A discovery earlier this year that payments to the Stow-Munroe Falls School District for a tax abatement approved in 2008 had not been made has now been resolved.
A settlement agreement was approved by the board of education at its Monday meeting that will result in the payment of more than $346,000 in arrearages plus annual payments of around $60,000 to the district.
Ken Trenner, the city’s economic development director, said he caught the oversight of non-payment in February as he was reviewing agreements for Community Reinvestment Areas. He noticed payments for the 13-year tax abatement for a 40,000 square-foot office building on Courthouse Boulevard had not been made by neither the developer nor the city.
According to the 2008 tax abatement agreement, Omni Clunk LLC was granted the real estate tax exemptions. The agreement called for the developer to pay to the school district 50 percent of what would have been the property’s real estate tax based on the total effective millage; the city had also agreed to pay 25 percent to the district.
According to the settlement agreement, no payments have been made from 2009, the first year in which a payment was to be made, through 2016, resulting in $231,742.28 now owed in arrearage by Clunk, Paisley, Hoose Co. LPA, which has assumed the interests and obligations of Omni Clunk. The city owes $115,871.14 in arrearages.
Trenner said a former treasurer for the district had been invoicing companies who had the abatement agreements but it is unknown why neither Omni nor the city had received any invoices. After discovering the oversight, he said he contacted the business about the situation. "Fortunately, they were very gracious about it, very reasonable," and stated that they weren’t aware of owing the money, but if they did owe it, "’we pay our bills and we’ll make arrangements to pay it.’"
In 2009, the property at 4500 Courthouse Blvd. had a tax value of $908,534; in 2016, its value was listed at $1.879 million. For 2016, the taxes generated by the district’s effective millage would have been around $85,410.
According to the settlement agreement, the company will make payments on its arrearage in 96 monthly installments of approximately $2,400. Kristy Stoicoiu, treasurer for the school district, said the company asked to have the eight years it would have been making payments to pay the arrearage.
In addition, it will pay its 50 percent annually through the remaining years of the agreement. Stoicoiu estimates that based on the current millage and property value, that payment should be around $40,000 annually.
The city plans to pay its arrearages in a "one-time payment", according to Trenner, which was decided by the finance department "as the best way to go." It will also make its annual payment of approximately $20,000. Because the city’s payment was approved by Council via the tax exemption agreement in 2008, no further action is required to settle the arrearage, said Trenner.
Stoicoiu said both the company and the city will be invoiced annually going forward.
In addition to the 25 percent, the 2008 agreement calls for the city to provide an annual amount of services to the district with a minimum value of $12,836.
Stoicoiu said the revenue from the tax abatement had not been factored into the district’s annual five-year forecasts and will go into the district’s general fund. And while it’s additional revenue, Stoicoiu stressed "it’s not going to change the bottom line that we’re in the hole by year four [fiscal year 2020]."