By Michael D. Clark
The Cincinnati Enquirer
MIDDLETOWN - Fresh off what could be a turnaround year for this struggling city, Middletown officials are grappling with fiscal challenges for one of the key urban economies of Southwest Ohio.
Last year Middletown's second-largest employer threatened to leave but was persuaded to stay, the roof of the massive downtown mall was torn off, and housing requirements were raised to their highest standards ever. So far, 2003 is shaping up as a year of fiscal restraint and possible city budget cuts, says Mayor David Schiavone.
"We're circling the wagons financially and we're being fiscally responsible by looking closely at the budget," Mr. Schiavone said. "The economy has forced us to look deeper into the budget, but we are not in the panic mode.
"Everything is on the table," said the second-year mayor, who added that layoffs are only a preliminary option. He said they would not be decided until later this year and if approved, not enacted until 2004.
Other leaders in the area say Middletown's outlook is boosted by its location straddling Interstate 75, near booming Butler and Warren county communities such as West Chester and Liberty townships, Lebanon and Springboro.
State Rep. Gary Cates, R-West Chester Township, whose district includes part of Middletown, said: "A lot of people forget that Middletown is 200 years old. Most of these communities around here are infants compared to this city. Middletown has lived at least two lives already. Now they are going through another phase. Middletown will grow and expand again."
Despite the good news in 2002 that saw city officials successfully entice the Middletown Regional Hospital to rebuild within the city limits - after they agreed to contribute up to $30 million in 10 years to the $250 million project - the lagging national economy now has Middletown officials facing a $2 million projected deficit and considering cuts in its $112 million operating budget.
City officials also intend to start updating a long-dormant 20-year plan they say will be a crucial blueprint to woo development to the community whose local tax base depends heavily on its largest two employers - AK Steel and the hospital.
"As AK Steel goes, so goes Middletown," said Mr. Schiavone of the Fortune 500 company that employs more than 4,000 workers and has anchored the city and mid-Miami Valley economy for more than a century. On Thursday AK Steel made a $1.025 billion bid to acquire rival National Steel Corp.
The action reflects the steel maker's position as one of the most profitable steel manufacturers. If successful, the acquisition would be AK's largest since its 1999 purchase of Armco Inc.
David Daugherty, president of the Mid-Miami Valley Chamber of Commerce, said Middletown's industrial base is "not only a strength for Butler County but for Southwest Ohio. It's a very dynamic community. These moves by the city really position Middletown for the future with waves of development coming down from Dayton and up from Cincinnati."
But next up for the city is making sure it stays within its budget for 2003.
No one is discussing specific job cuts among the city's 460 employees, said Mr. Schiavone, but he said the city needs to look for savings in eliminating city services - such as building inspections and parts of the city's health department - that duplicate those that could, at a reduced cost, be picked up by Butler County.
"We're still strong as a city and we want to stay ahead of the curve," he said, pointing to negotiations that resulted in the hospital agreeing to move to the city's east side, off Ohio 122 near Interstate 75, and the $13 million City Centre Mall renovation project that saw the cavernous and unprofitable mall disassembled into an open-air, retro-themed central business district of 26 business and office facades.
Last year city officials also approved stricter housing standards designed to raise the minimum square footage of houses. That in turn would spur more expensive housing to lure more high-income families and businesses into the community where 75 percent of the housing was valued below $150,000.
Some residents are uneasy about the changes.
Tracy Brown, who lives a few blocks from the hospital's current location off of McKnight Drive, worries that residents on the western side of Middletown, and nearby communities of Trenton and Franklin, "will have farther to go for medical care and emergency service."
The City Centre Mall, built in the 1970s, began losing business soon after opening and became a money drain on the city.
Jim Georgostathis, co-owner of the popular Parrott Restaurant, knows that too well. His restaurant has been a Middletown institution for more than 60 years, the last 18 spent a block from the old City Centre Mall site.
"The mall hurt a lot of us down here and it obviously didn't work," said Mr. Georgostathis, who remains optimistic about the new central business district.
"It can't get any worse than it was. Hopefully, there will be some new customers downtown to help us all out. City Council needs to keep focusing on downtown."
City Council will hold a public retreat 9 a.m.-noon today to hold preliminary discussions about the city's budget at Midfirst Financial Services office at 3600 Towne Blvd.
Enquirer reporter Jennifer Edwards contributed.
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