By Kevin Kelley
At its June 20 regular meeting, City Council approved a tax abatement agreement with Hyland Software for improvements the firm intends to make on its recently acquired Five Seasons Sports Club property.
The abatement is for 75 percent of property taxes on improvements made to the property over a 10-year period. Hyland had requested 100 percent abatement for 15 years, Mayor Dennis Clough said.
The abatement agreement replaces a previous agreement Hyland made with the city on a new building Hyland planned to construct. Hyland’s acquisition of Five Seasons supersedes plans to construct a new building on its campus, company officials said.
The terms of the new agreement – 75 percent over 10 years – are the same as had been agreed to when Hyland was planning for a new building. Council President Mike Killeen noted that the renovation of Five Seasons will add $5 to $6 million in value to the property, a third of the value of a new building.
The ordinance passed by a 6-1 vote, with Ward 1 Councilman Ed Hack voting against the measure. In November, Hack also voted against the previously agreed to abatement deal, suggesting Hyland was becoming too powerful and noting that the company benefited from two earlier tax incentive deals.
Council’s approval of the abatement comes despite the objections of the Westlake City Schools Board of Education to one aspect of the deal.
In a June 12 letter to Clough, board President Tom Mays noted that the school district is estimated to lose nearly $62,000 in revenue due to the agreement. Mays also expressed concerns that amount may increase if Hyland’s employment projections are not met because the schools will receive some payments through income tax sharing with the city.
“Overall the schools are projected to lose a net amount of $61,804 in abated real estate taxes during the term of the agreement while the city will actually gain $853,472 through a combination of income tax minus real estate taxes,” Mays wrote.
Mays requested the city revise the agreement to ensure the school district receives the same amount of money it would have without the agreement.
“It is no secret the schools’ resources are dwindling with the recent economic downturn and revenue cuts being handed down by the state,” Mays continued. “In addition, the recent levy failure has prompted the need for additional operational cuts in the fall. Approval of this agreement further exacerbates this situation knowing the main source of revenue for the schools is local property taxes while the city relies on a combination of municipal income tax, corporate taxes and local property tax.”
Prior to council’s June 20 vote, the mayor noted the school district’s objections but said the deal is beneficial for the community and is important to ensure that Hyland remains headquartered in Westlake.
Under the abatement deal, Hyland agrees to create 482 new full-time jobs and 23 new part-time jobs by the end of 2018. Those new jobs will add $16.8 million in payroll at Hyland.
Hyland, which paid $11,150,000 for the Five Seasons property, expects to spend $10 million in improvements and renovation and an additional $3 million for furniture and fixtures, the agreement states.