Understanding Grandview Yard tax revenue

Published August 30, 2016 by justicewg

The city has big plans in store for the future, and unless we are thinking about going to war with Upper Arlington, we will not be funding those plans with more taxable land area. We have some new businesses on Goodale, but that area has about maxed out on value (unless business owners can be convinced to build tall offices). That leaves Grandview Yard as the key to the future increases in finances. The City recently published an overall summary of the financial data available on the Grandview Yard development, let’s dig into the numbers.

Property tax income and TIFs and Pilots

Property value GY

The first chart shows the property market value of the Yard. The TIF value is the additional value that was created by construction, and by agreement with NRI, will mostly be used for infrastructure bonds. The abatements are cuts in taxes given as a lure to build (or what some might say as a give-away to businesses that always have a hand out for corporate welfare).

What you learn from this table – between the TIF and the abatements, the city has not increased tax revenue into the general fund from property tax. If anything, it went down. If the city would have the same reliance on property tax as the school, you would be reading stories in the TVN similar to the “No boon from G.Y.” story that was published this year.

Pilot is the brain of the TIF

We are getting into the complex part of the story when we try to understand PILOTs. I quote from the doc:

Properties in the Grandview Yard TIF pay amounts equal to the property taxes, known as “payments in lieu of taxes (PILOTS)”, as though the TIF had not been established. To the taxpayer in the TIF it is the same amount of money, but behind the scenes it is put into two different “pools”. The entire amount of PILOTs is sent to the City for distribution to the School, Library and Infrastructure Bond Trustee.

While the TIF was being set up, it was an agreed fact that the school and the library could suffer while the old buildings were torn down, and the TIF shuttled money to construction bonds. The PILOT is the brain of the TIF, and sets aside money to help the school and the library. There is complexity in the “Waterfall” of tax money that is diverted in stages to the school first, but I’m not sure if that’s important information. What you learn – the school tax income from G.Y. will be mostly flat.

Employment

According to the doc, there are over 2,000 new employees working at the Yard as of July 31, 2016. That’s not counting construction employees who are building the Yard. We are starting to get into the income tax part of the finances, and it is important to understand who pays income taxes to the city.

(Edit) I had some incorrect info about municipal income taxes, Ohio has some very complex rules. Some cities give 100% credit for income taxes collected outside the city, some 50%, some no credit. So it is possible for some Yard workers to pay taxes both to Grandview and an outside city. There is no breakout of the kind of tax income (personnel or business) in the data shown in this Grandview Finance document.

Business who are located in Grandview do pay income tax here. The 30 new businesses in the Yard will pay significant new income taxes to the city.

Summary of Revenue Created

Summary of Revenue Created

This chart shows a listing of the types of new money at G.Y. Note how much is being sent to the City of Columbus. Also note the size of the hotel tax, which only comes from one hotel, and will soon come from two. The largest non-TIF part of the pie is city income taxes.

Hotel Taxes

I’m working on a new story about how the Hotel taxes are generated and distributed. The only surprise I have at this tax is how well the Grandview Parks and Rec department did with a specific tax slice worth $136,439 last year. It will be something to watch as that number increases.

School Income

School district income from Yard

The school district depends on property taxes for most of their income. As you see in that section of the pie chart, the TIF agreements have held the taxes flat. The only section of the chart that is increasing is the “New Money PILOT”, and that’s only $302K last year, and is not supposed to gain much in the future.

The school can push for even higher property tax, but that will be coming from the rest of the city, not the Yard, which is protected by TIF agreements. The present millage puts us near the top of the chart in property tax rates in F.C., how much more can they expect Grandview residents to pay? Pretty obvious where the school will be going for new taxes in the future.

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2 comments on “Understanding Grandview Yard tax revenue

  • I think you need to brush up on your finance, before commenting further – you understanding is very rudimentary.

    For example: “The only surprise I have at this tax is how well the Grandview Parks and Rec department did with a specific tax slice worth $136,439 last year.” The improvements to the parks cost far more than $136k. Bonds were issued to finance the improvements and payments will be made, as the $136k is not a single windfall, but there will be similar or increasing revenue from the hotel tax. Think mortgage. If I buy a house that cost $300k, I’m not paying that off in one year (unless I’m rich). Instead, I may be paying $15-20k a year in principal and interest.

    • The surprise I had was about the specific income the P&R department receives from the hotel tax. As far as I know, it is the only city department that has a special income from a tax, all other departments are funded by the general tax funds. And yes, I know that year to year tax income is not the same as construction from bonds.

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