Tallmadge proposes service fees instead of property tax for residents of new development

Krista S. Kano
Kent Weeklies
Construction begins on the Tallmadge Reserve development on East Avenue on Monday, Nov. 23, 2020 in Tallmadge, Ohio. [Phil Masturzo/ Beacon Journal]

TALLMADGE — City Council plans to raise $3.2 million for a set of road improvements by collecting service fees from residents of a planned 208-home development. 

Pulte Homes has broken ground on the spec house for the new Tallmadge Reserve,  and its eventual residents will likely fund East Avenue improvements between the Tallmadge Recreation Center and the Brimfield line. 

MORE: New development will offer 208 new single-family homes off East Avenue

City Council is seeking to make the development a tax increment financing incentive district, or TIF, meaning homeowners would pay service fees rather than property taxes. The city would then use the fees to add a center turn lane and sidewalks to East Avenue and a traffic light at the Washburn Road intersection. 

"That East Avenue corridor really needs improving. With that additional housing development, it's going to be really important that we provide residents with roadways that are sufficient to meet the added demand," Finance Director Mollie Gilbride said. 

Homeowners would initially pay regular property taxes, and would transition to paying service fees instead starting in tax year 2024. Service fee payments would continue until the projects are paid off. 

Construction begins on the Tallmadge Reserve development on East Avenue on Monday, Nov. 23, 2020 in Tallmadge, Ohio. [Phil Masturzo/ Beacon Journal]

The TIF legislation states that it would last for 30 years, but Gilbride estimates the $3.2 million cost could be paid off in 10 years — at which point the TIF would end. 

The traffic light project would begin in 2021 and would cost about $840,000. The city's portion of the widening project and sidewalks would start in 2025 and would cost about $2.4 million. 

"As the years go on, it could be more. Based on the revenue estimates, I'm comfortable that we'll be able to cover both portions with the funds we generate from that TIF," Gilbride told Council. 

During the TIF period, the city would reimburse the school district in full so that there is no decrease in school revenues. Once the TIF is over, homeowners would begin to pay standard property taxes to entities like the fire department. 

"This isn't a tax abatement. The benefit they receive is that the city is going to have the funding in place to make sure they can get in and out [of the development] with a traffic light. And with increased traffic on that main East Avenue corridor, that widening will benefit them because we'll make sure there's decent traffic flow," Gilbride said. 

Construction begins on the Tallmadge Reserve development on East Avenue on Monday, Nov. 23, 2020 in Tallmadge, Ohio. [Phil Masturzo/ Beacon Journal]

The home prices will average $250,000 to $300,000, but Tallmadge will not see much revenue increase because the city operates predominantly off of income taxes, Mayor David Kline said. 

"A residential development doesn't make a huge impact on our income dollars unless they move in and they begin working in the city," Gilbride said. I'm sure there would be some impact, but it would be very small. Most of those people are not going to be paying any income tax directly to the city."

The TIF ordinance had its second reading earlier this month, and City Council is expected to pass it during the Dec. 10 meeting. 

Reporter Krista S. Kano can be reached at 330-541-9416, kkano@thebeaconjournal.com or on Twitter @KristaKanoABJ.