The compensation includes $4.35 million to be paid to the school district in installments over two years, including $1.35 million paid to the district in April. Another $500,000 will be paid by July 1, and the remaining $2.5 million is be paid in two equal installments by April 1, 2025 and April 1, 2026.
The settlement also sets up a new threshold where tax sharing between the city and school district will begin.
“The city and school district have a long-standing partnership serving the citizens of Vandalia and look forward to continuing and strengthening their partnership moving forward,” the joint release said.
The original dispute centered around “community reinvestment areas,” where the city offers property tax incentives to attract companies to a specific area. Property taxes are an important source of funds for school districts, so the state requires municipalities to share some income tax revenue with the impacted district.
In the now-dropped lawsuit, the district alleged that the city needed to pay half of the difference between the amount of taxes collected on the incomes of new employees in the reinvestment areas. Instead, the district said that the city simply kept the income taxes collected for itself. The suit said that Vandalia owed the school district more than $10 million.
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