A long-time feud between Columbus City Schools and the owners of Nationwide Arena may soon be coming to an end.
On Dec. 4 the board of education voted in favor of a resolution that would bring about a settlement regarding the tax abatement dispute between the two entities.
Nationwide Arena opened in September, 2000. Before the ground was broken, however, there was a tax abatement agreement in place.
This settlement ends seven years of litigation between the district and Nationwide Arena that started in 2001 when the county auditor determined the valuation of the Nationwide Arena property was $129 million, which is the amount that Nationwide’s taxes would have been based on, according to board member Jeff Cabot.
Nationwide wanted a second opinion and appealed to the Franklin County Board of Revisions, whose valuation went further to value Nationwide Arena at $156 million.
Nationwide was unhappy with the higher figure and appealed to Franklin County Court of Common Pleas, who came back with a valuation of the arena property at $44 million dollars.
Cabot explained these dramatically varying amounts, saying that unlike other business property, arena properties depreciate quickly and cited a court case for the Tampa Bay Ice Palace in which it was valued in 1996 at more than $150 million but just three years later the property value dropped to $24.5 million.
That knowledge and these widely varying valuations caused Nationwide and the district to try to hammer out a settlement.
"This litigation has gone on over some time now and there’s been conversations and discussion over a better way to do this," said Cabot.
School district attorney Thomas W. Hill explained the reason arena property values depreciate instead of appreciating like other types of property rests on the type of property being dealt with.
"Most people think real estate goes up in value all the time, on a house it goes up in value all the time, but arenas are a different thing because they’re larger, there aren’t that many of them, there’s less people that can use them so the demand is less, the supply is less and so arenas have a tendency over time to go down in value," said Hill.
Hill said that even if the district went back to court and continued to litigate and won, the law says a new valuation has to be done every three years, so the district would then have to battle with Nationwide for the valuations from the period 2004, 2007, 2010 and 2013.
Hill said the case regarding the 2004 valuation is already filed, pending the outcome of whether the settlement is accepted or not.
"And we’re going to fight one again on January 1, 2007, and again on January 1, 2010, and another on January 1, 2013. Fight after fight after fight. Every single one exceeding costs, literally hundreds of thousands of dollars in legal fees from both sides," said Hill.
Hill said so far the district has spent $496,000 for attorney’s fees, costs of litigation and consulting fees for experts on this endeavor.
Under this settlement agreement, the compensation from Nationwide to CCS is no longer based on valuations of the arena property but will instead receive payments based on ticket surcharges, payroll tax sharing from visiting players and previous payroll tax sharing amounts without the prior limits that were previously tied to the valuations. The district will also receive $3.3 million soon after the deal is sealed, according to Hill.
"There’s a guarantee provided in the agreement, a number of them actually. One of them is a guarantee that there’ll be no less than $1 million a year paid to the public schools," said Hill. "But for the first seven years, 2000-2006, the guarantee has been in the agreement that we’ll receive a minimum of $7 million in that full seven years. As it turns out we’ll be paid a total amount of $9 million over those seven years."
Jeff Warner, district spokesman, said this settlement would not change the district’s intent to continue to see a levy on the next ballot. Warner said while this agreement is beneficial to the district, the revenue is not nearly enough to cover the district’s billion-dollar budget.