City plan offers townships riches

The 40-percent water
surcharge would be cut
to 20 percent.

By DAVID SKOLNICK

CITY HALL REPORTER

YOUNGSTOWN — A draft of an ambitious economic development plan by Youngstown to use its water system to charge income tax to workers in Boardman and Austintown contends great riches could be had for all involved.

Over a 20-year period, $439 million would go to the city and two townships, according to a 50-page draft proposal by The PRM Group of Cleveland.

If deals are fully implemented with the two townships, the study states there are 500 acres of new business development in Austintown and 250 acres of new and redeveloped land in Boardman.

With those 750 acres would come 3,750 new jobs and an annual payroll of $170 million by the year 2027, the draft states.

But the report gives no specifics on the new business locations, the types of jobs or how the positions would be created except to state it “could occur through a regional approach to promoting economic development.”

City officials declined to turn over the draft report, but a copy was obtained by The Vindicator.

The report calls for workers at every business in the two townships who get Youngstown water to be assessed a 2-percent city income tax. The townships could also assess their own 0.25-percent income tax on those same residents.

If the townships used that income tax for economic development, the city would agree to match that dollar amount. PRM estimates that matching amount to be $11,250,000 over 20 years.

Also, everyone in the two townships who pays a 40-percent surcharge on their Youngstown water bills would see that cut to 20 percent.

PRM used the 2004 U.S. Census’ average salary for employees in Mahoning County, $27,616, in determining income tax costs from the economic development plan. A person earning that average salary impacted by this plan would pay $621.36 a year for a 2.25-percent income tax.

The average residential water customer, who uses 5,500 gallons a month, would save $52.75 in water fees a year, the study states.

That would be a net annual loss of $568.61 for each of those workers if they lived alone. It would be a bigger loss for a two-income family.

About half of Boardman gets its water from Youngstown. Nearly all of Austintown’s water comes from the city.

If the plan is implemented, Youngstown plans to reduce its city income tax, even for those who live elsewhere, from 2.75 percent to 2.25 percent.

So, those who work in Youngstown but live in Austintown or Boardman making the county’s average annual salary would pay $138.08 a year less in income tax and have the water bill savings.

It would be a greater savings for two-income families in which both work in Youngstown but live in Austintown or Boardman.

The final report, first commissioned by the city in August 2006, has met with repeated delays. It was originally to be done by November 2006.

The study, titled “A Regional Approach to Economic Development in the Mahoning Valley,” is nearly complete, city officials say. The city paid $100,000 for it.

A city official met last week with Boardman administrators to discuss the draft plan’s details. A meeting with Austintown officials is forthcoming.

If the plan is fully implemented, the draft states Austintown would obtain more than $138 million over the next 20 years; Boardman would take in about $120 million in the same period.

That money would come from income tax collections on current and new jobs, new property taxes PRM believes would be created through the plan, economic development money given to the townships by the city, and savings from a reduced water-use surcharge.

Some Boardman and Austintown trustees are adamantly opposed to the plan, saying an income tax would drive away businesses from their communities.

“We are in a very fragile economy,” said Boardman Trustee Kathy Miller. “Business owners have just faced an increase in the minimum wage and to now increase the costs of accounting systems with more paperwork is not a good idea.”

Boardman, she said, is the center of real property wealth and commercial viability in Mahoning County.

“I don’t want to see anything that could negatively impact the commercial activity” because it would not only impact Boardman but the entire county, Miller said.

Austintown Trustee Lisa Oles also opposes the plan — calling it “taxation without representation.”

Even though Youngstown would lose city income tax money and have a water revenue reduction, it would receive “significant new income tax revenue” from the plan, estimated by PFM at about $149 million over 20 years.

“The city’s proposed regional approach to economic development in the Mahoning Valley region is a ‘win-win’ for all parties,” the study reads.

The townships would also “be able to leverage scarce local resources with matching federal and state economic development grants. In addition, the ... revenues could provide economic incentives to private employers looking to expand or locate in the area.”

City officials have said they wouldn’t force the townships to adopt the plan — which would also require the approval of a majority of property and business owners in those proposed economic development areas.

Youngstown Mayor Jay Williams said the plan is beneficial to all involved.

“We’re offering revenue sharing with the townships and a reduction of the water surcharge,” he said. “This would be an economic development enhancement.”

If the trustees refuse, the city could increase the current 40-percent surcharge for Youngstown water or take other action, such as decline to install waterlines to new customers, city officials have said.

The report projects the city would receive $6,524,556 annually from those who work in Austintown through a 2-percent income tax.

If the township decided to impose its own 0.25-percent tax, it would receive $815,569 annually.

The city would receive $8,435,583 annually in income tax from those who work in Boardman.

The township would get $937,287 a year if it imposed a 0.25-percent tax.

Though the dollar amounts are precise, PFM acknowledges in the report that the information is based on estimates it obtained from the U.S. Census and the Regional Income Tax Agency, which collects Youngstown’s income taxes.

But the report states the estimates are conservative.

Under the plan, the city would decrease its 2.75-percent income tax to 2.25 percent for those who work in Youngstown.

Those who work in Youngstown, including those in the suburbs, would save $8,309,090 annually in city income tax if the plan is fully implemented.

The proposal estimates Austintown residents who work in the city would save about $2 million annually in Youngstown income tax. Boardman residents who work in the city would save an estimated $2.35 million a year.

The report doesn’t mention where the 750 acres are in the two townships.

But city officials have mentioned the long-dormant 189-acre Centerpointe business park proposed in Austintown between state Routes 46 and 11 along Interstate 80, and Austintown property near the city’s Salt Springs Business Park as two potential locations for development.

The report states the economic development incentives the townships could receive from the city would generate additional property tax revenue.

Based on a number of assumptions, including the size of projects, the cost of construction and tax abatements, Austintown would receive $44,030,000 in property tax over a 20-year period. That figure is $26,265,000 for Boardman over the same period.

Also, the report states the water surcharge reduction over 20 years would save $21,970,303 for those in Austintown, and $16,904,848 in Boardman.

skolnick@vindy.com