By BRIAN BOHNERT
SENIOR STAFF WRITER
All the uncertainty surrounding Fostoria’s financial future came to a head in 2016 as a deficit eight years in the making caught up to the administration.
A substantial shortfall in the city’s general fund forced State Auditor Dave Yost to place Fostoria in a state of fiscal emergency on May 25.
At the time, the general fund was projected to end the year roughly $800,000 in the red.
Since then, the administration has been working closely with state officials to come up with a plan to balance the budget and stop the perpetual bleed of city assets.
“The idea is to try to figure out some balance in there without making it too big of a burden on the taxpayers,” said Mayor Eric Keckler.
On Dec. 6 — roughly six months after being placed in fiscal emergency — Fostoria City Council approved the first draft of a financial recovery plan with a 5-2 vote.
But on Jan. 4, 2017 — less than a month later — the state-appointed commission overseeing Fostoria’s financial health unanimously voted to reject the plan.
The move, spearheaded by the mayor’s own “no” vote, has given his administration extra time to develop a plan better suited to get the city out of the red while reducing the burden on taxpayers.
“We’re trying to avoid huge tax increases,” Keckler said of his goals moving forward.
The original plan called for placing two tax levies on the ballot for the May 2, 2017 primary election — a 6-mill property tax increase and a quarter percent income tax hike.
The plan also called for eliminating local police and fire dispatch by July 1, drastically increasing sewer and water rates throughout the next five years, and hiring three firefighters/EMTs and two police officers.
Had the commission voted in favor of the recovery plan, Fostoria was expected to get out of the red by 2019 and yield a positive balance of $918,055 in the general fund by 2021 — a far cry from the -$1,578,322 shortfall projected for 2017.
While it’s unclear which elements of the original plan will make it into the second draft, the mayor has made it his goal to remove as many “unnecessary costs” as possible — specifically capital improvement projects he said could be pushed back until the city is on better footing.
He also wants to see if abolishing the tax credit for Fostorians who work out of town will provide enough revenue to eliminate the need for the two tax levies.
Council recently voted to enact a 50-percent cut to the tax credit effective Jan. 1 2017, with a complete elimination of reciprocity taking effect Jan. 1, 2018.
The measure, however, was passed separately from the recovery plan — meaning its direct impact on the official plan is unknown.
Belinda Miller of the state auditor’s office, who serves as the city’s financial supervisor, said abolishing the tax credit would generate an additional $500,000 in revenue each year for the general fund — totaling $2 million by 2021.
The mayor has said he hopes those savings would offset the need for the property and income tax levies.
This wasn’t the first time the city proposed eliminating income tax reciprocity. Keckler introduced legislation dropping the tax credit back in November 2015, but he backed out roughly a week later after receiving outcry from miffed Fostorians.
And even though the deficit has multiplied since then, the mayor said he does not regret pulling the plug.
“There were a lot of questions about it, even among city council members, at the time. And, we weren’t sure where we were going to be in 2017 — if there were more alternatives,” he said. “We thought we had a little more time, but then we didn’t.”
The state was called to Fostoria in early March 2016 after city officials became increasingly more alarmed about the growing shortfall in the general fund.
“Those numbers escalated very quickly,” the mayor said. “We knew in 2017 we were going to have a problem and we were going to have to make some moves of some kind. But the reason the state came back in and put us in fiscal emergency is because it escalated so quickly.”
Both the mayor and members of council questioned City Auditor Steve Garner’s numbers after the negative balance seemed to accelerate at a faster rate than they anticipated.
“The debate on just how large of a deficit we were looking at changed drastically over a period from 2014 to 2016,” Keckler said. “We started out looking at a couple hundred thousand dollars, then it jumped to -$400,000 and then to -$800,000.”
On Feb. 2, 2016, Garner told officials Fostoria entered 2016 with a balance of -$389,286.47. Two weeks later, silence fell on council chambers when he said the year-end deficit of nearly $400,000 compounded — resulting in a balance of approximately -$800,000.
Then, in the middle of the year, Garner said he anticipated the city would end 2016 close to $700,000 in the red — and, he was right.
Fostoria ended 2016 with a general fund balance of -$696,389.37.
Two years ago, the city entered 2015 with a balance of -$266,496.20 in the general fund.
Though, Fostoria’s money troubles can be traced back much farther than when the current administration took office.
Keckler, who served under former Fostoria Mayor John Davoli, said he saw signs of a forthcoming fiscal crisis more than eight years ago when the Great Recession all but collapsed the local economy.
For three years, money was being funneled from the city’s contingency fund in order to balance the general fund. Throughout the next four years, officials were using money from the SAFER (Staffing for Adequate Fire and Emergency Response) grant to cover the salaries and benefits of eight Fostoria firefighters.
“Had we known since 2008 that we had issues? Yeah,” Keckler said. “With contingency funds being used and grants being applied for, we always knew there would be an issue; but, the size of the issue was the debate.”
In October 2010, Garner told members of Fostoria Finance Committee $350,000 transferred from the contingency fund into the general fund at the beginning of that year had already been used.
“That’s not good,” Garner warned committee members at the time.
The auditor warned of a “tight” budget all the way back in 2009 as the general fund ended with a balance of a little more than $29,000. That was the total after council OK’d the transfer of an additional $25,000 from the contingency fund to cover outstanding expenses.
The seven-member Financial Planning and Supervision Commission will again have the final vote on the latest draft of the recovery plan when it is presented later in March.
First, however, the mayor will bring the second draft to council for discussion at the Feb. 21 meeting. If council approves of the plan, a vote is slated to take place during the first meeting on March 7.
The commission consists of Quentin Potter of the Ohio Office of Budget and Management; Andrew Coutts, a representative of the state treasurer’s office; the mayor; At-large Councilman Doug Pahl; and Eugene N. Schalk, Frank J. Kinn and Donald Mennel.
CLEANING UP FOSTORIA
One of the mayor’s proudest accomplishments in 2016 was the steps taken to eliminate blight in the community through the formation of the Seneca County Land Bank.
Seneca County founded the land bank in November 2015 as a way to restore the area’s vacant and foreclosed properties to productive use — improving both property values and quality of life throughout the county.
In November 2016 — one year after its inception — the land bank received more than $4 million to demolish foreclosed or real estate delinquent properties from the Neighborhood Initiative Program. Once structures are razed, the land will either be sold or given to adjacent property owners.
The property owners will then be responsible for paying real estate taxes, which will generate money for the county.
“The potential of that in the future of Fostoria is pretty big,” said Keckler, who proposed the idea to the Seneca County Commissioners alongside Fostoria Economic Development Corporation President Renee Smith.
The commissioners approved a resolution establishing the countywide non-profit “land reutilization” corporation on Nov. 10, 2015. Since then, officials in Fostoria, Tiffin and the county have been working to identify and acquire properties eligible for demolition.
“Everybody bought into it. Everybody realizes the value of it,” Keckler said. “We’re working real well with the county and there’s a lot of good attention given to Fostoria through the land bank, and what we’re trying to get accomplished here.”
As of Nov. 7, there were 161 properties throughout Seneca County identified for razing. However, officials have since said the number is constantly changing as the corporation continues to acquire targeted properties.
While much of 2016 was spent compiling the list of vacant and foreclosed homes in the area, Keckler said 2017 will be the year those properties start coming down.
“We’re actually going to start seeing some real good results from that land bank formation in Seneca County,” he said. “It’s really going to affect what Fostoria is going to look like in the future — in the near future, really.”
Restoring Fostoria’s neighborhoods to their old glory has been a goal of Keckler’s since first taking office in 2012. In fact, he and Smith spent several months in 2015 investigating the proposal, which the state opened to counties with a population size of less than 60,000.
“It started with a concept of what to do with all these vacant houses,” he said. “Then we started having meetings and the whole land bank idea opened up at just about the right time. The timing was perfect.”
The Seneca County Land Reutilization Corp. is overseen by a committee including the mayors of Fostoria and Tiffin, and commissioners Mike Kerschner and Holly Stacy.
The Community Improvement Corp., headed by Smith, handles the organization’s day-to-day operations.
CHANGING BUSINESS LANDSCAPE
As a whole, the mayor said 2016 was a bittersweet year for the business landscape in Fostoria. On one hand, companies like NOX Corp. and the Mennel Milling Company experienced a surge of growth and expansion. On the other, longtime staples like Great Scot and Pizza Hut closed their doors after decades in business.
“The idea of Great Scot closing was painful,” Keckler said. “When you would go in there it felt, in a lot of ways, like a mom-and-pop kind of place.”
Great Scot closed at the end of January 2016 due to slumping profits. Fresh Encounter, the Findlay-based parent company of Great Scot, announced the closure of the Plaza Drive store on Jan. 12, axing 39 jobs.
The decision came less than one month after the area grocer sold its prescription drug records to the Rite Aid Pharmacy on North Countyline Street.
Great Scot opened July 16, 2003 after taking over the lease of the former Food Town store at 560 Plaza Drive.
Fostoria’s Pizza Hut closed its doors in sudden fashion on Oct. 30, notifying its employees during a morning meeting. The Wood County structure was built in 1973 and existed as a Pizza Hut franchise for more than 30 years.
“You hate to see any business close in Fostoria,” Keckler said. “But then you look down the street in either direction and there’s two brand new businesses going in on Countyline Street. You take a couple steps forward and sometimes, I hate to say it, you take a couple steps back.”
One of those steps forward, the mayor said, was the unexpected growth of South Korean vinyl tile maker NOX, which opened its first American plant in Fostoria in 2015. Thanks to a state tax credit awarded to the company on Jan. 25, NOX will be able to add 150 jobs in total by the end of 2018. The jobs will pay an average of $31,200 per year.
The company currently employs more than 90 people.
One of the first things Keckler had the opportunity to do when he came into office was venture to Columbus and be part of the group stating Fostoria’s case for a piece of the Brownfield cleanup grant used to renovate the former Atlas Crankshaft building on U.S. 23.
“It didn’t promise any jobs; it just promised us a nice, clean property to market to somebody,” he said. “To have it turn into something like NOX and to have them continue to grow faster than they even anticipated, is great.”
“They’re still adding people and shifts,” he added. “To see that, that’s like planting that seed and watching it grow into a beautiful plant. That’s a beautiful plant.”
Like NOX, Mennel Milling continued to flourish in 2016 — expanding its operations both inside and outside of Fostoria. The company purchased an 80-year-old flour mill and mixing company based out of North Carolina back in August, and also reached a tentative deal with General Mills Inc. to purchase its Martel-based bakery mix and packaging facility in Marion County.
The recent purchases and expansion are all part of the company’s 2020 Plan, which includes a $45-50 million, 10-year project to improve the Fostoria facility.
“It’s just amazing to watch them grow and to know their headquarters are right here in Fostoria,” the mayor said. “Again, it shows a faith in Fostoria because they’re not going anywhere. You need those cornerstones to be your economic anchor in the community.”
The mayor’s optimism for Fostoria’s economic future can also be attributed to a recent grant the city received to clean up the old Clark gas station on North Countyline Street.
On Jan. 23, 2017, the city was awarded $100,000 from the Ohio Development Services Agency to clean up the long-abandoned gas station. On behalf of FEDC and the city, Smith applied for the grant back in September 2016.
The state awarded more than $1 million in grant funding to eight communities throughout Ohio for clean-up projects at abandoned gas stations. Phase one of the work will likely begin this spring and will focus partly on testing for potential contamination.
“Once that gets cleaned up, we’ll have a whole other property to be offered as a commercial business,” he said. “It’ll be a nice, clean property to advertise.”
One of the mayor’s primary goals for 2017 will be continuing the search for both a permanent, full-time safety service director and fire chief.
Lewie Ekleberry has been filling in as interim safety service director since November 2015 when Allyson Murray resigned to become village administrator of North Baltimore.
Ekleberry spent his entire career in the manufacturing industry before retiring in 2008 as the vice president and general manager for the brake hose division of Dana Corp.
Keckler said he plans to resume his search for a permanent safety service director once a financial recovery plan is approved and put into motion.
“It didn’t seem to make sense while we’re working through all of these issues to try and make a big change,” the mayor said. “He’s familiar, he knows where we are right now, and he’s been part of some of the planning and discussions. To try to bring somebody new into all this would really be unfair to them and I don’t think it would serve the city all that well.”
Ken Chapman resigned as chief of Fostoria Fire Division at the end of July, ending his nearly two-year stint in the city. Since his departure, Captain Scott Basinger has stepped in as interim chief to lead the understaffed department.
“Scott (Basinger) has done a nice job of steering the ship while we’re in this transition mode,” Keckler said. “I think that’s why I’ve been a little more comfortable about not trying to rush because he’s done such a nice job.”
The search for Fostoria’s next fire chief is also expected to begin in 2017 following the passage of the five-year recovery plan. In a July interview with the Review Times, the mayor had stated he planned to initially start the search in August.
Fostoria lost a dedicated public servant in 2016 whose heart was all about Fostoria.
Dave Clark, lifelong Fostorian and former member of Fostoria City Council, passed away Aug. 10 after a two-year battle with lung cancer.
He was 57 years old.
Clark was first diagnosed with cancer on July 18, 2014. That diagnosis would force him to reluctantly end his eight-year run as clerk of city council.
He served as clerk of council from January 2006 until July 2014. Prior to his time as clerk, he was as an at-large councilman for two terms — from 2001-2005 — even defeating his friend and current councilman, Tom Lake, in one of the elections.
“I’ve lost more elections than I’ve won and I’m not ashamed to say that,” Clark joked in a July 2014 interview with the Review Times, adding he learned more about being on council as clerk than when he actually served.
Clark returned to council chambers on Jan. 6, 2015 and announced he had won his fight against cancer and was ready to pursue his longtime goal of becoming council president.
“Anything I can do to help the people in the community, I’ll do it,” Clark said at the time.
And that’s exactly what he did.
After running unopposed in the November 2015 general election, he began his first and only term as president of council on Jan. 1.
Then, last winter, Clark and his family received the sobering news his cancer had returned — and it had progressed to stage 4. Since then, he had been under home hospice care until recently being moved to Bridge Hospice Care Center in Findlay where he lived out his final days.
“Dave came in with a lot of ideas and a lot of gumption about where he wanted to see the president’s position go, where he wanted council to go, and how he wanted meetings to go,” Keckler said. “It was certainly tragic to lose him as early as we did; and, with him went a lot of big ideas he had.”
CHANGES COME TO COUNCIL
Fostoria City Council welcomed new members to council chambers in 2016, as well as some familiar faces returning in different roles.
The first council meeting of 2016 served as a changing of the guard, so to speak, as longtime public servants Georgianna Widmer and Dr. David Bettenhausen relinquished their seats to a pair of new members.
Mathew Davoli, son of former Fostoria Mayor John Davoli, began his first term as an at-large councilperson, taking his oath alongside returning member Brian Shaver and former Council President Pahl.
Then, on Sept. 6, Fostoria City Schools Band Director Steve Kauffman was named interim president of council. He was appointed to the position by the mayor following Clark’s resignation and subsequent death.
“I think I have really enjoyed what I’ve seen out of Steve Kauffman so far,” Keckler said. “Without a lot of background or having seen how city council meetings run, he’s done a really good job. And he’s gotten better each time. He is a very welcome addition.”
While Kauffman’s role as council president was only through 2017, he recently filed his petition for election to the post in the May primary election. He will be running unopposed for the president’s seat.
“Just in the five years I’ve been here, we’ve gone from a very seasoned city council that ran, and seemed to work toward, the same goals and agenda, to a very new city council with maybe not that same effect,” Keckler said.
Several members of council clashed over seemingly simple pieces of legislation in 2016, including an ordinance setting specific rules for Fostorians who want to have chickens on their residential properties.
And as soon as 2017 began, council again clashed over a bevy of amendments to the city charter — including legislation establishing a city manager form of government and a measure allowing write-in candidates in elections.
In all, five proposed changes to the charter were grounded by council throughout the first month of 2017.
Keckler said part of the reason he believes the charter amendments failed was they were introduced for a vote before council had an opportunity to discuss the ideas properly.
“Change is good sometimes. But change just to change doesn’t make sense unless a lot of thought is put into it as to why the change needs to be made,” he said. “That just seems to make a lot of sense to me to have it pretty well hammered out before you bring it out for a vote.”
“I think there are ways to discuss new ideas without necessarily having them come up for a vote every time,” he added. “There’s room for discussion inside the council chambers, maybe sometimes before legislation is even introduced.”
Not only would doing that save time during council meetings, but the mayor said it would also allow more time for discussion without the pressure of having to take a vote on a potentially overwhelming piece of legislation right away.
“A lot of times, you’ll have legislation introduced and you’ll have to amend it on the floor,” he said. “Although those aren’t bad discussions to have, if it’s not time sensitive, it wouldn’t be a bad way to introduce it as a concept before introducing it as legislation.”
Keckler has said one of his goals moving forward is to put together an ad hoc committee to examine the effect of those proposed charter changes on the city.
With at least one new face coming to council chambers in 2017, the mayor said the biggest challenges facing the group this year will continue to be communication and time management.
“Debates and discussions and disagreements, there’s nothing wrong with that in government, but timing is a lot of an issue,” he said. “It’s frustrating sometimes.”