Microsoft Word - FAQ- 2022 Tax Abatement Renewal REVISED

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

2022 Tax Abatement Renewal

Frequently Asked Questions

Updated following Passage of Ordinance 482-2022

1. What is a tax abatement?

A property tax abatement is a temporary elimination or reduction of the increase in taxable value

resulting from new construction, renovation or rehabilitation of existing housing units, or other housing

improvements, such as additions.

2. Does a tax abatement reduce the taxes owed on existing value?

No, previous value is not eliminated or reduced.

3. Why is the council adopting a new tax abatement policy?

The City of Cleveland has routinely established a sunset (expiration) clause for previously adopted tax

abatement policies. Approximately every 5 years the City of Cleveland must renew its tax abatement

program

4. What was the tax abatement policy adopted in 2017?

Ordinance 244-2017 established a citywide tax abatement area where all residential development and

improvements were eligible to receive a 100% tax abatement for 15 years provided that the

improvements met Green Building Standards.

5. When does the 2017 Tax Abatement Policy sunset (expire)?

June 4, 2022

6. Is the City of Cleveland proposing a change to tax abatement as part of the 2022 Tax Abatement

renewal?

Yes. For the past 2 years the City of Cleveland has studied tax abatement policy and its impacts

throughout the City. This study was undertaken by the Policy Equity Group, convened by the Director of

Community Development in 2018. In 2020 the City released a Tax Abatement Study, a report completed

by The Reinvestment Fund, proposed a number of changes to target tax abatement and provide equity.

7. The 2022 Tax Abatement Renewal program components.

The City has adopt 6 recommendations from the 2020 Tax Abatement Study. They are:

 Geographically differentiate and target tax abate by neighborhood type

 Affordable housing developments eligible for maximum abatement anywhere in the City.

 Place a cap on tax abatement for single family developments, limiting tax abatement to the first

portion of new taxable value. See attached tax abatement.

 Require Community Benefits Agreements for Multi-Family Developments to include:

o Contracting opportunities for minority, women and Cleveland-based contractors

o Affordable Housing set-asides

o Voluntary Payment In-Lieu of affordable housing set-asides

 Continue Green Building Standard requirements

 Grandfathering/Grace period for the first 18 month where changes do not take effect until

January 1, 2022.

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

8. Where can someone find the 2020 Tax Abatement Study?

https://clevelandohio.gov/sites/default/files/forms_publications/ReinvestmentFund_Report-

ClevelandTaxAbatements-July2020.pdf

9. Did the 2020 Tax Abatement Study engage Cleveland residents and stakeholders?

The 2020 Tax Abatement Study has extensive community input. The tax policy study had developer,

realtor, investor and banker engagement led by GOPC.

 71 individuals representing stakeholders

 12 community listening sessions

 55 resident interviews

 250 community member participation

 The following is a list of touchpoints:

 15 Developers: 8 “large scale,” multi-family developers; 4 “mid-size to large scale” single family

home developers (some also do multi-family and/or retail); 2 “small scale” seasoned single family

home developers; 1 “emerging” single family home developer.

 8 Commercial Bankers or Advisors on Large Commercial Projects: 2 large, multi-state commercial

banker; 1 small, local, commercial banker; 2 financial analysts/advisors; 3 lawyers.

 3 Mortgage Bankers: 1 large, multi-state, mortgage banker; 2 smaller, local, mortgage bankers (1

who predominately lends on west side and 1 who predominately lends on east side).

 8 Realtors: A mix of west and east side realtors.

 3 Local Real Estate Observers

 17 Taxing Entities Representatives and Labor: Cleveland Metropolitan School District; City and

County Libraries; Cuyahoga Community College; Greater Cleveland Regional Transit Authority; Port

Authority, Regional Sewer District.

 19 Housing/Community Development Professionals: CDCs, social services practitioners, policy

observers, county landbank, academics

10. What are the neighborhoods identified for differentiated tax abatement?

The City will be divided into 3 areas based on market strength: Market Rate Neighborhoods, Middle

Neighborhoods and Opportunity Neighborhoods.

11. How were these neighborhoods determined?

The City of Cleveland, through a grant from the Cleveland Foundation, established the Middle

Neighborhood initiative. This initiative studied the real estate market across the City. In partnership

with Case Western Reserve University, 17 measures of housing patterns, market activity and

demographic indicators determine if a census block is:

 Market Rate Neighborhoods have seen substantial investment; higher sales and rental prices;

lower foreclosure rates; and higher incomes

 Middle Neighborhoods have higher density of single family, middle class / workforce housing; older

housing stock, some foreclosure and demolition activity

 Opportunity Neighborhoods have seen limited investment; substantial demolition and foreclosure;

and have lower household income

12. Is there a map to show these neighborhood designations across the City?

Yes and the City has developed an online version at

https://clevelandgis.maps.arcgis.com/apps/webappviewer/index.html?id=03c32cde01ec4316bfdb9ce2fba

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

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13. What different tax abatements are applied to the different neighborhood types?

See the tax abatement summary table for the different levels of tax abatement by neighborhood.

14. What is a Community Benefits Agreement?

A Community Benefits Agreement (CBA) is an agreement where the City would provide incentives or

assistance to a developer in exchange for certain investments or requirements that will provide a

benefit to Cleveland residents or businesses. These benefits can take many forms, but the tax

abatement ordinance would require two benefits for multi-family projects.

 Contracting opportunities to minority, women, or Cleveland-based enterprises

o Market Rate 15%

o Middle Neighborhoods 7%

o Opportunity Neighborhoods 8%

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

 Affordable unit set-asides

o Market Rate 25%

o Middle Neighborhoods 15%

o Opportunity Neighborhoods 5%

 Reduction of 1 unit required for every unit at 30% AMI affordability

 Voluntary Payment In-Lieu of providing affordable housing set-asides, $20,000 per unit

15. How will the voluntary payments be collected and used?

The voluntary payments will be received into a dedicated account as funding for a local housing trust

fund. These funds would then be available for use in creating affordable housing, primarily in project

not receiving federal affordable housing assistance. The proposed 2022 tax abatement ordinance

established the dedicated fund to receive such voluntary payments. The Department of Community

Development will need to submit a contracting and expenditure authorization ordinance to establish the

program for the use of these funds.

16. Does the new Cleveland 2030: A Housing Equity Plan support this proposed 2022 Tax Abatement Policy?

Yes. The new Cleveland 2030: A Housing Equity Plan, recommended the following: “Preserve and

improve the Cleveland Tax Abatement. The tax abatement is required to be renewed by City Council in

2022. The city should take this opportunity to consider the recommendations put forward in the

Cleveland Tax Abatement Study and explore scaling the size of the abatement by home type, price, and

location in order to encourage its use for homes in a wider range of neighborhoods and price points.”

17. What type of affordable housing projects would be eligible for the maximum tax abatement anywhere in

the City?

All Deed Restricted Affordable Housing Development would be eligible for 100% 15-Year Tax Abatement.

Including:

 Low-Income Housing Tax Credit Projects

 HOME Assisted Projects

 Community Land Trust

 Any other project that places an affordability restriction for the period of the tax abatement

18. What is the Green Building Standard required for all tax abatements?

Residents and developers seeking tax abatement for residential projects must meet Cleveland Green

Building Standards found in the Cleveland Green Building Standard Handbook.

https://clevelandohio.gov/sites/default/files/forms_publications/GreenBuildingStandardsHandbook2018.

pdf

The Standard is based on the nationally recognized green building rating systems. The five systems that

are eligible under the Cleveland tax abatement program are:

 Enterprise Green Communities- Affordable Housing

 Enterprise Green Communities Compliance

 LEED Silver Certification

 National Green Building Standard (NGBS) Certification

 Advanced Building Certification Program

19. Can a project loose tax abatement benefits after completion of a development?

Yes, The Housing Officer overseeing the tax abatement program may revoke a tax abatement for failure

to correct a building code violation, failure to correct a zoning code violation or failure to pay property

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

taxes owed.

20. Will projects have an opportunity to be grandfathered under the old tax abatement benefits?

Yes, the proposed ordinance establishes a 100% 15 year abatement city wide for all projects that submit

a complete schematic design review approval to the Planning Commission by December 2023.

21. Will the tax abatement program implement administrative improvements beyond the tax abatement

policy proposals?

Yes, the Department of Community Development is implementing a new Grants Management Database,

called Neighborly. This program will permit developers to apply for tax abatements digitally via an

online platform. The Department is also evaluating staffing needs for administering the new policy

requirements.

22. How many tax abatements were approved under the current (2017) tax abatement policy?

 2017-2021 Total Abatements 1,128 abatements

 2017-2021 New Housing Units 6,321 housing units

 2017-2021 Total Revenue Lost to Schools $128M lost revenue

 2017-2021 Total Revenue Lost City $28M lost revenue

23. If the Council had adopted the 2022 tax abatement proposal in 2017, what would have been the

estimated benefits the City and School District?

 2017-2021 MBE/WBE/CBE Contracting $100M opportunities for MBE/WBE/CBE

 2017-2021 Set-Aside Affordable Units 600-1500 affordable housing units

 2017-2021 Total Revenue Lost to Schools $15M cumulative new revenue

 2017-2021 Total Revenue Lost City $3.5M cumulative new revenue

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

City of Cleveland

Justin M. Bibb, Mayor

Deparatment of Community Development

Cleveland City Hall

601 Lakeside Avenue, Room 320

Cleveland, Ohio 44114

216/664-4000

www.clevelandohio.gov

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