Cincinnati Council voted 8-1 Wednesday to give final approval to an overhaul of the city's residential tax abatement program.
"I am confident that this reform will fix the current broken system, will lead to more equitable results, and will continue to be a tool that grows our city," Mayor Aftab Pureval said during discussion in committee Tuesday.
RELATED: How Cincinnati's residential tax abatement program works, and how it could soon change
A residential tax abatement eliminates property tax on new value added to a property for a set amount of time. Properties with up to four housing units are eligible, although they're most commonly used for single-family homes. (A separate program regulates commercial tax abatements, which includes housing with five or more units and all other development projects.)
The ordinance outlining a new program limits the value of abatements in wealthier neighborhoods and increases value — and, theoretically, increases participation — in lower-income neighborhoods. The idea is to offer better incentives in neighborhoods that haven't seen much investment recently. The changes are based on an external report that showed the current program disproportionately benefits high-income, majority-white neighborhoods.
Pureval says abatements alone cannot solve inequity.
"I am very confident that this reform will fit into the rest of our programs in order to increase housing stock and increase affordability in our city," he said.
Council Member Liz Keating was the only opposing vote in both committee and full council.
"If we keep saying this is going to help with equity, but then we're also saying this is not very effective and this is just one tool in the toolbox and this doesn't really get us there, then what I'm asking is, what problem does this actually solve?"
Pureval said he's concerned there is any confusion on that point after so many lengthy council discussions and community engagement meetings. He summarized arguments for the reform, concluding — quite pointedly — "to try and help educate you."
"If we got rid of abatements altogether, we would still have a segregated city; the issue of segregation is multifaceted," he said. "Pairing the important reforms of this program with all of the other reforms that were that we're looking towards ... this piece will have results that are more equitable."
Keating says her opposing vote doesn't mean she supports the existing program. She says she'd prefer to wait until Council considers comprehensive zoning and land-use reform, which officials have been calling Connected Communities.
"Everybody seems to be in agreement that we need more multifamily [housing]," Keating said. "So why would we not wait until we rezone the city to build more multifamily, and then know what we want to incentivize to drive investment and growth on that multifamily aspect?"
Other council members pushed back strongly. Council Member Jeff Cramerding said many council members campaigned on tax abatement reform.
"Neighbors are suffering," he said. "This is a tool to help them, they want action, and I don't know how we can go back on the campaign trail and say we're waiting for another study."
RELATED: What went wrong when council asked for public feedback on abatement reform
The city is facing a lawsuit from Black homeowners alleging the current program is racially discriminatory. Attorney Bob Newman says the changes don't do enough to fix the problem.
"The only way you can stop [racial segregation] is to eliminate the top tier neighborhoods from tax abatements," Newman told Council Tuesday.
Newman filed a new motion in his lawsuit against the city on Monday. He's asking the judge for an injunction on new residential abatements in what he calls "Eastern Caucasian neighborhoods" — Hyde Park, Oakley, East End, Riverside, Columbia Tusculum, Mt. Lookout, Linwood, California and Mt. Adams.
The city's law department had hoped to settle the lawsuit after council passed reforms.
Click here to read a full explanation of the current program and how the new program compares.
When will it take effect?
The new program will take effect Sept. 1.
If a construction permit is submitted before the effective date, it would qualify for the current abatement program, as long as construction begins within one year of the permit application.
What will change?
Cincinnati's 52 neighborhoods will be divided into three tiers using six equally weighted criteria:
- Income
- Poverty rate
- Home values
- Mortgage approvals
- Single-family market change
- New construction
The neighborhoods will be re-evaluated every three years and could be moved up or down a tier based on the results.
The SUSTAIN tier includes neighborhoods determined to be least in need of incentives:
- Columbia Tusculum
- Hyde Park
- Linwood
- Mt. Adams
- Mt. Lookout
- Oakley
The EXPAND tier is in the middle and would get slightly higher abatement values than SUSTAIN. It includes 10 neighborhoods:
- California
- Clifton
- Downtown
- East End
- East Walnut Hills
- Madisonville
- Northside
- Over-the-Rhine
- Pendleton
- Pleasant Ridge
The LIFT tier includes the city’s 36 remaining neighborhoods.
LIFT (0-2 Criteria) Neighborhoods
| Abatement Term Length | Max Abated New Value | |
| Remodeling | 15 years | $350,000 |
| New Construction | 15 years | $300,000 |
| EXPAND (3-4 Criteria) | Abatement Term Length | Max Abated New Value |
| Remodeling | 12 years | $350,000 |
| New Construction | 10 years | $300,000 |
| SUSTAIN (5-6 Criteria) | Abatement Term Length | Max Abated New Value |
| Remodeling | 8 years | $250,000 |
| New Construction | 5 years | $200,000 |
Bonuses will be available for sustainability, visitability (i.e. wheelchair accessible) and historic renovations. All abatements are eligible for the same amount regardless of neighborhood tier.
Full ordinance:
