Clinton Township officials have chosen to partner with Grandview Heights instead of Upper Arlington in a deal to share income taxes from new and existing businesses in the township.
Township trustees voted unanimously March 20 to create a Joint Economic Development Zone with Grandview.
In doing so, the trustees rebuffed offers from Upper Arlington, which was hoping to collect a portion of income-tax revenue from businesses located in the township.
"As the board reviewed proposals from both municipalities, it was Grandview that had the better deal for Clinton Township," Clinton Township Trustee Paula Armentrout said. "We feel confident and secure with Grandview."
Under Ohio law, townships are prohibited from collecting income taxes.
However, forming a JEDZ with a municipality that has taxing authority enables the municipality to collect income taxes from businesses within a township. Typically, under JEDZ agreements, the municipality and township then share tax revenues.
After voting to move forward with Grandview, Armentrout said, the township now is working with legal counsel to draft the formal terms of the JEDZ. That document also will need to be approved by trustees and Grandview City Council.
If that occurs, she said, the last step in the process would be approval by township voters, possibly in November.
If each step occurs, Grandview would be authorized to implement its 2.5 percent income tax against Clinton Township businesses located within the JEDZ.
Under the preliminary agreement, Armentrout said, the township would receive 80 percent of those income taxes and Grandview would receive the remaining 20 percent.
Upper Arlington Community and Economic Development Manager Bob Lamb said Upper Arlington offered the same 20-80 split of income taxes, but township trustees preferred to go with Grandview and its 2.5 percent income tax, as opposed to the 2 percent income tax Upper Arlington currently imposes on its businesses.
"They've decided to go with Grandview because of the 2.5 percent payroll tax," Lamb said. "The board felt 2.5 percent was a better deal for the township due to the increased revenue they would be collecting."
Lamb noted Upper Arlington's proposed 20-80 split of income taxes was its "final offer." Earlier, the city had proposed 35-65 and 50-50 splits with the township.
Armentrout said Upper Arlington's proposal for a 20-80 split came "at the 11th hour" after Grandview had already made the offer.
"(Upper Arlington) was not willing to work with us until the 11th hour when they were desperate," she said. "While we were in negotiations with Grandview is when that offer came on the table.
"That (20-80 split) is what we had been telling them we wanted all along."
Armentrout said she's hopeful the JEDZ agreement will be finalized and that township voters will approve it. She noted it won't be a new tax on anyone unless a resident also works in the township, because residents who work elsewhere already pay income taxes to the municipalities where they work.
Clinton Township Trustee Carl Reardon said "both proposals were good and both communities work well with the township," but added that Upper Arlington's offer of a 20-80 split came as trustees were holding their meeting to approve moving forward with Grandview.
Additionally, he noted the arrangement with Grandview will yield more revenue.
"Grandview will be collecting at 2.5 percent," Reardon said. "At the end of all the calculations, the township will be getting 1.9 percent.
"The big part for Clinton Township is to redevelop the area of Cleveland Avenue and Innis Road. There are areas of the township that have potential," he added.
"There's a lot of development on the west side of the township. We have some underutilized areas on the east side and we have to balance both of them out."
Lamb speculated the JEDZ could generate about $1 million in annual taxes to be divided by the township and its partner.
"We were using $1 million as a rough estimate, but that was truly a rough estimate," he said.
Currently, Upper Arlington provides fire and emergency-medical services to Clinton Township.
Upper Arlington was seeking the JEDZ with the township to generate revenue after the city saw its share of annual local government funds from the state shrink from about $5 million five years ago to an anticipated $1 million this year.
The Ohio General Assembly also eliminated estate taxes this year, a source of revenue city officials have said provided Upper Arlington with an average of $4.8 million each year.
Lamb said Upper Arlington would be willing to reopen talks with Clinton Township, should its deal with Grandview fall through.
In the meantime, he said, Upper Arlington "currently is active in several economic development projects" and will focus efforts there.
"I wouldn't say we're disappointed," Lamb said. "We're looking forward to opportunities to grow our relationship, and we understand Clinton Township felt this was the best decision for their residents."