Creating a joint economic development district with Austintown at the location of the racino under construction in the township, Youngstown Mayor Charles Sammarone said, would be a financial benefit to both communities.
Under the city’s scenario, Youngstown and Austintown would share money collected from an income tax imposed on all workers at Hollywood Slots at Mahoning Valley Race Course and a profit tax on the racino.
“It benefits both communities,” Sammarone said. “In government, everyone has a money problem. You can’t sit idle and be satisfied with a win today. You have to do better tomorrow. We have financial ways to help Austintown with [the racino] and other undeveloped properties.”
A JEDD permits a city to provide needed infrastructure, such as water and sewer lines, to locations in a township. The city is permitted to impose taxes in exchange for those services.
Youngstown imposes a 2.75 percent income tax on those who live and/or work in the city as well as a 2.75 percent profit tax on companies in the city. The income/profit tax at the racino likely would be 2.5 percent, though that would be negotiable, said Youngstown Finance Director David Bozanich.
But Austintown trustee Lisa Oles is adamantly against the idea, criticizing city officials for looking to make a quick buck at the expense of Penn National Gaming Inc., which owns the racino under construction, and at the expense of its employees.
Bob Tenenbaum, a Penn National spokesman, said his company has had no discussions with the city on water or tax issues.
“A JEDD is a very typical thing that happens in a development project like this,” said Tenenbaum, specifically talking about an income tax on workers. “We don’t look at a JEDD that taxes employees as anything unusual at all.”
But he wasn’t as accepting of a profit tax, declining to comment on it.
Also, trustee Jim Davis said he wouldn’t oppose an income tax, but doesn’t support a profit tax.
“We don’t want it to be a money grab,” he said. “Granted, it would be great, but we want businesses to build in our community. That would discourage business coming to our community.”
The city can’t legally change its taxation laws to get rid of a profit tax, but can reduce the tax amount or possibly provide a refund through a tax-credit program, Bozanich said.
Austintown trustee Richard Stauffer couldn’t be reached Tuesday to comment.
In a Tuesday letter to township trustees, Sammarone wrote that “the time has come to discuss a mutually beneficial JEDD arrangement.”
While there are many possible tax scenarios, Davis said the three trustees agree that any proposal would need unanimous consent from the trio. Oles said she has no interest in working with the city on a tax plan for the racino.
Sammarone wants a definitive answer on the JEDD proposal from the township by the end of the month. If the trustees aren’t interested, “we’ll figure out Plan B, whatever that is. This is an idea. Either do something or put it to bed. I want to work with people. I’m not here to only help my city. I want to help the area.”
Davis wants to keep discussing issues related to the racino with the city.
Oles and Davis said Youngstown officials have told township leaders that a JEDD possibly could provide about $2 million a year in profit and income taxes to be split between the township and city.
Bozanich said there isn’t a specific figure, and the city is looking at other scenarios to benefit Youngstown and Austintown.
Among the scenarios is Youngstown assessing a water-connection fee for Penn National’s racino if a JEDD doesn’t work, city and township officials say.
Bozanich said there are different figures being considered. Oles and Davis said Youngstown officials told township leaders that figure also is $2 million.
Tenenbaum said, “If in fact Youngstown wants a $2 million-a-year payment to use city water, that would be unprecedented. It could have a chilling effect on the project.”
The company is looking at all water and sewer options, he added.
Penn National is spending $125 million to construct Hollywood Slots and another $125 million to the state for its slot-machine license and a relocation fee from Beulah Park in Grove City. It will provide $1 million to Austintown in 2014 and 2015 for infrastructure improvements, and then $500,000 a year as long as the racino is open that the township can use at its discretion.
That is enough money for the township, Oles said.
“We’re not looking to get any more money than what will be given to us from Penn National,” she said.
The racino is expected to be finished by next year. It will feature about 1,000 video slot machines.
Oles’ relationship with city officials has been cool since Youngstown proposed in August 2006 — during the Mayor Jay Williams administration — a JEDD with Austintown and the portions of Boardman that get city water. The plan was to tax existing and future businesses in those townships. The pushback from Oles and others resulted in the proposal going nowhere.
Sammarone, who was city council president at the time of the JEDD proposal, said he also opposed taxing existing businesses in the suburbs.