BOE explains sale of Delisle Center land
Several residents have asked about the property transaction involving four parcels of land at the Delisle Center that the Cleveland Heights-University Heights Board of Education (BOE) recently sold to the city of University Heights. Since the community is interested, I’d like to explain the factors which led the BOE to this decision—many of which may not be readily apparent.
First, Ohio Revised Code (ORC) has specific rules regarding the disposition of public school properties, which are considered public assets. We must follow the law even though the law may not enable a school district to maximize potential revenue the way a city can.
Second, the Ohio Community Reinvestment Area (CRA) program permits municipalities and counties to designate CRAs which provide a direct incentive tax exemption for up to 15 years, depending on the construction project. Under this program, municipalities are empowered to grant these tax abatements.
Third, the four parcels the school district owned at the Delisle Center were not usable for educational purposes. This meant, in addition to being responsible for their upkeep, the district was required to pay taxes on them. The city of University Heights owned an additional three parcels. Because of the shape and location of the parcels, and the fact they were owned by two separate entities, they were unlikely to be usable or to be developed unless they were combined. Back to my first point: Under ORC, a city has more latitude to deal directly with individual developers. The school district paid the taxes on the four properties that we owned to settle our tax obligation before transferring the property. The city of University Heights picked up legal fees and other costs required to complete the transaction.
Fourth, the school board ensured the legal agreement includes a "claw back provision." This ensures that if the development does not proceed as planned, the land reverts back to the school district.
Fifth, if the school district had continued to own [this] land that we deemed unusable for our needs, we would not gain any tax revenue from it (and we would have to continue to pay the upkeep and taxes). If the land were developed, even under a CRA, in the first 15 years, we'd receive modest tax revenue from the developer based on the parcel divisions and the initial improvements required to develop the land. Due to the CRA, the buildings themselves will be tax-abated for 15 years, which the school district has no authority to contest or approve. After 15 years, the district will receive taxes on both the land as well as the buildings, which should increase significantly based on the project’s [anticipated] value in 15 years.
Sixth, a new development, as is planned for this property, typically increases the value of its surrounding neighborhood, and often spurs additional economic growth. Revitalizing the Taylor corridor would bring positive benefits to the cities of University Heights and Cleveland Heights, as well as the school district.
After considering these factors, the BOE decided it was in the public's best interest in the long term to proceed with selling the parcels so this project could move forward. If we didn't, we were unlikely to ever receive revenue from this land, and it would continue to cost the district money.
As with all construction projects, the district will include the projected tax revenue for this project in its Five-Year Forecast, once ground is broken on the project. Many proposed real estate developments are delayed, or never built, for a variety of reasons. It would be inappropriate to forecast tax receipts before we have evidence they are likely to materialize.
Jodi Sourini is president of the Board of Education for the Cleveland Heights-University Heights City School District. She's been a resident of University Heights for more than 25 years.