Study offers financial insight into potential mergerWritten by Autumn Lee | | email@example.com
An Urban Affairs Center feasibility study suggests a merger between the City of Sylvania and Sylvania Township could bring tax savings through a reduction of property taxes despite the extension of the city’s income tax rate onto the township while yielding an additional $12 million in revenue for the merged community.
Lynn Bachelor, a UT political science associate professor who helped prepare the report, said they spoke to local officials, determined how services are funded and conversed with other officials of other communities, who went through a merger, to help them guide their analysis.
Hugh Hinton, a UT political science associate professor who also contributed to the report, said it does not provide any recommendations, but rather it looks at the economic impacts of a merger between Sylvania and Sylvania Township.
Hinton said the merger would be economically feasible and “whether to go forward with the merger is the community’s decision.”
A merger would have more of an impact than creating a larger total population of about 45,000 and increasing the total land area to more than 27 square miles.
A considerable change would include shifting from property taxes to finance city services to predominately relying on an income tax.
Assuming the 1.5 percent income tax would be applied to the merged community, the report suggests the shift “would yield an additional $12 million in revenue, for approximately $20 million as currently budgeted,” Page 8 reads.
However, the report estimates nearly 80 percent of those employed in the township are non-residents of the city and the township and would be the most affected by 1.5 percent income tax. Of the anticipated $12 million, only about $5 million would be paid by current township residents.
The shift from a reliance on property taxes to a reliance on income taxes would allow the merged community to “transfer costs of city services from property owners and primary residents to employed persons, primarily non-residents and decrease reliance on a static financing source,” Page 11 states.
This change would reduce property tax rates for current city residents by an estimated 5.6 mills and township residents by 13.5 mills — meaning a residence valued at $200,000 would save a city resident $227 annually and a township resident $491 (including special assessments).
Overall property tax savings would amount to city residents and businesses saving more than $700,000 and township residents and businesses saving more than $8 million.
The difference between the income tax increase and estimated property tax reductions results in a “net tax reduction of $3 million in tax payments for current township residents,” Page 12 reads.
The merger would affect Sylvania and Sylvania Township residents differently.
Current Sylvania residents would experience changes in property tax rates through the elimination of existing township property taxes and an additional property tax allocated for the road and bridge fund and an additional 0.30-mill property tax for the fire pension fund.
Sylvania Township residents would be impacted by a 1.5 percent municipal income tax, an annual $111 garbage and refuse collection fee, $0.30 front foot special assessments each for tree maintenance and ditches and drains, an additional $5 vehicle registration tax, city property taxes extended to current township and elimination of all but one township property tax.
In terms of increased costs as result of the merger, the most significant changes in expenditures resulting from a merger would involve street construction and maintenance and repair, engineering services, capital improvements, courts and corrections, refuse collection, income tax administration and pension funds.
Of these changes, the most costly would be Sylvania Township’s street construction, street maintenance and repair and capital improvement expenditures currently covered by Lucas County. By taking on these costs, the merged community would incur more than an additional $2.83 million.
City of Sylvania Mayor Craig Stough said he has not made up his mind on whether he supports the merger, but he said he favors further study and will decide when he has “the facts in hand.”
Stough said consideration should be given to the ramifications on local government and services that could result from the merger. More specifically, he said, the amount of additional income taxes that could result from the merger (about $12 million as listed in the report) “needs to be confirmed.”
The merger should be “a real financial benefit to all our citizens if we’re going to merge into one larger entity that could result in less efficient government,” Stough said.
Sylvania City Council President Barbara Sears had a positive outlook on the possible merger.
“We already do so many good things together,” she said as she named their shared school district and fire department. “It seems like it would make logical sense [to merge.]”
Sears said she believes increased financial and leadership stability would result for the township if the merger were to occur since it would receive revenues on an income tax basis rather than through its current system of property taxes.
She said political reconstruction would occur with a merger, but she welcomes that as it gives them a “great opportunity to come up with some new ideas.”
Sylvania Township Administrator Hugh Thomas said he feels the Urban Affairs Center did a “good job at a very difficult task” in its preparation of the feasibility report.
As indicated in the report, Thomas said it was hard for the UAC to estimate the revenue stream.
Thomas said if the community wished to consolidate, it should be for other reasons besides financial factors.
A Sylvania Township resident and business owner, Dock Treece, president of Treece Financial Services, does not support the merger.
“There is no advantage for Sylvania Township residents that I can find,” he said.
Treece said the merger “would not be financially bad” for the City of Sylvania. However, he said it is a “losing proposition [for Sylvania Township] when you have to pay more in income taxes than you save in real estate taxes” as he indicated the “breaking even” point is an income of $33,000 each year.
Many Sylvania Township residents most likely live in the township “because they’re fleeing from living in a municipality,” Treece said.
Sylvania resident Howard Madigan said from what he has read he feels the merger has much to offer.
Madigan said, “At the present time, [Sylvania Township and Sylvania,] in a sense, are competing with each other, and I don’t see a good reason why a merger wouldn’t benefit them both.”
Pat Nowak, executive director of the Sylvania Area Chamber of Commerce, said during the initial Feb. 7 community meeting, which presented the feasibility study, community members were actively involved through listening and asking insightful questions.
A follow-up public meeting scheduled for 7 p.m. March 1 at the Sylvania Senior Center will provide further information to the public.
If there is enough interest after March 1, Nowak said the community might see the formation of a merger feasibility committee.
The merger would become a two-year process since the public would not be able to vote on it until the 2009 general election, Nowak said.
That is, if the merger reaches that point.
To establish the merger, several provisions must be followed according to the Ohio Revised Code, Sections 709.43 through 709.48, which involves a lengthy process.
The process begins with obtaining petition signatures of 10 percent of both Sylvania and Sylvania Township residents who voted in the last gubernatorial election and nominating five commissioners for both the city and the township. That provision must be met and later validated by the Lucas County Board of Elections before the communities can vote to establish a merger commission tasked to formulate merger conditions. The majority of commission members from both subdivisions must agree to conditions to be issued in a report or they may vote against a merger. If the majority can agree on the conditions, the conditions must be approved by a majority of the voters from both Sylvania and Sylvania Township. At any of these stages throughout the process, if the majority from both divisions does not grant approval, no further merger petitions may be filed for at least three years.
For further details on the merger process or more information on the feasibility study, visit http://uac.