North Canton council approves tax financing for new Hoover District facility

NORTH CANTON – City Council has approved legislation that opens the door for much of the Hoover District developers' property tax payments for their new building to be set aside to cover infrastructure improvements at the facility.

An agreement between the city and the developers on the newly constructed facility for Diebold Nixdorf has provided city officials some hope that they can next year resolve a longstanding "stalemate." That's where retail and residential development of the former main Hoover factory building has been delayed for more than a decade.

On Monday, council approved a measure allowing up to 70% of property taxes based on the increased value of a new Hoover District building to be used to fund public infrastructure improvements that support the facility.

The property is a 160,000-square-foot complex on Orchard Avenue NE, south of Fifth Street NE, that Hoover District developers built by June to serve the manufacturing needs of its tenant Diebold Nixdorf, which has manufactured cash machines at an adjoining building formerly used by Suarez Corporation.

The city's director of administration Patrick DeOrio said the developers foresee it adding $12 million in value to the property with a new property tax bill estimated to be hundreds of thousands of dollars a year. The Stark County Auditor has yet to assess the new building's property value for determining property taxes owed.

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DeOrio said he's "guardedly optimistic" the city can reach a separate agreement with the Hoover District next year to develop the original Hoover factory into retail and residential space that the developers have put off for more than 10 years.

Mayor Stephan Wilder said, "We've been waiting patiently for this moment for a long time. I think this is the closest that we have to put an option on the table for the good of our community. And for the development of the Hoover District. I wouldn't have introduced this if I didn't feel that something positive is going to come out of this."

He later added, "We're determined to end the stalemate."

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Tentative deal with Hoover District developers

Council approved the ordinance establishing a "placeholder" tax increment finance or TIF agreement on a voice vote and on an emergency basis with no objections. Six council members were present with Daryl Revoldt, At-Large, being absent. The council members voted after discussing the agreement for more than 40 minutes in executive session.

According to the legislation, the public infrastructure improvements that can be financed by the foregone property tax revenue include reconfiguring and improving streets and sidewalks; new signage; improving lighting; building or improving walking paths; improved connections to the electricity grid; improving sanitary and storm sewers; improving flood remediation; upgrading gas connections and communication lines; improved water lines; putting in a new streetscape with new trees and landscaping.

DeOrio said he was mindful that the Hoover developers since 2008 often had not followed through with plans to develop the part of the former Hoover factory that faced North Main Street. So he negotiated several conditions to get the city's consent for the tax increment financing deal. If the developers fail to meet any of the conditions, they won't get the tax financing.

The developers would have to negotiate with North Canton City Schools by the end of next year to determine how much of the tax revenue could be spent on the infrastructure improvements and how much of the money would go to the school district, said DeOrio.

State law allows a city to unilaterally reach a tax increment finance agreement without a school district's consent. That agreement can deprive the school district of a portion of tax payments. But Wilder said he wanted the city and school district to have a good relationship, so he believed it was important for the school district to take part in the discussions.

DeOrio said he kept North Canton City Schools' Superintendent Jeff Wendorf in the loop. And the district school board in an emergency meeting Monday morning agreed to waive its right under state law to hold up a tax-increment financing agreement for 14 days, DeOrio said.

The Hoover District has to give a 10.32-acre parcel of land, DeOrio valued at several hundred thousands of dollars a year, to the school district at no cost within six months. If talks on revenue sharing fall through but the developer has transferred the property to the school district, then the school district gets to keep the property. DeOrio said North Canton Schools plans to use the land, which adjoins the southern end of the school district's stadium property, as the site of an athletic facility.

The developers have to demolish at no cost to the city three dilapidated homes on Witwer Street NE that are owned by the Hoover District by that same deadline. The district would have to bring its parking lot lights into compliance with the city's zoning code within four months.

"This (approval Monday) is not the first step. This is one of many more steps to come," said DeOrio.

'Virtually no risk'

Council member Jamie McCleaster, Ward 1, said the city and school district had everything to gain and nothing to lose from the agreement.

"There's virtually no risk to the schools," he said. "There's no risk to us. I don't see a downside to this."

Council President Matthew Stroia, At-Large, said, "That's what I like about this. The schools is in control."

Council member David Metheney, Ward 2, said, "I like that the city is in control."

Talks began years ago

DeOrio said developer Stuart Lichter first asked the city for the tax increment finance agreement about three years ago. The developer originally wanted the entire 75% of property taxes allowed by state law under tax increment financing to fund infrastructure improvements at the Hoover District. DeOrio said the city and school district were unwilling to give up all that property tax revenue.

DeOrio said there was a lack of follow-up on proposals by officials on what developers were willing to give the city and school district in return for the financing.

DeOrio said the Hoover District developers faced a deadline. By law, no new tax increment financing agreement could be reached for new property value created by development the calendar year after such construction or improvements had taken place. After Dec. 31, no tax finance improvement agreement for the Orchard Avenue NE building would be possible.

After the developers' staff reached out to him again to discuss the financing, DeOrio said he told them it was time to discuss concrete proposals the developers would commit to if they wanted to make the deadline. He said he then negotiated with Jeff Martin, the senior vice president of development for Solon-based Industrial Commercial Properties, which is owned by Hoover District developer Chris Semarjian. During five conversations from Dec. 2 to Dec. 8, DeOrio said he hashed out the agreement.

A message was left Tuesday for Martin at Industrial Commercial Properties seeking comment.

Separately, council voted to submit proposed five-year, 2-mill street paving and storm sewer levies to the Stark County Auditor. The city now has a 1-mill street paving levy and 1-mill storm sewer levy that each raise $387,000 a year and cost the owner of a $100,000 home with a homestead exemption $23.16 a year. By law, the county auditor's office must certify the amount that the proposed levies would raise before council can vote to place them on the May 2 ballot. If the 2-mill levies are approved and assessed on substantially higher and updated property values, the cost of the levies for property owners would more than double.

Reach Robert at robert.wang@cantonrep.com. Twitter: @rwangREP.

This article originally appeared on The Repository: North Canton Council approves Hoover district tax funding with strings