Bond counsel Richard Spoor addresses Hillsboro city council during Monday night's meeting. (HCP Photo/Caitlin Forsha)
Bond counsel Richard Spoor addresses Hillsboro city council during Monday night's meeting. (HCP Photo/Caitlin Forsha)
Hillsboro city council members heard a discussion on the tax increment financing district for the Marriott hotel project in Hillsboro and voted to rezone a parcel of land for the development Monday night.

In September 2019, former Hillsboro mayor Drew Hastings described the proposed development as “an 83-room Marriott hotel property with two franchise sit-down restaurants on site as well,” with a “total market value of … about $23 million.” In October 2019, both city council and Hillsboro City Schools voted to approve the TIF district for the hotel development.

As previously reported, there was a heated discussion between then-council member (now mayor) Justin Harsha and then-mayor Drew Hastings at the Dec. 10 city council meeting regarding an ordinance on the bonds for the hotel project. Harsha was the lone council member voting against an ordinance “providing for the issuance and sale of not to exceed $3 million of special obligation development revenue bonds, Series 2019 (Leo Capital/Morlii Project), of the City of Hillsboro, under Chapter 5709 of the Ohio Revised Code, for the purposes of paying the cost of certain public improvements; authorizing a pledge of and lien on certain service payments to secure such bonds; authorizing the exception and delivery of a trust agreement to secure such bonds; and authorizing and approving related matters.”

This ordinance is related to the one approved in a special meeting Oct. 28 by city council to establish a tax increment financing [TIF] district for a proposed multimillion-dollar hotel project in the city of Hillsboro, near the state Route 73/Harry Sauner Road intersection.

The discussion last month came from Harsha suggesting that council place the ordinance in a committee for further discussion, to allow questions from former auditor Gary Lewis and council, while Hastings said that if Lewis “had any real, valid concerns about this, he wouldn’t have been absent for the last six months” at city council meetings. Following the meeting, Lewis wrote a letter to the editor outlining several of his questions and saying that council “allowed themselves to be bullied one last time.”

Attorney Richard Spoor of Keating Muething and Klekamp gave a short presentation with information on tax increment financing districts to answer some of council’s questions on how the TIF will work. The attorney told the city that he expects the bonds to be issued within the next two months.

Spoor told council that TIFs have been used in Ohio for “probably 40 years,” particularly in larger cities, and gave an overview of the different types of TIFs, including “short-term” and “private” TIFs, although the one for the hotel project is a 25-year TIF that required school board approval.

With the TIF, Spoor told council “the new property taxes produced by new developments are captured in a special fund.” Under the TIF granted by the city and by the Hillsboro City Schools Board of Education, “taxes are captured for 25 years,” he said.

“For larger projects, like the Marriott hotel, the request is almost only for a 30-year or at least a 20-year TIF. In this case, it worked out to be 25,” Spoor said. “That way, the taxes are captured for 25 years.

“When the money comes in — the tax increment money — there’ll be a payment to the school district, and the balance will be used to pay principal and interest on the bond issue.”

Spoor then explained “the bond issue,” as he said it was “very important” for the city as well as Hillsboro citizens to understand.

“These bonds are not general obligation bonds, and they don’t go against the full faith of credit of the city, so it is not a debt of the city,” Spoor said. “They’re payable only from the incremental taxes.”

Spoor said there are “two risks” for bond purchasers, with the first being whether the development will be built.

“I know that sounds crazy, but if it doesn’t get built, there’s no incremental tax,” Spoor said. “There’s a requirement on the developer that they will guarantee completion, and a certainly it’s in their best interest to do so. So that risk is not great.”

The second risk, Spoor said, “is that the property taxes will not be enough as projected to pay the schools and principal and interest on the bonds.”

“Again, the city is not liable for any deficiency in that respect,” Spoor said. “The developer is. They signed an agreement to that effect, so they will take the bond over if those funds are insufficient. They’ve also agreed to make the school payment if those funds are insufficient, and the school is happy with that.”

Spoor said that while the city of Hillsboro is issuing the bonds, “it’s clear to the bond holder what the nature of that investment means.”

The attorney also assured council that “the developer will build the project to the specifications of the city.”

“The city will be reviewing the project,” Spoor said. “You don’t have to accept anything that they build. It’s got to be up to the city specs.

“The TIF law also allows to expend money on private property in certain cases. For stormwater retention and detention, the TIF law allows money to be spent on private property for those purposes because they’re a general benefit to the public, but normally the city doesn’t want the retention pond. That’s another slight difference that you’ll see.”

Spoor invited city administrators and council members to ask questions Monday night or to have Harsha contact him in the future with other questions.

Public works superintendent Shawn Adkins asked if Spoor said the city would “own the retention — like, if they do an underground retention” system for the hotel development.

“No, you would not, unless you want it,” Spoor said, to which Adkins said “no.”

Former safety and service director Dick Donley, who was involved in numerous meetings regarding the TIF district, asked if “the process of the bonding” had begun and if Spoor had an idea of the time frame for that process. Spoor replied that the Piper Jaffray firm (which was recently renamed Piper Sandler, according to their website) is currently working on the bonds.

“They’re getting information now on the project from the Patels [the developers],” Spoor said. “As I mentioned earlier, the critical path for the bond issue is knowing when the project is going to be built and how much it’s going to produce, so they’re looking at the timing of construction and also when it’s going to come off the taxes.

“I would think we’d be issuing the bond in the next two months and will certainly be working with the auditor and the safety and service director and everybody else as we proceed.”

Council president Tom Eichinger thanked Spoor for “educating us” on the TIF district.

“Just what you covered addressed a lot of questions that were being raised before,” Eichinger told Spoor.

Prior to the regular council meeting Monday, a joint public hearing between city council and the Hillsboro planning commission was held to allow the community to comment on a proposed zoning change. With no input from the public, the meeting adjourned within two minutes.

During the regular meeting, city council heard the first reading of a resolution “to amend the zoning map of the city for County Auditor Parcel Number 25-10-000-144.04 known as the proposed location of the lodging development near the intersection of state Route 73 (North West Street) and Harry Sauner Road and under a tax incremental financing plan and to declare an emergency.”

The resolution is to amend the parcel from industrial zoning to commercial zoning. The zoning map change was previously “considered and approved by the Hillsboro planning commission.”

Council member Brandon Leeth asked if the resolution needed “to go through kind of quickly” for the bond process.

“According to our law director, it does not require three readings, but it is an emergency [resolution], so we want to do it tonight if at all possible,” Eichinger said.

Council voted 6-0 to approve the resolution.