For the third consecutive year, Upper Arlington set a new record for income tax collections in 2013.

For the third consecutive year, Upper Arlington set a new record for income tax collections in 2013.

The city took in $16.79 million in income taxes, besting its previous high by 10 percent.

According to city Finance Director Cathe Armstrong, a number of factors contributed to the new figure, including the gradual growth of the economy.

Business activity at the Kingsdale Shopping Center and last year's expansion of the city's largest private employer, National Church Residences, also played roles, she said.

The latter project involved National Church Residences' $2-million purchase of the former Willis Insurance Building at 2245 North Bank Drive to expand its corporate headquarters.

The city assisted National Church Residences by extending it a $650,000 loan, which will be forgiven if the organization remains headquartered in Upper Arlington for 10 years and generates at least $1.6 million in new payroll taxes over that time.

"We have rebounded from the recession, which is a big factor," Armstrong said. "Historically, the income tax grows with salaries. When the economy is good, workers receive raises and the income tax grows."

The 2013 collections topped previous record years for the city in 2012 and 2011, when Upper Arlington collected approximately $15.29 million and $14.7 million in income taxes, respectively.

"We had three years of decline, and then 2010 wasn't quite to the 2007 levels," Armstrong said. "So, we have had growth again since 2010.

"This is a typical pattern," she said. "For example, we reached $14 million in 2005, then didn't see that again until 2011."

Upper Arlington directs 87 percent of annual income taxes collected to its general operating fund. The balance is allocated to capital improvements.

Armstrong said funding the city's capital needs -- such as road repairs and infrastructure improvements -- remains Upper Arlington's "biggest challenge."

Last fall, City Engineer Dave Parkinson presented a 10-year capital improvement program to Upper Arlington City Council in which he identified needed projects estimated to cost $113 million.

Increased income taxes will help, as will 2013 estate tax collections that reached $3 million.

However, the estate tax was eliminated by the Ohio General Assembly as of Dec. 31, 2012, and the city no longer can rely on that revenue.

"We prepare a balanced general fund budget every year -- we don't appropriate more money that we anticipate in revenue," Armstrong said. "We count on the income tax to grow as expenditures grow, and some of that expenditure growth is outside our control.

"Take, for example, the price of gasoline. We are happy that the economy is better and people are back to work, but the loss of the estate tax is a significant and permanent loss to both the operating and the capital funding.

"We could cut services to balance the operating budget, but that doesn't get the streets fixed and we already have a significant backlog of infrastructure needs that must be addressed somehow," she added.