South Euclid councilperson Jane Goodman filed a complaint with the Ohio Elections Commission alleging false statements by No on 96.
We are posting our campaign's response to her complaint, which led the Commission to summarily dismiss it on October 31.
DISPUTED CLAIM #1: “Issue 96 costs us $500,000.”
First Interstate and the City of South Euclid have not released a fiscal impact study for Oakwood Commons, but other Ohio cities have analyzed the fiscal impact of retail development on their communities. The City of Dublin in central Ohio has a similar cost of living index as South Euclid. (See Exhibits 1 and 2). Dublin’s consultants concluded in 2007:
“The retail land use prototype generates the most operating expenditures at $1,514 per 1,000 square feet annually.” – Cost of Land Uses Fiscal Impact Analysis, June 19, 2007, page 26. (See Exhibit 3).
First Interstate’s conceptual design submissions to the City of South Euclid show its intention to construct 325,000 square feet of retail space (See Exhibit 4).
Using the Dublin cost figure of $1.514 per square foot of retail space, 325,000 square feet of retail space would cost the City of South Euclid $492,050 (325,000 x $1,514=$492,050).
DISPUTED CLAIM #2: “…The Defendant falsely asserts that the loss will be $87,000.”
In her complaint, Ms.Goodman conflates the concepts of “cost” and “loss.” In the response to the accusation above, we’ve demonstrated how we calculated the costs that the City of South Euclid would incur each year. Loss, however, is a net calculation of revenue minus cost.
Instead of taking First Interstate’s self serving and shifting claims about the revenue Oakwood Commons would generate at face value, we made our own calculations, in order to determine the overall profit or loss to the City of South Euclid.
The Energy Information Administration concludes that for the type of retail Oakwood Commons will house, there is on average 1 employee for every 818 square feet of space. (See Exhibit 5).
For a 325,000 square foot building, this would result in (325,000/818) = 397 employees, which is very close to the 400 employees that First Interstate claims will be directly employed at Oakwood Commons.
A value-oriented, big box retail center like Oakwood Commons is likely to pay wages that are below the national average, so using an average wage figure that blended the national averages for retail and food service in 2010 from the National Retail Federation, we estimated the average annual wage at Oakwood Commons would be $25,000 per year. (See Exhibit 6).
According to the Regional Income Tax Agency, South Euclid has a municipal income tax of 2%. (See Exhibit 7).
Based on these figures, the City of South Euclid would receive: $198,500 in annual income tax revenue from Oakwood Commons (397 employees * $25,000 * 0.02).
First Interstate estimates that Oakwood Commons will have a property value of $45 million. (See Exhibit 8). The property tax rate in South Euclid is 3.97% of market value, but only 11.55% of property tax revenue goes to the City of South Euclid. (See Exhibit 9).
Based on these numbers, the City of South Euclid would receive: $206,341 in annual property tax revenue from Oakwood Commons ($45 million * 0.0397 * 0.1155).
Combining the property and income tax figures, the City of South Euclid would receive: $404,821 in total tax revenue from Oakwood Commons ($198,500 in property tax revenue + $206,341 in income tax revenue).
Therefore, the net profit/loss for the City of South Euclid would be: a Net Loss of $87,209 ($404,841 in total tax revenue minus $492,050 in cost).
While this is how we derived the $87,000 loss figure, we could have used a much more stark calculation. In 2004, the Mid-Ohio Regional Planning Commission (MORPC) analyzed the Fiscal Impact Analyses of eight communities and concluded that retail development resulted in an average net loss of revenue of $0.44 per square foot. (See Exhibit 10, Understanding the Fiscal Impacts of Land Use in Ohio, page 3).
Based on First Interstate’s proposed 325,000 square feet of space, a loss projection for the City of South Euclid based on MORPC’s analysis would be $154,000 per year. We chose to use the more conservative figure of $87,000 net loss to the City of South Euclid.
DISPUTED CLAIM # 3: “Issue 96 kills over 500 jobs”
A big box retail development like the one proposed for Oakwood Commons will have an impact on the jobs in the surrounding community. It may cause new jobs to be created, as businesses are launched or expanded to serve its needs and it may force other businesses to downsize or close through competition.
According to the 2007 research paper The Effect of Wal-Mart on Local Labor Markets, “…each Wal-Mart worker replaces approximately 1.4 retail workers.” (See Exhibit 11, p. ____).
This is the basis for the ratio used in the campaign that for every 5 jobs directly created, 7 jobs are lost.
Using First Interstate’s 400 direct job creation figure, a retail outlet like Wal-Mart would eliminate (400 *1.4) = 560 jobs.
We have chosen to use the more conservative figure of 500 jobs that would be eliminated.
Contact: Jon Benedict
For Immediate Release
Developer Mitch Schneider’s Issue 96 Campaign Faces Complaint of Multiple Violations
South Euclid, OH –The No on 96 Campaign announced today that it is filing an official complaint with the Ohio Elections Commission against the Issue 96 campaign, funded by developer Mitch Schneider, for false statements in campaign materials.
“Mitch Schneider acts like the rules don't apply to him. His Issue 96 campaign is so desperate they may have violated state election laws and the regulations and laws of three communities,” said Shana Johnson, co-manager of the No on 96
“South Euclid, Lyndhurst and Cleveland Heights had to force Schneider’s Issue 96 committee to remove signs illegally placed on public land in their communities,” continued Ms. Johnson. “The campaign also may have violated Ohio laws by paying for the return of ballot applications, and the committee’s literature contains numerous false statements. As a result, complaints are being filed with the Ohio Elections Commission and Ohio Secretary of State’s Office.
“Each of these actions is troubling but collectively they demonstrate a pattern of behavior. First, he fought to block the citizens’ right to vote on this important issue. Then, he said he could proceed even if the voters rejected his rezoning request and now he is spending hundreds of thousands of dollars on a campaign so desperate it can't follow the laws. Mitch Schneider assumes he can use his millions and influence to get away with anything he wants," concluded Ms. Johnson.
The complaint to the Ohio Elections Commission alleges that the campaign committee, funded by Schneider, made false statements repeatedly in campaign literature. Specifically, the campaign has stated that the proposed big box development won’t cost South Euclid any money and has inconsistently stated the number of jobs created and revenues generated. In fact, as shown in multiple studies that are applicable to the proposed Oakwood development, the big box center could cost, conservatively, $500,000 annually for police, fire, EMS and other city services, and could cause hundreds of job losses in the community.