The city of Youngstown rolled the dice in its bid to supply drinking water to the racino in Austintown — and turned up snake eyes. So now, Youngstown is an observer while Penn National Gaming conducts tests to determine if well water is a viable option for its $125 million Hollywood Gaming at Mahoning Valley Race Course.
The international gambling/entertainment company owns facilities that use well water, so what they’re doing in Austintown is not unique.
But what is new is Youngstown’s failure to parlay its drinking water into a bargaining chip — as it has done many times before. What happened? Lisa Oles.
The township trustee, who makes no attempt to hide her disdain for the city, wasted no time in thrashing a proposal from Mayor Charles Sammarone for the creation of a Joint Economic Development District that would encompass the racino site.
Under state law, a city and township can form a JEDD where the city’s income tax is applied in return for needed infrastructure, water and sewer lines.
But before the Youngstown-Austintown proposal could even be formally discussed, Oles slammed the door shut on it.
She characterized the JEDD as a plan by “greedy politicians” to tax middle- class workers. Oles pointed out that the $2 million profit Youngstown believes could be generated — the two communities would split the money — is not needed by Austintown.
Penn National will pay the township $1 million in 2014 and 2015 for infrastructure improvements, and then $500,000 a year as long as the racino is open.
For a JEDD to become a reality, all three trustees in Austintown — Oles, Jim Davis and the Rev. Richard A. Stauffer — would have to approve it.
With the proposal dead on arrival, Youngstown officials suggested that the city could still supply drinking water to Hollywood Gaming at Mahoning Valley Race Course, but at a relatively steep price.
An annual water-connection fee of $2 million and a tax on the racino’s profits were suggested as the cost of Penn National getting its water from Youngstown.
While the gaming company is used to its employees paying income tax, the $2 million appeared to be the deal breaker.
Company spokesman Robert Tenenbaum would not publicly comment on a profit tax, but he called the $2 million connection fee “unprecedented.”
Tenenbaum said the fee “could have a chilling effect on the project.”
It wasn’t long after Penn National found out what it would cost to hook up with the city that the well water option came into play.
“There are still some final tests that need to be run,” Tenenbaum told The Vindicator recently. “We are very hopeful that we will be able to provide our own water.”
If the tests prove successful, Penn National will make sure the water is of high quality and there’s enough to meet the needs of the racino.
But the company has a fallback position if well water proves inadequate.
The city of Niles has offered to provide free drinking water to the racino, but it would have to run water lines to the site. Niles officials have said they are willing to do whatever is necessary to ensure that Penn National’s needs are met.
What caused the rift between Austintown and Youngstown? The 40 percent surcharge in water rates that the city’s suburban customers pay has been a point of contention for township officials going back decades.
But the water fight became more intense in 2006 when former Mayor Jay Williams unveiled a proposal for the creation of JEDDs in Austintown and Boardman that would have resulted in workers in existing companies — not just future ones — paying city income tax.
Needless to say, trustees in both communities were vehemently opposed to companies already operating being put on the city’s tax rolls; they made it clear they would no longer be held hostage by Youngstown.
The suburban communities aren’t blind to the reality that Youngstown’s population is shrinking, which means water usage is dropping.
With Youngstown on the ropes, the administration needs to adopt a new strategy — with humility at its core.