The Akron Public Schools will be able to
substantially reduce its projected deficit in the coming year with a revenue-sharing
payment made by the City of Akron today.
At his weekly news conference this morning, Mayor Don
Plusquellic presented a check in the amount of $2,097,966.53 to Akron Public School
Superintendent Dr. Sylvester Small.
"This shows what real collaboration can produce," said the mayor. "With
the cooperation of the Akron Board of Education, the City has been able to promote
economic development and create new jobs. New jobs produce new revenue, and by sharing
these revenues the city and its schools both benefit."
Under a 1997 agreement, the City is permitted to offer benefits to companies that
construct new facilities in Akron. Tax Increment Financing (TIF) allows the city to use
the difference between the tax value before development and the tax value after
development---the increased increment---and allocate it to the cost of improvements made
by the city for the property owner.
Typically, TIF is used to pay for roads, water lines, sewers, and other improvements
that might otherwise be a cost borne by the property owner. TIF is a state-approved
incentive that allows municipalities to participate in private development so that a
project is more attractive to private lenders.
But under TIF, the public schools receive tax only on the pre-construction amount, not
the increased value. To make up for some of the loss, the city will share a percentage of
the lost revenues with the schools.
Under the 1997 agreement, the Akron school board agreed to allow the citys
economic development office to offer TIF to new projects. The agreement also provides that
Akron schools may not expand the school district into townships. In exchange for these
commitments, Mayor Plusquellic agreed to share revenues received from the Joint Economic
Development Districts (JEDDs) with Akron Public Schools.
"We understand that for Akron to grow, the City must be competitive in offering
incentives," said Dr. Small. "And it is fair for Akron Public Schools to receive
some of the benefits produced by the development of new jobs."
Akron has four JEDDs---three that have been in place for more than 10 years: Coventry,
Springfield, and Copley; and the Bath - Fairlawn JEDD created in 1998.
The 1997 agreement with the schools provides that a percentage of net revenue from
Akrons JEDDs will be paid to the schools: 12% from Coventry, Springfield and Copley,
and six percent from the Bath-Fairlawn JEDD.
Such payments to the schools typically amount to several hundred thousand dollars each
year. The reason for payment of the large amount today was due to a provision in the
agreement that called for payments to the schools to be tolled for six years after the
Bath-Fairlawn JEDD was created. In this case, the net revenues due the schools from the
Bath-Fairlawn JEDD have been accruing since 1999 and became payable in March, 2005.
The check issued today includes six percent of net revenues from the Bath-Fairlawn JEDD
as well as 12% of net revenues from the other three JEDD districts based on activity in