The City of Owensboro and Daviess County Public Schools spent almost a month negotiating an agreement that would appease DCPS officials and employees.
Despite the City’s forcible annexation of nine DCPS properties, and the subsequent occupational tax hike employees at those locations would incur, officials from both sides stated publicly that things were moving in the right direction. An agreement was in the works, and the details would soon be finalized.
However, something changed between June 5 — when the City voted in approval of the annexation of these properties — and July 8. Though tensions were high throughout negotiations, DCPS Superintendent Matt Robbins and City Manager Nate Pagan continued to tell the public that things were moving forward.
Both entities announced on July 8 that the City of Owensboro would be repealing its former ordinance approving the annexation. Mayor Tom Watson stated Tuesday that he hadn’t meant to cause so much division, but that the City needed to expand and garner revenue. He said the decision to annex the properties had been bold, but something he deemed necessary at the time.
After voting in unanimous approval on Thursday to repeal the annexation, city commissioners divulged their reasons for backing out of the agreement with DCPS, citing a risk for unintended consequences and a contract that would force the City to pay DCPS with TIF (tax increment financing) funds. When those funds ran out after the TIF payout reached its 20-year max, commissioners say DCPS “demanded” their employees to be made whole “in perpetuity,” or, forever.
Although officials said DCPS employees would inevitably be made whole, despite their tax increases, City officials say they couldn’t abide by DCPS’s negotiation of perpetual wholeness. Once that TIF money “dried up,” commissioners 20 years into the future would be forced to find funding somewhere else.
“We could have moved forward without a deal, but we were trying to come up with the best agreement for all parties involved,” Commissioner Larry Conder said.
Commissioner Jeff Sanford said he agreed with Conder that DCPS demanding their employees be made perpetually whole was a bad move for the City. His main reason for repealing the original vote, however, was based on unintended consequences he feared the City and other companies involved in the TIF district would face.
Sanford said there were a few companies who expressed concern over where those TIF dollars would go, specifically mentioning Gulfstream Commercial Services — a development company who will benefit from TIF dollars outsourced through Gateway Commons.
“There’s money that sits in a TIF fund, and I think there was some misunderstanding about where the money was actually going to go,” Sanford said. “I don’t feel comfortable doing that until I have something on paper telling me exactly where the money is going to go.”
Describing the agreement as “murky waters,” Sanford said, in the end, the risks outweighed the rewards.
“There were too many unintended consequences that affected too many people — it just wasn’t worth it,” he said. “Let’s find something else in the future [to garner revenue].”
In the aftermath of the unanimous vote of approval to annex these properties, Conder said he took a look at the agreement after returning from vacation and quickly realized he needed to take a step back and reconsider what the contract meant.
Both commissioners said, from their perspective, DCPS officials seemed very satisfied with the compromise reached prior to the repeal.
“They were, I’d say, over 95 percent happy with it,” Conder said. “There might’ve been little verbages they wanted to tweak but, about a month ago, there was a really good, mutual agreement about what could be happening.”
DCPS hasn’t publicly expressed frustration toward the City’s decision to pull out of the agreement. Robbins told his staff in an emailed statement on Monday that their taxes would not be increased, and that the City had decided to repeal, but the superintendent did not attend Tuesday or Thursday’s meetings and has made no further comments regarding the matter.
As for future annexations, Conder and Sanford said Owensboro will absolutely have to figure out a way to annex as much property as possible in order to grow the City and create revenue.
“We’re still working on a substantial amount of annexations. You have the new strip center going in where McCallister’s is. Think about that, where it’s located. It’s not in the City,” Conder said. “In order to incentivize them, you have to tell them you’ll rebate a portion of their property taxes and occupational taxes.”
Conder said everything north of the bypass should be annexed into the City.
“How do we get there? That’s the big question,” he said. “This was an attempt to get there — didn’t happen. But we’re not going to stop going down that path, to annex everything we can.”
Daviess County Board of Education attorney Sean Land refused to comment to all media sources after Thursday’s meeting.