Toledo, Oregon agree to share coke plant taxes

3/22/2005

In hopes of averting a border dispute that could kill plans for a $350 million coke processing plant, representatives of the cities of Toledo and Oregon have agreed to an equal split of tax revenues.

However, a stumbling block remains whether the tax-sharing would be permanent or for a defined period, such as 40 years.

Toledo Mayor Jack Ford announced yesterday the city's willingness to share revenues with Oregon.

Oregon City Administrator Ken Filipiak confirmed the direction of the negotiations but expressed concern about the details.

"Toledo has suggested a fixed term of 40 years, and that's a step in the right direction," Mr. Filipiak said.

"But if we go forward as regional partners, we should go forward as equal partners. [Oregon's] position is that we would like an equal share of all the revenues for an indefinite period of time, and Toledo wants a limit on the term. That would be an unequal position."

The negotiations with Oregon follow closely on the heels of the discovery that the proposed site for the U.S. Coking Group appears to be inside the city of Toledo, rather than Oregon.

Mr. Filipiak and Barb Herring, Toledo law director, said negotiations were continuing.

Mr. Filipiak said officials from both cities essentially agreed on an equal distribution of revenue, but an obstacle is the fact that Toledo officials want to put a limit on the terms of the agreement.

He suggested both cities could decide to look at the agreement from time to time but said the terms should automatically renew unless both parties agreed to change it.

Mr. Ford, in disclosing the city's offer to compromise with Oregon, characterized it as a 40-year commitment.

"It's pretty much a 50-50 split, but rather than get bogged down in a war I think we've reached agreement to come together and send a strong message to the company," Mr. Ford said. "Let's go ahead and build this and we'll share not only in the taxes on the jobs but water sales and so forth."

He acknowledged that the border squabble threatened the effort to build the plant in Lucas County. "It had the potential. This is a $300 million investment, 40-year duration. Even if it was sited in Oregon, folks from Toledo would be working there. As it turns out, it's probably sited in Toledo," Mr. Ford said.

The plant is expected to produce huge tax benefits for both cities, as first construction jobs and then factory jobs contribute to income tax coffers, and as the improved value of the property boosts property tax revenues for the Toledo and Oregon city school districts.

The agreement is expected to be enshrined in a joint economic development zone being negotiated between Oregon and Toledo.

A border dispute has forced Oregon to negotiate tax-sharing with Toledo.

Steve Herwat, director of the Toledo-Lucas County Plan Commission, said a review of maps shows that Toledo's eastern border is really about 500 feet farther east than previously thought, placing more than 90 percent of the land to be leased by U.S. Coking Group inside Toledo.

Duck Creek, a stream that originates in Navarre Park in East Toledo and empties into the Maumee River near the Port of Toledo, has marked the traditional Toledo-Oregon border since 1957 when Oregon was incorporated.

The creek runs along the west border of 51.5 acres of property owned by the Toledo-Lucas County Port Authority that would be leased to U.S. Coking Group.

The company proposes to erect a plant that would produce coke, a key ingredient for the production of steel.

"Oregon is willing to offer Toledo an equal share so that our conflict does not become an obstacle in the project moving forward," Mr. Filipiak said. "Quite frankly, we believe that is very generous on [Oregon's part] because [Oregon] has done all the legwork."

If the tax division is agreed upon, Mr. Filipiak said the border that is in dispute would be clearly defined and the area the plant is located on would be in Toledo in a joint economic development zone, which would allow the U.S. Coking Group to be eligible for federal tax credits.

"We think that showing Lucas County, the greater community, and the client that we're able to reach an agreement where both sides are equal sends a message that we truly are committed to regional development," Mr. Filipiak said.

He said he expects both cities will jointly announce an agreement shortly.

Staff writer Tom Troy contributed to this report.

Contact Erika Ray at:

eray@theblade.com or

419-724-6088.