Ward: Pay to stayWritten by Lisa Renee Ward | | firstname.lastname@example.org
Is the use of incentives the way to attract and keep businesses in Toledo? That was a topic of discussion at the June 21 Toledo City Council agenda review.
Opinions were mixed.
Councilman Joe McNamara said what they are trying to avoid is offering an incentive for action that would have happened anyway.
“Some years ago there was a development outside of the city of Toledo and they placed infrastructure in the ground and they offered an incentive exactly like the TEI,” Deputy Mayor Tom Crothers said. “That place is called Arrowhead Park and when that opened ultimately it took 20,000 people out of Downtown Toledo. We are the ones on the front line speaking to these clients. They need incentive to stay in Toledo.”
In 2007, Toledo City Council passed an ordinance approving the creation of the Toledo Expansion Incentive (TEI) program. It designated zones within Toledo that were eligible for what basically amounts to a rebate on taxes if a company meets an agreed upon increase in payroll taxes from hiring new employees.
The percentage varies from 10 percent to 30 percent with an additional 10 percent awarded for companies that spend 15 percent of its net profits on research and development.
“If I were to take a dollar out of my pocket and say to you all, you may have this dollar but only if if I can get 30 cents back, the question is would you take that deal?” Crothers said. “Now if you don’t take the deal then I’m going to put the dollar back in my pocket and you get 100 percent of nothing. Or do you want 70 percent of something, see that’s the question.”
“Are we using a slingshot when we need a bazooka?” Councilman Adam Martinez said.
The specific legislation before them was to seek approval of a 30 percent TEI for Burkett & Sons Inc. based on a planned payroll expansion from $756,000 to about $1.5 million and the hiring of 20 new employees.
Councilman Rob Ludeman wanted to make sure that the fact that Burkett testified in the past about water rates was on the record.
“They asked us to ‘be kind to the business owners’ when it came to storm water rates,” he said.
Commissioner of Development Brad Peebles said they started negotiations with Burkett in August.
“This was why we originally came to Council requesting Council consider making the citywide 30 percent TEI policy versus having to come to council for specific approvals,” he said.
That legislation would have allowed the Economic Development Department to award TEIs without going to Council for approval as long as basic standards were met.
Discussion has taken place during the past year about the use of TEIs and how effective it is. At a hearing Sept. 30, experts testified and advised caution in the use of incentives.
“We need to continue these discussions — have a stable policy so we know what we are talking about each time one of these deals come along,” Ludeman said. “This is an important project, it stabilizes the part of Toledo it’s in.”
Councilman George Sarantou said the credit does not happen until additional people are put on the payroll.
“I appreciate the comments about Arrowhead, we need to be reminded of that. If you go around the entire county, if you go out Central Avenue — you’ll see a lot of businesses and services that were originally in Toledo — Sylvania Township doesn’t have an income tax,” Sarantou said.
He said if we don’t continue to offer incentives, jobs will continue to move out of Toledo.
“We’ve got to quit offering them our great Toledo water at a discounted rate without a JEDD or a JEDZ. We did that for Rossford and Northern Wood County,” Councilman Mike Craig said. “That’s a 20-year agreement, a lot of jobs can leave here in 20 years.”
The legislation for Burkett’s TEI was given emergency status, which means it will be before members of Council for a vote June 28.
Crothers said the proposed changes to the TEI program were almost ready to present and suggested a hearing so Council and the public would be informed. Are incentives the best way to create jobs? That will be debated another day.
Toledo Free Press Web Editor Lisa Renee Ward operates the political blog GlassCityJungle.com.