Bexley Mayor Ben Kessler doesn't like the idea of charging a public service fee to nonresident students attending educational facilities within the city.
Kessler outlined his reasoning in a recently released position paper reacting to the Bexley Alternative Revenue Task Force's recommendations.
In 2011, Bexley City Council formed the task force in order to assist city leaders in identifying sources of non-traditional, non-tax revenue in order to help solve issues with the city's finances.
The task force was provided with a five-year financial projection for the city of Bexley, based on 2011 and 2012 budget figures and estimates, that showed an annual shortfall in the range of $1 million was looming. The task force then researched options and provided a series of recommendations that could raise sufficient non-tax revenue to cover the anticipated shortfall.
Kessler's position paper provides an analysis of and response to the recommendations of the task force: charge a public service fee for nonresident students, generate revenue from digital advertising, put parking meters on Main Street, install speed cameras and focus on long-term economic development.
"Some of the task force recommendations would require City Council action to implement, and all of them would require support of the administration, so it is imperative that the administration provide a perspective to the task force recommendations," Kessler said.
"The task force report includes several recommendations," Kessler said. "Of those, some recommendations clearly quantify potential revenue that can be gained, while others were more akin to best-practice recommendations or were recommendations that required further study or long-term implementation."
Service fee pros, cons
The task force's public service fee recommendation is a form of a Payment in Lieu of Taxes. Kessler said PILOT programs have been instituted throughout the country with varying degrees of success.
However, PILOT programs are rare in Ohio, and where they do occur, they typically occur in situations involving payments to school districts by property tax-exempt users. Kessler noted local tax structures vary widely throughout the country, so PILOT programs in other states are not necessarily analogous to Bexley's situation, and caution is essential when comparing out-of-state arrangements, in that the local tax environments must be adequately understood before drawing conclusions that are relevant to Bexley.
The PILOT program recommended by the task force is a public service fee, to be assessed against nonresident students within Bexley. The task force recommends a monthly fee structure ranging from $5 to $20 per student, with anticipated annual revenue of slightly less than $500,000.
Opposition to this recommendation has been voiced by representatives of Capital University, St. Charles Preparatory School and the Columbus School for Girls.
Kessler said educational institutions in Bexley represent the largest non-residential users of land in the city.
"The support of educational institutions is a core component of the city's adopted mission and vision statement," Kessler said. " ... Therefore, having thriving educational institutions is a core component of the city's adopted Mission and Vision statement."
In addition to being dominant land users and a focus of the city's long-term vision, educational institutions also represent the largest segment, or "industry," of non-resident contributors to the city's payroll tax revenue.
The task force report claims nonresident students represent an additional burden to the city's safety services, above and beyond that of residents of the city. Bexley safety and infrastructure services are from time to time deployed and dedicated to educational institutions.
However, Kessler said "an examination of police reports and calls from the past several years demonstrates relatively few calls to Bexley's private schools, and calls to Capital University are heavily mitigated by Capital's administration of its own public-safety department. The additional burden placed upon city services by these users is not demonstrably higher than, say, the burden attributable to non-resident traffic to Bexley's businesses or religious institutions."
There also is the issue of whether such a fee could be interpreted as a tax, creating another issue.
"Based on research conducted by the Bexley city attorney and consultation with municipal and tax attorneys, the proposed fee is not believed to be legally enforceable, as it would pay towards a service that benefits all users of the service but that is charged through to only a select number of people. This sort of a fee is, per our counsel, a tax, and is not a tax that is allowable under the Ohio Revised Code."
Kessler said any PILOT initiative would need to be a voluntary program that involved a cooperative approach with the private educational institutions, and it is the position of the mayor and administration of the city that an imposed public service fee would "be detrimental to the city's long-term best interests."
As an alternate to a public service fee, the administration recommends, and has been working toward, finding "cooperative cost-sharing opportunities that would be mutually beneficial to the city and to our private educational stakeholders."
Ideas currently being explored include the sharing of police dispatch services between Capital University and Bexley police; the sharing of IT infrastructure between Capital University and-or Bexley City Schools; and the sale, by the city, of fleet maintenance services to Capital University, Bexley City Schools and any other of the educational institutions in Bexley that could be served by the city's full-service maintenance garage.
Bexley directors and the management of Capital University met to discuss those concepts at a meeting in late 2012, and research among associated departments is under way to study the feasibility of some of these ideas, Kessler said.