The Owensboro City Commission voted unanimously on Thursday to repeal six ordinances that would have annexed several Daviess County Public Schools sites, thrusting thousands of employees into a higher occupational tax rate.

Although efforts were underway to strike a deal between the city and school district since the annexations were initially approved just last month, the commission, at Mayor Tom Watson's recommendation, pulled back from the negotiating table altogether, abandoning an effort that would have generated millions in additional tax revenue.

Officials have been mostly tight-lipped about what led to Thursday's decision. Watson did say on Tuesday that other businesses and organizations wanted a deal similar to the one that the city was prepared to broker with the school district.

But multiple sources close to the negotiations have since confirmed with the Messenger-Inquirer that the proposed deal, which would have reimbursed the school district for part of the costs of constructing a new middle school in the Gateway Commons tax increment financing district, could have come at a cost to other developers in that area.

"The staff, it’s their job to try to come up with additional revenue," said Commissioner Jeff Sanford on Thursday. "There’s nothing wrong with thinking outside the box, which they did, but, at the end of the day, you’re going into the TIF to get dollars from there but then it affects one other group. That affects the next group and the next group and the next group. By the time you get to all of that, it’s not worth it. ... My sticking point was unintended consequences."

For weeks after the annexation ordinances passed on June 4, details leaked from City Hall about an effort to give DCPS some TIF revenue as it built the new Daviess County Middle School near Gateway Commons.

Under the proposed agreement, the district would use that money to reimburse employees' take-home pay so that it would reflect an occupational tax rate equal to that of employees still outside the city limits.

The new school will be located on property slated for a "community center" in the city's TIF application, meaning that it would still qualify as public infrastructure growth that state and local tax dollars could reimburse.

Gulfstream Commercial Services, however, the primary developer in Gateway Commons, expressed concerns behind closed doors that the deal would hinder growth there, limiting the total economic impact that the TIF was intended to have.

One source, who spoke on condition of anonymity, said the commission was partially swayed by Gulfstream's warnings and that the district began expressing concerns of its own that TIF dollars may not be so reliable, despite what city officials said.

Multiple calls to officials with Gulfstream went unanswered late Thursday evening.

When approached with these details, Watson said that Gulfstream's concerns were one of many that he and the commission heard.

"It was just another leaking hole in the bucket," he said. "All the groups were upset. The people with the posters — none of that stuff bothered me. It was overall picture that, with all the good things we’ve got going on in Owensboro, why are we wanting to make everybody upset over whatever revenue could be generated from that. There wasn’t anybody left. You had fiscal court, you had the sheriff’s department, you had Daviess County Fire Department, you had, of course, the school system; I had local businesses that called me and said, ‘Can we get the same deal?’ "

Indeed, the development company's concerns were by no means the only thing city commissioners considered.

Commissioner Larry Conder said he was primarily worried about the district's insistence that any TIF appropriations deal last "in perpetuity."

"It was going to be in place in perpetuity, meaning there wasn’t any deadline," he said. "There wasn’t a drop-dead time or no amount of money that it would hit or anything. It was going to go on and on. ... That, in my opinion, is a little bit disadvantageous to everyone else — that you put those type of agreements in place. Things change over a long period of time."

Austin Ramsey, 270-691-7302, aramsey@messenger-inquirer.com, Twitter: @austinrramsey

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