Township, city partner to create new tax

As construction continues on a new office complex in Union Township, finishing preparations are being made by local officials to create an earnings tax that will affect any new businesses or industries that move to the new complex.

Ivy Pointe, a new business center located near I 275 just south of the SR 32 intersection, will open for business with a one percent earnings tax that will be collected by the City of Milford, located several miles to the north.

Union Township Administrator Doug Walker said that the tax will be the result of creating an economic development district that encompasses the new office complex.

“Basically, the taxes are collected from employee payrolls through the taxing authority of the city of Milford,” said Walker. “The township is able to create a contract which establishes a joint economic development district which utilizes Milford taxing authority to collect payroll taxes in that district.”

The authority to create the district, or JED, comes from legislation that allows entities such as a township, that can’t impose taxes of this sort, to gather tax money by partnering with a city. A city, which can impose an earnings tax, then has the authority to tax that area of the township, and then the proceeds from that tax are split between the entities creating the JED.

While Milford isn’t in Union Township, Walker said that it was a good choice for a partner in this instance.

“The reasoning behind it is to let communities who don’t have taxing authority to create economic development opportunities that can be shared with adjacent communities,” said Walker. “We could have partnered with Cincinnati, but there are a couple of reasons we chose Milford. One is that they are an adjacent community to us. While they’re not in the township, we share a lot of the same traffic issues and some of the people who will work in this district will live in Milford. The other reason is they have a reasonable tax of 1 percent, instead of up around 2.5 percent like some of the other cities.”

While the tax itself is slight, Walker said that the township hopes to reap well from its creation. Since it is a payroll tax, Walker said that there is no way to determine how much it will generate until there is a more definite idea of how many employees will be located in the JED.

“That will depend on how many businesses and employees we end up getting in there,” said Walker. “It could really vary all over the place. We did some ‘what-ifs,’ but nothing set in stone. We need to know how many employees they will have, but a reasonable scenario of 10-15 companies in the district could generate over the life of the district, which is 30 years, $12-15 million.”

After the monies are collected, the township and city will split the funds with 85 percent of the money going to the township. Businesses are expected to relocate to Ivy Pointe by sometime just after the beginning of 2007.

While some may see the tax as a detriment to attracting new business to the complex, Walker said that the funds will be used to make improvements to the area, which he said would be an appreciated tradeoff to any prospective business.

“I don’t think there will be any chilling effect,” said Walker. “What we’re doing with the income created here is putting that money back into the infrastructure of that site, building roads and sewer and water lines. The businesses understand that.”

The land on which Ivy Pointe is located was purchased earlier this year by Clermont County, and then developed into an office park. Some 100 acres in size, the project cost the county nearly $8 million, but is hoped to bring far more back in economic development revenue.