Milford and Increased Hotel
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Massive incentives: $24 MILLION IN INCENTIVES (from August 10 numbers): • $5.4m in LAND: Taxpayers, (Milford and increased hotel tax) will pay $5,382,521 for land for FC Cincinnati including $911,187 from Milford taxpayers and $4,471,333 from a hotel tax increase • $17.3m in PROPERTY TAX: FC Cincinnati will not pay property tax of $866,744 per year ($17,334,880 total of which $12,090,540 would have gone to schools) • $.2m in TAP & FEE WAIVERS: Fee waivers of $209,107 by Milford • $1m in SALES TAX: Savings of $1,050,000 in sales tax on construction • $.1m in PORT AUTHORITY FEES: $105,000 in Port Authority fees paid by the Milford CIC Biggest ever in Clermont County? For 60 direct jobs. INCENTIVE FACT SHEET: $24,081,507.50 in incentives in just 5 items FREE LAND NO PROPERTY TAX MILFORD CIC • Taxpayer land purchase $5,382.520.50 • Forgo $17,334,880 in property tax TO PORT AUTH. • Lose $1,144,160 currently collected • Payments of $105,000. NO CONSTRUCTION SALES TAX WAIVED FEES • Forgo $1,050,000 in sales tax • Waive $209,107 in fees FCC PAYMENT FACT SHEET: $2,805,000 (but, net to $1,305,000) DEVELOPER CONTRIBUTION (LAND) PORT AUTHORITY FEES / “RENT” • Pay $1,500,000 but most people need to pay for • Pay $305,000 over 20 years in Fees and Rent their land But the deal is set to pay it back: SCHOOLS PAYMENT Incentives: $24,081,507.50 • Pay $1,000,000 in deal but, current owners pay Inputs (all credit): ($2,805,000.00) $798,000 ($39,200/yr) so true net is $216,000 Net “incentive” $21,276,507.50 But likely $22,776507.50 (after FC gets bask its $1,500,000) SCHOOLS VIEW: Loss of $11 million • IF FCC PAID PROPERTY TAX: Schools would get $604,527/yr ($12,090,540 over 20 years) • RIGHT NOW – BEFORE FC: Schools get $39,200/yr ($798,000 over 20 years) • IN THE “DEAL” FCC PAYS $50k/yr: Schools get $50,000/yr ($1,000,000 over 20 years) which is only $10,800 more per year than they get today and $216,000 more over 20 years • That is a 12x return for FCC (Avoid $12m for $1m) • Other agencies (Senior Services, CCDD, MHRB, PARK, Children's Services and Senior Services) lose $1,493,180 Convention and Visitor Bureau economic claims not subject to verification 2018 – CVB Claims As of 8/13, will not release the Sports Facilities • $6.8m a year and 17,854 room nights Advisory (SFA) study on which claims are based. • 3 fields 2015 – Prior CVB Claims • Red Barn in 2015 – same actors • Claimed an average $5.6m a year and 13,000 room nights • 13 fields No discernable / visible economic impact in Batavia. Lopsided Agreement for FCC: Example 1: 100% exclusive and unlimited use in writing. Example 2: Allows FC Cincinnati to pass on prop. Tax incentives to other commercial developers. Example 3: FCC gets paid back the $1.5m they claim “pay in.” Hard to understand how the deal complies with Ohio Revised Code and CVB Articles of Incorporation: Ohio Revised Code 5739.09(12)(b) excerpt Revenue from the increase in rate shall be used for the purposes of paying the costs of constructing, improving, and maintaining a professional sports facility in the county and paying expenses considered necessary by the convention and visitors' bureau operating in the county to promote travel and tourism with respect to that professional sports facility. How does the $ only getting transferred to Milford and only for land comply with this statute? Convention and Visitor’s Bureau Articles (Oct 2017) The activities of the Corporation will not include engaging in a regular business of a kind ordinarily carried on for profit or performing particular services for individual persons. How does funding land for a private company’s “exclusive use” comply with the CVB articles? ORC 5739.09 – That allows the increase in the hotel tax: • Last minute changes when it was adopted in a back room seem to make it confusing. It is not clear how it can be complied with as written. (12) (a) As used in this division: (i) "Eligible county" means a county that has a population greater than one hundred ninety thousand and less than two hundred thousand according to the 2010 federal decennial census and that levies an excise tax under division (A)(1) of this section at a rate of three per cent. (ii) "Professional sports facility" means a sports facility that is intended to house major or minor league professional athletic teams, including a stadium, together with all parking facilities, walkways, and other auxiliary facilities, real and personal property, property rights, easements, and interests that may be appropriate for, or used in connection with, the operation of the facility. (b) Subject to division (A)(12)(c) of this section, the board of county commissioners of an eligible county, by resolution adopted by a majority of the members of the board, may increase the rate of the tax by not more than one per cent on transactions by which lodging by a hotel is or is to be furnished to transient guests. Revenue from the increase in rate shall be used for the purposes of paying the costs of constructing, improving, and maintaining a professional sports facility in the county and paying expenses considered necessary by the convention and visitors' bureau operating in the county to promote travel and tourism with respect to that professional sports facility. The tax shall take effect only after the convention and visitors' bureau enters into a contract for the construction, improvement, or maintenance of a professional sports facility that is or will be located on property acquired, in whole or in part, with revenue from the increased rate, and thereafter shall remain in effect for the period specified in the resolution. If revenue from the increase in rate is pledged to the payment of debt charges on securities, the increase in rate is not subject to diminution by initiative or referendum or by law for so long as the securities are outstanding, unless a provision is made by law or by the board of county commissioners for an adequate substitute for that revenue that is satisfactory to the trustee if a trust agreement secures payment of the debt charges. The increase in rate shall be subject to the regulations adopted under division (A)(1) of this section, except that the resolution may provide that no portion of the revenue from the increase in the rate shall be returned to townships or municipal corporations as would otherwise be required under division (A)(1) of this section. (c) If, on January 1, 2019, the convention and visitors' bureau has not entered into a contract for the construction, improvement, or maintenance of a professional sports facility that is or will be located on property acquired, in whole or in part, with revenue from the increased rate, the authority to levy the tax under division (A)(12)(b) of this section is hereby repealed on that date. HOW IT WILL BE SPENT – 5 stipulations: • (1) constructing, (2) improving and (3) maintaining a professional sports facility. • (4) promote travel and tourism with respect to that professional sports facility. • (5) facility located on property acquired, in whole or in part, with revenue from the increased rate. CVB ROLE: • convention and visitors' bureau enters into a contract for the construction, improvement, or maintenance of a professional sports facility . Chris Hicks added bullet point comments above. But, the entirety of the hotel tax seems to be being aligned to land acquisition and there is no evidence that the CVB is going to become a “contractor” to build, maintain and improve a professional sports facility. The whole thing seems incompatible with the CVB Articles of incorporation as replaced only 9 months ago (October 2017). Articles of incorporation of the CVB as replaced in October of 2017: From the Ohio Secretary of State website. Article 3 stipulation: THIRD: The Corporation is not organized for profit and will be operated exclusively as a business league within the meaning of Section 50l(cX6) of the Internal Revenue Code of 1986, as amended (the "Code"), or corresponding section of any future federal tax code, and 26 C.F.R. ("Regulation") Section 1.50 I (c)(6)- l. More specifically, the activities of the Corporation will include: (i) to promote the common good of the people and communities of Clermont County, Ohio (the "County") by promoting the common business interests of businesses located or operating in the County, which common business interests are (i) to promote special events and programs that encourage travel and tourism in the County; and (ii) thereby to improve business conditions for the industries and lines of business located or operating in the County; and (iii) whatever is deemed necessary, useful, advisable or conducive, directly or indirectly, to carry out the purposes of this Article Third, including the exercise of all other authority that the Corporation possesses under the Ohio Nonprofit Corporation Law. The activities of the Corporation will not include engaging in a regular business of a kind ordinarily carried on for profit or performing particular services for individual persons. Notwithstanding any other provision of these Articles of Incorporation, the purposes of the Corporation will be limited exclusively to exempt purposes within the meaning of Section 501(cX6) of the Code and Regulation Section l.501(c)(6)-1. • Stipulates “common business interests”: common good of people the people and communities .