GENEVA – A three-hour marathon meeting of the Geneva Area City Schools Board of Education on Thursday, April 6, resulted in a unanimous vote to approve what the board agreed was its final offer to Spire holding firm Roni Lee, LLC to settle a multimillion-dollar tax arrearage due to Ashtabula County taxing entities stemming from an April, 2016 denial by the Ohio Supreme Court of the firm’s application for tax-exempt status.
Several rounds of offers and counteroffers between the Geneva Board of Education and Columbus-based lobbying firm The Montrose Group have sought to settle the arrearage, which dates from the 2010 tax year through the present and amounts to $6.2 million, according to Ashtabula County Treasurer Dawn Cragon.
The board’s final offer will settle Roni Lee’s arrearage for roughly 40 percent of the amount due, or what would have been agreed without the board’s involvement had the firm sought a tax abatement through established channels with the Ashtabula County Board of Commissioners, according to Geneva Board of Education President Ed Brashear.
“After all this time and all this effort, we’ve come back to where they should have been if they’d applied for an abatement in the first place,” Brashear said. “This offer shows Geneva schools wants a long-term relationship with this organization.”
All of the taxing authorities due some share of the arrearage agreed with the Geneva Board of Education leading negotiations with Roni Lee, LLC because it’s owed the lion’s share – 49.7 percent, according to Geneva Board of Education Treasurer Kevin Lillie.
Representatives of the other taxing entities affected by any deal struck were on hand to witness deliberations and make suggestions. Ashtabula County, the Ashtabula County Technical and Career Campus, Harpersfield Township, the Ashtabula County District Library, Ashtabula County Metro Parks and Northwest Ambulance District are each due a share of the 50.3 percent not due to Geneva Area City Schools.
“I hate how hard we’ve all had to work to get an entity to do their duty to this community, which they claim they love,” NAD Director Vince Gildone said.
NAD’s share of the arrearage amounts to $375,236, according to documents submitted by Ashtabula County Deputy Auditor Dennis DeCamillo.
The terms submitted by the board, which were based on an April 5th counterproposal from The Montrose Group, are dependent on the passage of legislation by the Ohio legislature as part of the biennial budgetary process.
This rider, known as “uncodified legislation,” offers the Ashtabula County Board of Commissioners the authority to waive penalties and interest on past due taxes, to waive some or all taxes and to designate the Harpersfield Township property on which Spire sits as an enterprise zone – allowing for tax abatements in the future.
The draft legislation also allows the Ashtabula County Treasurer the authority to extend tax repayments for past due taxes to ten years from the current legal limit of five.
The rider applies specifically to Spire, describing the 170-acre sports training facility and the county without specifically naming them in a move aimed at avoiding invalidation on Constitutional grounds.
Terms submitted to Montrose by the board are all subject to what’s known as a “claw-back provision” which dictates that any breach in the agreement at any time makes Roni Lee subject to all of its back taxes, plus penalties and interest.
The terms submitted to Montrose by the board agreed substantially with the lobbying firm’s proposal on the first item – a payment of taxes for the years 2010 through 2013, minus penalties and interest, of $2.1 million over a ten-year period from 2017 to 2026.
The second point of dispute between Montrose and the board, the amount due for tax years 2014 to 2016, amounts to $3.5 million including penalties and interest, according to Cragon.
The board had asked for a $742,500 payment in lieu of taxes (PILOT) for the three-year period, spread out over the same ten-year timeframe agreed, or $82,500 a year.
Montrose had countered with an offer of $645,000, which the board rejected.
“I sort of had a feeling we were going to stick to $82,500,” Brashear said. “We’re holding firm.”
The third point of negotiation covers the current and future taxing years through 2026, with Montrose asking for a $55,000 PILOT. The board rejected this figure, paring down their earlier request for $275,000 to $250,000 a year.
Some debate broke out during the discussion on this point and touching on the use agreement between the district and sports facility, with board member Richard Dana expressing doubts about Spire’s commitment to the schools after the agreement expires in 2026.
“After 2026, a concern I have is if our kids are left in the lurch,” Dana said. “I’m concerned about the commitment Spire has. I love our kids having access to this world-class facility, but we may have to make other arrangements.”
Brashear responded and echoed his remarks during a March 24th board meeting, during which he told Montrose Principal David Robinson, “We have no choice but to trust you.”
“I admit we may need to find another place for our kids,” Brashear said. “That’s not the best case. The worst case would be foreclosure and a sheriff’s sale. We’d get our $6.2 million and you know we’re not going to use that to build a stadium, we need that for operating costs. The best case scenario is our kids are playing [at Spire] long after I’m gone and the local economy continues to grow.”
Another point of compromise sought between the board and Roni Lee is the use agreement currently running through 2020 allowing Geneva Area City Schools the use of Spire facilities for $20,000 per year. The board had asked for free use for the period of the abatement and Montrose had countered with a reduced, $10,000 figure.
The board rejected that figure, and added conditions for negotiation of a new use agreement for free use for the period of the abatement through 2026, and adding conditions for the price moving forward.
“The terms of that contract need a lot of work,” board member Jessecca Wilt said. “It was all originally based on what we were paying for Memorial Field.”
Roni Lee had acquired Memorial Field from the Geneva Board of Education as part or early plans for a sports academy, along with $100,000 in “earnest money” to use the facilities at Geneva High School for evening classes. The academy never materialized and Memorial Filed was returned to the district, which in turn was given to the City of Geneva for conversion into a park when it was determined that the field and stand were in unusable condition, according to Lillie.
The board also appended a request that a new use agreement be hammered out prior to June 30, 2017, with charges for access to Spire be pinned at no more than .1 percent of general fund revenue for the school district as detailed in the annual five-year forecast.
“We have to create a true public-private partnership,” Dana said. “That hasn’t existed since 2009. A lack of communication has resulted in this festering situation. I have to ask, are you solvent? What are your plans and where do [Geneva schools] fit into that?”
A Montrose request to support future abatements through the Ashtabula County Board of Commissioners would also have accepted the now-unfinished aquatics center and still-unpaved parking lots from a future valuation of the Spire property. This was rejected by the board, which stuck to its original language stating all abatements on future development at Spire must go through the usual, legally-established channels.
“We’re not determining abatements and valuation here,” Brashear said. “We don’t know how to do that.”
The final request from Montrose was the board’s support in passing the uncodified legislation currently pending in draft form at the Ohio House of Representatives.
“Believe it or not, they can’t do anything without local support,” Brashear said.
Dana expressed his wish to have any legislation introduced into Ohio law introduced by local representative Dr. John Patterson in the Ohio House or Sean O’Brien in the Ohio Senate.
“I’ve spoken with Senator O’Brien, and we stand ready to do what you need us to do as your representatives,” Patterson said. “At this point I stand with you, I stand behind you, I stand in front of you.”
One final matter of debate amongst board members regarded access to financial statements from Roni Lee, which as a for-profit corporation are not public documents.
At a March 29th meeting in which the board submitted its earlier set of proposals, board member Sarah Fisher said she had difficulty discussing an agreement without seeing any financial documentation and in an email exchange between Geneva Area City Schools Superintendent Eric Kujala and Montrose Principal David Robinson it was again asked if the board will see any financial statements.
Kujala said the board ultimately decided not to push for disclosure of the firm’s finances.
“We had discussed that, but made a decision not to,” Kujala said. “Anything we look at would be part of the regular abatement process in the future, which as I understand it is part of the process – finances and project cost.”
DeCamillo said the auditor’s office is moving forward with an appraisal of Spire to settle an October, 2016, appeal by Roni Lee, LLC to the Ashtabula County Board of Revision to reduce the valuation of the 170-acre, 720,000-square-foot sports training facility from $54.6 million as assessed to $7.94 million.
“We have approval from the Ohio Tax Commissioner to go ahead with an appraisal,” DeCamillo said. “I’m going to have access to Roni Lee’s financials and I’m bringing in a forensic accountant to find out what’s going on there.”
Pictured is a document prepared by Ashtabula County Deputy Auditor Dennis DeCamillo listing figures for the different proposals made by lobbying firm the Montrose Group, Geneva Area City Schools Board of Education as well as the total tax arrearage for the Spire Institute, with no concessions made.