$18.8M tax break for Pizzuti OK’d

The Columbus Board of Education approved a total property-tax abatement for what could be up to a $50 million warehouse project near Rickenbacker Airport, before the city of Columbus had completed an analysis of exactly how much tax revenue is being excused.

The tax break will save Pizzuti Companies an estimated $18.85 million over 15 years, of which about $12.5 million would have flowed to Columbus City Schools, the city Department of Development now estimates.

But because of what was perceived as a lack of communication between the city and the school district on past tax breaks, the two

sides changed roles, with the school district doing the initial analysis and negotiating directly with Pizzuti for compensation.

“What we did here with Pizzuti was something between us and them with direct negotiations,” said district Treasurer Stan Bahorek.

Because the company was requesting more than a 10-year, 75 percent property-tax abatement, the school district essentially had veto power over the deal under Ohio law.

Bahorek said the school district lost about $8.7 million more in potential tax revenue by agreeing to the 15-year, 100-percent abatement, but was able to negotiate for direct concessions worth about $1.5 million. Also, the district will split with the city an estimated $900,000 over 15 years in new income taxes generated by 80 new warehouse jobs that Pizzuti projects for the site.

The company, the city and the school district are convinced that, absent the deal, nothing would have been built there for decades, and everybody would have lost money.

“Eventually, year 16 does come,” said Steve Schoeny, the city’s development director. “And come year 16, that abatement starts looking like a pretty good investment.”

The school board pointed to a list of concessions made by Pizzuti Companies, including upfront cash payments, student internships and new equipment, that it says makes this deal extraordinary.

“I think this is a first in the way that we approached it,” said board member Dominic Paretti. “You’re not just talking about economic gain, you’re talking about educational enhancements.”

Pizzuti Executive Vice President Bill Brennan said the firm has been unable to develop the farmland just north of Rickenbacker Airport. County records show Pizzuti bought the 103 acres a decade ago for $12.4 million. The land currently is valued by the Franklin County auditor’s office at about half that.

Brennan said the company doesn’t yet have a tenant, and is building the warehouses on speculation. Clients can build around Rickenbacker on parcels in Groveport, Obetz or parts of the unincorporated county and get 100 percent off their property taxes for 15 years, making the Columbus City Schools parcel unattractive, Brennan said.

“It was going to continue to be farmland for 25 years,” he said. “That’s the reason this project wasn’t developed 10 years ago.”

The deal was finalized by the school board on Tuesday, when the board approved a package of agreements with Pizzuti. The firm will make three direct payments to the school district totaling $1.1 million as it develops up to 1.3 million square feet of warehouse space in three phases: $680,000 within five business days after financing closes on the first warehouse; another $216,000 before Aug. 1, 2020; and $204,000 before Aug. 1, 2023.

Pizzuti also will purchase five reading kiosks for the districtat a cost of $160,000, and provide 10 paid construction trade internships a year to district vocational students for 10 years.

The city puts the projected value of the new construction at $34.5 million. Schoeny said the city sent Pizzuti to the district upfront to see whether it could land a deal, which “is not normal.”

Typically the No. 1 reason given for tax incentives is job creation. The city and district agree that the 80 jobs projected to be created for a project of this size is low, Schoeny said. It offsets the almost $19 million in abated property taxes by only $900,000.

The income-tax offset was so small that the district didn’t even consider it in its calculations, said school district spokesman Scott Varner.