The Attention-Getting Device

Here's some good news for uptown Athens: The College Book Store is in the process of restoring the Beckley Building, located at the corner of Court and Union and the book store's home since 1952. Renovations will include a new diagonal entrance to the store at the corner of the building, the opening of currently bricked-in windows along Union by the Burrito Buggy and restoration of the building's brickwork to its original unpainted state. Further details are available in yesterday's Athens News.

Work should be done by mid to late July, and the College Book Store will remain open for business throughout. Consider taking a moment to thank general manager Michael Fitterer and his team for taking the initiative to spruce up their bit of uptown by calling them at 740-594-3505.

The following gets into the details of local tax law, complex but still important to any resident of Athens County who cares about how their tax dollars are spent.

In 2006, a local retirement center, the Lindley Inn, sued over Ohio University's plan to give 16 acres of tax-exempt state land to National Church Residences to build a retirement village next to the Stimson Avenue Bridge. OU’s original lease was for the token sum of $1 a year, and lawyers for the competing complex alleged that this amounted to a state institution giving preferential treatment to NCR over its competitors. In response to pressure from the Ohio Department of Administrative Services, OU has raised the yearly lease to $40,000. However, lawyers for the Lindley Inn recently filed another complaint, claiming that OU's land appraisal and new lease amount are still unacceptably low.

I have a related question: is NCR's payment in lieu of county property taxes enough?

In the early days of the project proposal, an arrangement was suggested where NCR would pay a $20,000 fee to Athens County, City and Athens schools to make up for the fact that the development was to be built on tax-exempt land. OU's new yearly lease has sometimes been quoted in the media as being $60,000 when what has supposedly happened is that the $20,000 tax replacement fee is now paid to OU instead of directly to local government, with OU then splitting up the $20,000 between the County, City and school district.¹

From a citizen’s perspective, NCR should pay the full amount of property taxes that it would if it decided to develop land elsewhere in Athens County. Any amount below this fair market tax value is in effect forcing the rest of Athens County taxpayers to shoulder the tax burden for the retirement center and its residents, all of whom will apparently be from middle to upper income brackets.^¢1 Since 60% of property taxes in Athens City go to the Athens City School System and 30% go towards County services, these entities would stand to lose the most. Also, Athens City does not collect income tax on pensions or retirement benefits², so without a replacement for property taxes the 200 proposed residents would contribute zero to the city tax base, while the City and County (meaning the rest of us) would be financially responsible for providing them with safety, street & road maintenance and recreation services.

With this in mind, I examined NCR’s tax replacement payment against what four comparable local retirement facilities paid to their respective Athens County tax districts in 2007. By scaling the building area of each facility to the size of NCR’s plans and averaging the resulting numbers, I was able to reach an solid estimate of what NCR’s tax bill should be. To take an in-depth look at the study, complete with spreadsheet calculations, a slideshow of site measurement techniques and hyperlinks to source data, click here.

The annual bill I arrived at was between $80,000 and $220,000, depending on how many stories the retirement center will be (2 or 3 floors will double or triple the total square footage of the development). That’s four to eleven times the proposed tax replacement fee, and this leads me to ask what may be a silly question: Will NCR still pay property taxes to Athens County for the buildings it erects on tax-exempt state land?

If so, then the $20,000 fee OU now plans to charge NCR on the city and county’s behalf replaces tax on only the tax-exempt land NCR is leasing. There is certainly precedent for this type of arrangement, since one of my four comparison facilities, Heritage Commons off Stimson and Kurtz, is a tax-liable structure built on exempt land. Sadly, this explanation appears unlikely, since $20,000 would be more than double the annual tax due on land appraised at 480k.^¢2

If, on the other hand, NCR will not be paying taxes on the retirement center buildings, then OU’s fee is far too small, and Athens County taxpayers will be subsidizing the retirement center to the tune of $60,000-$200,000 a year. That’s between $1.2 and $4 million over the next 20 years (not adjusted for inflation, which will increase the loss if the replacement fee stays fixed). It would amount to highway robbery, with the entire county as victim and the cash going directly into NCR’s pocket. Remember that even the government-supported low-income senior center at Heritage Commons pays taxes on its building; the idea that a retirement center for the well-off shouldn't have to do the same doesn't just tilt the playing field against NCR's competition; it also flies in the face of a basic sense of fairness and human decency.

Can anyone help shed some light on this? I find it hard to believe that County and State officials wouldn’t have made a fuss about such a huge tax subsidy if the second scenario is the correct one.

It’s that season again. Building season. The season of capital improvements. Summer. No students, no frost, no rain (at least by July), potentially meddlesome people off on vacation, so bust out the heavy machinery! And where better to start the summer than Athens’ own South Side?

The corridor along Richland Avenue has been in local news regularly, both as a hotspot for City, University and private development and as the location of two high-profile traffic accidents which have prompted intense debate over the adequacy of the current infrastructure. Since keeping up with all of the plans and issues is a real chore, The Attention-Getting Device presents a handy cheat sheet and visual reference, progressing from North to South along Richland Ave:


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The map appears courtesy of Google. Use the +/- buttons to zoom in and click on any blue area to read a more detailed description. If the map refuses to load in your browser, you can view it directly on the Google Maps site, or, if all else fails, download a jpeg picture version here.

A. Removal of Haning Hall at the intersection of Union and Richland and widening of the north end of Richland to a 2-way street. (OU, City of Athens, in discussion, no start date announced yet.)

B. Safety Issue: Pedestrian crossing between Grover and Porter Halls where an OU grad student sustained a serious head injury when he was hit by a truck in September of 2004. (OU, CoA, no solid plan for change.)

C. Construction of proposed new student health center on site of current tailgating field and welcome center across Richland from Peden Stadium. (OU, in discussion, no start date announced yet.)

D. Safety Issue: Richland Bridge site of a June 2007 accident where an OU graduate student was struck and killed by a drunk driver who allegedly ran a red light at the Richland/S.R.682 intersection. (CoA, see project below).

E. Widening of Richland Avenue Bridge to protect sidewalks and construction of proposed Richland/682 roundabout. (CoA, in site review and planning stage.)

F. Renovation or demolition of large sections of the Ridges complex. (OU, in discussion, no planned date.)

G. Construction of The Summit at Coates Run, an 870-bed student apartment complex, south of Dairy Lane behind the OU Inn. (Edwards Development, Columbus, in progress.)

I tend to look at issues of signage as being small change in the context of long-term community development: billboards are awfully transient things. Still, the idea of viewsheds has become a hot topic for a number of Athenians, so I couldn't resist doing a quick comparison of two stories recently covered in both the Athens Messenger and the Athens News (click here to link to the four articles).

In story number one, Nauman Outdoor Advertising, a billboard company based in Lancaster, has donated three weeks of space on one of their signs to Jonas Hart, an artist from Logan. Hart's project, entitled "This Exit", is a 320 square foot mural of the surrounding highway view on Route 33 north of Nelsonville, which he says is intended to shake us passing motorists out of our driving daze and point to the incredible Southeast Ohio landscape we often take for granted. Nauman, whose company website claims that "Outdoor advertising offers endless creative options", seems to be backing that statement up -- they supplied the panels Hart painted the project on and installed them on the sign for him, all free of charge. The result is one seriously neat roadside art exhibit and a surge of positive publicity for Nauman Advertising. "This Exit" will be up through the end of this month, and if your drive doesn't take you on that stretch of 33 you can still catch a glimpse of the mural on Jonas' Flickr photo album.

Story number two is a horse of a different color. Barnes Advertising Corp., a Zanesville company similar in size and profile to Nauman, has partnered with Athens Paint and Decorating to dodge an Athens City ordinance forbidding large billboards within the city limits and place a double-decker, two-way serving of ads halfway down Columbus Road. The signs take advantage of a ragged city line that leaves a few parcels on the Hocking River side of the road out of reach of Athens law; Barnes has apparently even brushed off requests by County Planner Bob Eichenberg that their ads be lit from above to cut down on light pollution. A number of Athenians have already complained, but the governmental response has been "It's technically outside the city limits, there's nothing we can do."

Well, there is a small thing you can do: take a moment to email both companies and tell them what you think of the way they do business. Thank Nauman for showing the world that an advertising company can be civic-minded and savvy at the same time. And tell Barnes Advertising that they don't have to being doing something that's illegal for it to be shady, tacky, unethical and mean-spirited, and that Athens locals have longer memories than they might expect. May the benevolent business model win!

Contact at Nauman Outdoor Advertising
noa@naumanoutdoor.com

Contacts at Barnes Advertising Corp.
Mary Jane Shackelford, president of Barnes Advertising: maryjshackelford@sbcglobal.net
John Barnes, vice president of Barnes Advertising: jw_barnes@sbcglobal.net

While you're at it, it might be a good idea to send a gentle reminder to David West, owner of Athens Paint and Decorating, that sticking your thumb in the collective eye of your customer base doesn't do much to keep them loyal. Too many people shop at Lowes already; why should a competing local business owner give them another reason to do so? Email him at davidewest@yahoo.com.

I was pleased to crack open last Thursday's Athens News to discover that The Attention-Getting Device received a mention at the end of a June 5th article concerning a fresh legal complaint which alleges that Ohio University's land lease agreement with National Church Residences constitutes a misuse of state property for private gain.

According to the News, TAGD "appears to have launched only last month, and most of its posts so far have dealt with the proposed retirement home, offering detailed attempts at cost-benefit analysis on the project", a spot-on explanation of what has been covered here up till now. Thanks for the copy, A-News!

So far, I've highlighted the windfall NCR expects to reap from the retirement development off Stimson Avenue and the disaster that I think it would be for east-siders, but what of the third party with a vested interest in the outcome of the project?

There have been three arguments consistently made about how the proposed NCR-run retirement center will enhance Ohio University. The first is that the center will provide on-site learning opportunities for students in the college of Heath and Human Services. I’m not sure this argument carries much weight. The programs in HHS have been graduating successful students for decades without the benefit of such a local arrangement, and if representatives for an existing local retirement facility are to be believed, HHS has never (at least not recently) explored the possibility, which suggests that even they don't view it as a high priority.¹

As for the second popular argument, the idea that OU wants to keep its retired faculty in the area for their expertise and continued involvement, I think that the University may be hoping to draw more heavily on its retired profs as an inexpensive teaching pool, but my unscientific observation is that many departments still seem actively engaged in trying to shoo their emeriti out the door. Also, former employees spread out around the country would seem to constitute a much more effective publicity presence than a single enclave, and the task of harnessing them for the institution will simplify as the information age progresses.

So what’s in it for OU?

The major benefit that an OU-branded retirement center might carry is in direct fundraising. It's no secret that University financial planners are looking for bigger sources of private money in an era when public funding for higher education continues to decline. Retired alumni, faculty and staff living in close proximity and connection to a university are likely to make larger yearly donations or, even better, major bequests from their estates.

How much money is at stake? It is important to measure the boundaries of the potential financial benefit that Ohio U. may receive from residents’ gifts. I will now present one method of calculating such a figure.

To keep the math simple, I'll use rounded averages provided by the Ohio University Foundation, OU's fundraising arm: $25 million a year in total gifts divided by 25,000 donors. Using this formula, the average per capita yearly donation to OU is $1000. (click here for a discussion of the limitations of the above formula). Assuming that all 200 grateful center residents will double the amount their gifts would have been otherwise, OU stands to profit around $200,000 a year from the facility, $240,000 if the new land lease is added in.

This figure is underwhelming to say the least. In the scheme of a more than $300 million University budget, $240,000 isn't much money at all.² It also represents less than a quarter of what NCR stands to make on the development (see related article). OU officials may hope they get better returns from center residents who choose to make large estate bequests, but there's no sure way of knowing whether those bequests will actually be made, and the fact that the center is slated to cater to upper-middle income retirees rather than the very wealthy puts a cap on the size of any bequest OU can expect to receive.

OU's best bet for ensuring that they receive estate bequests from center residents is to include language in the lease requiring that NCR build a true continuing-care facility. A July 2006 Chronicle of Higher Education article on the growing trend of university retirement initiatives suggests that "Communities should include all levels of senior housing: independent living, assisted living, skilled nursing, and dementia care. Colleges that don't build the full spectrum of senior housing may put some philanthropic [fundraising] pursuits in jeopardy."³ The piece goes on to quote industry expert Andrew Carle, director of George Mason University's assisted-living and senior-housing administration program: "If philanthropy is one of the big hooks, why would you put in a place a model that, by definition, makes you kick people out just before they're going to give you money?"⁴

Currently, a model that kicks people out seems to be just what NCR is planning. They have yet to obtain any state nursing bed licenses, nor have they announced any concrete strategies for doing so. This should serve as a clear red flag to OU planners. Keep in mind also that the new lease agreement still doesn't appear to contain stipulations that NCR limit the amount it charges its residents or that the center work in specific ways to provide internships for OU students in HHS. While these may be much smaller concerns, the picture they help paint is bleak: Ohio University on the verge of entering into a long-term lease agreement with no guaranteed benefits or legal leverage to make its partner honor promises made, a managing company in a position to make $4 for every dollar that OU does (and to demand a bailout in the event of a business failure), and neighbors, including a sizable cross-section of the University's own faculty and staff, that strongly resent the entire project.

A year and a half ago, one University trustee remarked that he was "concerned about the reputation of Ohio University for integrity", suggesting that OU's reliability as a business partner would be called into question if it re-examined NCR's lease after making early commitments.⁵ I believe the opposite. By going through with this deal without more legally binding guarantees than appear to be in place, Ohio University risks tarnishing its reputation as an institution that manages its assets wisely and its business shrewdly. Once done, that damage will be difficult to repair -- NCR's complex will not vanish once built. It could wind up making something like a 2 million dollar loss on a food service venture seem tame by comparison. I don't think that anyone with experience in the business world will fault OU for stepping gracefully, or even awkwardly, out of the current agreement.