XENIA — The City of Xenia is pivoting to a new method of funding infrastructure improvements for the multi-million dollar Market District project that won’t require an agreement with the local school district.

The city earlier this year tried to enter into negotiations with Xenia Community Schools to receive 75 percent of tax revenue on the improved value of Towne Square for 30 years through tax incremental funding (TIF), which would help fund the necessary improvements. The Ohio Revised code says municipalities can take 75 percent for up to 10 years but would need the school district to sign off on anything longer.

That request was met with a response that was not “overly negotiable,” City Manager Brent Merriman said last week in an exclusive interview with the Gazette.

Xenia has since come up with a funding plan that will allow for the infrastructure improvements necessary for the project without district approval and on Aug. 1 sent notice to XCS and the career center of its intent to utilize tax incremental funding via an urban redevelopment plan and stack that with other funding incentives.

Allowed under ORC 725, Xenia can abate 75 percent of property tax on the improved value for up to 30 years (or as long as the urban renewal bonds are not paid off). Xenia also plans to use a community reinvestment area to exempt 100 percent of property tax revenue for 15 years before the TIF kicks in.

The urban development TIF function is “perfect” for the site “because of the slum and blight conditions that exist there,” Merriman said.

Merriman and Finance Director Ryan Duke stressed that the school district will not be losing any property tax revenue it currently receives from Towne Square and it will gain extra funding in the form of income tax, estimated at around $90,000 a year until the CRA falls off.

At that point, the district will begin to receive 25 percent of the improved or incremental value, estimated at around $175,000-200,000 a year. When the project is built out, around 30 years into the future, the district’s property tax revenue will be around $800,000.

XCS had earlier pushed back on any TIF requests and still maintains its stance that school revenue should not be affected by city growth.

”We understand that the city is planning to move forward with their plan to fund the development of Towne Square using revenue from residential property taxes meant to support education for Xenia students,” Superintendent Dr. Gabe Lofton said in a statement. “Under current Ohio law, they are within their rights to do so, and have announced their intention to take 75 percent of the revenue intended for our public schools for this project. As I have stated in the past, economic growth for the city should not come at the expense of our students, and it was my hope that the city would search for an alternative to this plan. While that is unfortunately not the case, I am glad to know that the initial ask for 100 percent of the revenue is off the table, and that we can make plans to move forward accordingly.”

In an email to the community sent in March, Lofton said the abatements would amount to “millions in lost revenue for the school district over 30 years.”

The city doesn’t agree.

“It’s not revenue they had in the first place,” Duke said. “If we didn’t do this, if we didn’t invest in infrastructure to this extent you’re not going to have this level of investment.”

As an example, Duke said if a Hardee’s came to Towne Square, 100 percent of that property tax would be a lot less than income tax revenue from town homes worth $300-400,000.

“If there’s not an investment in the infrastructure, none of this is going to happen,” Merriman added.

He also said the schools are not at risk one bit. It’s the city that has to pay the debt service, estimated at around $800,000 a year, if the project fails to meet the expectations.

“The schools lose nothing here,” Merriman said. “They only gain.”

Xenia is expected to approve the necessary resolution at a special meeting Aug. 15. The Gazette reached out to XCS and the career center but did not receive any reaction to the notice prior to deadline.

Reach Scott Halasz at 937-502-4507.