Grandview Heights Schools is asking voters to approved an 8.51-mill combined facilities bond issue and operating levy on the Nov. 6 ballot.
But if an ongoing effort to renegotiate the school compensation agreement with Nationwide Realty Investors for the Grandview Yard development proves successful, property owners as well as the district would see a financial benefit.
If the bond issue passes and the renegotiation succeeds, property owners will end up paying less in new taxes, Treasurer Beth Collier said.
"Although nothing is final at this point, the proposal that is currently being evaluated is (the district receiving) a flat 40 percent of the Payments in Lieu of Taxes from development at the Yard, regardless of the type of property (residential or commercial)," Collier said. "This would provide increased revenue and it would greatly simplify the calculations required under the current formula."
Payments in Lieu of Taxes are payments made to compensate governments for property-tax revenue lost to tax incentives.
The bond issue would fund construction of a new grade 4-8 building at the current Edison Intermediate/Larson Middle School site; major renovations to the high school building; construction of a connector between the high school and the new building; and improvements at Stevenson Elementary School to add safety and security components and bring the building to ADA compliance.
The district estimates the cost of the ballot issue to taxpayers could be reduced from $239 to between $120 and $140 per $100,000 of property valuation, she said.
"We looked at the additional revenue that would be generated under the new proposal and determined that it would cover 40 to 50 percent of the required debt payments for our bond levy," Collier said. "As a result, the amount needed to be collected from residents would decrease accordingly."
"The 40 percent proposal is certainly not final as these negotiations are ongoing," said school board Vice President Melissa Palmisciano, who also serves as the board's liaison to Grandview Heights City Council.
"Currently, we receive only 11 percent of commercial, and the proposals that have been floated would be a straight percentage of both residential and commercial, which would both increase our annual revenue from the Yard during the life of the (tax-increment financing agreement) and simplify the projections, calculations and administration of the school compensation agreement for both the district and the city," she said.
No 'big windfall'
The renegotiation of the compensation agreement will not result in an immediate influx of cash for the district, Palmisciano said.
"I think there may be a misconception that we will get a big windfall from this," she said. "It won't be like we get one big payment. The additional revenue will be spread out" for the remainder of the life of the TIF.
The 2009 school compensation agreement was ratified to provide the district with a portion of the taxes it would have received but doesn't because the funding is used to pay for the infrastructure of the Yard development. A TIF redirects tax money to pay for public infrastructure.
Under the terms of the 2009 school compensation agreement, for the first 400 residential units built at Grandview Yard, the district is receiving 15 percent for the first 15 years the parcels are exempt from property taxes. The amount will grow through the years until the district would receive 55 percent for years 41-45.
For the next 200 residential units, the district would receive 20 percent for the first 15 years, growing to 60 percent for years 41-45.
For the next 200 units, the district's compensation would begin at 25 percent and grow to 65 percent for years 41-45.
For any additional units, the district would receive 30 percent for the first 15 years, increasing gradually to 70 percent for years 41-45.
The district receives a higher percentage for residential development to compensate for additional students that may move into the residences, Palmisciano said.
In 2010, the first year under the compensation agreement, the district received $210,212 from the Yard.
The total has been increasing steadily; the district received $1,021,408 in 2018.
Estimates under the current agreement show the district would receive an estimated $1.6 million next year, and by the year 2040, the estimated payment would be $5,030,067.
"The Grandview Yard money we currently get represents between 7 and 8 percent of our operating budget," Collier said. "Basically, what that revenue does is offset the loss in state funding we've seen. We've lost over $1.5 million in state funding per year."
The compensation agreement revenue "helps keep our program and staffing levels whole," she said. "It's been a blessing. We haven't had to reduce our program or staff even with the state-revenue loss."
Any additional revenue that comes from the renegotiation of the compensation agreement would be earmarked toward the district's proposed facilities project, Collier said.
"Those funds would be pledged to offset the cost of the bond issue," she said.
The school board is considering a resolution that would specify new revenue from the Yard would be used for the bond issue, Palmisciano said.
The actual bond millage would be reduced by the county auditor after the district filed its annual certification of the required debt payments for the following year and the additional revenue from new Grandview Yard funding that could help offset those payments, Collier said.
The county auditor would set the millage for the remaining amount needed to pay the debt, a process that would occur each year, she said.
Not worth the wait
Since the additional money would be used to help pay the cost of facilities projects, some people have asked whether the district should wait until the new compensation agreement is in place before going to the ballot, Collier said.
"Even if we did wait until the negotiations are done and came back to the ballot next year, we would still have to issue the full $55.25 million in debt to fund our facilities project," she said.
State law prohibits a ballot measure to be modified to include or reflect other potential sources of funds, Collier said.
"The ballot issue is the most secure way to provide funding for the project," Superintendent Andy Culp said.
Taking into account such factors as inflation, increased construction costs and rising interest rates, the proposed facilities project would cost an additional $2.5 million for every year before the work began, Collier said.
"If we waited two years, that would be $5 million, and our $55 million project would cost $60 million," she said.
Along with the facilities bond issue, the ballot measure includes a 1-mill operating levy.
The current revenue from the compensation agreement is the primary reason why the operating levy's millage is so low, Collier said.
"It's the lowest operating levy we've had in the history of the school district," she said.
"There's no way we could be at 1 mill without the revenue from the Yard," Culp said.
The district's last operating levy in 2014 was 5.9 mills, Collier said.
The school district began talking with the city about the potential of renegotiating the school compensation agreement in February, after a revised financial projection showed the Yard was now performing ahead of expectations, Palmisciano said.
The city administration and most elected officials were receptive to the idea, she said.
As part of its "deep dive" into the details of the facilities project, the Financial Advisory Committee that formed to make a final recommendation regarding the facilities issue called for the district to seek a revision of the compensation agreement, Culp said.
Grandview Yard revenues received were relatively steady at around $1.5 million between the years 2013-16, but now have now blossomed to over $6.5 million in 2018, said Bob Dvoraczky, the city's director of finance.
"Completed and occupied new buildings, along with known future development, have presented an opportunity to recalibrate this revenue stream," he said. "Over the life of the school compensation agreement, the recently completed buildings along with the known future development, are projected to provide, on average, approximately $800,000 in additional annual revenue above the original estimates."
Future negotiations among the parties have the potential to further increase that projection, Dvoraczky said.
A renegotiation of the compensation agreement would require an extension of the development agreement between the city and Nationwide Realty Investors, Palmisciano said.