XENIA — The Xenia schools superintendent is pushing back on the city’s request for an extended tax abatement for the proposed Market District in downtown.

The city and Springboro-based developer Dillin, LLC are looking to turn the former Towne Square property from a largely vacant shopping center into a plaza with restaurants, shops, retail, and residential housing. To help spur the $125 million plan, the city has put together a package that includes tax abatements and other incentives.

According to Ohio law, Xenia can take 75 percent of the tax revenue intended for schools for up to 10 years as part of tax incremental funding (TIF) and 100 percent of property taxes as part of a community reinvestment area for up to 15 years.

The city is asking the school district to forego 75 percent for 30 years to help fund necessary infrastructure improvements that the city says are necessary to make the project happen.

Dr. Gabe Lofton is balking at the city’s request. In an email to the community sent last Friday, Lofton said the extra abatements would amount to “millions in lost revenue for the school district over 30 years.”

However City Manager Brent Merriman sees it a different way. He said currently the school district receives around $35-40,000 annually in property tax from Towne Square as it is now. Under the proposed TIF, the district would receive $36,626 in 2024, an amount that will ramp up to $161,742 in 2028, according to the public finance model from Dillin, obtained by the Gazette through a public records request. In 2034, the revenue is more than $260,000 and those are conservative estimates, Merriman said, adding that by the end, the school district will have received more than $9 million.

Merriman also said that the city is not asking the schools to give up money it currently receives.

“You can’t negotiate what you don’t have,” Merriman said. “A private investment that generates tax won’t happen if the public part isn’t done. All of that has to be in the works and agreed to in order for that private investment to occur. That tax money will never be created if there isn’t an agreement to invest some of that up front. We’re not asking the schools to give up everything.”

Merriman said the city has, as a “good faith measure,” excluded residential properties from the abatement. He added that the new residential properties are not expected to impact the schools as they would be geared toward young couples without school-age kids and empty-nesters. The schools will also receive income tax from the development right away, he said.

“What we need is partnership to be able to leverage some of that new tax value to pay for infrastructure that then allows the private investment to move forward,” Merriman said. “The schools’ position is negotiating away value, there’s no value to negotiate away from.”

Merriman also said there is zero risk on the school district’s part because if the infrastructure improvements are made and the development doesn’t happen, the city still has to pay off the debt. Dillin also has some risk, according to Merriman, as it would be responsible for any financial burden that stems from the creation of a required New Community Authority District.

Lofton, in the letter, cited the expected rise in the cost to educate students as a reason for being against the abatement.

“I know that the cost to educate students is only going to go up in years to come, as costs continue to rise and the demands on our school system increase,” he wrote. “Cutting into the budget for educating our children when it needs to be healthy, strong, and stable to meet their needs is not fiscally responsible, and would unduly impact individual property owners.”

Lofton said he can “appreciate the pressures our city leadership is facing, but this request to our board of education to forego the remaining portion of the property taxes from certain businesses and residences, in my opinion, would have serious long-term consequences and implications for the school district’s financial health and stability.”

“Ultimately, any agreement that does not make the school district ‘whole’ and does not contain mechanisms that provide for a true accounting of where all the funds are flowing, is truly unacceptable to me,” Lofton wrote. “This asks our young learners and their families to bear the burden of economic development.”

Reach Scott Halasz at 937-502-4507.