the Pledge of Allegiance, the Scouts came before council during the citizens’ comments portion of the meeting with a request to host “a clean up day at Liberty Park.”
“I think that would be wonderful,” Koogler said. “We would love to have you out there to do that and to be involved ourselves.”
Koogler asked the troop to meet with city administrators to set up a date “when things warm up and you’re ready.” The troop said they are looking into Earth Day, April 22, as a possible date.
• • •
Hillsboro resident Chris Matthews also spoke to council to discourage council from “raising our property taxes” by joining the Paint Creek Joint EMS/Fire District after the city’s contract with the fire district expires in December.
“To raise our taxes to cover a fire department again is absurd and totally fiscally irresponsible to the citizens of this town,” Matthews said. “It’s coming. You know it. I know it. We talked about it, and everybody ignored it and just went ahead with their plan and now we’re going to have to face the fire when it comes down. Raising property taxes is not the answer, and that’s the only option you’ve left us with, which that’s your fault.”
Hastings disagreed, saying the city has “a number of options.”
“I don’t think you speak for or represent all the citizens of Hillsboro,” Hastings said. “I also think that anytime you do something where you propose a property tax on people, which arguably nobody ever volunteers to have, you try to do a bit of groundwork beforehand and lay out a schedule as to why it needs to be done.”
The mayor said that the city has made improvements over the past “four or five years” and that he believes citizens “want to see more improvements.”
“That may or may not come down to a property tax thing, but that’s not up to me. That’ll be up to city council,” Hastings said. “They know there’s options to doing that. We can continue paying that from the General Fund, and I don’t believe that’s on our agenda tonight to talk about.”
Koogler said that discussions about the contract with Paint Creek will be “addressed the second half of this year” and that Matthews is welcome to attend future meetings.
“It will be something that’s well contemplated before any action is taken,” Koogler said.
• • •
Council concluded the meeting to enter into executive session “to discuss the acquisition of real estate.”