Lorain and Spitzer brace for property tax dispute over Harborwalk

There is a simmering financial dispute over the value of land and homes in Lorain’s Harborwalk waterfront neighborhood.

Spitzer Great Lakes Ltd. and the city will team up to challenge the Lorain County Auditor’s assessment of land and condominiums in the Harborwalk neighborhood along the Black River.

Pay for development

The financial dispute affects how the city reimburses the cost of installing infrastructure such as streets, water pipes and sewers.

In 2003, the city and Spitzer Great Lakes entered into a 30-year agreement to use tax increment funding, often referred to as TIF, to pay for the installation of water lines, sanitary sewers, roads and connections electrics needed before the house was built, Lorain City Auditor Karen said. Shawver.

The total cost was $9,803,645, paid for with two bond issues to borrow money and a loan from the Ohio Public Works Commission.

The remaining debt is $5,054,182, according to figures from Shawver’s office.

The town of Lorain will support Spitzer Great Lakes Ltd. in a dispute over land and building values ​​in the Harborwalk waterfront neighborhood of Lorain. (File photo from the morning paper)

Financing by tax increase is not the same thing as a tax abatement.

Instead, once a project begins construction and property values ​​increase, tax increment financing allows the city to use property taxes to repay money borrowed to pay for building costs. ‘infrastructure.

For Harborwalk, Spitzer Great Lakes “guaranteed to the city that any shortfall between taxes generated by the TIF and debt service owed on the aforementioned obligations would be paid by Spitzer,” according to the joint litigation agreement.

Upgrade Values

“In the 2019 tax year, the County Auditor reallocated residential housing values ​​by reducing the value of Spitzer-built improvements and increasing the value of the land portion of residential units, but without changing the value of these units without clear justification,” the agreement states.

This caused the negative effect because the tax increase funding generates revenue based on the value of the improvements, according to the agreement.

The decrease in the value of the tax increase financing “caused by the reallocation of values ​​harmed both the city and Spitzer and effectively interfered with the objectives of the development agreement” for Harborwalk, according to the deal.

“We need to get an explanation of why this happened,” Mayor Jack Bradley said.

City law director Pat Riley also discussed the financial effects in his letter to Lorain City Council.

“The city’s concern is based primarily on the fact that the Lorain County Auditor’s action reduces the amount of money the city receives for repayment of Harborwalk’s bonded debt,” Riley wrote. “The city is further concerned that such action could impact other bond projects related to the city’s TIF.”

It was unclear which venue or court would handle the dispute.

The listener responds

Lorain County Auditor Craig Snodgrass said he received no official notification from the city or Spitzer Great Lakes.

However, Lorain’s land values ​​have an overall average of about 23% for the land to building ratio, which means land values ​​represent 23% and building or improvement values ​​represent 77% of the overall value. land, Snodgrass said.

For riverside land in Lorain, the land value is higher – around 34% of the total value, with the building value accounting for 66% of the total value.

At Harborwalk, by the river, land value is about 18% of total value and building value is 82%, Snodgrass said.

“Frankly, I think 18% is too low,” Snodgrass said.

Riparian land is more valuable, he said.

“This is where I disagree that 18% is too high — it’s not,” Snodgrass said. “I’ll tell you right now, it’s not.”

Property taxes benefit schools in the town of Lorain, the city, and other political subdivisions that raise funds through levies.

If someone doesn’t pay, the tax burden shifts and someone else pays more, Snodgrass said.

He said he “absolutely” disagreed with placing a lower percentage value on land.

If there’s more emphasis on the building and less on the land, “someone is going to lose their income,” Snodgrass said.

Penny D. Jackson