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Tax break aims to develop downtown Wadsworth

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    A banquet hall located at 123 Broad St. could become home to a new coffee bar. Owners of the property are negotiating a seven-year, 60 percent tax abatement with the city.

    JONATHAN DELOZIER / GAZETTE

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WADSWORTH — An agreement to bring a new business downtown could mean owners of the property receive a substantial tax break from the city, but Wadsworth Schools receives a compensation package to offset the revenue loss.

Strand Company Ltd. is considering turning its banquet hall space at 123 Broad St. into “Dolce at the Strand,” which would offer coffee, cocktails, and desserts. The company and the Medina County Economic Development Corp. have proposed that the city offer a seven-year, 60-percent tax abatement. Tax abatements are a component of a community reinvestment agreement program enacted by the city last year.

Public Services Director Robert Patrick said the company is targeting an opening date in the fall or early-winter and City Council will vote on the tax abatement during its July 16 meeting. Council’s economic development and planning committee voted unanimously on July 2 to move the measure forward for possible approval by Council.

“We created this CRA program to spur investment and growth downtown,” he said. “It’s been around for about a year and no one has really taken advantage of it until now, where we have three businesses moving forward with it. It’s pretty exciting.”

Strand has invested roughly $1.16 million in the prospective coffee bar, including $631,000 for property acquisition, $300,000 for new construction, $160,000 for machinery and equipment, $61,000 for furniture and fixtures, and $10,000 for inventory.

According to Strand, opening the coffee bar would create eight to 10 permanent jobs. However, not all of those positions would be scheduled 40 hours a week. The company told Council that two people working 20 hours per week are equivalent to one full-time job.

The other two businesses seeking tax abatements are a prospective ice cream shop owned by Akron-based Silvermist Properties, LLC and an eatery named Blue Tip BBQ.

“When a tax abatement is below 50 percent, the city can just agree and sign off on it,” Patrick said. “When it’s above 50 percent, it has to be an agreement that involves the schools because of how it affects them. The other two businesses aren’t seeking an abatement of 50 percent or more.”

Wadsworth school board approved a compensation agreement Monday with Strand and the city that calls for the city to make annual payments to the school district amounting to 50 percent of the tax revenue it receives from Strand during the tax abatement period. If during one of those years tax revenue paid to the city does not equal or exceed $1 million, no payment to the school district is required.

According to the non-profit research firm Policy Matters Ohio, local tax abatements cost Ohio public school districts at least $125 million in revenue during fiscal year 2017 with heaviest losses being reported by metropolitan regions with the highest amount of subsidized development.

In 2017, schools in the Cleveland-Elyria region reported losses of $53.8 million in revenue while the Cincinnati area reported a $25.3 million revenue drop.

“Any time we look at considering these tax abatements, we know that a big chunk of that money that gets abated is on the back of the school district,” Wadsworth Superintendent Andy Hill said. “Our board takes those conversations very seriously, but we try to balance it with other forms of compensation that are specified in the agreements. We try to balance what’s in the best long-term interest not only for our school district but also for the city of Wadsworth.

“We try to look at what the impact will be beyond the period of abatement.”

Some 2020 U.S. presidential candidates have proposed negating local abatements by adding businesses’ unpaid local taxes onto what’s owed each year at the federal level, which they say would halt a “race to the bottom” between municipalities looking to attract businesses.

“These are individuals who want to invest in Wadsworth,” said Mayor Robin Laubaugh.

“This is giving the business a little more of an opportunity to make that investment. Obviously, it’s very expensive to purchase a building, to do renovations, and to buy additional machinery and equipment. Any sort of help we can offer in that regard is a positive.”

Contact reporter Jonathan Delozier at (330) 721-4050 or jdelozier@medina-gazette.com.
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