With the influx of 3,000 jobs from Nationwide Insurance's corporate campus, Grandview Heights is projected to see its net income-tax revenue from the Grandview Yard development increase sixfold by 2020.
City Council's Finance Committee met Monday, July 7, to review and discuss the financial impact and implications of the revised development agreement with Nationwide Realty Investors, the Yard's developer.
Committee Chairman Steve Gladman said the projected increase in revenue is based on the income-tax information of existing and announced jobs that are expected to be located in the Yard.
The net income-tax projected to be paid into the general fund in 2014 is $486,506, Gladman said. That amount is expected to grow each year to a projected $3.2 million in 2020.
Long-range, the tax incentives will end in 2039 and the infrastructure bonds will be paid off by the year 2040.
At that time, the Yard is projected to be generating nearly $12.5 million in annual income-tax revenue.
To put that in context, the city's annual operating budget is about $10.5 million, Gladman said. Revenue from the Yard currently provides only about 5 percent of the operating budget.
A fiscal impact analysis was completed to determine if the projected revenue would support additional service levels for the city, he said.
The study confirmed that the projected revenue will allow the bonds to be paid sooner while providing enough revenue to meet other city needs, Gladman said.
The school compensation agreement and payments to the library will remain unchanged, he said.
"The primary difference is that we are using income-tax revenues to pay for part of the public improvements," Gladman said.
Under the revised development agreement, NRI commits to developing more than 500,000 additional square feet of commercial office space in the Yard between 2016 and 2019, he said.
The developer also will complete the public infrastructure within the Yard by the end of 2019 and increase the public infrastructure budget from $119 million to $158 million, Gladman said.
Financial modifications also are being made to the development agreement, he said.
Real-estate taxes generated within the Yard will be distributed in this manner:
* Grandview will receive 100 percent of the construction income taxes generated in the Yard.
* From 2014-17, the city will allocate income taxes generated by each tenant with 75 percent going to city operating funds and the rest to repay bonds. From 2018-22, 55 percent will go to the city operating funds and 45 percent to repay the bonds. Beginning in 2023 and until bonds are repaid, the city will receive 45 percent of the revenue and 55 percent will be used to pay off the bonds.
* The city will receive 100 percent of the income taxes after bonds are fully repaid.
"These changes will provide greater economic benefit and allow the bonds to be repaid sooner," Gladman said.
Other provisions include that NRI will build a new hotel and conference center and will receive 25 percent of the bed tax from the new hotel for 15 years.
The 25 percent will be the portion required by state law to be spent for travel and tourism promotion, Gladman said. The Destination Grandview convention and visitors bureau will move its offices into the conference center.
Nationwide Insurance will be able to receive a job creation tax credit of 24 percent of income tax withholding for 20 years as each new building in its corporate complex is occupied. The credit will apply to employees and contractors working in the buildings.