Has economic deal between city, township run its course?
Annexations by Springfield for housing prompt a new look.
An economic development agreement with the city of Springfield has pumped millions of dollars earmarked for services in annexed territory into Springfield Twp.’s coffers for more than 20 years.
But in the wake of the city annexing more land for proposed housing development projects in recent years, one Springfield Twp. trustee says the Cooperative Economic Development Agreement — or CEDA — needs to be reexamined. The township plans to hire an attorney for advice regarding the CEDA and other economic incentives, Trustee Tim Foley said.
Tweaking the agreement could allow the township to get a share of Springfield’s income tax revenue generated by residential projects in annexed territory. The additional funding would help offset costs incurred by the township, which is tasked with providing certain services.
However, a Springfield city commissioner says that the CEDA, signed in 1999, is now unnecessary, given the recent economic growth in the township and current state laws. As a result, the city would not be opposed to doing away with the agreement, said Assistant Mayor Rob Rue.
“When CEDA was adopted 23 years ago, it was a useful economic development tool for cooperation and collaboration between government agencies in Ohio,” he said. “Now in 2022, it may have served its purpose and is no longer necessary. The community is experiencing unprecedented economic growth, and the city of Springfield does not want to burden townships with services we are willing and able to provide.”
Under CEDA, the township gets 12.5% of the city’s 2% income tax revenue generated by commercial industrial development in land annexed to Springfield. In return, Springfield Twp. is responsible for services such as street maintenance, and the city provides economic development, engineering, planning services and public safety.
The agreement allows the annexation to benefit both the township and the city, officials have said.
To date, the township has received more than $4.8 million from the city in income tax revenue collected from commercial industrial development in the CEDA territory.
The agreement has been in place for 23 years, and it is set to expire in 2050. It was signed by Springfield Twp. trustees, Springfield city commissioners and Clark County commissioners.
The CEDA was established at a time when annexations were causing townships in the state to shrink. So the agreement provided an alternative, said Springfield City Manager Bryan Heck. In 1999, the CEDA that focused on territory in Springfield Twp. was the first of its kind to be approved by the state he said.
In 2018, the city approved the 226 unit Bridgewater housing development, and entered into a Tax Incremental Funding (TIF) agreement with the developer. The TIF, which is aimed at attracting and subsidizing new investments, means that the township won’t receive an increase in property tax from the new homes for 30 years.
A similar agreement is being considered for the proposed Sycamore Ridge development that aims to construct 258 homes.
It’s not clear at this time if city commissioners will also put in place a TIF agreement with developers of a proposed 1,258 housing units along East National Road. Commissioners recently agreed to annex 248 acres of land from the township for that project.
Homeowners in the new developments will be residents of both city of Springfield and Springfield Twp. They will be eligible to vote for city commissioners and township trustees, and certain ballot issues. However, the homes will not be within the Springfield city school district.
The three new developments represent the largest influx of new housing in the area in decades.
Foley is among residents who are opposed to the TIF. The loss of property tax revenue for some of the proposed homes in addition to the township’s responsibility for road maintenance for new residential developments would create a financial burden, Foley and the residents say.
They’re concerned that the hundreds of new residents will overcrowd the township schools and roadways, and stretch other resources even more.
Heck disagrees. The annual payments Springfield has been making to the township under the CEDA are more than enough to cover the township’s responsibilities to both commercial industrial and residential properties, he said.
The CEDA does provide an opportunity for a property to come into Springfield and use city utilities, which can be attractive to private development. However, the township continues to collect road and gas tax distributions since they are in charge of maintaining those roadways, the city said.
Separate service payment to the township also include portions of city income tax revenue generated by commercial industrial growth in the CEDA territory. But under the current agreement, the township would not get a portion of the city’s income tax that would be collected from those living in homes that will be built on the annexed territory, Foley said.
Renegotiating the CEDA to address that concern would be fair, he said.
But Springfield officials insist that the money the township gets under the current CEDA agreement is enough. They say payments have increased in recent years with new businesses that have come to the area, and more are being added, which will mean additional tax revenue for Springfield Twp.
For instance, the township gets income tax revenue from high tech manufacturing firm Silfex, which came to the area in 2018, and employs more than 500 people. In addition, Springfield Twp. will get income tax revenue from the Prime Ohio II Industrial Park that will be the home of a 870,000-square-foot distribution center, which will create 833 full-time equivalent jobs.
In 2021, the city made a service payment of $469,912 to Springfield Twp. as part of the CEDA deal. The payment included money from a separate agreement related to Prime Ohio, as the township receives 5% of the income tax generated. Nearly $287,000 came from commercial industrial properties under the CEDA and $181,313 came from the separate agreement related to the industrial park.
Foley said the money collected last year represents a significant boost to the township’s general fund and with the growth of those commercial businesses, that amount is expected to continue to grow annually.
But the CEDA agreement could be terminated at anytime depending on the mutual consent of the township and the city, Heck said.
There has not been any official discussions between the entities related to tweaking or terminating the agreement. However, Heck and Foley said they’re hoping the parties will meet in the near future to have a discussion.
Annexation and rules around it in the state have changed since the CEDA was implemented in 1999. At that time, if property was annexed from a township to a city, it would be detached from that township. The state has since updated its annexation regulations to reverse that.
“Annexation rules have changed in favor of the townships since we put the CEDA in place,” Heck said. “But we were kind of at the forefront. We were out ahead of the state by having this agreement where we would collaborate and partner together on annexation so that the township would not continue to shrink.”
Still, Foley believes the CEDA could be tweaked without being terminated. However, Springfield Twp., trustees did not elaborate what those tweaks would look like.
The trustees recently voted to seek outside legal council that would aid in matters related to the CEDA, TIF and similar agreements geared toward economic development.
“The trustees were elected to protect the township, and that is why we are hiring specialized legal counsel,” Foley said. “(We) look forward to meeting with city and county officials to discuss improving the agreement, especially, as it relates to residential development.”