Not Everyone Thinks Cleveland's Proposed 'Shore-to-Core' TIF is a Good Idea

As the city of Cleveland, along with Bedrock and the Haslams, plot historical remakings of the lakefront and Cuyahoga riverfront, gleaming renderings have been splashed around showing what each could begin to look like in the decades to come.

An open question remains, however: How will it be paid for?

In late September, weeks before Bedrock began stabilizing the land along the river, Cleveland City Hall announced interest in pursuing legislation to act as a major funding avenue: tax-increment financing, or a TIF, that doesn’t just pertain to Bedrock’s buildings in front of Tower City Center, but most of Downtown and the Inner West Side.

Calling it a Shore-to-Core Tax Increment Financing Overlay District, which would cover an area that is not yet defined, would funnel money that would otherwise be paid in increased property tax values into a fund for work on the lake and riverfront in the form of infrastructure. Property taxes owed to CMSD would still be paid, but the rest would be siphoned off.

“They are TIFs that generate new revenue and don’t affect existing tax revenue streams,” Ward 3 Councilman Kerry McCormack told Scene in a text message, “and are going to be used solely for public infrastructure.”

The cheerful buzz of this type of financing hasn’t appeased Zach Schiller, a researcher at Policy Matters Ohio. Instead, Schiller argued, this “overlay” TIF money would take away from the pots of money that other institutions rely on. Tri-C and Cuyahoga County’s Health & Human Services, just to name two.

“What will happen is that additional revenue, instead of going to the community college, the public library, the Metroparks,” Schiller said, “instead of going to them, that additional revenue will go back into this fund.”

He added, “If you’re concerned, for example, about the kids spending the night at Jane Edna Hunter [Social Services], well, you’re basically taking tax revenue that would go to them.”

Legislation for the proposed TIF won’t be scrutinized by council until early next year, as the Bibb administration seeks to seed financial pots for the two megaprojects.

Tax-increment financing has been around in Ohio since the 1990s, when legislators saw that such incentives could be used to help regrow city centers, which had been faltering after decades of Americans’ flight to the suburbs.

In line with state law, such “Service Payments” can only be used for construction in the area defined by the district creators—meaning that the TIF fund grown by Bedrock’s build along the river could only be spent, most likely, in a two-mile radius.

Some 59 local hotels, apartment buildings, shopping centers, or empty lots have benefited from these tax incentives in the past two decades. And just this past Monday, City Council renewed TIFs set to expire after their 30-year run-out dates for the Steelyard Commons, the Downtown Hilton and the Westin on Superior Ave.

Overlay TIFs have become common in Columbus and Cincinnati.

Across Franklin County, where Columbus is situated, 92 TIF districts have been created since at least 1996, when such economic perks aided the construction, three years later, of the Easton Town Center, arguably one of the most lucrative outdoor malls in Ohio. Downtown Columbus’s TIF, a 731-acre area, has absorbed millions of dollars that would’ve went to the Columbus Zoo or the Metropolitan Library, and funneled that money into downtown projects. (City-owned garages, mostly.) It was laid out 15 years ago, in 2008.

An study from two Ohio State University researchers found little upside for residents.

From 2009 to 2019, according to the study, Franklin County amassed $17 billion in taxable property value from and in those TIF districts. The value of homes in or near TIF areas spiked, the researchers found, nine percent on average.

The tax burden that once was placed on businesses shifted, the researchers found, to homeowners.

“We find no statewide statistical correlation between TIFs and economic measures such as increased GDP per capita, sales tax base, and personal income,” the researchers concluded. “This calls into question the overall economic benefit of TIFs for the average county taxpayer.”

For Schiller, who’s been studying tax laws since the early 2000s, the overlay district is a tough matter to crack. He knows that downtown development is overly positive, and he has nothing against Bedrock as a developer. It’s just the matter of the perks.

“We’re not arguing, ‘Oh, no, we don’t want this to happen,'” Schiller said. “What I’m saying is I think that you can have a good discussion about whether creating a TIF for Bedrock in the area that it’s developing is a good idea and makes sense.”

“I think that there’s always a question mark when you have a wealthy developer coming to a poor city and asking for a handout,” he added. “Is that in fact legitimate?”

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