City details goals, plans of new fund

If the city of Toledo wants to attract new housing and job opportunities, it has to be proactive.

That was the pitch Brandon Sehlhorst, the city’s chief of growth, gave to Toledo City Council’s economic development and innovation committee on Thursday.

To be proactive, the city has to create sites and opportunities for development, Mr. Sehlhorst said.

On Wednesday, the city announced its $20 million Shovel Ready Sites Fund, which will be used to acquire and prepare sites so employers can move and invest in Toledo. The fund will be managed by the Toledo Community Improvement Corporation.

The sites have not been disclosed, but Toledo Mayor Wade Kapszukiewicz said he believes the $20 million will be deployed by the end of the year.

Mr. Sehlhorst, the executive director of the community improvement corporation, said the corporation’s strategy in identifying properties is to “think like a developer” and focus on sites the market will respond to.

“We know, based on data, what [developers] want to see, what they want to look at,” Mr. Sehlhorst said. “Industrial companies want to be by the highways, by the rail, by our port. ... We know where developers want to develop affordable housing based on where they can score ... low income housing tax credits.”

Mr. Sehlhorst said the improvement corporation is looking at developing all types of housing, from affordable and market-rate units to single-family homes and “missing middle” housing.

As for what the corporation is targeting in terms of appealing to companies, it is looking at the city’s strengths.

“We do have industries that are our target industries,” Mr. Sehlhorst said. “They’re ones that we’re competitive in because we’ve got the work force, and they’re ones that we, as a state, have resources to be able to assist, so advanced manufacturing, automotive, food processing, logistics, and distribution, these are constantly the industries that we typically compete well in.”

But the sites aren’t limited to just manufacturing, the executive director said, adding that the corporation is looking at attracting all types of industries.

Ultimately, the corporation wants to invest where the city can have the best return on investment.

“Our return on investment is not only selling the property for what it’s worth,” Mr. Sehlhorst said. “Our return on investment is the fees that come from the permits that they apply for, the construction jobs, the payroll tax, that’s the long-term sustainable revenue source that goes back to the city.”

Mr. Sehlhorst said the city is also looking at tools it can put on sites to ensure there is a dedicated revenue stream coming back to the corporation to maintain the fund, such as tax increment financing districts, community reinvestment area property tax exemptions, or new community authorities.

The $20 million Shovel Ready Sites Fund will come at no cost to taxpayers and is structured to be budget neutral.

Instead, it will be supported by the city’s joint economic development zone, or JEDZ, with Rossford.

How the money works

Since 1992, Toledo and Rossford have contractually shared income tax revenue generated by the development zone.

Last year, the cities amended that contract. Under the updated agreement, 15 percent of the total gross income tax revenues goes toward public safety within the territorial limits of the JEDZ; the remaining income tax revenue is divided between the two municipalities, with Rossford receiving 72 percent and Toledo receiving 28 percent.

During the course of negotiations, Rossford held the money that Toledo would have normally received in escrow. Now that the agreement has been approved by both parties, Toledo has received a lump sum payment of about $5 million.

The city expects to receive about $1 million every year for the next 35 years, which is the length of the agreement.

Toledo’s portion of the JEDZ revenue goes directly to the community improvement corporation.

Of the $5 million, $4 million of it will be put aside. Council will be asked to allow the city to issue a bond that will not exceed $18.7 million. That bond will be paid back through the $1 million that the corporation collects from Rossford every year.

“The city will issue economic development, nontax revenue bonds, and loan those bond proceeds to the TCIC,” Mr. Sehlhorst said. “This bond fund will be used to establish the TCIC’s Shovel Ready Sites Fund.”

The loan will be coterminous with the bond, meaning the loan will terminate as the city’s bond terminates in 2056.

The city will carry the debt, Melanie Campbell, the city’s finance director, said, but she does not expect it to have an impact on the city’s internal debt limit because there is a source of repayment from the corporation.

She also does not expect it to hurt the city’s bond rating, which has received back-to-back increases.

“I don’t see any current potential impact to the bond rating,” Ms. Campbell said. “I think, long-term, the agencies would see this as a positive for Toledo in terms of site preparation and development and growth in the future.”

The city’s administration is expected to send two pieces of legislation to council next week that would issue the bond and authorize the loan to the improvement corporation.

“I think this is an enormously important project,” Councilman George Sarantou said. “I think if anything, Wall Street would view this very favorably. ... Very often, they want to know what we are doing economically. What are we doing to diversify our economy? There was a time in the early 2000s, when we were being nailed to the wall because we had a huge dependency on the automobile industry.”

Once the legislation is introduced, council could vote on the ordinances as soon as March 3.

Contact Alice Momany at amomany@theblade.com.