As tax collections, property values and state funding have shrunk, cash-strapped cities and townships all over Butler and Warren counties are implementing new — and sometimes unconventional — ways to generate extra money.
The city of Mason, for example, is raking in $1.2 million a year by renting space in city hall and at its community center to a fast-growing, DNA testing company and TriHealth. The city of Middletown has also taken up the role of landlord, renting out space in its city building to Middletown City Schools for $65,000 a year.
West Chester Twp. officials estimate they have saved about $750,000 since 2012 by utilizing shared services, collaborative purchasing and contracted services.
In the wake of extensive cuts in state funding, job losses, foreclosures and lower property tax collections due to the economy, local jurisdictions across the state have struggled mightily, according to Ohio Municipal League spokesman Kent Scarrett.
“They have been dealing with efficiencies and shared services and regional approaches and collaborations and all these other things to try and lower the overhead costs that they experience in administrating the city,” he said. “But there are only so many areas that folks can come together and coalesce to share services. There is just a need for revenue.”
Income tax is the largest revenue source for most cities, but that revenue can’t grow unless cities can woo new businesses or companies are growing. Scarrett said under current financial constraints it’s tough to lure potential businesses when municipalities have been forced to cut back on services and infrastructures improvements like roads.
Middletown was featured in the May/June 2013 OML magazine, showcasing all that city has done to rise out of the ashes since Forbes Magazine dubbed it one of the fastest dying cities in 2008. Atrium Medical Center, the new Cincinnati State campus and the Pendleton Art Center all were lauded as strategic partnerships that have helped turn the tide.
“The city has made this exciting turnaround possible by building and utilizing substantial public/private partnerships at numerous locations throughout the city…,” the article reads. “These new partnerships have given municipal officials new latitude to attack problems that have been systemic in the city for years.”
Income tax in Middletown is projected to jump 8.5 percent to $11.7 million from the actual receipts in 2011. The city of Mason is projecting an income tax hike of 10 percent next year to $22.5 million, largely a result of forging strong private/public partnerships.
The city partnered with the school to build the Mason Community Center years ago. In 2007 when it was drowning in red ink the city joined up with TriHealth, Group Health Associates and Bethesda Rehabilitation Services to build a $19.6 million expansion. City Manager Eric Hansen said the city was staring down a $2 million a deficit before the expansion and last year the center was $100,000 in the black, after the 2010 opening.
TriHealth pays the city just over $1 million in rent and operating costs annually. The city has another rent-paying tenant, Assurex Health occupies part of the community center expansion and runs a huge genetic testing lab out of the basement of the city building. Their rent adds $180,000 to Mason’s bottom line. Hansen says they also pay $40,000 for premium passes to the community center and their 125 employees who earn between $50,000 and $100,000 salaries also pay income tax. But at the rate the company — that tests DNA to help doctors determine the correct medication to give a patient — is growing those figures should soar.
Assurex had 17 employees when it was in a strip mall across from the Sharon Nursery, 35 or 40 moved into the community center a year-and-a-half ago and they have hired 20 people in the past two months. The company was considering moving to the West Coast until Mason approved a 15-year tax abatement and a $100,000 forgivable loan. President and CEO Jim Burns said the partnership with Mason has been incredible.
“This is a real example of where government and private businesses work in unison, it’s good for them and good for us. We have an opportunity, as we kind of do this together, to actually build a model city,” he said. “What does a model city look like? The economic engines that help build the city are working in tandem with the city. You don’t have to get jumbled up in politics. You figure out what’s got to be done and you go do it. How refreshing.”
The exposure companies like Assurex get rubs off on the city as well. Assurex is now involved with Cincy Tech, venture capitalists and other bio-health companies.
“Having such a huge success story as Assurex pretty much guarantees us additional attention, additional looks from other similarly situated companies,” Hansen said.
Assurex COO Don Wright said he was at a conference on the west coast not too long ago when what Hansen described actually happened. One of their doctor partners was giving a presentation when all of a sudden Assurex popped up on the overhead.
“He was talking about rock walls and swimming pools and all this stuff, and if people really want to see how communities can work together with companies, they should all go to Mason, Ohio,” Wright said. “There was a picture of us up on the screen. We’re sitting in California and all of a sudden people are Googling Mason, Ohio.”
Public and private partnerships are also advantageous, said Middletown City Manager Judy Gilleland. The city and school district both benefit financially, she said, because the district needed to update their administrative offices, and the city had a lot of wasted office space they have been heating and cooling. Having 40 more workers from the school district in the downtown area eating and shopping will be an economic boon. And upcoming joint ventures between the city and schools will be easier to facilitate from under one roof.
In the end, local officials say “thinking outside the box” seems to pay off. Mason Mayor David Nichols said he has urged the city to approach every opportunity with business-like, open minds rather than with government blinders on.
“Does it make sense? We try to look at every one as a stand alone unit and what can the city do,” he said. “Everybody is always telling me what we can’t do; I’ve got that, that’s easy. (But) can you tell me how we can do something? … Figure out how to put the flag at the top of hill.”