The City of London will enter into a contract with the City of Cleveland to collect income taxes following an agreement proposed by Mayor Dave Eades last month.
Council approved the action during its regular meeting Thursday after nearly an hour of discussion regarding the pros and cons of proceeding with Cleveland’s Central Collection Agency (CCA) versus the Ohio Regional Income Tax Authority (RITA).
Council voted 5-1 to move forward with CCA. Member Dick Minner cast the sole dissenting vote; member Steve Skaggs was not present for the meeting.
An ordinance proceeding with RITA was left on the agenda for a third reading, and was not voted upon. RITA representatives approached council in recent months with a plan to assume all London income tax collections and effectively close the city tax department.
Under a draft agreement with CCA, London’s tax department remains intact. The Cleveland agency will simply collect delinquencies and locate city residents who fail to file or under-report their incomes, using IRS records.
An agency spokesperson present at the meeting said CCA retains 5 percent of all funds collected. The remaining 95 percent is given back to the municipality, and the city will never receive a bill.
Prior to the vote, London Tax Director Randy Courter told council members his department — staffed with three employees — expects to collect at least $5 million in taxes this year. He said his office has filed 1,153 delinquency letters, and spends “a great deal of time” on delinquency enforcement.
“There is a rule of thumb in business that I learned many years ago, and that is 80 percent of your effort is spent generating 20 percent of your success,” Courter said. “That rule of thumb can be applied to municipal income tax collections.”
Eades also spoke to council in support of CCA. He said moving forward with RITA would result in a “significant amount of lost revenue” for the city since there is a $140,000 annual fee in addition to delinquent work, which is considered optional, additional work, and the city is estimated to gain $20,000 to $50,000 in return.
Following the vote, member Trint Hatt said the move was “a good stepping stone.”
“It’s something we need to get started with, and it will start bringing money in,” he said. “Maybe eventually we’ll move to RITA, but I think this is a good stepping stone.”
In other business:
• Council approved a resolution, granting a 10-year, 50 percent property tax abatement for a new franchise Taco Bell on a site once occupied by Rax. Franchisee Triple Play Restaurants, Inc. is reported to plan to invest $900,000 in the former Rax site. The new restaurant will employ three full-time and 31 part-time workers. It is expected to open in January or February 2015, according to a Taco Bell corporate spokesperson. All members voted yes except for Minner, who abstained from the vote.
• Council President Pat Closser said the city received an application from Petroleum, LLC for a new liquor license at 256 Lafayette St. — the former site of the Swifty gas station. The license would provide the property owners the opportunity to sell beer, wine and mixed beverages. Closser said the property could act as a carry-out.
• Safety-services director Steve Hume announced Tony Brake would be the new parks and recreation director. Hume said Brake’s background serving as an administrator and coach with London City Schools will be an asset in the job. The position was open following the May resignation of former director Ben McCoy.
• Council entered into executive session to discuss personnel. Following a 50-minute meeting, no action was taken in public session
• Hume asked council members to decide if they would like to pay up to about $39,000 to have a premium, asphalt crossing installed at the railroad tracks on South Main Street. Norfolk Southern Railway Company will replace the area with a standard crossing for free, but uses lower quality materials which will not allow the repair to last as long, Hume said.
The crossing was last replaced during the mid 1990s using the premium materials. An example of the standard materials is used on Walnut Street. Council members expressed support for the premium crossing but did not take any formal action. The replacement is needed due to the railroad tracks dropping below street level, Hume said.
• Council approved an additional $8,500 for the parks and recreation department.
Andrea Chaffin McKinney can be reached at (740) 852-1616, ext. 1619 or via Twitter @AndeeWrites.