Westlake City Council is set to vote on an ordinance laying the legal groundwork for the American Greetings world headquarters and Crocker Park planned expansion. The agreement details tax exemptions for the property, infrastructure to be provided by the city, service payments from American Greetings, provisions for the school district and much more.
“This is the agreement that solidifies what American Greetings promised the city and what the city promised American Greetings,” said Mayor Dennis Clough. “It doesn’t approve the development plan, but it at least gives parameters. As much as we could define is included in that agreement.”
The agreement could not be passed at the last regular city council meeting because two members were absent. Ward 4 Councilman Michael O'Donnell, an American Greetings employee, will not be voting on this ordinance.
Under the agreement, American Greetings and Crocker Park managers Stark Enterprises will pay no taxes on the increased value of their property for 30 years, starting in 2014. Instead, developers will make service payments to the city.
Those service payments will be used for several purposes, including an annual tax compensation payment of at least $455,000, or 25 percent of property taxes as they are with the current zoning, to Westlake City Schools.
“The valuation of that property will be exempt from real estate taxes, except for the school,” Clough said. “This is what they would have gotten with the current zoning. The estimate, and this is only an estimate, is that if this were developed and they were entitled to all real estate taxes, it would be $400,000 to $500,000. The schools need to get that amount regardless, so the schools won’t be harmed at all based on the current zoning,” he said.
Zoning in the area will soon change, however, if the ordinance is passed Friday, to allow for office space, retail, and other uses not allowed under the existing zoning, Clough said.
The property involved in the first phase of construction, which includes the American Greetings offices and parking lots, will be exempt from property taxes beginning in 2014. Other pieces of land will be eligible for tax-exempt status once crews complete one or more buildings assessed at $100,000.
Clough said the city opted for a 100 percent, 30-year exemption, the maximum tax exemption allowed by the state, because competition for the American Greetings headquarters the area was so stiff.
“The bottom line is we had to be competitive with all the other cities trying to woo them,” Clough said. “We had to match what they were being offered and that’s what they were offering. We feel that with American Greetings coming into the city of Westlake, it’s going to be a benefit to the sustainability of Crocker Park and the other business there. Lots of businesses want to be around American Greetings. This helps to sustain the existing businesses and increase the value of property in the whole area.”
The amount of those payments will be determined in the development agreement. The service payments, along with any shortfall payments or rollback payments will be placed into a newly established tax increment equivalent fund.
Shortfall payments would be made by developers in the event that the amount of service payments is not sufficient to ensure financing of public infrastructure improvements and to pay the school district the minimum annual school district property tax compensation
That money can be used for school district payments, public infrastructure improvements, bond interest payments and others necessary expenses as the project unfolds.