Anyone who lives in Tremont, Ohio City or Detroit-Shoreway can tell you that the city of Cleveland’s blanket 15-year tax abatement policy — the worst, obvs — is no longer doing what it’s ostensibly designed to do. That is: spur investment in areas that wouldn’t otherwise get it by offering an incentive to developers.
This sweeping policy functions as a direct handout to said developers, because they’re able to jack up the sales price of their new builds, knowing that home purchasers are more than happy to pay a premium since they won’t be paying taxes for the likely duration of their residence. Many of them flee just before the taxes kick in. Developers love the policy because they can keep cramming condos into hot areas already attracting new residents, and Cleveland upholds the status quo, content as ever to redistribute funds upward. You know, to the folks who really need it.
The two frustrating side effects of this policy are: 1) That neighborhoods that would benefit from a generous incentive are overlooked. Why would developers take a risk by building in Buckeye when they wouldn’t have to take a risk (and could still get the abatement) by building in Ohio City? 2) That longtime homeowners in hot neighborhoods shoulder an increasing percentage of the tax burden. Taxes go up as neighborhoods get hotter, but the folks responsible for the hotness, for all that rising home value, don’t pay.
The good news is that city council has said the program could do with some tweaking, and just last week, the city announced that it was commissioning a study on the abatements in partnership with a number of local nonprofits.
“Equity requires inclusion,” said Councilman Kerry McCormack, “and we can’t have an inclusive process without first having a process that includes all stakeholders — residents, homeowners, developers, schools, researchers, and more must contribute to the process. Comprehensive research and equitable community engagement will create space for resident voices, while helping us to make sound policy decisions based on the hard facts.”
If the city passed legislation based on hard facts, it would be the very first time. We look forward to it!
— Sam Allard
This article appears in Apr 24-30, 2019.
This is a really flimsy analysis, Sam.
While their taxes probably do go up modestly (actually, have you fact checked that they have, Sam?), long time area residents do benefit from the abatement program when they resell and their properties have skyrocketed in value because of new build induced neighborhood improvements. I’d happily pay $500 more for 10 years to see my home go up in value by $100,000.
I’ve watched this happen in multiple areas and wish I had the foresight to buy every property I could have before the building boom started. If anything these residents have disproportionately benefited – they put in ZERO new equity into their homes and they’ve doubled, tripled, or more in value while other people put tens of thousands (20%) down on a home in a neighborhood that 5-10 years ago would be considered less desirable On a cost adjusted basis the the long time residents did better than anyone from this policy.
And, so what if the buyer of the home sells when the 15 years is up, the City of Cleveland still gets a home that generates $5000+ in annual property taxes from an area that was previously struggling. That all adds up. BTW, finally, go onto Zillow, builders are doing abated properties in Buckeye; its not their fault that less folks want to live there. These things take time. There’s a massive social commentary behind that part of your (sorta?) debate and I wish abatement was the solution because if it was Buckeye would be booming.
I believe this topic requires more than the barely six paragraphs you put into this…..
Also, one point I didn’t make above, go ask the people that excavate, plumb, paint, frame, roof, tile, and landscape these homes how much they dislike this policy. I think they’ll say your nuts. There’s not exactly a building boom in Parma or Strongsville to keep this many folks employed.
I could go on for days about this one….you left so much out.
Very much agree with the above comments. Taxes do not go up by even $500 a year either. We are talking marginal increases such as $70-100 a year. That is basically nothing. And please, spare me the whole ” they aren’t making a lot of money and have lived there FOREVER, so every dollar counts and they shouldn’t be penalized for new residents moving in.” As stated above, these homes that are probably worth $15k – $50k in a normal market, but are selling for over $100k for a complete remodel. Just because Ohio City, Tremont, and Detorit shoreway have been successful over the last let’s say 4 years, doesn’t mean you pull the tax abatement out. I personally built a new home 2 years ago in Ohio City and yes it helped. Also tho, I built a $300k home next to a $25-$50k home that is now probably skyrocketed in value with all of the other redevelopment in the area. Do you think all of these businesses are moving in and around Lorain and Ohio City without all of these new homes and condo’s being built? Do you think the city is investing in all of these street projects without all of these new homes being built with all of these new residents with $500k homes being built? Its way to early to pull the tax abatement. Cleveland is just getting started and people like this with thoughts like this, are the things that have held Cleveland back in the past. Please – let us move forward and progress. Tax abatement isnt needed in other places like Buckeye and parma anyways. A nice home there can cost like $75k. That’s a big difference to $300-$600k homes in tremont, ohio city, and detroit shoreway.
Didn’t Scene just post an article that other than Tremont there has been no gentrification in NE Ohio? And the gentrification that has happened has impacted “hundreds” of people. People act like Tremont, Ohio City and Detroit Shoreway are the second coming of the Gold Coast in Chicago. Walk down even the best redeveloped blocks and you will still see multiple run down homes that look like meth labs. Rolling back the abatement will only slow the progress the city has made in attracting middle to upper income residents that have fled the city for decades.
I can attest that my already outrageous property taxes have gone up plenty thanks to people like Taxin Jackson and thief Budish over at the county with their latest ma$$ive property tax reevaluation increases!!!
Meanwhile, all these millennials that are paying $500k + and up for these way overpriced, cheaply built, teeny tiny dumps (Battery Park, Trendy Tremont) pay nothing for 15-years, and the rest of us get left holding the bag, and the developers make out with tons of $$$!!!!
Time to end the giveaways to developers in the form of tax abatement programs now!!!
@what a dump, Drive back to tremont, Ohio city, and (yikes) Detroit Shoreway circa 2003 and tell me youd rather have that than what we have today? I doubt youd stay in 2003 land in those areas for very long. Abatement stimulated interest despite an otherwise rough city government.
The economics of abatement are sound.
Sam, did you create the “Our community is not your commodity” sign that is flying in Ohio city?
It hurts our community when we give tax abatements for expensive condos in Cleveland neighborhoods that are already thriving and or gentrifying.
The city and schools need tax revenue. Providing tax incentives to the wealthiest Clevelanders (those who can afford 300k+ condos) and their developers marginalizes the urgent needs of working families.
I live in Canton….where they just adopted this abatement program. I disagree with the complaints that some have been stating…namely that longtime residents have seen their taxes go up and are thus feeling an economic pressure to move. You have to look at the big picture of Cleveland’s decades long negative status. Is it better to have every single “hood” in Cleveland going down to rock bottom, dull dozer status? Or is it better to have those few “hoods” with the most potential come back with new middle class residents? I cannot agree that old urban cities should only be fit for subsidized folks or people with very limited incomes. You are basically saying Cleveland should be as poor as possible with the most challenged folks in the County living there as their default “hood”.