HERMITAGE — Under an “additional contribution agreement” reached by Hermitage School District officials and the developer of a proposed retail development anchored by a Kohl’s department store, the developer would pay the district $60,000, should the school board change its vote to in favor of a tax incremental financing plan.
The board, which vetoed the plan by a 6-3 vote May 21, will reconsider its vote tonight. The motion also calls for approval of the additional contribution agreement.
The Herald obtained copies of the resolution and agreement under a Right-to-Know request.
The $60,000 would come due if the city creates the TIF district - city commissioners already have approved the TIF plan - and the state guarantees bonds that would be issued on behalf of the developer, driving down the interest rate on the bonds.
Levey and Co., Akron, Ohio, proposed the TIF plan, in which the city, county and school district would defer 69 percent of new property tax money generated by the development for 20 years, with the deferred money going to pay off a bond issue to provide up-front money for construction.
The bond proceeds primarily would cover the costs of widening the Shenango Valley Freeway between Maple Drive and South Hermitage Road, installing a new traffic signal, improving storm water drainage, mitigating wetlands and dealing with poor soil.
The plan also includes a $50,000 up-front payment to the city to cover the cost of electricity and maintenance of the traffic light - which the city would assume ownership of after construction - and for police and fire response to the development over 20 years.
The $50,000 would come from the TIF bond proceeds, while the school district’s $60,000 would come from Levey.
City and county commissioners have approved the TIF plan, which was put together by a committee made up of a member of each taxing body and representatives of Levey and Mercer County Industrial Development Authority, which would issue the bonds on Levey’s behalf.
Levey officials have said all three taxing bodies need to approve the plan for the development to go through.
Also under the proposed agreement with the school district, Levey will make up any shortfall in tax proceeds based on the projection in the TIF plan, an “additional contribution” in the terms of the agreement.
Levey believes the school board’s 31 percent cut of the new property tax money will be $90,459, when the Kohl’s store and four outparcels are occupied.
Should the new tax proceeds at “full build out” fall below $90,459, Levey will pay the school district the difference for up to five years.
If Levey defaults on paying the difference, the district could sue it for the money, or place a lien on the property, making the land unable to be sold until the lien is paid off.
If the district cuts property taxes, Levey would not have to make the additional contribution