Westlake Economy Improving Largely From American Greetings

This year, income tax revenue will be up at least 5 percent from 2011, more than the 1.5 to 2 percent increase city officials originally expected.

Finance director Prashant Shah expects income taxes to increase 2 percent for each of the next five years based on current trends — and because of projects already underway, namely the construction of American Greetings’ new world headquarters.

“I think we’re pretty much holding our own and actually doing very well,” Shah said, adding much of this is in part to the oversight and planning of the mayor and council president, both of whom are certified public accountants. “A lot of good things are happening here. We’re proud.”

Employee paycheck withholding taxes account for about 73 percent to 75 percent of income tax revenue and are the driver of the overall increase, said Shah, who started in November 2010.

Almost half of the city’s total budget comes from income taxes that are levied at 1.5 percent, 1 percent of which goes to general operations. There’s also a 0.9 mill levy to support fire and police departments.

Westlake’s total income tax revenues for the past four years were:

• $18.8 million in income taxes, which is about $1 million less compared with the year before
• $18.4 million in 2009,
• $18.5 million in 2010 and
• just over $20 million in 2011.

This year, the city has collected almost $13.1 million.

Looking at printouts of city approved projects, Robert Parry, director of planning and economic development, tells the story of how Westlake has fared through the recession.

Between 2009 and 2010, 163,000 square feet of open land was developed for purposes excluding residential. No single family or multifamily lots were approved in 2009, and 37 were approved in 2010.

Last year, there were few projects, albeit large ones. A total of 418,980 square feet was developed for an expansion at St. John’s Medical Center and new Westlake middle and high schools along with 11 multi-family units were built.

“It’s pretty clear the recession put a stop to most private, commercial, industrial and office development,” he said. “The only major projects that were built were St. John’s, Westlake schools and Tri-C, which are public or quasi public.”

That’s in sharp comparison to 2006 when 319,219 square feet of land was developed for retail, office, industrial, restaurant, institutional and recreation uses. There also were 211 single and multifamily units built.

During the recent downturn, the Planning and Development Office managed to keep busy designing a bikeway plan, conducting a community and industrial market analysis and establishing a job creation grant program to help companies renovate and move into existing buildings. Three companies — Henkel Corporation, Bonne Bell Cosmetics and Hyland Software — signed on and brought 431 jobs to Westlake between 2009 and 2011.

The program helped hold occupancy rates stable, which in turn helped stabilize income tax withholdings. In 2009, total vacancy rates were 12 percent for office, 10 percent for industrial and 7 percent for retail. Parry said it’s common for vacancy rates to be between 10 to 15 percent, and he hasn’t noticed those numbers increase because of the recession. There is a large vacant commercial building in town, but there are few vacant industrial buildings. 

According to the survey, in 2009 there a total of 3.4 million square feet of retail space, 3.5 million square feet of office space and 3.7 million square feet of industrial, excluding residential.

The city has roughly 10 million square feet for commercial/industrial development.  Adding hundreds of thousands of square feet to that base is a good sign, Parry said. When development slows down, that not only means there’s little growth in the business community but also a slowdown to the tax base and ultimately the community.

Parry isn’t sure of the full effect of American Greetings relocating to Westlake, but there have been land buys around the company’s offices. Construction is underway for more tenants at Crocker Park. Employees may move into town and residential developers might develop neighborhoods for those employees. Most importantly, Parry said American Greetings has given the city increased awareness.

What’s more, it’s all going to be new construction.

“Very little has been submitted so far, but there’s a large list of pending projects,” he said. “It will be a busy fall with the planning committee and council.

“This year will be as big as 2002-2003 with the construction of Crocker Park,” Parry said. “It will more than make up for the lack of retail and private development of the last four years.”
  
Part of the reason Parry thinks the card company chose Crocker Park is because of the lively atmosphere and appeal to a high caliber of potential American Greetings employees.

“Fortunately, we’re in a little bit of a good position that a lot of the hard work that has been done the past 30 years is paying off,” Parry said of the inquiries he receives daily from potential new employers. “People know where the city is. The city’s worked hard to have a good reputation, maintain good services and good streets. Sometimes, the city sells itself.”

Editor’s Note: In this series, Patch gauges the recovery of 18 Ohio communities based on income tax receipts since the Great Recession. Read about