CINCINNATI -- The Cincinnati Public Schools Board will not swap West End land with FC Cincinnati if the team doesn't offer to pay more in yearly school property taxes on its future $250 million stadium.
In a letter sent Monday night, the school board officially rejected FC Cincinnati's offer to make a $100,000 yearly payment in school property taxes, increasing the payments to $500,000 by 2031.
"The Board of Education will not consider a proposal to swap property with FC Cincinnati unless FC Cincinnati promises to pay CPS its fair share of property taxes on a new stadium built in the district," the letter said.
In order to build in the West End, FC Cincinnati needs the school board to agree to a land swap that involves FC Cincinnati taking the district's Stargel Stadium site. In return, the soccer club has also offered to build a new $10 million high school stadium in the West End.
But negotiations are not going well. This is the second offer from FC Cincinnati that the school board has rejected.
Last week, the team offered to pay the school board the same amount of property taxes -- $70,000 -- property owners are currently paying on the site.
The school board said no.
Over the weekend, the team offered to pay $100,000 in yearly property taxes to Cincinnati Public Schools if it builds a soccer stadium in the West End, increasing the amount every few years until the annual payment would climb to $500,000 in 2031. After 2031, how much the soccer club pays in school property taxes would be tied to FC Cincinnati's profits.
School board members are objecting to the deal because the team's proposed payments are less than what a development of that size would normally pay to the schools. Under the city's current tax policy, a new $250 million development would pay roughly $2 million ever year to the schools, according to the school board's estimate.
"Being as transparent as we can be about it, it’s not in the best interest of our schools and our district to accept what they currently propose," school board president Carolyn Jones said.
For weeks, school board members have questioned how much the team will pay in school property taxes on the potential stadium.
In a March 7 letter, the school board asked two questions of the soccer team: Does FC Cincinnati plan to pay school property taxes on the stadium site, and will the team sign a community benefits agreement with the West End neighborhood?
"We’re really concerned about it because the fact of the matter is, we fund our schools on property taxes," board member Mike Moroski said.
The school board threatened to walk away from negotiations with FC Cincinnati, after the club submitted an offer last week to keep making a yearly payment of $70,000 in school property taxes on the West End site.
In another letter sent back to the team on March 9, the school board said it was "very disappointed" in the club's refusal to pay more taxes and threatened to kill any deal. The board also asked for a more details on the agreement it plans to sign with the community.
"FC Cincinnati disclaims any responsibility to make Cincinnati Public Schools whole for its share of property taxes payable on a newly constructed stadium deal," the letter says. "You advised that a structured deal is contemplated that would exempt FC Cincinnati from paying property taxes. The club proposes to make payments instead in lieu of taxes based on the current value of West End parcels. FC Cincinnati's proposed payment of $70,000 represents only a fraction of the property taxes that would be payable on a newly constructed stadium without a tax exemption or abatement ...
"Without a more satisfactory response to the two issues above, the Board will not proceed with considering this matter further."
FC Cincinnati responded with a new proposal the next day. The team also vowed to sign an agreement with the West End neighborhood.
Under the team's second offer, FC Cincinnati's annual school property tax payment would peak at $500,000 in 2031. After that, the team would guarantee a base payment of $500,000 every year and make larger tax payments, depending on how much profit the soccer club rakes in ever year. The payments could climb as high as $3.6 million after 2032.
“If our stadium site is located in the West End, we are committed to a partnership with CPS where the District and its students, particularly those in the West End, will benefit greatly," FC Cincinnati General Manager Jeff Berding said in a statement released to WCPO Monday evening. "These benefits include a commitment whereby FCC will pay substantially more in property taxes than CPS currently receives on the site properties, at levels that will rise over time as FC Cincinnati grows upon its $400 million private investment."
In recent weeks, some have demanded FC Cincinnati pay the schools the full amount of property taxes on the appraised value of the stadium project. School board members have publicly stated they are worried the team will get a tax exemption on the full value of the property.
Normally, a $250 million property would pay as much as $2.8 million every year to the school system, according to Cincinnati Public School's estimate. Under the city's tax abatement policy, which allows owners to avoid paying taxes on the improvements they make to the property, the schools would collect $2 million every year on a development worth that much.
Right now, the schools collect $70,000 every year from the properties FC Cincinnati wants to buy.
FC Cincinnati is also promising a number of new programs - from free soccer game tickets for Taft High School and Hays-Porter Students to providing funds for a soccer program at every one of the district's schools - if the stadium lands in the West End.
But the school board isn't biting unless the money is there.
Jones said FC Cincinnati still has work to do on its proposal to claim the West End site.
"We’re planning to send a letter to once again stress that we were not satisfied with the current proposal, and hopefully they will get back with us," Jones said.
Still, FC Cincinnati's offer than what the city's other two professional teams pay to school property taxes. The Bengals and Reds pay nothing -- because the public actually owns the stadiums. Instead, county taxpayers have to pick up the yearly property school tax tab.
The stadium project's footprint would span more than two blocks in the West End, from John Street to Central Parkway, according to a plan FC Cincinnati released Monday night.
Under the plan, the team would add green space and plazas around the stadium itself.
To do that, FC Cincinnati will need to acquire properties beyond Stargel Stadium.
County property records show SNM Properties, an LLC operated by the law firm representing FC Cincinnati, obtained three properties in the 1400 Block of Central Parkway for $1.1 million in December. The club has not confirmed if they were behind the purchase.
Both the school board and Cincinnati City Council will need to sign off on a stadium deal if the club chooses to settle in the West End. Cincinnati City Council has committed $37 million in infrastructure work to the stadium project.
FC Cincinnati is considering two other sites as well -- Newport and Oakley. The club is waiting to hear a final decision from Major League Soccer on its bid for entry.