Council approves tax exemption for luxury housing, saying its 'a better deal for taxpayers'
Cincinnati Council voted Wednesday to approve a 15-year tax exemption for a Downtown housing development. The project is 29 luxury apartments at Fourth and Pike near Lytle Park. A subsidiary of Western & Southern Financial Group (Eagle Realty) plans to renovate the 50-year old building.
"With the renovation, this property will pay significantly more to local government due to the large expected increase in property value," said Markiea Carter, director of Community and Economic Development.
The new housing will cost between $2,800 a month for a one-bedroom and $5,800 a month for a four-bedroom.
The city will still collect taxes on the property based on its current value. In exchange for the exemption on new property value, developers will make payments over the next 15 years: about $1.5 million total to Cincinnati Public Schools, and about $700,000 total to VTICA, the city's streetcar fund.
The VTICA payment alone is worth more than what the city will give up in property taxes (about $650,000 over 15 years, based on an estimated post-construction value).
Officials also estimate $180,000 in income tax from two years of new construction jobs, and up to $844,000 in income tax from the new residents. Council Member Reggie Harris says that's a key factor.
"While for some folks it may be unpopular, I think, as a steward of this city, our tax base is important," Harris said. "When we have an increased tax base, maybe we won't necessarily have to charge residents to fix sidewalks [for example]."
The income tax estimate assumes all 29 units will be occupied by people new to the city. It also assumes an income level for residents spending no more than 30% on rent and utilities, so the actual income of new residents could be lower.
This new council has been slower to vote on tax incentives like this. Earlier this year, Council voted 5-4 to deny an abatement for a commercial development in Oakley.
"I think in other cases, like Oakey, it was fairly obvious that it would proceed without [the abatement]. I think in this case, it seems like … it would not," said Council Member Mark Jeffreys. "It is a better deal for taxpayers to do this. To walk away from it because politically, you know, you're bashing developers, I don't believe is the responsible task."
Council expressed some wariness when the deal was first introduced two weeks ago. Several members said developers should agree to higher percentages of inclusion for contractors; since then, developers agreed to increase their goal for minority-owned businesses to 7% (up from 5%, while the goal for women-owned businesses remains at 7%). Developers also say at least 25% of the 70 temporary construction jobs will be filled by Cincinnati residents.