A proposed overhaul of Cincinnati's residential tax abatement program looks a little different after changes in committee Tuesday, but critics say it's still not enough to make the program more equitable.
The program offers a property tax break for buildings with up to four housing units, but nearly all abatements go to single family homes. (A separate program regulates commercial tax abatements.)
Mayor Aftab Pureval's ordinance would limit the value of abatements in wealthier neighborhoods and increase value — and, theoretically, increase participation — in lower-income neighborhoods.
One change to the new program under consideration is adding an extra bonus for more units.
"This tiered approach means that we're incentivizing on a unit by unit basis," said Council Member Meeka Owens. "So when you get to that fourth unit, you get the highest value. And we're leaving the discretion of our experts in [Community and Economic Development] to come up with what that value should be."
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Council also added an extra bonus for accessibility: an additional $25,000 in abated value if the home has a wheelchair accessible bedroom and bathroom. This would be on top of the "visitability" bonus in the original ordinance, which requires a wheelchair accessible entrance and hallways.
A suggestion from Vice Mayor Jan-Michele Lemon Kearney's office was to add a bonus for new construction that doesn't connect to natural gas; that motion was referred to the administration for a report.
Council responds to criticism
Most of the criticism has been that low-income households can't afford to make the kind of renovations that would qualify for an abatement. The motion with amendments to the ordinance also included several promises that council would "prioritize increased funding" for homeowner programs in the next city budget:
- HARBOR (Homeowner Assistance Repairs & Building Order Relief)
- Housing repair services
- HELP (Home Enhancement Loan Program)
- Emergency mortgage assistance program (foreclosure prevention)
- CARE (Compliance Assistance Repairs for the Elderly)
- New funding to offset the $250 application fee for residential tax abatements for low- to moderate-income homeowners.
Council Member Liz Keating objected to that part of the motion.
"I think it's important that we look at this all as a whole, understand what our budget looks like, where our gaps are, we know where to go," Keating said. "Because if everything's a priority, nothing is a priority. So I'm really struggling because this feels like an empty promise."
Council will pass the next budget sometime in June.
Equitable Growth and Housing Committee Chair Jeff Cramerding defended the funding promises.
"The intent of this motion was, let the citizens know that their concerns were heard and that we as a Council are moving forward to respond to those," he said. "Is it binding? No, it's not, but I think it is substantive and important."
The motion also supports boosting "marketing, education and outreach, particularly among LIFT neighborhoods [one of three tiers proposed in the overhaul] and low-moderate income homeowners."
The amendments to the ordinance and budget priority statements were included in a single motion, which passed with eight votes, while Keating abstained.
Other criticism involves how tax abatements impact revenue for public schools.
Michelle Dillingham of the Cincinnati Federation of Teachers says the entire abatement program is detrimental.
"Our schools are impacted by these abatements to the tune of millions a year," Dillingham said. "On average, $6 to $7 million annually is foregone, meaning the schools don't get it because we're incentivizing residential abatements."
City officialssaid in an FYI memo for council members that abatements don't take money away from Cincinnati Public Schools, because it only forgoes tax on new value — property owners always pay taxes on the value before any improvements or new construction.
"The intent of the program is to encourage investment in our housing that would not otherwise occur," the memo reads. "The goal of the program will be to continue to create taxable value that would not otherwise be created, benefiting the city, CPS, other taxing jurisdictions, and our economy."
State law allows for a Payment in Lieu of Taxes, or PILOT, for commercial tax abatements, meaning developers pay CPS an agreed amount to compensate for the tax revenue CPS would have gotten without an abatement.
The City Solicitor's Office says state law doesn't address that kind of system for residential abatements.
"The state law itself is silent," said Kaitlyn Geiger from the law department. "However, there is an Ohio Attorney General opinion that states if the statute is silent, then that means payments are not permitted."
Council Member Reggie Harris responded generally to criticism from the past several weeks.
"I want to push back really harshly to critique that this policy is racist, that our intent is to cause harm," Harris said. "As someone that has been very intimately involved in the detail of this, we put in the three-year look-back to ensure that we are doing things correctly and that we are not causing harm."
What happens next?
The law department will draft a "B version" of the ordinance based on the changes Council requested in the motion.
The amended ordinance will be up for an initial vote in the Equitable Growth an Housing Committee Tuesday, Feb. 28.
If it passes in committee, it will be up for a final vote Wednesday, Feb. 29.
If passed, it would go into effect Sept. 1. If a construction permit is submitted before that date, it would qualify for the current abatement program, as long as construction begins within one year of the permit application.
