City Council Approves Special TIF District For Bedrock Riverfront Project, Promising Up to $1 Billion in Subsidies

Ward 5 Councilman Kerry McCormack was adamant that both tax-increment financing (TIF) districts were sorely needed for Downtown’s future. Despite any worries some at the table had that big institutions were getting potential handouts. Credit: Mark Oprea

Just a few months after City Council formally made Downtown Cleveland into a self-propelling revenue generator, thanks to the Shore-to-Core-to-Shore tax increment financing (TIF) district, they spent a bulk of their second summer meeting discussing another TIF, one for Bedrock that would remove the riverfront from the overarching one covering the central business district and pour $1 billion in subsidies into Dan Gilbert’s mega Cuyahoga project.

On Wednesday, after morning and afternoon meetings in Council Chambers, the legislative body okayed a fresh TIF district for the project area south of Tower City Center and north of the Cuyahoga River where $3.3 billion worth of apartments, offices, retail, parks and a new Cavs practice facility are planned.

Renderings of the new Cavs practice facility Credit: Courtesy Bedrock

The idea mirrors the guiding mission behind Downtown’s Shore-to-Core TIF: Bedrock putting shovels into long-blighted ground would generate up to $1 billion over the next 45 years that would be devoted to new water lines, bike lanes, parks, parking garages and river cleanup, among other efforts. The funds would come from increased property values, with taxes that would otherwise go to the county library or Tri-C funneled back into the riverfront project.

In exchange for what some see as a generous financial break, Bedrock would have to promise to construct at least 400 of those 2,000 housing units alongside the river “at or below market value” — affordable housing as judged by area incomes.

Most at the table on Wednesday shared the same spirit found in May, when Council passed the Shore-to-Core as a promising boost for Downtown Cleveland—and tens of millions of dollars allocated to the rest of the city.

“Will economic development be here? Absolutely. Jobs created here? Absolutely,” Ward 5 Councilman Kerry McCormack said at the meeting. “Will there undoubtedly be value added that wouldn’t otherwise be added? Of course—we have vacant lots boxed off from the community right now.”

“So adding a twelve-acre park and economic development of course will add value,” he added. “I mean, a fifth grader will tell you that.”

An economic impact study commissioned by Bedrock estimates 30,000 new jobs and an eventual increase of $1.2 billion in property taxes for CMSD, $5.1 billion in city income taxes and $4.6 billion in other taxes across the next two decades.

Discussion revolved frequently around Bedrock’s upfront investment, $25 million in spending that, as legislation passed in tandem guaranteed, would be dedicated to the neighborhoods surrounding Downtown—including $5 million in a Minority Business Credit Fund, $3 million for workforce training, and $1 million for mentorship for job seekers.

That community benefits agreement, which Council had been urging to be included in the Shore-to-Core TIF, would provide immediate results, as Ward 10 Councilman Anthony Hairston said: “Not 15, 20 years down the road, but at the onset of this project, at the beginning stage of this project.” That includes a promise from Bedrock for 40% minority and female-business hiring for construction, 20% of workers being city residents and an emphasis on Cleveland-based firms.

City center tax districts are either downtown saviors or possible resident burdens, according to which side of the legislative table you ask. Columbus’ own Downtown TIF district, created in the early 2000s, is often tied to its generally higher land values than Cleveland’s.

The special Bedrock TIF District, shown here in blue, will help divert property tax money into the surrounding public space—into bike lanes or water lines. Credit: City of Cleveland

But some studies show that the incentives passed along to wealthy developers do little to improve life for residents, shifting economic burders to homeowners across the city. And that regional services are forsaken at the expense of infrastructure enjoyed by relatively few.

“While I’m a Cavs fan, like I’m sure most of you are, [the TIF] underlines that city residents are getting only a small amount in relation to the $3.4-billion project,” Zach Schiller, head of research at Ohio Policy Matters, told Council.

Schiller worried that a special TIF for Bedrock could spell bad news.

“I just don’t understand why you think that the public library, or mental health services, or Tri-C, or protecting the elderly, or all the other things that are no longer going to be exceeding these funds are less important,” he said.

To that, Council pushed back, secure in its legislative promise for Downtown: Most of the institutions, either mentioned by Schiller or not, are funded in part or wholly by tax levies—either at the county or city level. (The Cleveland Metropolitan School District would be “held harmless,” or unaffected, regardless.)

“It’s important for everyone here at the table or in the media to understand that this doesn’t take away any revenue from the City of Cleveland,” Ward 13 Councilman Kris Harsh said. “And that this is a good thing. And that our city needs this.”

The exact split between the Bedrock TIF and the Shore-to-Core-to-Shore TIF is, as you might imagine, complicated business. Cleveland.com has a good breakdown here.

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