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Agency’s record, need for tax hike generate debate
By Ed Runyan
To U.S. Rep Tim Ryan, who launched the full-time economic-development office at the Western Reserve Port Authority three years ago, funding that office is “one of the top priorities in our community.”
Ryan of Niles, D-17th, says opportunities coming into the Mahoning Valley because of shale gas means “our community has to have every tool in its economic-development toolbox to bring all these deals home.”
To Mahoning County Commissioner Anthony Traficanti, however, the port authority’s economic development program has yet to prove itself worthy of the amount of funding Mahoning County commissioners have provided.
“As a taxpayer and as a county commissioner, I would like to know what bang we get for our buck for our $300,000 for the port authority. I don’t know,” Traficanti said.
On Thursday, Mahoning County commissioners announced hearings to gather information on the tax will be in a couple of weeks.
Commissioners in Mahoning and Trumbull counties have each provided $100,000 per year for the past three years to fund economic development at the port authority. Rose Ann DeLeon has led that operation for 28 months.
Youngstown, Warren, Niles, Howland and the Western Reserve Building Trades Council provide the rest of the $375,000 per year for three years to get the operation started.
The agreements for that funding run out in about 20 months.
In addition, in 2011 alone, the two counties’ bed tax sent another $868,987 to fund port-authority operations at the Youngstown-Warren Regional Airport.
T. Sharon Woodberry, director of economic development for the city of Youngstown, said the port authority didn’t ask Youngstown to renew its $50,000-per-year earlier funding commitment because “everybody understands” that the port needs to have a more sustainable method of funding the authority’s work.
“Whether that’s the bed tax or not remains to be seen,” Woodberry said. Each county collects this tax on lodging.
Typically, a port authority generates its funding through fees paid to the organization for projects it works on, but the Western Reserve port has been “kind of slow off the ground” in generating its own funding, Woodberry said.
Warren City Council President Bob Dean, a former colleague of DeLeon’s at the Port of Cleveland, said no one has approached him or the city administration regarding renewal of Warren’s $50,000-per-year funding.
Bed tax increases
Trumbull County commissioners approved a 1 percent increase in its bed tax effective March 1, 2011, raising Trumbull’s bed-tax contribution to the port authority from $229,947 in 2010 to $350,877 in 2011. Trumbull County’s bed tax is now 5 percent, the highest amount allowed by Ohio law.
Also a year ago, the port authority asked Mahoning County commissioners to increase its bed tax to the maximum allowed — from 3 percent to 5 percent. Commissioners have not acted on it yet.
The 2-percent increase would increase the port’s revenue by about $500,000 per year. The current bed tax provided the port with $518,110 in 2011.
Mahoning County’s bed tax raises more money than Trumbull’s because more customers use Mahoning County hotels and motels, officials say.
Port Authority Board member James Floyd answered reporters’ questions Wednesday after the monthly board meeting at the Youngstown Business Incubator. Before that, it was unclear how the proposed 2 percent Mahoning County bed-tax increase would be used by the port authority. Calls to most of the port’s board members the week before weren’t returned.
Sarah Lown, hired as DeLeon’s assistant in November, says the port authority has certain powers that other government bodies don’t have, such as providing bond-financing for companies. The port can also help townships by buying property on their behalf and working across county lines to ensure that a business can get the best possible deal, Lown said.
The port also can do things the Youngstown/Warren Regional Chamber can’t do, Lown said, because the chamber is not a government entity.
“For our region, we can integrate the economies of Trumbull and Mahoning counties and make use of the infrastructure to work with everybody — the Chamber and everyone else,” Lown said.
Additional bed-tax money would be used to pay for DeLeon and her staff’s work, Floyd said. It would also be part of the larger income stream used by the port authority to run the airport in Vienna Township.
It’s not clear what portion of the money would be used for economic development and what portion for the airport, but the port authority approved a 2012 economic-development budget of $360,000.
Mahoning County Commissioner John McNally IV said county officials met Tuesday with members of the county hotel association, and the county convention and visitors bureau to further discuss the issue. County Commissioner Carol Rimedio-Righetti is gathering information about other ways to raise funds for the port authority.
Until that is done, the commissioners won’t make a decision on providing money to the authority, said McNally, who, along with Rimedio-Righetti, favors increasing the bed tax.
They both said they favor the tax increase because economic development is important to the Valley.
Hotel officials have told Mahoning commissioners an increase would negatively affect their businesses.
The increase would bring Mahoning County’s total hotel-tax rate to 14.75 percent, which Mike Naffah, owner of Hampton Inn and Suites of Canfield, said would make it one of the highest rates in Ohio and above the national average.
Another hotel official pointed out that a 14.75-percent rate would be higher than the rate in Canton (11.75), Kent (12.75) and Pittsburgh (14).
Lown points to other Ohio communities with higher rates such as Akron (15), Cincinnati (17), Cleveland (16.25), Columbus (16.75), Springfield (16) and Toledo (16.75). Dayton is at 13 percent, Lima is at 12.5 percent, and Sandusky is at 11.5 percent, Lown said.
Ryan says DeLeon’s work on projects such as the B.J. Alan Fireworks Co. relocation to the former Delphi Packard Electric property in Trumbull County and V&M Star’s purchase of the former Indalex factory have been “very helpful.”
DeLeon’s office is “moving in the right direction” and can play a significant role in helping improve the local economy because a port authority has powers that other government bodies don’t, such as bond financing, Ryan said.
DeLeon brokered a deal last year that allows B.J. Alan to expand into facilities in Howland and Bazetta townships. Delphi was making plans to demolish the former factories.
DeLeon also helped identify financing options and assisted with bond financing that is paying for $3.6 million in improvements at the Youngstown-Warren Regional Airport and helped V&M Star acquire the former Indalex plant in Girard for office use and equipment storage, Ryan said.
Ryan says “spinoffs from natural gas” are economic-development opportunities that require the expertise of someone like DeLeon.
“As we’ve seen from Shell and those types of companies, the competition is great,” Ryan said of the announcement that Shell Oil Co. had selected a site near Pittsburgh to build a multibillion dollar petrochemical refinery.
“I don’t want the Mahoning Valley to be the last community at the dance,” Ryan said.
Ryan says the value of DeLeon’s office is that a port authority “does things a regular city can’t do — purchasing buildings, tax-exempt financing. It takes time to build up a successful port authority like the one in Akron, for instance.”
Patrick Pellin, one of four Mahoning County representatives on the port authority board, said he thinks port-authority economic development is a “great idea.”
The downturn in the national economy during the two years and four months DeLeon has been on the job has made her task difficult, he said.
The work DeLeon has done, however, places the Mahoning Valley in a good position to capitalize “when the area starts to rebound,” he said.
Another Mahoning County port authority member, Don Hanni III, who has been critical of DeLeon in the past, said he would not comment on her work but he supports the proposal to increase the bed tax.
One reason is that Hanni is chairman of the intermodal committee, whose task is to explore ways that various modes of transportation can be combined in one location, such as rail, trucking and air.
Hanni said he believes there are intermodal opportunities worth exploring, such as restoring a rail spur at the Youngstown-Warren Regional Airport.
Effort in flux
The port’s economic- development work is in flux now because DeLeon has been on sick leave for a month, but Lown is doing a good job in her place, Hanni said.
In the weeks since the announcement of job and aircraft reductions at the U.S. Air Force’s Youngstown Air Reserve Station, port authority members have begun to stress the importance of maintaining the Youngstown-Warren Regional Airport, which shares the airfield with the air base.
“The airport receives no Department of Defense tax dollars in any aspect,” Floyd said. “What’s required to maintain the airport — all the rubber removal, all the lights, everything required for the maintenance of the runways, everything that is done to put airplanes on the ground — is the direct responsibility of the Western Reserve Port Authority.”
Perhaps the only exception is that the Air Reserve Fire Department provides support to the airport at no cost, Floyd said. The air base pays $31 million annually in civilian pay and $30 million in military pay.
Lown said the base makes up the largest share of aviation activity at the airport.
Floyd said the port authority has not asked the funding partners from 2008 to renew their earlier contributions because the bed tax would be a more stable form of revenue and because economic conditions since late 2008 would make it harder for those governments to provide the money from their general funds.
“Monies in general budgets of counties and cities ... are very fluctuating amounts based upon collections,” Floyd said.
The bed tax seems like a better way to fund the port, Floyd said, because of an anticipated increase in hotel and motel business from shale-gas industries.
Furthermore, the bed tax is “one of the few opportunities” where the county can “have some importing of money” from visitors or temporary workers, Floyd said.
Traficanti says he has been disappointed in the amount of information the port has provided him in since the commissioners first approved its $100,000 yearly contribution.
Traficanti said he asked to be kept informed of hiring matters and would like to know whether the port has formally evaluated DeLeon’s work and would like to see a business plan.
“I don’t know how they are going to utilize the new money,” Traficanti said. “Before we send any new money, I want information. There’s just a lot of unknowns.”
“I’m upset about the amount she’s being paid,” he added. “If she’s done something great, all is well. I just want to see an evaluation of what she’s accomplished. That’s $300,000 we could have spent on deputies.”
In 2011, payroll and benefits for DeLeon for 12 months and Lown for two months was $205,120. DeLeon’s base salary is $155,000 per year. She earned a $5,000 bonus in 2011. Lown’s base salary is $65,000.
Lown said DeLeon’s salary was suggested by Ryan and the firm that did the search for DeLeon’s position to attract someone with experience at a port authority. Other port directors in Ohio make more than DeLeon, Lown said.
Floyd said Wednesday that DeLeon is very ill and her health is “a great concern.”
Trumbull County Commissioner Frank Fuda said he believes DeLeon’s work has been valuable and would like to see it continue “because we need a professional group to do our economic development.”
Fuda said one disappointment has been the inability of the port authority’s economic-development office and the Regional Chamber to work together. “I don’t think there’s been enough cooperation,” he said.
Tom Humphries, president of the Youngstown/Warren Regional Chamber, said he had heard that such comments were being made, so he asked staff to compile a “calendar” of all of the instances in which DeLeon participated with the chamber in discussions about business expansion or with business executives.
Humphries passed along that information — a list containing about 60 such meetings or phone calls — to Fuda.
“I can say we have gone above and beyond the call of duty to be inclusive,” Humphries said of DeLeon.