LORAIN — After a two-year legal fight, Mayor Tony Krasienko and County Auditor Mark Stewart have reached an agreement over a tax-exemption program created under former Mayor Craig Foltin, officials announced Thursday.

The agreement still must be approved by Common Pleas Judge Mark Betleski and City Council.

At issue is the Community Reinvestment Area program, which gave properties in five areas of the city a 15-year,
100-percent property tax abatement in 2006 and made the legislation retroactive to 2000.

The city created the CRAs in the 1980s to spur development in certain areas of the city.

Stewart objected to the 2006 designations when about 320 homeowners who he didn’t think were qualified for the abatement filed for the exemption.

“There were homes built between 2000 and 2005,” he said. “They were already built, lived in, taxed, etc. The city gave them an abatement for 15 years going forward, even though they really didn’t have the ordinance or the authority because the ordinance wasn’t passed until April of 2006. I balked at giving this retroactive abatement.”

The agreement announced Thursday also orders City Council to “pass new ordinances” dealing with the CRAs “no later than” Nov. 9.

Another key issue in the ongoing disagreement was an application fee of $4,000 per household, Stewart said.
“No other county or municipality charges for a CRA application,” he said. “Generally, the fees are relegated only to commercial and industrial properties.”

Auditor Ron Mantini said that he believes that the application fees received so far have been placed in a separate account within the Community Development Department. Acting head Robert Gilchrist said he doesn’t know the amount in that account or whether any of the money has been spent.

According to Thursday’s agreement, all application fees will be reimbursed.

The agreement maintains the abatement for anyone who “built after April 2006,” but for those who built before then, Stewart said that the one-year tax abatement that they received in 2008 will be the extent of the tax break that those homeowners will receive.

The city will also pay $50,000 toward Stewart’s legal fees, according to the agreement.

“It was something that we needed to do to get it settled, and the alternative is spending hundreds of thousands of dollars to continue this litigation,” Krasienko said.

Contact Alicia Castelli at 329-7144 or acastelli@chroniclet.com.