By Gary Ogle
gogle@wbcowqel.com

Like many small communities in the Midwest, the slow economic recovery has left Galion looking for ways to get individuals and businesses to build in the town.

Galion Mayor Tom O’Leary believes his community may have found at least one piece of the puzzle, solving community investment through the use of Community Reinvestment Areas or CRA’s.

“Both Bellevue and Tiffin have CRA areas,” O’Leary said, noting in Galion the Enterprise Zone is everything inside the city limits. “Their installation was driven by the same sort of thing ours is.”

The city of Galion is essentially offering two types of CRA’s through tax abatements: one for residential investment and the other for commercial investment. The tax abatements have a 10-year span.

The premise is that by offering a tax savings for home improvements and new home construction, or by commercial improvements or new construction, the city will benefit in the long run by getting more people and businesses to commit to the community. That commitment will result in more people coming to town, along with more jobs.

By giving back a little tax money, the city believes it can generate more.

“What we want to do is provide the answer to ‘Why do I want to build a home in Galion?’” O’Leary said.

The residential CRA’s provide abatements rates of 50 percent on expenditures $5,000 up to $60,000. Beginning at $60,000, the abatement rate increases to 75 percent.

That means the individual doing remodeling or improvements totaling $5,000 would realize a tax savings of $470 over a 10-year period. At $25,000, the savings would be $2,380.

But at $60,000 where the rate increase kicks in, the savings would jump to $8,550 over the same 10-year span.

“It’s the new construction where they’ll see the greatest savings,” the mayor said.

O’Leary cited a tight real estate market for homes in the $80,000 to $150,000 range as providing the target for home construction.

“It’s a solution where it helps the local school district as well as the community,” O’Leary said. “Everyone who is a resident of the school district, this is a benefit to them.”

For commercial investment inside Galion, the abatements begin with a $100,000 project where a 50-percent rate equals tax savings over 10 years of $14,568. At $500,000, the abatement rate is 100 percent meaning a tax savings of $117,495 over 10 years.

“It really allows negotiation of commercial development,” O’Leary said. “Just talking about it has started interest.”

O’Leary said those businesses who hope to qualify for a commercial CRA must apply and demonstrate expected costs. The city hopes to be able to use CRA’s to target certain types of development.

“Each project will be viewed a little bit different,” O’Leary said.

The details of the process for residential CRA’s is being finalized.