Developers react to mayor's abatement proposal

Posted by Henry J. Gomez April 10, 2007 16:09PM

Categories: Breaking News, Economic development

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 like the green elements.   if you build green then you get 10 or 12 years.  build normal, on the cheap (perhaps with the developer taking the money that should be passed through to the purchaser), you get 7 years. 

 

so, maybe after some negotiation, this goes to 10 for traditional and 15 for green.  Zone states something along the lines that "it is too expensive to build green."  this is the kind of thinking that is holding us back.  the same thing for the developers.  i have a real hard time believing that you can't build stonebridge green.  and if it is not green, why not?  who doesn't like having a $30 electric bill vs. $150 a month?

 

let's build cleveland for the next generation, by providing a housing stock that is easy to maintain, less costly to heat/cool, and perhaps reduce our water runoff problems. 

 

HEY MAYOR FRANK JACKSON

 

" IF IT AINT BROKE DON'T FIX IT"

 

IF HE REALLY FEEL THAT HE NEEDS TO SHORTEN THE NUMBER OF YEARS OF THE TAX ABATEMENTS KEEP IT ABOVE 10 (12?) KEEP DEVELOPERS WHO WANT TO MAKE YOU AND YOUR CITY LOOK BETTER DONT WORRY THE TAXES WILL COME

 

THE EVIRONMENTALLY FRIENDLY HOUSES = B.S.

 

ALSO DON'T WE HAVE ENOUGH SENIOR CITIZEN RESIENTS ALREADY

Y, I don't think it's as simple as 'if it ain't broke don't fix it.'  Yes it's a fabulous program, and as KJP it exists in different forms; but discussion and possibly a different solution for the one that expires this summer is not a bad idea; we certainly need tax money as much as we need residents. I still want to see the money crunches - I am hoping we will be able to do that.

It won't be 7 years. The least it will be is 10 (from a very reliable source).

For us it isn't so much about making money that we are considering a move to an abated property.  It is the thought that without adding taxes to the monthly mortgage payment we can probably take that mone and pay down the principal.  That would allow us to reach our financial goals sooner rather than later.

i agree, this is a negotiation strategy. The abatement will stay. However i do like the healthy discourse this is providing. Questioning a good proposal to make it better is always in the best interest of the people. I think the fear is that because certain politicians have meddled (and ruined) things in the past...this is just history repeating itself.

 

But I don't see it that way

 

Tax abatements aren't the only thing keeping people in the city...I don't care what Doug Price says. The facts are that the market has shifted, and there are several huge factors pointing towards urbanization of metropolitan areas. People are crying out for density, diversity, and authenticity where they live. They want culture...they want a true neighborhood. These are the things that people in the suburbs say are "intangibles". But when you have them....in you life day-in and day-out...they are as valuable and as tangible to you as the mortar between the bricks of your foundation. These are things the suburbs can't provide....and these are things that Cleveland can. And people are willing to pay for them.

 

The market wants to live in the city...the developers know that already. They just want to increase the profit margin (which i don't blame them for....i'm just trying to bring a little REALITY to the "the sky is falling" cries). Cleveland is surging forward (tax abatements are a peice), and the mayor needs to take a stand.

 

I agree with Phillip's comment that "we aren't over the hill yet". The abatements need to stay, but mayor needs to step up to the plate and flex some muscle here. Not in an idiotic and meaningless sort of way....but in a way that says, "Cleveland will only be as great as the strength of ALL its citizens. Not one group over the other, but ALL" That is the fiduciary responsibility of the mayoral office, and Frank would be incompetent if he DIDN'T think the way he is thinking.

KJP raises a very interesting point above ... that this would not impact downtown abatement (and downtown in a pretty large sense) for at least 3 more years (at which point a similar debate would occur for that abatement).

 

I think 7 years is short, but just to play devil's advocate, would it lead to an increased attention toward downtown development (where the additional 8 years of tax abatement would draw even more market demand)? If this happened, it might be an end to achieving some of the additional density, walkability, later retail hours, etc. that we're all often clamoring for.

 

And if downtown does enjoy additional development opportunities, what role would this play in neighborhood development? Having only been in Cleveland for 5 yrs., I don't know how this played out when downtown development did have a longer abatement than the neighborhoods. How did this impact the mix of downtown v. neighborhood construction?

 

KJP raises a very interesting point above ... that this would not impact downtown abatement (and downtown in a pretty large sense) for at least 3 more years (at which point a similar debate would occur for that abatement).

 

I think 7 years is short, but just to play devil's advocate, would it lead to an increased attention toward downtown development (where the additional 8 years of tax abatement would draw even more market demand)? If this happened, it might be an end to achieving some of the additional density, walkability, later retail hours, etc. that we're all often clamoring for.

 

And if downtown does enjoy additional development opportunities, what role would this play in neighborhood development? Having only been in Cleveland for 5 yrs., I don't know how this played out when downtown development did have a longer abatement than the neighborhoods. How did this impact the mix of downtown v. neighborhood construction?

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.

...

Paul O'Neil, the company's chief financial and development officer, said the Jackson proposal could be the nail in District Park's coffin.

 

What whiners. Build green. Then you get 12 years.

 

Also, I wouldn't be heartbroken to see the next phase of Price's project delayed. I'd rather see the heart of downtown buzzing again before we worry about the west bank of the Flats.

What if they started reducing the tax abatement by 1 year starting in 2008? So, if a developer already has somewhat developed plans (ie D.P., Stonebridge, 515 Euclid, Pesht) that may be breaking ground in the next 2-3 years they will still benefit from extended tax breaks.

 

For Example:

A project that breaks ground in 2008-15 years

                                          2009-14 years

                                          2010-13 years etc

What whiners. Build green. Then you get 12 years.

 

Also, I wouldn't be heartbroken to see the next phase of Price's project delayed. I'd rather see the heart of downtown buzzing again before we worry about the west bank of the Flats.

 

I've been thinking about that a lot lately. Stonebridge's impact is really insulated. Imagine if those buildings (ok, you can change the architecture) were dropped into the WHD. 

If it wouldnt affect downtown then they are not recognizing that in the article.  What are they whining about with District Park and Stonebridge?

Some interesting letters from Sunday's PD. I'd swear the woman from DC was paid to write that letter by a local developer who wants to keep the abatement... it just sounds a little fishy to me.

 

 

Letters Removed

Council likely to reject Jackson's plan to cut tax breaks

Wednesday, April 18, 2007

Olivera Perkins

Plain Dealer Reporter

City Council is expected to extend Cleveland's policy of awarding 15-year tax breaks on new houses, rejecting Mayor Frank Jackson's proposal to reduce the abatements on most houses to seven years.

 

Sixteen of council's 21 members attending a workshop Tuesday agreed not to tamper with the terms of residential tax abatement, which comes up for renewal in June. Sabra Pierce Scott, council's majority leader, said council could renew the program in as little as two weeks.

 

The vote could set up a showdown with Jackson, though the mayor declined to say Tuesday whether he might resort to a veto. Instead, Jackson released a statement that only expressed his disappointment at the prospect of council not taking his recommendations.

 

"City Council's proposal to maintain status quo on tax abatement is a missed opportunity for homeowners and for the city to produce a product that would give Cleveland a competitive advantage," he wrote.

 

The council majority favors keeping 100 percent, 15-year abatements on new houses for another five years. The majority also proposes keeping 10-year, 100 percent tax breaks on rehabilitated homes.

 

The Jackson administration last week asked council to slash abatements on most houses to seven years. The mayor also proposed 12-year tax breaks for homes built with environmentally friendly designs and those with fewer steps and other features that appeal to older buyers or younger buyers who don't want to move when they become elderly.

 

In his statement Tuesday, Jackson said his proposal would "lower energy bills for homeowners, help abate lead poisoning, allow seniors to stay in their homes longer and provide current homeowners with a real chance to share in the benefits of tax abatement."

 

Read more at Cleveland.com

Can anyone list the Cleveland suburbs that offer housing tax abatements, and what the terms are?

I know that Lakewood and Cleveland Hts offer abatement, but its much less.

Shaker Heights has five different types and expect for the portion of shaker hts, near shaker square (I suspect they are trying to compete with the new housing that's gone up in the Cleveland section of shaker square) the area that qualifies for abatement starts at van aken and goes south to the Shaker-Cleveland border.

 

I think that the glendale section of the Lee-Harvard area is a big hit for first time home buyers as the homes are nice with nice sized lots.  and on some of those streets because of housing style its hard to tell if you're in Cleveland or shaker.

I live in Cleveland Hts. and have a 50% abatement for ten years.  I am under the impression that the abatements vary project to project in the Heights, and some do not even have them.

I live in Cleveland Hts. and have a 50% abatement for ten years.  I am under the impression that the abatements vary project to project in the Heights, and some do not even have them.

 

Your right, its like Shaker, it varies by project and location.

Lakewood - 2 years at 100%, 3 years at 50%

Why can't we use Tax abatement in a more constructive way to build green. Give Developers an incentive to not only develop land, BUT develop green space around that land.

 

example: if you build a development in an urban area, and have a small percentage of green space, then you only receive 8 years. If you develop significant green space around your development (a square footage to be determined by the city planning commission), then you will receive a 16 year abatement.

 

Developments are great, but every time i take the rapid into Tower City, i look south when the train is passing over the flats....i see the desolate Scranton Peninsula. That space could be converted into so much, and yet it just sits. To the north, Stonebridge is taking advantage of the abatements, but there is no green space what so ever. Green space impacts the value of ALL the land surrounding it...thus increasing property values...and eventually..tax revenue. Not to mention the fact that it raises that quality of life we ALL enjoy.

 

I know that there are people that say expansive green space isn't a crucial issue in downtown development; there are plenty of successful major cities that don't have alot of green space. Quite frankly, i don't care if other cities don't have as much green space in their urban core...Cleveland is know for its green spaces in its outer ring....the same should be true in its core. I want a unique city that meets Clevelander's desires. I agree...lets build green, but lets LITERALLY build green and not just energy efficiency.

I get a little uneasy when I hear developers and the public talk about green space. Too often, it is poorly conceived. There are so many projects that have an unuseable strip of green infront of a home or townhome.

 

If you are talking about a larger space where people can gather, then I'm all for it.

I'm not excited by "greenspace" either.  There are other things that I'd rather that the developers focus on in redeveloping our city in order to get tax abatements- green building, good urban design, mixed use, mixed income development.  Encouraging developers to put in "greenspace" so that they can get a tax abatement is really going to open the door for a lot of scattered greenspace that will be on the fringe of whatever development is taking place, not where it will be useful and accessable for the community.

As an aside, Corna/Price say that residents at their Stonebridge development benefit from having two parks within walking distance -- the oxbow park (oa whatever it's called, next to the Center Street bridge) and the much larger Settlers Landing park across the river.

I guess it depends on how greenspace is used. If it is full of pestisides and fertilizer and used for a dog $hit park then no I dont like it.  Stonebridges abstract interpretation of "green" space is the superior viaduct. it is not grass but reuse of an old structure for a park. I absolutely love it out there and cannot believe the utilization is not higher.

 

I am sickened by the lack of use of empty flats land and buildings. Yes I am biased but it is my favorite part of the city....looking up from the gorge into the city and all the bridges is amazing. All those old brick warehouses with giant windows over looking the city and river sit empty. I don't know what would be involved with turning this land from industrial/commercial to residential.  If I could get something really cheap and make it into a home I'd be one happy camper.

Are there actually that many of the old brick industrial buildings sitting empty?  I can think of a couple, but mostly I thought they still had industrial users in them.

I am not sure of the numbers at all. But in the flats for example you can see scores of buildings that are for empty and for lease- and have been for a long time. There seem to be plenty in midtown as well

I agree on the number of empty buildings!  every time we drive through some of the flats along the bridges we always see the buildings that would make great loft condos. there is one building in particular that has been empty for years!  If I only could win the lottery! 

Peabody,

 

The vast majority of the old brick warehouses in Cleveland operate as multi-tenant industrial facilities. Just because you see a 'for lease' doesn't mean that the entire building is vacant. Usually, you'll have a vacant floor or two and the rest are all filled up.

Peabody,

 

The vast majority of the old brick warehouses in Cleveland operate as multi-tenant industrial facilities. Just because you see a 'for lease' doesn't mean that the entire building is vacant. Usually, you'll have a vacant floor or two and the rest are all filled up.

 

I would also like to add, that some industrial (or light industrial) companies might keep off hours as to not clash with their residential or retail neighbors.  thus giving the appearance that the building they occupy is empty or abandoned.

oh I know some are partially used and operational . I did not mean to imply all warehouses are abandoned. When I have insomnia I see all the trucks rumbling through the Flats. Stiil there are some where there is never any light, sound or other signs of life. ever   

Good analysis of the tax abatement debate being waged between the Mayor and City Council

 

Personally, I believe the incentive to build high performance/green housing will benefit everyone (developers, builders, renters, owners) in the long run.

 

http://gcbl.org/building/housing/mend-not-end-tax-abatements/greening-tax-abatements-0

Council to approve new tax breaks

Posted by Susan Vinella May 21, 2007 14:09PM

Categories: Breaking News

Starting in 2010, developers must build more energy-efficient homes in Cleveland if their buyers are to qualify for 15-year property tax breaks, according to a new law expected to be passed by Cleveland City Council tonight.

 

Council's long-awaited decision on tax abatement will be announced at a 5 p.m. news conference. The 21-member body is expected to approve the law at its 7 p.m. meeting.

 

The law will keep in place 15-year tax abatements for buyers of new homes. But for developers to continue to offer the tax breaks to buyers after 2009, their homes must meet energy standards established by the federal government.

 

A council spokesman said details on these standards were still being worked into the legislation this morning, and she could not comment. But an executive with Cleveland's Green Building Coalition said a home that meets "Energy Star" standards can be required to have better insulation --double-pane instead of single pane windows, for example.

 

The coalition's Melanie Kintner Knowles said the extra cost of building a house to certain Energy Star standards is only about $2,000.

 

http://blog.cleveland.com/metro/2007/05/council_to_approve_new_tax_bre.html

^^ I like the fact that council will pass the tax abatement proposal as long as the homes are energy efficient.  This could help make Cleveland look more progressive to those who move to the city.

this is a great solution. While these developers should be doing this on their own...they were not. this is win-in all around for everyone.  The time to end tax abatement completely has not come IMO. I love it when we are actually progressive!

The welcome mat will remain out

Council keeps tax-break program for houses built in Cleveland

Tuesday, May 22, 2007

Olivera Perkins and Susan VinellaPlain Dealer Reporters

 

Cleveland City Council voted Monday to keep 15-year, 100-percent tax breaks for houses built in the city, but added a couple of catches.

 

Starting in 2010, developers must use energy-efficient designs to qualify their houses for tax abatements. Also, buyers could lose tax breaks on their homes if they fail to maintain the property or fall behind on taxes for the land beneath the house. The tax breaks do not apply to land ...

 

... More at http://www.cleveland.com/news/plaindealer/index.ssf?/base/cuyahoga/1179823076246080.xml&coll=2

[shadow=red,left][/shadow] I realize that an energystar rating isn't the answer to everything, but I agree, this is a step in the right direction.  I do wish there had been a TOD component as well....but by 2010 we can all lobby for that addition!

Why can't we use Tax abatement in a more constructive way to build green. Give Developers an incentive to not only develop land, BUT develop green space around that land.

 

......Stonebridge is taking advantage of the abatements, but there is no green space what so ever. Green space impacts the value of ALL the land surrounding it...thus increasing property values...and eventually..tax revenue. Not to mention the fact that it raises that quality of life we ALL enjoy.

 

Urban Manna,  I think I agree with you on this idea, but I suppose the question is how to implement it with a carrot rather than a stick and perhaps to better define greenspace as an intentional landscape buffer.  A purposefully planted landscaped buffer adds value to the building and the surrounding area by softening hardscape (buildings, roads, etc), creating interest to passerby, and providing habitat to insects, birds, and small mammals. 

With the StoneBridge developments and others in the Flats area that are so close to our potentially beautiful Cuyahoga River, it would seem wise to incentivize builders to create functional landscaping that prevents run-off or CSO's from the water that is captured by impermeable roof tops as CSO's and run-off are directly responsible for pollution in our lakes, rivers, and streams.  This type of landscaping is typically known as a raingarden < http://www.ohioprairienursery.com/documents/neo_raingarden_manual1.pdf > If/when NEO creates a storm sewer disconnect policy, builders creating rental properties would have a direct incentive to create raingardens as a means of reducing their sewer bill.  A raingarden is but one type of functional landscaping that can be created when developments are built.

 

I think it is important to distinguish the role of landscape buffers vs. the role of greenspace and I believe that this is where you were going with your idea, yes?

 

A few recent developments that come to mind when thinking about landscape buffers are the townhomes of Ohio City on Clinton and.........well that's all I can think of right now, which to me, conveys the point that landscaping, let alone functional landscaping, is not regularly considered when developers construct buildings.  This may be the issue that Urban Manna is trying to convey.  Is it?