Dan Horn

dhorn@enquirer.com

Christy Lambert can see what’s wrong with Norwood every time she pulls out of her driveway onto Cypress Way.

Sometimes, when she hits a pothole just right, she can feel it, too.

The street, which straddles Norwood’s border with Cincinnati, is split down the middle: Cincinnati’s side is freshly paved and smooth, while Norwood’s is riddled with cracks and crevices. Lambert, who lives on the Norwood side, watched in amazement last year as road repair workers stopped pouring asphalt at the border, packed their things and drove away.

“They never came back,” she said, marveling at the uneven, two-toned street in front of her house. “How can they leave us with half a street?”

The answer to her question is a few miles away, at Norwood City Hall, where elected officials are dealing with a financial crisis so severe the city struggles some months just to pay its bills, let alone fix its streets.

Major road repairs are on hold. State auditors are on the scene. The city’s backup ambulance is so beat up it can’t go faster than 30 mph. And cost-cutting options include reducing employee pay, outsourcing 911 service and eliminating entire city departments.

Desperate for answers, one city councilman recently joked that maybe Norwood should consider buying lottery tickets to raise cash.

“Their house is not in order right now,” Ohio Auditor Dave Yost said last month after releasing a dismal fiscal assessment of the city.

This kind of drama isn’t entirely new to Hamilton County’s second largest city. Norwood has been in and out of financial trouble since the old General Motors plant closed three decades ago, wiping out thousands of jobs and one-third of the city’s tax base.

But even by Norwood standards, the latest crisis is exceptional. Norwood Auditor Jim Stith summed up the bad news at a December City Council meeting when he explained how the city would get through the first 90 days of this year.

“This just covers the minimal of the minimal,” Stith said. “It’ll keep the lights on, keep our computers running, keep things from getting repossessed.”

Then, he added a caveat: “If we can make the payments.”

Disagreement over what's wrong

That’s not exactly the stuff of a Chamber of Commerce campaign, but it’s the world Norwood will be living in until City Council and the mayor figure out how to balance a $21 million budget that started this year more than $1 million in the hole.

It won’t be easy. The state has declared a fiscal emergency, which means the city must come up with a recovery plan and present it to a special commission for approval in the coming months.

But first, city leaders need to reach consensus on what the plan will look like. And lately, they haven’t agreed on much.

Mayor Tom Williams took to Facebook recently to accuse some council members of caring more about their re-election campaigns than solving the city’s problems. Some on council, meanwhile, have complained the mayor might not appreciate the magnitude of the city’s budget woes.

“I don’t have any faith in the numbers,” said Williams, a life-long Norwood resident who has worked in government for 50 years, including more than a decade as mayor. “Maybe it’s because I’m not the brightest bulb in the marquee, but I think there’s only a couple people that do know what’s truly going on.”

When asked to explain his concerns about the numbers, Williams wouldn’t elaborate.

“I have a right not to believe them,” he said.

The mayor’s resistance confounds those who say the city can’t fix the budget if the people at the top won’t acknowledge it’s broken. “Nothing is going to change until the mayor trusts the numbers,” said City Councilman James Bonsall. “Whatever that takes, it needs to happen.”

Drive around Norwood, though, and it’s easy to see why the mayor and others might have a hard time believing the city's problems are as bad as state auditors say.

Hotels, restaurants and retail shops have been popping up for years at Norwood’s three big consumer attractions: Rookwood Commons, Rookwood Exchange and Rookwood Pavilion. New office complexes have gone up, too, and companies like CDK Global and Paycor recently set up shop in the city.

After decades of decline, Norwood’s population is now holding steady at about 19,000. Median home values and per capita income are down slightly over the past 15 years, when adjusted for inflation, but are in decent shape considering they’ve endured a recession, a housing crisis and a slow recovery.

In other words, Norwood is not a Rust Belt horror story. The city has made some missteps, to be sure, but it’s also had some success adapting to life after the GM plant. Families still move here. Businesses still open here.

“There’s a lot of new development,” said Kathy Walters, executive director of the Norwood Chamber of Commerce. “We’re seeing a lot of positive things.”

Benefits, salaries biggest expense

Lambert, who has lived in Norwood for most of her 30 years, agrees there's a lot to like in her hometown. She's raising her daughter here and enjoys taking her to the city's parks. She likes the schools and her neighbors, and she's encouraged by the businesses and jobs that have come to the city in recent years. "I have Norwood pride," she said. "If I didn't like it, I wouldn't be here."

But if so many good things are happening, why can’t the city make ends meet? Why does it need an emergency plan to keep the lights turned on, and why can’t it afford to pave its side of Cypress Way?

“I don’t know where our tax dollars go,” Lambert said. “It’s going into a black hole or something.”

While it may seem that way to some, the truth is less mysterious. The vast majority of Norwood’s annual expenses – about 80 percent – are salary, benefits and overtime for Norwood’s 200 city employees.

Personnel costs accounted for $16.9 million of the $21.1 million the city spent last year, with police and firefighters getting the lion’s share at $13.7 million.

Those costs are high, but Norwood isn’t an outlier in an age when many cities struggle to cover employee expenses and benefits.

Norwood pays more than $3 million a year in health care benefits to its employees and is supposed to pay another $900,000 in retiree health benefits, though the city failed to pay a large portion of the amount due retirees last year.

Current employees pay no health care premiums. That may sound too good to be true, but such deals were common decades ago when health care was relatively cheap and cities were willing to provide blue chip benefits in exchange for smaller pay raises. Soaring medical costs have turned those benefits into a financial nightmare for many cities.

Norwood's recent troubles have been exacerbated by a combination of bad luck, bad timing and a failure to scale back expenses. In the past two years, the city got socked when a combined $2.6 million in bond payments came due, a figure that will return to a more typical $350,000 this year.

It also refunded more than $1 million to local companies after learning those businesses had overpaid for earnings taxes, most notably at Medpace, which moved out of town in 2008.

While those costs will drop this year, new expenses are looming, including $400,000 owed to a fund for retiree benefits and more than $600,000 for the hiring of new firefighters in 2014. A federal grant had paid much of the cost for the firefighters, but the city will have to pick up most of the tab starting this year.

Spending is only part of Norwood’s problem. As costs have risen, state revenue sharing and tax reimbursements have declined, leaving the city with about $1 million a year less than in 2008.

“Communities continue to see less and less coming back to them,” said Kent Scarrett, executive director of the Ohio Municipal League. “But the challenges haven’t changed. They’ve only increased.”

One of those challenges is holding on to jobs and bringing in new ones, a task that’s far more complicated now than when GM was around.

Back then, Norwood could count on one big employer to anchor its community and its tax base. Today, that base is more diverse but less predictable, dependent on dozens of smaller businesses employing waiters, sales people and office staff who typically earn less than the autoworkers who once manned GM's assembly lines.

The new workers are different in another way, too. Unlike those GM employees, who often lived in Norwood, the people who work here now are more likely to commute to their jobs, which means they aren't buying as many houses or paying as much in property taxes.

Norwood now relies more heavily than ever on its 2 percent earnings tax, which brings in about $15 million a year. So when companies like U.S. Playing Card and Medpace left in recent years, taking hundreds of jobs with them, the budget took an immediate hit.

“It’s all about the earnings tax,” Bonsall said. “Jobs are king. The earnings tax is king.”

Tough decisions, changes ahead

Despite the financial doom and gloom, there are hopeful signs.

A hotel is going up at Rookwood Exchange, CDK Global's service center is open and Paycor’s new office building is filling up with more than 500 employees.

There’s also progress in neighborhoods, where new and long-time residents are looking past the potholes, which are plentiful these days, and investing in homes and small businesses. The city's old houses appeal to those who can afford to fix them up, and Norwood's central location off I-71 makes it a convenient landing spot.

“This has become our family, our community,” said Josh Stoxen, a father of four who moved to Norwood from Illinois with his wife in 2010. “I’m staying right where I’m at. It’s important to me.”

Stoxen, the pastor at Vineyard Central Church, is building an addition onto his rehabbed house so the family can stay. He said the church community and his neighbors made the decision easy.

“We don’t need to go somewhere else,” he said.

John and Bonnie West aren’t going anywhere, either. They’ve owned the Surplus Work Clothes store on Montgomery Road for three decades and have watched the city slowly dig out after the loss of GM.

“We’re having to really reinvent ourselves,” said John West. “I still have hope.”

Still, there’s much to be done. Norwood is just three square miles surrounded on all sides by Cincinnati, so the city must use its space wisely and make smart development and zoning choices. Compared to suburban communities like West Chester Township, which covers more than 35 square miles, the margin for error in Norwood is small.

The city also must deal with its financial crisis, sooner than later. If nothing is done, the city's budget shortfall is expected to balloon to more than $3 million by 2020. Stith, the city’s auditor, gave council members a list of cost-cutting options in December and the response ranged from unhappiness to disgust.

The list included scaling back retiree health care benefits, outsourcing the city’s 911 service, eliminating the health department, shuttering the community center, cutting pay for employees and hiring the sheriff to take over police patrols.

Those are just options, Stith emphasized, and most will never happen. But something has to give.

“If there’s not something on here that disgusts you or angers you to the core, there’s not enough stuff on here,” Stith said of the list. Everybody should see something on here that just makes them bilious with anger, but it has to be on here.

“We have to make this thing balance,” he said. “We need to start thinking about it now.”

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All about Norwood:

Founded: 1888

Motto: “Gem of the Highlands”

Land area: 3.15 square miles

Population: 19,207 (2010 census)

Racial makeup: 86.6 percent white, 7.6 percent black, 5.1 percent Hispanic

Education: 82 percent are high school graduates; 25.5 percent have college degrees

Housing units: 9,515

Median home value: $116,300

Per capita income: $23,638

Persons in poverty: 22 percent

Famous residents: Carl H. Lindner Sr. (founder of United Dairy Farmers), David Frisch (founder Frisch’s Big Boy restaurants), Joseph Ralston (vice chair of Joint Chiefs of Staff, 1996-2000), Henry Farny (French painter who lived in Norwood in 1880s), Marc Edwards (NFL running back), Dottie Kamenshek (a top player in the All-American Girls Professional Baseball League and model for the lead character in the movie “A League of Their Own.”

Source: U.S. Census and Norwood Historical Society