Hunt Brawley, director of development for the nonprofit Hippodrome-Colony Historical Theatre Association, asked members of Marietta City Council's finance committee Thursday to consider approving a community reinvestment area (CRA) that would benefit the Peoples Bank Theatre (former Colony Theatre) renovation project.
The Ohio Community Reinvestment Area program is an economic development tool city governments can use to provide tax abatements for property owners who renovate existing buildings or construct new facilities. But to qualify for a CRA the property developer must be a for-profit company.
"Hunt brought in an application for the creation of a new CRA, but nothing can be done until the theatre association becomes a for-profit entity," explained Andy Coleman, Marietta's development director.
In addition to qualifying for the CRA tax abatement program, the theatre association must also develop a for-profit company in order to be eligible for an estimated $4 million in new market tax credits toward the renovation project, according to Brawley.
"So we will be forming a for-profit limited liability company," he said. "But the Hippodrome-Colony Historical Theatre Association will remain as a nonprofit entity."
Brawley said the for-profit company would likely be known as the Hippodrome-Colony Historical Theatre LLC.
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"As an LLC we would be subject to property taxes like any other taxpayer," he said.
But Brawley added that a CRA designation for the project, with a 100 percent tax abatement, would allow the LLC to be property tax-exempt through the required seven-year period that the association must maintain its for-profit status in order to qualify for the new market tax credits.
After that seven-year period the LLC would be dropped and the theatre association would become totally nonprofit again, he said.
"Have you talked to the local schools about this?" asked Councilman Tom Vukovic, D-4th Ward, who chairs the finance committee.
Because the school system receives a portion of local property taxes, the local school board must agree to forego that revenue before the city can grant a CRA.
Brawley said he had talked with Marietta City School Board President Greg Gault, Superintendent of Schools Harry Fleming, and board treasurer Matt Reed and was told the board would likely support the CRA designation.
"But you will also have to check with Ewing School and WASCO, Inc.," Vukovic said, noting both of those institutions also receive a small portion from property taxes the LLC would have to pay if the CRA is not granted.
Brawley said he would be talking to both entities about the proposal.
Only members of the finance committee were in attendance during Thursday's meeting, but Vukovic said in the past the full council has been generally supportive of CRAs.
The last reinvestment area abatement was created for Ken and Dagmar Kupsche who used the tax savings to develop The Cook's Shop business out of a former grocery warehouse building on Front Street.
Brawley asked if council could issue a letter of endorsement for the theater project CRA, prior to actually granting the abatement.
"I don't know if we can issue anything up front, but we are the granting agency, and have been supportive in the past. Based on previous experience I would think my fellow council members will support the CRA as long the school district agrees," Vukovic said.