Tax breaks help draw businesses into communities

ST. MARYS - Tax abatements are a key tool in attracting new businesses to a municipality.

St. Marys officials are seeing the benefits of the city's incentive program with the arrival of four new businesses. Kohl's department store opens Sunday, and Tractor Supply Company, Buffalo Wild Wings and Beer Barrel Pizza plan to open in the next several months.

All received 100 percent tax abatements for 10 years.

Abatements are beneficial because they lower the company's bottom line while bringing jobs to a community, said St. Marys Economic Development Director Todd Fleagle.

A tax abatement - given to a company deciding to locate in an enterprise zone or community reinvestment area - exempts a business from paying some or all of its real estate taxes for a certain number of years.

The state has guidelines for establishing abatements, but each community decides what perks to offer.

"Every community in Ohio has something different set up," Fleagle said. "But they also have to stay within state regulations, including the 15-year cap for abatements."

A community creates a reinvestment area by petitioning the state to designate where building and investment have been discouraged. An enterprise zone is created when the state certifies a particular area with a contiguous boundary.

The St. Marys enterprise zone includes all land within city limits, and the reinvestment area is anywhere there's existing retail or industrial businesses.

Celina's enterprise zone and reinvestment areas include all land within city limits.  

Both city councils can abate taxes up to 75 percent for 10 years for businesses in an enterprise zone. Anything greater than those terms must be approved by the city school district.

St. Marys allows up to 100 percent abatement for 10 years in a reinvestment area before needing the school board's approval. Celina allows 75 percent for 10 years.

School officials sometimes negotiate a payment from the company to compensate for the district's loss of property tax.

Celina City Schools Treasurer Mike Marbaugh is in negotiations with Machine Pro on Market Street for such payment. The company intends to build an addition and applied for a 100 percent, 15-year abatement.

Any payment would go directly to the school's permanent improvement fund, Marbaugh said.

St. Marys school officials did not seek compensation from Kohl's, Tractor Supply Company, Buffalo Wild Wings and Beer Barrel Pizza because their approval wasn't needed.

The city of Wapakoneta also has its own tax abatement ordinance, which economic development director Greg Myers fully supports.

"The idea of the abatement is to encourage economic development and job creation," he said. "The abatement produces a boost in the economy, and eventually (the company) begins paying full property taxes, increasing the city's revenue."

Residents can also benefit from the tax breaks.

Sara Scott, Mercer County chief deputy of real estate, said all Celina residential property owners can apply for an abatement because the entire city is a community reinvestment area.

"So even if a Celina homeowner plans to build an addition, garage or shed, they could apply for an abatement, as long as it's real estate property," she said.