It’s been three years since new rules for residential tax abatements in Cincinnati went into effect, the result of City Council-approved reforms aimed at making the program more equitable.
The reforms included a requirement to re-evaluate the program every three years, but the first evaluation didn't happen by a Sept. 1 deadline. A few Council members questioned the delay during Tuesday's Housing and Growth Committee.
"I think we, as a council, probably need to go through this 2023 ordinance and maybe do some cleanup," said Council member Anna Albi.
Before the changes, residential tax abatements were the same no matter where they were located in the city. Under that system,majority-white and higher-income neighborhoods benefited disproportionately, according to an external report commissioned by the city.
A lawsuit filed by dozens of Black residents alleged the city's policies were racially discriminatory. That lawsuit was eventually settled after City Council approved the reforms.
Under the 2023 changes, the value of an abatement depends on the neighborhood. The idea is to offer better incentives in neighborhoods that haven't seen much investment recently.
Neighborhoods are divided into one of three categories based on criteria like income, poverty rate, home values, and certain market considerations. The neighborhoods were supposed to be re-evaluated every three years, with an initial deadline of Sept. 1, 2026.
City officials say the delay is due, in part, to a major restructuring of the city's staff focused on development, including the position originally tasked with conducting the re-evaluation. Earlier this year, City Manager Sheryl Long dissolved the former Department of Community and Economic Development and created an Office of Strategic Growth, and a Department of Opportunity and Resident Services.
Roy Hackworth is a division manager in the Department of Opportunity and Resident Services. He says most of the abatements approved over the last three years are still under the old rules because it’s based on when building permits were first approved.
"We really would like to see the implementation of the 2023 reform be in play for at least another year to be able to accumulate more data on how the program is operating and what type of city goals it's meeting," Hackwork told the Council committee Tuesday.
About 300 abatements have been approved under the new policy, compared to over a thousand approved since 2023 under the old rules. Hackworth says a full analysis should include five years of data, and should be done by an objective third-party.
So far, there's evidence the reforms are working. Under the new program, there have been 156 abatements in the "Lift" neighborhoods, the ones with the highest-value abatements; another 115 abatements in the middle-tier neighborhoods; and 39 in the highest-tier (wealthiest) neighborhoods.
"We've increased our engagement and awareness with the reform," Hackwork added. "Many people in some of these 'Lift' neighborhoods were doing renovations to their homes, but they just weren't utilizing the program. Now we've done more engagement in communities, talked more with residents."
Housing and Growth Chair Mark Jeffreys says it makes sense to do some cleanup of the 2023 ordinance.
"There are a few things we can do there, and we'll follow up accordingly," he said.
What is a residential tax abatement?
A residential tax abatement eliminates property tax on new value added to a property for a set amount of time.
This program is for housing with up to four units and is 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 program aims to attract and retain city residents, stimulate community revitalization, and reduce development costs for home ownership and rental projects.
Only taxes for new value are abated.
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