Recommendations are included in this draft in summary form, as the final recommendations need to be blended with other analysis being conducted as part of the Comprehensive Plan process. Several issues, however, need to be highlighted as the result of the SPP Fiscal Analysis.

1. The city revenues derived from real and personal property tax are unusually low. With the potential dampening of the productivity of the Income tax, property tax revenues will have to play a larger role in the funding of basic operational costs. For that reason, it appears that tax levies to support Emergency Services and recreation facilities should be seriously considered by the City. Police and Fire services will continue to place major stresses on local expenditures and indeed will increase their percentage of overall operational costs based on current practices. This trend will prevent the City from making needed expenditures in the areas of Road Improvements and quality recreational facilities. Other funding sources must be developed to address Emergency Services costs.

2. Over 30 % of current homeowners in Middletown are above 65 years of age. This indicates that an increasing number of owner occupied structures will be coming on the market in the next ten to fifteen years. These homes will tend to be older, and not as desirable from a market standpoint. Analysis of current data suggests that an increasing number of homes in Middletown are shifting from owner occupied to rental property. The City already has a relatively high concentration of rental properties (41%). High percentages of rental properties tend to reduce public participation and civic involvement particularly when they represent a high subsidized housing component. From both a financial and social involvement perspective, the City needs to address redevelopment of obsolete rental areas in a serious effort.

3. Based upon this Cost of Service study as well as many regional economic studies, it is SPP's recommendation that Tax Increment Financing and tax abatement programs not be used for retail development projects on undeveloped land. The State of Ohio stopped allowing tax abatement participation in retail projects for the same reasons highlighted in this study. The financial benefits derived do not compensate for the lost property tax revenues. The one exception to this would be the use of Tax Increment Financing for a mixed-use downtown redevelopment project that would include a retail component.

5. The report has noted the lack of investment in open space and recreation facilities in Middletown. In addition to the consideration of a dedicated property levy on this issue the City should revise its Zoning and Subdivision regulations to create more productive open space as new development occurs. This is also important in the area of new office park development. The GEM Report noted the need for high quality office park environments from a marketability perspective. It is more likely that this will occur if zoning requirements include environmental quality issues. These items are an insignificant cost in the overall office park development, but will substantially increase marketing potential and income tax potential.

6. In older industrial Cities, full income tax credit was often given as a benefit to residents. The high proportion of income -tax paying jobs offset the full credit policy. For the last ten years the relationship between residents and local employment has changed substantially. The highest and most enduring expenditures for the City are occurring in the areas providing direct resident services i.e., Police and Fire Protection. These costs will continue to grow with the population. Since all residents use these services, it is appropriate that all residents contribute to their funding in a more direct way. The City should consider elimination of a portion of the income tax credit as a means of dealing with this issue.