CRA’s and income tax revenue foster growth in Groveport

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By Rick Palsgrove
Southeast Editor

In 2001, the city of Groveport had about 3 million square feet of commercial warehouse/distribution space under roof in its industrial parks. As of 2017, that number has grown to an estimated 24 million square feet.

A significant factor in this commercial growth, which brings along with it a substantial amount of income tax revenue for the city, is the city’s use of designated Community Reinvestment Areas. Groveport has five CRA districts within its boundaries which were established before 1994. These CRA’s allow for 15 year, 100 percent property tax abatements to encourage development. (CRA’s established after 1994 typically offer a lower percentage of abatements for fewer years.) These five CRA’s combined employ 6,604 workers in Groveport.
Groveport Finance Director Jeff Green said the property tax abatements are “a short term sacrifice for long term gains.”

He notes most communities offer economic development incentives in either abatements or with free land, discounted utilities and so on.

“If a community doesn’t offer incentives,” said Green. “It simply does not compete for jobs, investment, and tax revenue to allow a community to thrive and invest in the quality of life for its residents.”

Green noted the income tax revenues from commercial development help pay for city parks and recreation, police protection, infrastructure, and other amenities in the city.

Added Groveport City Administrator Marsha Hall, “If Groveport did not offer incentives, then the businesses and the revenue they generate would go to Columbus and Columbus Schools. By offering incentives we keep revenues in place for the city of Groveport and Groveport Madison Schools.”

Green noted that 80 percent of Groveport city residents work outside of the city and are exempted from the city’s 2 percent income tax. This means the majority of the city’s income tax revenues are generated by the thousands of non-residents who work in the city.

To counter the lack of property tax revenue that normally would go to Groveport Madison Schools if it were not for the abatements, the city of Groveport and the school district entered into an income tax revenue sharing agreement in 1999 where the city and school district each annually receive 50 percent of the income tax revenues generated on the abated properties whose payrolls exceed $1 million annually.

In 1999, the school district received about $70,000 as part of this agreement. As commercial growth increased in Groveport, the school district’s share of the income tax revenue also grew so that in 2016 Groveport Madison Schools received $1.7 million in income tax sharing revenue.

“Since this agreement was made 18 years ago, Groveport Madison Schools have received about $16 million in income tax revenue sharing,” said Green.

When abatements expire

Green said the fear that companies leave once their abatements expire is unfounded.

“The companies are staying,” said Green, citing Eddie Bauer and The Gap as examples of large businesses who have stayed in Groveport for the long term. “Currently we are seeing about seven or eight property tax abatements expire per year.”

Green said that, even in the rare case locally that a company would leave after its property tax abatement expired, the property taxes on the building would still be collected for the schools and other entities.

“But we would lose income tax revenue if they left,” said Green.

According to Green, in 2014-15, 21 property tax abatements expired which resulted in $3 million in property taxes being collected. From 2016-18 another six abatements will expire restoring another $1.5 million in property taxes.

Income tax/property tax breakdowns

For an example of where the city’s revenues are generated from, let’s look at 2015. That year, the city of Groveport had $12.8 million in revenue. Of that figure, 90 percent, or $11.6 million, came from income tax revenue generated from existing businesses and commercial growth in the city. The remaining 10 percent of revenue was generated as follows: 3.5 percent from fines, licenses, and permits; 2 percent from charges for services; 2 percent from property taxes; 1 percent from miscellaneous; 1 percent from other government sources; and less than 1 percent from investments and special assessment

What entities receive the property taxes you pay? Approximately 56 percent of property taxes generated from your property go to Groveport Madison Schools. Madison Township receives 21 percent, Franklin County gets 18 percent, Eastland-Fairfield Career Center gets 3 percent, the city of Groveport receives 1 to 2 percent, and the library system 1 percent.

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