State help in limbo for Seneca County courthouse

Whether to renovate or demolish the Seneca County Courthouse, an 1884 Beaux Arts-style sandstone building designed by noted architect Elijah E. Myers, is a continuing debate.

COLUMBUS - Those seeking to save the Seneca County Courthouse from the wrecking ball are creatively pursuing the new Ohio Historic Preservation Tax Credit.

But the already narrow window they're trying to climb through may be even narrower than originally thought.

Although the program was created with the goal of approving credits for 100 projects in the fiscal year that began July 1, Gov. Ted Strickland's administration plans to stick to a $120 million limit allocated in the state budget for the program's first year.

"[Seneca's] was the 101st application to be filed, but others have fallen out for various reasons, so now it's number 93," state Rep. Peter Ujvagi (D., Toledo) said. "The issue is whether a cap set on the amount of money being utilized will be sufficient [for 100 projects]."

To date, 22 projects have been approved with a future tax-credit value of about $50.5 million, the equivalent of 25 percent of the total $201.9 million price tag of the projects.

But there are another 55 applications in the pipeline ahead of Seneca's that have already been deemed "complete" by the Department of Development and are in the formal review stage. Seneca's application is still in its infancy, making it unlikely a final decision will be made before voters go to the polls on March 4 to consider an $8.5 million bond issue for the project.

"The program was budgeted for $120 million, and the expectation at this point is that the state will make use of all $120 million," said Mr. Strickland's spokesman Keith Dailey. "The $120 million is what the General Assembly agreed to with one dissenting vote when it approved the budget."

Mr. Ujvagi plans to introduce a bill this week to set aside 10 percent of the tax credits for government projects - a move that would benefit the Seneca County courthouse project.

"Even though the application has been accepted, there is nothing in statute that enables a county to accept a tax credit," he said. "The only way that could be is if the county deeded or sold the courthouse, through [a limited liability corporation], which then leases it back to the county. That's a little convoluted, and it's my sense that there's little likelihood that the county would be willing to do that."

His bill would get rid of the middle man by authorizing counties to buy and accept tax credits themselves.

Historic preservation consultant Steve McQuillin, of Westlake, Ohio, has submitted an application on behalf of Seneca that, if approved, could make the county the indirect beneficiary of $2 million in state tax credits and eventually $1.6 million in additional federal tax credits - almost half of the total estimated $8 million project price tag.

Mr. McQuillin's proposal would involve creation of a limited liability corporation, through which the county and a private business would partner.

Creation of a limited liability corporation to "own" the courthouse during the restoration would be a paper transaction with the county continuing to control the courthouse, its use, and the construction work to renovate it.

Mr. McQuillin said the county would maintain control because it would be the managing partner in the LLC.

The other partner in the LLC would be a tax-paying business, such as a local bank, which would receive the state and federal tax credits and hand them over to the LLC, controlled by the county. After the restoration project was complete the LLC would eventually dissolve and the courthouse would revert to the county.

The tax-credit money would significantly lessen the financial burden on county taxpayers, which should interest county commissioners, local preservationists say.

"We should turn over every rock and beat every bush to bring more money to Seneca County," said Jackie Fletcher, a member of the Tiffin Historic Trust and a candidate for county commissioner this year.

The project must demonstrate that the courthouse project will be a job-creator and a money-

maker, which could be a tough argument for a project that would essentially move county jobs around rather than create them.

"We have to show that, during a 15-year period, we can replace the lost revenues to the state," Mr. McQuillin said.

"There are things that other projects can show that we don't have, such as an increase in property taxes collected. But we will have the state and local taxes paid by construction workers on this project, and we would have the tax revenue from the employees who would work there.

"The building is empty right now, so that helps us," he said. "You can argue that these people are county employees already, but you could also argue that you'd have to throw out all of the commercial projects as well if those jobs don't come from outside of Ohio."

Seneca's application was signed by the one commissioner who has backed restoration over demolition from the beginning, Mike Bridinger.

Commissioner Ben Nutter, the board's sole Democrat, met with members of Mr. Strickland's staff Friday and said he's optimistic some announcement about state support could come before March 4.

But he harbors no optimism when it comes to the tax-credit application.

"We're clearly not eligible," he said. "Sending in an application and having that accepted is very different than having a tax-credit certificate. We have many huge issues as far as ownership that cannot be overcome. Our bond counsel is telling us that since we don't pay taxes, a tax credit is of no use to us."

Commissioner Nutter, a steadfast backer of demolishing the courthouse, has repeatedly refused to consider seeking money in the form of state and federal tax credits to help pay for courthouse restoration even when preservationists have shown him how the county could qualify for up to $3.6 million in such credits.

Ms. Fletcher said Friday that she doesn't understand Mr. Nutter's opposition to seeking more money from the state through tax credits to help pay for the renovation of the courthouse.

"We need to look aggressively for money from outside the county. I think he's either asking the wrong people or asking the wrong questions," she said. "Why would the people at the Department of Development encourage us to move forward with this if it wasn't viable?"

Seneca County is hoping to garner about $2 million from Ohio's capital budget due for debate this spring.

Assuming the project also wins the state tax credit and a separate federal tax credit worth an estimated $1.6 million, the courthouse project conceivably could benefit from a total of $5.6 million in government aid.

Preservationists hope to have as much of this lined up as possible before voters must decide whether to approve the 20-year bond issue and earmark 0.72 mills in property taxes to pay for it.

The commissioners have vowed not to collect the additional tax but rather to use its approval on paper to obtain a lower interest rate.

Sen. Kirk Schuring (R., Canton), the architect behind the historic-preservation tax credit, challenged the administration's contention that it has the authority to set a dollar cap on the tax credit when the law creating the program set the goal at 100 projects.

"The idea is that an application has to stand on its own through a cost-benefit analysis," he said.

"The burden is on developers to show that they can generate enough taxes to not only cover for the credit, but provide even more benefit to the state. In theory, there should be no cost to the state."

He noted that any cost in the form of a credit against future tax collections cannot occur until a project is completed, which could take years in some cases.

Mr. Ujvagi said he hopes to convince Mr. Strickland to make a firm commitment that the Seneca courthouse will receive some capital budget funding before March 4.

Mr. Dailey said such a commitment is unlikely.

"[The governor] believes the courthouse is important, and he continues to work to determine what financial assistance from the state will be available to assist in renovation," he said.

"That work is ongoing. One option would be the capital budget, but those discussions have not begun yet and would require the support of local legislators," Mr. Daily said.

Development spokesman Kelly Schlissberg said the department has two people conducting application reviews.

The Ohio Historic Preservation Office, which conducts the first phase of the review, has two to three people assigned to the program, she said.

"There is no specific time frame that we're operating under," Mrs. Schlissberg said.

"We're doing it in as timely a fashion as we can. It could take a couple of months at historic preservation and the same amount of time here."

Contact Jim Provance at: jprovance@theblade.com or 614-221-0496.