With a stalemate on creating a joint economic development district to share tax money at a racino under construction in Austintown, Trustee Jim Davis is requesting a meeting of officials from the township, Youngstown and Penn National Gaming Inc. to discuss the matter.
Under the city’s plan, Youngstown and Austintown would share money collected from an income tax on workers at Hollywood Slots at Mahoning Valley Race Course, opening next year in the township, and a profit tax on money made by Penn National at the racino. State law permits cities and townships to form a JEDD to impose taxes in exchange for needed infrastructure, water and sewer lines from Youngstown in this case.
Township trustees don’t support the tax plan, but Davis, chairman of the board of trustees, said Tuesday he contacted Penn National officials seeking a meeting with company, township and city officials.
“If the township trustees ask us to meet and talk, we would certainly accommodate them,” said Bob Tenenbaum, a Penn National spokesman. “They’ve been extremely cooperative with us.”
A meeting date hasn’t been scheduled.
When told of Davis’ request by a Vindicator reporter, Youngstown Mayor Charles Sammarone said, “I’m not against speaking to anybody, but have him call me and the two of us can talk. Then we’ll see if we need to talk to Penn National.”
Davis had complained that Sammarone provided a letter to the newspaper last week that was addressed to the trustees about a JEDD before giving it to the township officials. Davis said the letter was Sammarone’s way of “throwing his weight around and making noise.”
Sammarone said there wasn’t anything in the letter that he hadn’t told Davis in a previous meeting.
The mayor wants Austintown trustees to decide on a JEDD by the end of the month. At their Monday meeting, all three trustees said they aren’t interested in the JEDD.
Trustee Lisa Oles said she opposes a JEDD as it’s a plan by “greedy politicians” to tax middle-class workers.
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.
The township is not looking for more money than that, said Oles, who successfully fought a 2006 Youngstown proposal to create a JEDD to tax existing and future businesses in Austintown and portions of Boardman that get city water.
A JEDD at the racino could provide about $2 million a year in profit to be split between the city and township. While the city’s income and profit tax rate is 2.75 percent, the racino tax likely would be 2.5 percent, though that’s negotiable.
“Why would anyone object to it when it will bring money into the township?” Sammarone said. “It’s their decision to make. Let’s sit down and talk about it” and then go to Penn National. “If they’re not for it, tell me and I’ll look at something else. I don’t know what that plan would be. You don’t dictate to anyone. You negotiate. If they don’t want to work on this, we’ll deal with the company.”
Talking with Youngstown about the water issue is necessary, Davis said, but he wants Penn National to be a part of those conversations.
“We can work it out with all parties,” he said. “We can discuss the options to get this worked out so there’s not a delay. [Penn National has] no objection to sit down and come up with a best-case scenario how to resolve this issue. We get nothing accomplished if we sit here banging heads.”
If the JEDD idea is dead, the city will look at other scenarios, Sammarone said.
One is for the city to assess an annual water-connection fee for Penn National, with $2 million being the figure thrown around.
As for a profit tax on Penn National, Sammarone said there is the possibility it can be eliminated or at least reduced through tax breaks the city would give the company.
But city Finance Director David Bozanich said last week the profit tax can’t be waived if there’s an income tax. City Law Director Anthony Farris said Tuesday that his initial reading of state law is “it doesn’t appear we can exempt” Penn National from paying a profit tax if an income tax is imposed on racino workers.
“From our point of view, it’s all speculation,” Tenenbaum said. “We haven’t seen a proposal and haven’t spoken to the city.”
Tenenbaum said last week that a JEDD that taxes employees’ salaries “is a very typical thing that happens in development projects like this.” But he declined to comment on a profit tax and said an annual $2 million fee to use city water would be “unprecedented” and “could have a chilling effect on the project.”