Prepared Notes for Board Meeting – WEC Rental
October 11, 2010
Marc A. Schare –
Whenever I vote against an administrative recommendation, I always want to explain why. In the case of the renovation of the WEC, the administration contemplates spending $143,950 in order to secure building rentals of between $41,000 and later, $68,000 per year.
I have a number of concerns about this proposal.
When this proposal was first brought to the board, I requested a statement of anticipated revenues and expenses. While I have no reason to expect that this business venture wouldn’t ultimately be profitable, the statement never materialized and to this day, I don’t know what, if any, incremental expenses may be incurred.
One such expense would be the property taxes that we might have to pay on the portion of the building that is rented out. Legal opinions are mixed as to whether we would owe property taxes and we would get a large percentage of those taxes back in any case, however, a business case for the renovation would include a thorough examination of that requirement. I exchanged a number of emails with OSBA’s Holly Reedy on this topic and she correctly points out that if a non-profit attempted to exploit a property tax exemption by renting to a commercial enterprise, most school districts would attempt to capture those funds.
Another issue is the legality of the operation. President Keegan and I exchanged a number of emails on this topic and basically, we wound up with dueling cases. There is the concept of “de-minimus” that may apply in this case, but there is also a prohibition against a public entity expending funds for the express purpose of making a profit. Please note that I’m not accusing anyone of violating state law, I am saying that the law is vague enough that additional effort should have been expended to get a definitive answer.
Finally, there is the morality of the situation. With this action, the Worthington School District chooses to enter the commercial real estate market in Worthington’s Wilson Bridge Corridor. Currently, according to a presentation by Bird Houk, the city’s consultant on redevelopment for the corridor, we are competing with 23 buildings that have a vacancy rate of 23.3%. Is it fair for the district to use its property tax exemption to take business that might have otherwise gone to other buildings – buildings that ironically pay their property taxes so our kids can benefit.
This is a difficult vote for me because I want us to be entrepreneurial and I want us to think outside the box. I applaud Mr. Joseph and Mr. Gehring for finding tenants and I certainly want to reduce the burden on district taxpayers whenever possible. I just want to be sure that we’ve dotted every I and crossed every T before moving forward.