I was under the impression you could apply for abatement even if you don't sell your home, but meet the 'rehab' requirements. I'll have to re-read the City info on this but I'm pretty sure that is true.

Yes, here is the City of Cleveland info from their website:

http://www.city.cleveland.oh.us/government/departments/commdev/cdneigdev/cdndtaxabatement.html

Damit - I just redid my kitchen, too.

I don't see how.  You haven't lost a thing by it.  It's not as if vacant lots are going to pay much in taxes.  If anything, they use more in services- policing, upkeep, etc.  But new and substantially rehabbed homes will eventually pay substantial taxes to the city.  But it requires a tax abatement as incentive to get those homes built in the first place.

 

No I haven't lost anything, but as I continue to improve my home, my taxes go up.  And living in a historic building the paper work and hops that you have to jump through is not easy.

 

 

Good news re: increased home values, increased tax revenue, etc.  I'm interested to know if the study also looked at the results on a neighborhood by neighborhood basis, i.e. did 60% of homebuyers in Tremont buy because of the abatement, or was it 90%? or 40%?  Then by year as well -- i.e., in 2005, what percentage of homebuyers bought in Tremont because of the tax abatement?  How does that compare to 1993?

 

No idea what the percentages would be, but I personally think that there is some merit to keeping it the policy at 15 years, but targeting it to certain neighborhoods and phasing it out for others (maybe Tremont).  I'm not sure if you can put that idea into practice systematically, legally, etc., but I'd be much more open to that than a across-the-board phase out.

^I was one of the 400 that was surveyed. I had totally forgotten about it. Glad to see the results.

I saw this today in Crains as well. As I said in my blog, it really is great news, it shows it works; I don't think however, that means we have to keep using the tax abatement carrot in the same way we always have (well, always being 20 yrs). How about using it in neighborhoods that still desperately need revitalization? Or for TODs? You know, the same drill we have mentioned here before. It really was an eye opener to me though, to see the 60 percent figure. Cool. 

I wonder if the survey looked at how many people play "tax abatement hopscotch" -- leaving a house before the tax abatement is up for another house where the abatement is just starting. I have heard of this anecdotally, and it seems to be an inherent flaw in the current system.

Here is the link to the study.

Happy reading.

 

http://urban.csuohio.edu/abatement_report_final.pdf

I have a question... If abating taxes for new/renovated housing makes sense (and I believe it does), why doesn't Cleveland abate corporate & employee withholding income taxes for new/relocated businesses to the city? That includes corporations, partnerships, Subchapter S corporations, etc.

 

Here's my suggestion for how to do it:

Year 1 - 100% abatement;

Year 2 - 100% abatement;

Year 3 - 50% abatement (100% if business located in census tract having average personal incomes below the citywide average, or if business is located in LEED-certified structure);

Year 4 - 50% abatement (100% if business located in census tract having average personal incomes below the citywide average, or if business is located in LEED-certified structure);

Year 5 - 50% abatement if business located in census tract having average personal incomes below the citywide average, or if business is located in LEED-certified structure;

Year 6 - 50% abatement if business located in census tract having average personal incomes below the citywide average, or if business is located in LEED-certified structure;

Year 7 - no abatement offer.

 

That's my suggestion. Is it doable?? Or desireable??

I don't mind the idea at all it might actually draw businesses here; I'm just not sure about the 100 percent aspect. Maybe 100 percent for first year to defray job move expenses etc but after that why not 50 percent for seven years. And what is an LEED certified structure for those of us (ok, me) who are neophytes?

LEED=green, environmentally-friendly buildings

 

If you incorporate green elements in your project, you can apply for LEED certification. I am aware of LEED silver, gold and platiunum categories.

thanks 3231 - KJP supports then what we've said before about abatement encouraging green development.

Question sort of related -- cany anyone confirm for me the personal income tax for individuals who live in Cleveland?  What percent?  I thought it was 2%???  It it RITA??

^ pretty sure it is 1%. 

2%

 

http://www.ccatax.ci.cleveland.oh.us/taxrates.asp

jmjr- the tax rate if you work in Cleveland 2%. You asked 'what the rate is if you lived in Cleveland'- well that depends, if you live and work in Cleveland ,as this would most likely be the case, the tax rate would be 2%. Basically income earned in the same city you live in is not subject to residence tax. If you live in Cleveland and work in another city then the resident rate depends on how much the taxing agency (RITA/CCA) residence city requires you to pay.

Thanks!  One of us works in Brunswick and the other in Mayfield Heights.  Does Cleveland offer reciprocity?

 

 

Here is the link to the study.

Happy reading.

 

http://urban.csuohio.edu/abatement_report_final.pdf

 

I really think they stopped the abatement program a little too soon. As mentioned by others a phase out..or 50% abatement or what have you may have been a better plan than quitting cold turkey. I would love to see 100% abatement for rehab of historic houses and buildings. Maybe 50% for new.  I guess a real test will be whether  higher end homes and projects continue to be built and rehabbed at the rate they are now.  I know there was some speculation as to how far along plans and projects had to be to still qualify. I know stonebridge 5 and I believe the  Ave district are good to go, but not sure about Wolstien's project or the future Stonebridge plans. I believe is was Doug price who said they are not going to be doing anything unless it is abated...but he says a lot of things.

 

Why did the city end the abatement before this study was complete? Regardless of how you analyze the findings it would have made sense to have all the info before making such a significant policy change.

Did I miss something? When did they stop the abatement program??  I thought that it expires this summer and that Council was discussing in what form they would continue it.

It hasn't been 'stopped.' You are correct, they are debating the extension or lack thereof that needs to occur when the abatement period ends this summer.

I thought it was a done deal. projects that had broken ground were safe, but others not. The fact that the door is open is a relief. Are there any recent links that have the very latest? Or are we waiting until summer for further info?

I thought it was a done deal. projects that had broken ground were safe, but others not. The fact that the door is open is a relief. Are there any recent links that have the very latest? Or are we waiting until summer for further info?

 

If your project has approval by the city, then it can still qualify for the !00% abatement even if it breaks ground after the legislation expires this summer. The abatement policy very well may remain the same, but that is uncertain.

First 3231 starts asking about the CMJ Festival and they cancel it. Then he says the administration hasn't done anything yet with tax abatement. The powers of a wizard, I say.

 

Mayor proposes tax abatement limit

Scott Shaw

(Cleveland) Plain Dealer

April 10, 2007 11:47AM

 

Cleveland Mayor Frank Jackson is proposing to cut the tax abatement periods for residential construction from 15 years to seven years.

 

The limit would apply to one- and two-family homes. The proposal under discussion this morning at City Hall allows for 12-year abatements when builders incorporate "green" building techniques or include certain design features, such as shorter stairways and wider doorways, that appeal to seniors ...

 

... More at http://blog.cleveland.com/plaindealer/2007/04/mayor_proposes_tax_abatement_l.html

This doesn't sound bad to me...12 years for green building. I guess the question is, do the abatements still make buying new in the city a value?

 

Also, tax abatements get all the press. Is there anything similar for existing housing? It seems to me you'd want to package and market programs for new and existing housing, especially since there's so much of it available. Thoughts?

First impressions:

 

- Yay to incentives for green building.

- Boo to incentives for short, squat buildings ... I'm all for creating incentives around senior-friendly housing, but aren't there narrower incentives that could be offered instead of a large-scale tax abatement?

- Where is the abatement for rehab? Are they leaving it alone, which would mean a higher abatement for rehab than for new construction? If so, double yay.

^State law limits incentives for rehab to 10 years.  Part of the Jackson proposal was to lobby the state to change the law so that abatements for rehab would be the exact same as those for new construction, 7 w/out meeting the senior or green building requirements, 12 years if you do.

"If you incorporate green elements in your project, you can apply for LEED certification. I am aware of LEED silver, gold and platiunum categories."

 

There is also LEED-NC (for new construction) and LEED-EB (existing buildings), both break down into the platinum, gold, and silver categories.

Am I understanding this correctly? He's proposed that there be no abatement for projects such as Stonebridge and The Avenue District. He only wants abatement for single family and duplexes?

OH, good question. I assumed abatements were broken down per unit. So, a Stonebridge could still happen because it's a 1-family unit, or whatever?

 

Am I wrong?

OH, good question. I assumed abatements were broken down per unit. So, a Stonebridge could still happen because it's a 1-family unit, or whatever?

 

Am I wrong?

 

Then how would you explain the reference to two-family homes?

^There would still be abatement for multi-unit buildings such as Stonebridge.  The standards, I think, would be uniform across the board for market rate units, unless mandated by state law, as is the case with rehab.

Thanks for clearing that up, Ewoops.

so can I fufill my dream of buying a warehouse and renovating it to make an apartment  or house?

Developers react to mayor's abatement proposal

BY HENRY J. GOMEZ | [email protected]

April 10, 2007

 

CLEVELAND - Predictably, real estate developers and downtown boosters aren't happy with what they're hearing today from Mayor Frank Jackson.

 

Jackson proposed reducing the 15-year, 100-percent property tax abatement for buyers of newly built city homes to seven years (see earlier post here).

 

Some of the city's more high-profile projects, including Scott Wolstein's Flats East Bank Neighborhood (about 300 condos and apartments) and Nathan Zaremba's Avenue District (more than 400 condos and townhomes), have been grandfathered in under the 15-year abatement.

 

But opponents of a reduction worry one would put the brakes on future projects and cancel some already planned but not yet far enough along to qualify for the 15-year deal.

 

Doug Price said if passed, Jackson's proposal would kill plans for 1,300 additional units in the Stonebridge neighborhood he and Bob Corna are building on the west bank of the Flats.

 

About 500 apartments and condos have been completed there. Another 200 have yet to be built but are grandfathered. The final phases, announced last fall, likely would be shelved.

 

"You can write off a ton of development," Price said. "I am shocked, absolutely shocked. I thought maybe it would be reduced to 10 or 12 years, but never seven years."

 

http://blog.cleveland.com/business/2007/04/developers_react_to_mayors_aba.html

I think 7 is too low and I am NOT  fan of the abatement.  I think maybe 12 for 4 years, then 10 for 3 years.  Reduce it gradually to a final number of 5 years.

I'm not opposed to 7 years at all. However, I would think it would behoove (love that word!) the City to 'dog and pony' the number crunches behind the decision.

i dont understand this. is Jackson really this stupid.

you know, I was just wondering, are there too many new units on the market that aren't being sold and this is a way to speed up the sales on units on "grandfathered" projects?  They can always vote to restore the abatement if supply starts to run short.  We have been looking at lots of places to potentially purchase.  I can tell you that it doesn't seem like the places are moving quickly and on top of that there are older, previously abated properties coming on the market with only 2 to 5 years left on the abatement.  Competition to make a sale is fierce.  I'm not saying I agree, but could this be part of the issue and the decision to slow the growth?  I tihnk failed new development attempts are worse than development that never makes it off of the drawing board.

well, zaremba has recently stated that he has presold an entire 10 story condo building in the avenue district. stonebridge on the west bank doesnt seem like they have any problems selling condos as they continue to build. that doesnt seem to be the case. i jus dont think frank gets it. we got a good thing goin here. let it play out. this will kill all new residential developement. not just downtown but all over the city.

battery park already has abatement so correct me if I'm wrong, but all 300 homes of various kinds in battery park could be purchased with abatement. yes?

yes, it includes the whole project.

The local HB Assn said in November that there was an 18 month supply of new construction.

 

From the National Assn of Home Builders website on Cleveland: "Reports on new home construction in the district were mixed, with most builders saying the decline in sales had continued into November. Looking forward, almost all the residential contractors expected 2007 activity to mirror the second half of 2006 and they said that they had significantly curtailed, or eliminated, 'spec' building."

i jus dont think frank gets it. we got a good thing goin here. let it play out. this will kill all new residential developement. not just downtown but all over the city.

 

I have to disagree with the comment that Frank "doesn't get it". I think he gets it, the report shows, point blank, that tax abatements work. They bring more people into the city, help raise tax revenues for the city, and help redevelop the physical infrastructure of the Cleveland. The issues isn't whether they work or not....the issue is HOW they work and how they affect the entire city.

 

How is it that a tax abatements RAISE tax revenues? The reason is they raise the value of the land that surrounds the newer developments...thus raising the surrounding properties tax rate. If these new developments are moving into lower income areas, this hike in taxes is disproportionately affecting Cleveland's lower income population...i think that Frank sees this and is being cautious. The tax abatements definitely benefit me...and i could not move into the city without them, but the responsibility of the mayor is to manage the whole city.

 

I think these tax abatements are good and need to stay as is, but lets have a little more balanced discussion about the issues at hand. Is there a better alternative that helps the whole city. Perhaps you could target tax Abatements to specific areas around the city. Concentrate development in high density urban areas (like Dowtown, Ohio City, Tremont, Midtown) by giving them the maximum 15 years of tax abatement. In other areas, reduce the tax abatement to 10 years.

 

 

Well said, Urban Manna.

 

Currently, I'm about three years away from seriously looking at homeownership in Cleveland. If tax abatement was completely discarded, I would likely have to delay another year or two, or my buying power would be a little diluted (e.g. probably would not be moving into new construction, which is okay b/c I favor rehab anyway).

 

That being said, Urban Manna is right. Jackson does have to balance the issue for the entire citizenship of Cleveland. Not only does tax abatement put a disproportionate burden on the poor; it also disproportionately affects long-time residents of the city to the benefit of newer in-migrants.

 

And if you recall, early rumors reported Jackson considering scrapping abatement altogether; 7 years of abatement seems to indicate that he's mollified his position a little. Moreover, I would anticipate that Jackson is recommending a low number so he has room to negotiate with a council that might be hostile toward reducing abatement (rather than recommending 10 and having to compromise at 12).

"Not only does tax abatement put a disproportionate burden on the poor; it also disproportionately affects longtime residents of the city to the benefit of newer in-migrants".

 

I have lived in areas (in FL) that basically have tax control for long term residents living in gentrifying areas..now of course is the house turns over then the tax rate goes up to market rate.  I am really supprised Cleveland does put something in place like this. Current practice not only squeezes out the poor but working/middle class as well

 

People can argue 100% abatement amounts to so little-but as a person living in abated property the actual rates hardly reflect what the postage stamp piece of land amounts to under our highrise condo (I am not complaining mind you). As I have mentioned in other posts, nearly all of our locally spend $ is now spent in the city. The last locally spent $ I spent outside of the city of Cleveland was probably a 2-3 months ago for a lunch in Lakewood and a case of wine from  Trader Joes.

 

 

That being said, Urban Manna is right. Jackson does have to balance the issue for the entire citizenship of Cleveland. Not only does tax abatement put a disproportionate burden on the poor; it also disproportionately affects long-time residents of the city to the benefit of newer in-migrants.

 

And if you recall, early rumors reported Jackson considering scrapping abatement altogether; 7 years of abatement seems to indicate that he's mollified his position a little. Moreover, I would anticipate that Jackson is recommending a low number so he has room to negotiate with a council that might be hostile toward reducing abatement (rather than recommending 10 and having to compromise at 12).

 

Also good points.

 

Don't forget - the Federal government is subsidizing most people's homes anyway through write-offs on their interest. We have to be able to give back to the community a little.

 

I'm in favor of tiered abatement. I am pretty sure it was brought up on this thread before.

Something along the lines:

100% for 5 years

75% for 10 years

50% for 15 years

25% for 20 years

 

You catch might my drift

I think that the tiered plan is a good idea. My abatement just ran out (my home was renovated in 1997) and now $200 has been added to my monthly payment. I can see how some people may want to flee their homes in anticipation of their abatement running out. If its tiered, its a much easier pill to swallow.

I wonder how many people buy these properties with abatements thinking that in 10 years they'll be making a lot more money to support higher payments when the abatement runs out, then realize they don't... That's what happend with the loan programs they offered for my mom's subdivision and well...probably 1/5th of the houses in the subdivision are for sale, mostly due to foreclosure. I'd imagine its not a huge issue though.

Don't forget that the tax abatement for downtown is on a different renewal timetable compared to the rest of the city....

 

From the Introduction at http://urban.csuohio.edu/abatement_report_final.pdf:

 

The legislation that created the property tax abatement program for neighborhoods (Ordinance

1776-A-90) is due to expire on June 15, 2007. This ordinance does not cover downtown. A

separate ordinance (2831-86) covers the Downtown Community Reinvestment Area (boundaries

currently defined as the Innerbelt along E. 27th Street, along the Innerbelt Bridge, and W. 25th

Street to Whiskey Island). This ordinance is due to expire on June 15, 2010.

 

Also, note that:

 

Cleveland currently offers 15-year residential property tax abatements to people who purchase

newly constructed homes or build new multi-family construction (market rate and low income).

The abatement applies to 100 percent of the taxes on the building. Land taxes, determined by the

Cuyahoga County Auditor’s Office based upon a percentage of the purchase price of the property,

are not abated.

 

Rehabilitation or improvements made to one- and two-family homes that increase the assessed

value of those properties receive a 10-year, 100 percent tax abatement on the increased value after

the rehabilitation is completed. The owner is responsible for all previous building and land taxes.

Rehabilitated multi-family buildings (not located downtown) receive a 12-year, 100 percent tax

abatement on the increased value. Downtown multi-family rehabilitation projects (market rate)

receive 75 percent abatement for the first five years, 50 percent for the next 5 years, and 25

percent for the final 2 years.