Winning the federal designation excites Youngstown development officials.
By ROGER G. SMITH
CITY HALL REPORTER
YOUNGSTOWN -- Bill D'Avignon heard the news over the phone. "Whoo hoo!"
D'Avignon, the city's deputy director of planning, then turned and told Anthony Kobak, his associate planner. "Yeaaaaah!"
That's the reaction that came with Tuesday's announcement that Youngstown is one of 40 federal renewal communities. The city planning office and a variety of other officials made it happen.
Local economic development officials are just as enthusiastic about the potential jobs and investment that the program's major tax breaks and incentives could bring the city.
Each said the program is one more important tool to lure jobs and businesses to Youngstown.
Maybe most important, however, the designation shows that all segments of business development in the city can come together, said Reid Dulberger, executive vice president at the Youngstown/Warren Regional Chamber of Commerce.
He said few cities around the country were able to muster an effort as strong as Youngstown's. Everybody involved should be proud, he said.
Renewal community status gives the city bragging rights and a competitive advantage over many other cities.
"It's a big deal," Dulberger said. "It proves we can come together. We can compete."
How it works: Businesses that operate or locate downtown, in a segment of the North Side along U.S. Route 422, and the Smoky Hollow neighborhood will be eligible. The designation lasts until 2010.
The award means millions of dollars in tax breaks and other incentives that add up to reduced employee, equipment and investment costs for companies.
"From a tax advantage standpoint, it's pretty powerful," said Jeffrey L. Chagnot, city development director.
He gave some examples:
U Metropolitan Bank is spending $2 million to renovate a neighboring downtown building. One renewal incentive could let the bank write $1 million of the investment off its taxes the first year. The rest of the investment could be depreciated over 10 years, rather than waiting 40 years.
U ExTerra Credit Recovery Inc. has about 200 workers downtown. The renewal program has several incentives that would let the company have a $1,500 to $5,000 tax credit per worker if the employee lives within the zone or is hired from the welfare rolls.
U A business owner relocates a company into the renewal zone. The owner sells the company after five years. One renewal feature lets the owner avoid the 20 percent capital gains tax on the profit made from selling the company.
A business that occupies a building, fills it with equipment and hires workers could seize a whole range of tax incentives, Chagnot said.
Mayor George M. McKelvey said the incentives could help the city keep B.J. Alan Co. The fireworks maker, being courted for expansion elsewhere, falls within the zone. The renewal tax credits also should be attractive to investors interested in the proposed downtown civic center and related development, he said.
City's role: The incentives are complicated, so the city development office's role will be to simplify the process, Chagnot said. It must be as painless as possible for interested businesses, he said.
The complications, however, shouldn't deter companies from taking advantage, Dulberger said.
"Businesses and their accountants become very good, very quickly," he said. "You can bet those that can take advantage of it will."
The city has a solid, well-thought out plan to make the renewal program work, said Julie M. Michael, Gov. Bob Taft's local representative for the state Department of Development. Companies, especially new ones to an area, want bureaucracy to be simplified, she said.
The city's successful collaboration with area banks and the U.S. Small Business Administration should combine with the renewal program to lure new development, she said.
"I think it's absolutely fabulous. I'm thrilled," she said. "I have great hope Youngstown will be equally, if not more, successful with this program."
"This is the shot in the arm that Youngstown needs," said Councilman Richard Atkinson, R-3rd. His ward is within the renewal zone and he is chairman of council's community development committee.
Press conference: U.S. Sen. Mike DeWine, R-Ohio, and McKelvey traded credit at a press conference Tuesday, despite the supposedly objective economic criteria the government used to make the awards.
McKelvey said DeWine's lobbying efforts in Washington made the difference; DeWine said McKelvey's persistence is what paid off. "This status brings a great deal of hope," DeWine said.
Hamilton is the other Ohio city to receive a renewal designation.
Empowerment program: Youngstown skipped applying for the more competitive empowerment zone, which it has lost out on before. Instead, officials concentrated on the renewal program.
There is little difference between the two, said Roy Bernardi, assistant secretary for Community Planning and Development at the U.S. Department of Housing and Urban Development.
The main difference is that a couple of empowerment zone tax breaks are a bit higher, he said. The 10-year, $100 million grants that previously came with empowerment zones have been eliminated.
Youngstown is in a better position to get a future empowerment zone now that it is a renewal community, McKelvey said.
How much benefit the city gets from the renewal status depends on how many businesses it can persuade to take advantage, Bernardi said.