CINCINNATI, OH (FOX19) - One local developer is taking the city of Cincinnati to court after the city failed to repay a loan it took out against local neighborhood revitalization effort projects.
Ray Schneider is the developer of Madison Circle in Madisonville who made use of a tax increment financing (TIF) program, which is used to invest in neighborhoods in an effort to raise property values and attract new businesses. When property values raise, the property tax gains are put into a TIF fund to finance further development projects in that district.
Schneider used $4 million in TIF funds to redevelop the site of the former Oakley Drive-In, turning it into a Christ Hospital speech and hearing clinic, a senior living facility, a pet resort and a sports complex.
But Schneider claims the city forced him to pay more for water and sewer improvements on the site than he should have had to because the money was not available in the Madisonville TIF fund.
Instead, that money was used as part of a $5 million loan the city made to itself in 2011 to make its property tax payment to Cincinnati Public Schools on the land where the stadiums sit.
"They really are stealing. There is no provision under Ohio law that allows the city of Cincinnati to do what it is doing," said Joe Braun, Schneider's attorney.
Councilman Charlie Winburn says using the loan money for other purposes was necessary to maintain safety service staffing levels.
"If we had not used that money, we would've had to lay off 189 Cincinnati Police officers, and we would've had to lay off 127 firefighters. We were not going to do that," Winburn said.
The city repaid $1 million of the loan promised to the TIF districts in 2012 and said it would repay the remaining $4 million by 2015. But in the latest proposed budget, the city is cutting that deal even further.
An internal memorandum from Interim City Manager Scott Stiles to Cincinnati City Council, and obtained by FOX19 Investigates, says the city wants to cut the remaining $4 million loan payment in half in an effort to balance the 2015 city budget, and delay paying that $2 million to 2017.
The memo states the city does not have to repay the loan because "this is an internal loan, and as such, is not required to be repaid."
There are eight TIF districts who are currently owed money from the city to repay the loan, including Madisonville ($794,490), Evanston ($669,043) and East Walnut Hills ($585,410), who are the hardest hit.
Schneider's case is expected to begin in Hamilton County Common Pleas court on Tuesday. If a judge rules in the developer's favor, it could mean major changes the city's 2015 budget.