I think there is room for tweaking city economic development programs. But TIFs are a no brainer to continue. They cost the city nothing. Eliminating TIFs will slow down large scale development in the city especially in the higher interest rate environment. 

5 minutes ago, freefourur said:

I think there is room for tweaking city economic development programs. But TIFs are a no brainer to continue. They cost the city nothing. Eliminating TIFs will slow down large scale development in the city especially in the higher interest rate environment. 

There is an opportunity cost. In hot neighborhoods, at least some percentage of those projects would happen even without the TIF. Especially considering the tax advantages of Opportunity Zones (which includes all of downtown.) Granting the TIF could be leaving tax revenue on the table.  It’ll be tricky to get the balance just right.

14 minutes ago, Boomerang_Brian said:

There is an opportunity cost. In hot neighborhoods, at least some percentage of those projects would happen even without the TIF. Especially considering the tax advantages of Opportunity Zones (which includes all of downtown.) Granting the TIF could be leaving tax revenue on the table.  It’ll be tricky to get the balance just right.

 

The cash flow on many of these projects is much tighter than many people think. But I agree that some adjustments could be made to TIFs. Perhaps shorter duration in some neighborhoods and longer in others. I just hope they don't scrap TIFs altogether 

Edited March 10, 20232 yr by freefourur

2 hours ago, DHubb said:

"When you look at historic poverty rates, historic unemployment rates, that money hasn't really moved the bar," she said during a public meeting. "You can't spend a half a billion dollars on economic development and not move the bar for anybody."

This logic feels shaky. Were the existing incentives created with combatting poverty and unemployment? Surely these aren’t the only measurements of economic development. 

 

It seems like they’re using a bad measure for evaluating the success of these programs. 

It’s tough to balance all interests. Having worked in development a bit, it’s undeniable that the people who benefit the most from these programs are developers. They make millions every time they complete a project. I know we like to cheerlead development here, but I worked for Millennia for a few years and we weren’t developing sh!t until that developer fee in the pro forma was nice and fat. 
 

On the other hand, I agree with Miss Jackson (hooo, I am for real) to some degree. What do any of these projects do for people already living in the city? Ostensibly this is the constituency that the city government works for. 
 

I get that there are marginal benefits from having more affluent people living in the city. But it’s certainly worth examining whether these loans/tax breaks/tax credits benefit the people who already live here in more than a tangential way. 

9 minutes ago, bumsquare said:

It’s tough to balance all interests. Having worked in development a bit, it’s undeniable that the people who benefit the most from these programs are developers. They make millions every time they complete a project. I know we like to cheerlead development here, but I worked for Millennia for a few years and we weren’t developing sh!t until that developer fee in the pro forma was nice and fat. 
 

On the other hand, I agree with Miss Jackson (hooo, I am for real) to some degree. What do any of these projects do for people already living in the city? Ostensibly this is the constituency that the city government works for. 
 

I get that there are marginal benefits from having more affluent people living in the city. But it’s certainly worth examining whether these loans/tax breaks/tax credits benefit the people who already live here in more than a tangential way. 

I suppose an argument can be made that if tax revenues from the development exceed subsidies then it is a net benefit to city services.  But I can see both sides of this issue. 

10 minutes ago, freefourur said:

I suppose an argument can be made that if tax revenues from the development exceed subsidies then it is a net benefit to city services.  But I can see both sides of this issue. 

For sure. Although I guess I would be surprised if income tax revenue from new residents exceeded subsidy. 

Why do you think the general fund has been increasing over the years? In addition to the higher tax rate, the answer is income tax collections from new residents over the last 15-20 years who live in the homes/apartments built with the incentives the city is giving for projects that wouldn’t happen otherwise. The revisions in City incentives, which are political decisions disconnected from sound financial ones, will hurt the general fund and in turn the residents of the city. Current residents may not care for all the new development, but it’s the only thing keeping the lights on.

Edited March 11, 20232 yr by w28th

Also, the subsidies will expire, and the new development will still be there.  These subsidies are long term plays.

8 minutes ago, X said:

Also, the subsidies will expire, and the new development will still be there.  These subsidies are long term plays.

This is true but the city does provide 30 year TIFs. Perhaps those can be shortened a bit since it's a long horizon for payback.  But I hope they take a holistic approach at the benefit of subsidies and don't focus only on poverty rates, etc. 

Yeah, I’m with w28th here. What would the landscape of the city today look like without these programs that have been in place? How many vacant office buildings downtown? We all know what Tremont, Ohio City, D-S, midtown, etc looked like years ago. 

 

That’s an incredibly ignorant viewpoint from the city’s economic development director. We’re in real trouble if she has influence. 

 

The city needs new dollars coming in in order to hope to help the state of existing residents. I’m not sure how that’s achieved if our ED director thinks these programs have failed. I’m my view, they haven’t gone far enough.  

 

TIF’s and tax abatement cost the city absolutely nothing in real dollars. They’re carrots. Carrots that now bear the city new income every year, as the tax abated developments of the late 2000’s now  roll off the books. There’s a new crop every year now. 

Edited March 11, 20232 yr by marty15

15 hours ago, w28th said:

Why do you think the general fund has been increasing over the years? In addition to the higher tax rate, the answer is income tax collections from new residents over the last 15-20 years who live in the homes/apartments built with the incentives the city is giving for projects that wouldn’t happen otherwise. The revisions in City incentives, which are political decisions disconnected from sound financial ones, will hurt the general fund and in turn the residents of the city. Current residents may not care for all the new development, but it’s the only thing keeping the lights on.

I don’t take either point you made as given. How do you know a lot these projects wouldn’t happen anyways? Every single city in the country has seen growth in the urban core. It wouldn’t have happened in Cleveland without tax abatement? And how do you know that the increased taxes are from new residents? The bulk of the increased revenues most likely came from the income tax % increase in 2017. 

Edited March 11, 20232 yr by bumsquare

^ Without having a breakdown of the tax revenues we can't know how much was from the tax increase and how much was from new residents but regardless, l think we're missing a critical point here. Which is that the city of Cleveland is in a struggle not only with local suburbs but other states to keep wealthier people here. These people can live anywhere. If Cleveland isn't able to provide an environment that appeals to them they are out of here and they will be taking their discretionary income (and spending) with them. 

 

I don't want to turn the discussion into a class thing but the reality is a struggling rust belt city like Cleveland can't afford to just focus on its poorer residents. It absolutely needs to continue to provide incentives to wealthier people to get them and keep them. Not only do they provide tax dollars they also offer a needed expertise. I say that and l come from a working class environment but it is absolutely necessary to have ALL levels of income living here in order to make the city work. A Cleveland made up primarily of poor people is not going to make it. 

 

Sorry if that steps on some toes but it's the truth.

7 minutes ago, cadmen said:

^ Without having a breakdown of the tax revenues we can't know how much was from the tax increase and how much was from new residents but regardless, l think we're missing a critical point here. Which is that the city of Cleveland is in a struggle not only with local suburbs but other states to keep wealthier people here. These people can live anywhere. If Cleveland isn't able to provide an environment that appeals to them they are out of here and they will be taking their discretionary income (and spending) with them. 

 

I don't want to turn the discussion into a class thing but the reality is a struggling rust belt city like Cleveland can't afford to just focus on its poorer residents. It absolutely needs to continue to provide incentives to wealthier people to get them and keep them. Not only do they provide tax dollars they also offer a needed expertise. I say that and l come from a working class environment but it is absolutely necessary to have ALL levels of income living here in order to make the city work. A Cleveland made up primarily of poor people is not going to make it. 

 

Sorry if that steps on some toes but it's the truth.

You are absolutely right. You need to have a tax base. I'd like to think the new residents downtown are new to the city and adding to the tax base. 

49 minutes ago, bumsquare said:

I don’t take either point you made as given. How do you know a lot these projects wouldn’t happen anyways? Every single city in the country has seen growth in the urban core. It wouldn’t have happened in Cleveland without tax abatement? And how do you know that the increased taxes are from new residents? The bulk of the increased revenues most likely came from the income tax % increase in 2017. 

You don’t think other city’s are offering tax incentives? Fighting the same battles as Cleveland against its suburbs?

Without incentives, what advantages would a middle class family have to locate inside the city, as opposed to any random suburb with cheaper taxes and better services? 
 

Were still generally ranked #1 or #2 as the poorest large city in the nation. It’s no time to declare victory and eliminate, or even scale back these programs. 

 

They need expanded and better targeted.

there is another point, not really for this thread, but clevelands property taxes are very high and get poor services for the premium.

 

another thing to consider is as some of these 20 yer abatements are expiring - when a house valued at 400k loses its abatement, it becomes immediately less marketable. because the tax burden will jump 10k a year.

4 minutes ago, Whipjacka said:

there is another point, not really for this thread, but clevelands property taxes are very high and get poor services for the premium.

 

another thing to consider is as some of these 20 yer abatements are expiring - when a house valued at 400k loses its abatement, it becomes immediately less marketable. because the tax burden will jump 10k a year.

So the price of the house will be lower because of it. So what? The owner has enjoyed a benefit for 20 years, and they'd be fools to believe this isn't what's going to happen when the abatement expires. Now, from a marketing perspective, this home is equal to any other in its price class. Its also likely to be nicer than the average home its competing with, as the original builder made the home better than average due to the abatement savings that were on offer at the front end.

Anecdotally the building I'm in now lost their tax abatement last year from when it was built and there were a ton of condos for sale in the building assuming because residents didn't want that big increase. But they all got sold (one to me lol) and now we're paying the full tax amount to the city which is great for the city because you got 150+ units now paying full property taxes in a full building for years to come. There was no max exodus or plummeting of property value when the abatement expired.

Behind the paywall of Michelle’s article it states this is more of a revamp than a do-away.  Cleveland will continue to incentivize projects but are likely to use a new matrix in how they score what projects get how much.  Capital investments, public vs private money, job creation and wages will be factored.  Access to jobs, services and transit is also expected to weigh in.
 

The city is working to improve all of it’s programs not just this.  The only incentive that’s completely disappearing is the “Vacant Property Initiative”.

15 hours ago, marty15 said:

That’s an incredibly ignorant viewpoint from the city’s economic development director. We’re in real trouble if she has influence. 

 

Totally agree. She's looking at the hole, not the donut.  The programs were intended to bring higher earning individuals to the city.  Their taxes would be vital to support the burden of having about 25-30% of the population in poverty.  Looking at Cleveland's income tax receipts over the past five years, the growth in income tax receipts has been over 300%. Income tax receipts dwarf real estate tax receipts to the point that the amount of the reduction for developers and residents - indeed even the whole r.e. tax revenue to the city -  is close to insignificant. (This does not apply to the school board's portion.)

 

Presumably the deeper research Kerry McCormack calls for will point this out.

15 minutes ago, Sapper Daddy said:

Behind the paywall of Michelle’s article it states this is more of a revamp than a do-away.  Cleveland will continue to incentivize projects but are likely to use a new matrix in how they score what projects get how much.  Capital investments, public vs private money, job creation and wages will be factored.  Access to jobs, services and transit is also expected to weigh in.
 

The city is working to improve all of it’s programs not just this.  The only incentive that’s completely disappearing is the “Vacant Property Initiative”.

Thank you for this clarification.  This seems fairly reasonable.  The Vacant Property Initiative is usually capped at $180k. And is essentially free money. I think the city is smart in doing away with that program.  

When it comes to investor equity into real estate projects, Cleveland is competing as much with other metro areas as it does with its own suburbs. I just wrote about Leopardo expanding to Cleveland. They want to invest here because of Cleveland's development incentives. Without the incentives, the only places attracting outside investment will be in the suburbs.

 

Another thing -- if the city wants to incentivize development here, then finally update the zoning code and simplify the project approval process. A developer last night was noting that his project in Columbus got a building permit six days after he submitted it to the building department. A project he has in Cleveland was submitted to planning commission two years ago, was approved last summer  after much haggling and redesign but is still waiting on a building permit. His pro forma was no longer valid and had to reapply for financing. Fortunately, his equity investor was sympathetic. If the city incentives are reduced, I doubt this and other investors will be so sympathetic. That means a poorer city with fewer jobs in retail, restaurants, hotels and other entry-level jobs that lower-income residents with a Cleveland schools education can get.

 

^ This!

22 hours ago, TMart said:

You are absolutely right. You need to have a tax base. I'd like to think the new residents downtown are new to the city and adding to the tax base. 

I’m not wealthy but I live downtown and have my own unit and two rentals. Combined I pay just a little over 30k a year in property taxes. My incentive to buy was the tax abatement program. I got a 15 year relief of property taxes. Now that the 15 years has run out, I have no problem paying for my property taxes.

21 hours ago, Whipjacka said:

there is another point, not really for this thread, but clevelands property taxes are very high and get poor services for the premium.

 

another thing to consider is as some of these 20 yer abatements are expiring - when a house valued at 400k loses its abatement, it becomes immediately less marketable. because the tax burden will jump 10k a year.

15 year tax abatement

Somewhat related to this is the Port Authority's proposal to step back a bit from its prevailing wage requirement for projects they finance.  They say it is costing jobs, projects, and indirectly jeopardizes their credit rating.

 

https://www.crainscleveland.com/government/port-cleveland-board-weighs-changes-prevailing-wage-financing-requirement

 

Cleveland adds fewest apartments among major metros
By Ken Prendergast / March 16, 2023

 

New data from a leading North American real estate services firm shows that Greater Cleveland had the smallest number of new apartment units under construction in the USA in the fourth quarter of 2022. That snapshot of construction activity in America’s multi-family rental market shows that, not only is Greater Cleveland lagging way behind the nation’s largest metropolitan areas in adding new apartments, it’s also lagging behind many of its peer metros. The report comes as the City of Cleveland considers reducing its financial incentives for new developments.

 

MORE:

https://neo-trans.blog/2023/03/16/cleveland-adds-fewest-apartments-among-major-metros/

1 hour ago, KJP said:

 

Cleveland adds fewest apartments among major metros
By Ken Prendergast / March 16, 2023

 

New data from a leading North American real estate services firm shows that Greater Cleveland had the smallest number of new apartment units under construction in the USA in the fourth quarter of 2022. That snapshot of construction activity in America’s multi-family rental market shows that, not only is Greater Cleveland lagging way behind the nation’s largest metropolitan areas in adding new apartments, it’s also lagging behind many of its peer metros. The report comes as the City of Cleveland considers reducing its financial incentives for new developments.

 

MORE:

https://neo-trans.blog/2023/03/16/cleveland-adds-fewest-apartments-among-major-metros/

 

I thought it was mentioned on this site a while back that construction costs in Cleveland are higher than in other cities. If so, could that be a factor?

I'm curious to see not a snapshot of current construction but maybe % inventory growth over the past 5 years. We're missing some big projects that were recently completed and wouldn't be accounted in this IPA report since they are done already. 

 

Also second thought; if you want fancy new apartments you need to have it be worth the cost. And with Cleveland's great affordability I'm sure that is a deterrent for development sometimes. There's some great encouraging signs lately with these new apartments fetching $3/sqft now and still being fully leased out in a year's time. That seems to be continually pushing for new development as it shows high returns are possible. 

12 hours ago, KJP said:

 

Cleveland adds fewest apartments among major metros
By Ken Prendergast / March 16, 2023

 

New data from a leading North American real estate services firm shows that Greater Cleveland had the smallest number of new apartment units under construction in the USA in the fourth quarter of 2022. That snapshot of construction activity in America’s multi-family rental market shows that, not only is Greater Cleveland lagging way behind the nation’s largest metropolitan areas in adding new apartments, it’s also lagging behind many of its peer metros. The report comes as the City of Cleveland considers reducing its financial incentives for new developments.

 

MORE:

https://neo-trans.blog/2023/03/16/cleveland-adds-fewest-apartments-among-major-metros/

In your article it had the link to the IPA site, but just to their home page.  Do you have the link to this data/article?  I'm curious where Columbus fell in the mix?

47 minutes ago, Gnoraa said:

In your article it had the link to the IPA site, but just to their home page.  Do you have the link to this data/article?  I'm curious where Columbus fell in the mix?

 

It was posted on LinkedIn. There was no report issued. Just the chart and some explanatory text. I would also like to see the complete data set. Maybe they'll release it at some point. But they showed the top 10 cities with apartments under construction and the bottom 10, with Cleveland at the bottom. I would like to know why they cut off their data set at the number of metro areas selected. The contact at M&M (IPA's parent company) wasn't sure either.

Does new apartments include building office to residential conversions, or is it only talking about new builds? 

33 minutes ago, Ethan said:

Does new apartments include building office to residential conversions, or is it only talking about new builds? 

 

I had the same thought. I'm assuming this is just new construction. Since we led major metros in office-to-residential conversions, it's sort of a yin-yang thing that we would trail in new builds.

19 minutes ago, LlamaLawyer said:

 

I had the same thought. I'm assuming this is just new construction. Since we led major metros in office-to-residential conversions, it's sort of a yin-yang thing that we would trail in new builds.

I'm thinking the same thing. Don't get me wrong. Our new apartment numbers combined still aren't exceptionally high, they're probably floating more around 4-5k though. Probably closer to 4k. 

 

To add on to this, I would guess around 300-400 for sale homes/townhomes were built in the city last year. Just eyeing Knezs website which I look at every few months, they are building and or completed around 100-150 homes themselves within the last year. 

 

I don't think the credit rollback will slow them much as most of the homes they're building now are in areas that wont be rolled back i.e. Glenville and Fairfax. 

Edited March 17, 20232 yr by KFM44107

One bright light in another ranking where Cleveland comes up last...if/when the Centennial and SHW's old Hq are converted to housing they should fill up pretty fast. Based on how quickly new residential leases l would expect these two projects to get greenlighted sooner rather than later. Those two massive conversions filling up should keep the downtown population moving forward. Hell, we might even see that elusive City Target some day.

2 hours ago, Ethan said:

Does new apartments include building office to residential conversions, or is it only talking about new builds? 

 

I'm pretty sure it's all new apartments. An office-to-residential conversion is still construction. And the two guys that I quoted in the article thought that it referred to the conversions.

1 hour ago, KJP said:

 

I'm pretty sure it's all new apartments. An office-to-residential conversion is still construction. And the two guys that I quoted in the article thought that it referred to the conversions.

 

Your source says 2,300 new apartments are u/c.  If we add in conversions, it's arguably 3,300 units in the pipeline.  Didn't GCP say the annual absorbtion rate is about 1,000 for downtown and 1,500 more for the rest of the metro area?  If so, 2,300 units sound like a prudent pace that won't wreck anything.

 

 

6 hours ago, KFM44107 said:

I'm thinking the same thing. Don't get me wrong. Our new apartment numbers combined still aren't exceptionally high, they're probably floating more around 4-5k though. Probably closer to 4k. 

 

To add on to this, I would guess around 300-400 for sale homes/townhomes were built in the city last year. Just eyeing Knezs website which I look at every few months, they are building and or completed around 100-150 homes themselves within the last year. 

 

I don't think the credit rollback will slow them much as most of the homes they're building now are in areas that wont be rolled back i.e. Glenville and Fairfax. 

Wasn’t cleveland ranked one of the few cities where homeownership is more affordable than renting? It might not be unreasonable to think there could be a bit of a substitution effect with some people who otherwise would’ve rented new apartments moving into new construction homes.

I once did a geographical size comparison to Columbus whereby if Cleveland was expanded to the same physical extent, absorbing first ring suburbs in each direction their populations would be the same.

 

Point being, Cleveland was cannibalized early, creating these now desperate aging entities providing the competition for new development.

 

I would be curious to see how other peer cities compare in size and suburbanization.

 

Not to mention exurban sprawl, the car dependent poison that keeps on giving.

 

I see inner ring mergers with Cleveland as a partial solution: Lakewood, Cle Hts, Shaker Hts, Garfield, our friends in EC, Brooklyn, Rocky River, Fairview, etc

 

Behold NEW CLEVELAND

Edited March 19, 20232 yr by MVH
add map

Another unmentioned issue is that CCA is competing with RITA for municipal income tax management with RITA seemingly ahead in terms of efficiency(?)  I only deal with CCA now and their processes are laughable which I believe contributes to nastiness when a "client" has any questions.

 

It's obvious however that these competing entities are creating unnecessary complications in the tax process, much like the suburban chaos generally, and the anti-city tax sharing Work City vs Resident City codes handed down from our city-hating State Legislature.

1 hour ago, MVH said:

I once did a geographical size comparison to Columbus whereby if Cleveland was expanded to the same physical extent, absorbing first ring suburbs in each direction their populations would be the same.

 

Point being, Cleveland was cannibalized early, creating these now desperate aging entities providing the competition for new development.

 

I would be curious to see how other peer cities compare in size and suburbanization.

 

Not to mention exurban sprawl, the car dependent poison that keeps on giving.

 

I see inner ring mergers with Cleveland as a partial solution: Lakewood, Cle Hts, Shaker Hts, Garfield, our friends in EC, Brooklyn, Rocky River, Fairview, etc

 

Behold NEW CLEVELAND

I responded in the NEO Regionalism thread:

 

 

Seeds & Sprouts XXVIII – Big retailer to Steelyard, AJ Rocco’s progresses, Hemingway bets on offices, Leather shop reno, Bakery to Euclid Ave
By Ken Prendergast / March 22, 2023

 

Table Of Contents
+ Ross Dress for Less opening at Steelyard Commons
+ AJ Rocco’s Restaurant & Bar progresses downtown
+ Hemingway bets on Midtown office spaces
+ TRD Leather gets new insides on the West Side
+ New bakery coming to Euclid Avenue

 

MORE

https://neo-trans.blog/2023/03/22/seeds-sprouts-xxviii-big-retailer-opening-at-steelyard-aj-roccos-restaurant-progresses-hemingway-bets-on-offices-west-side-leather-shop-reno-bakery-planned-on-euclid/

BTW, that old Best Buy is going to be split into two retail spaces, Ross and Hibbet's. Apparently Chipotle is getting a standalone location as well. I know they are moving toward more online pickup sales so I wonder if that is the driver. 

BTW, that old Best Buy is going to be split into two retail spaces, Ross and Hibbet's. Apparently Chipotle is getting a standalone location as well. I know they are moving toward more online pickup sales so I wonder if that is the driver. 

I wonder if they ever considered negotiating with Guthrie's for the remaining space since they control the drive thru and Guthrie's move to either where T-Mobile was or the side by Target.

Sent from my Pixel 7 using Tapatalk

3 hours ago, MyPhoneDead said:

I wonder if they ever considered negotiating with Guthrie's for the remaining space since they control the drive thru and Guthrie's move to either where T-Mobile was or the side by Target.

Sent from my Pixel 7 using Tapatalk
 

That Guthrie's and its drive through, are closing at the end of the month, so that's likely what happened.

That Guthrie's and its drive through, are closing at the end of the month, so that's likely what happened.

Oh wow, didn't expect that tbh. Welp that's more convenient than a new build.

Sent from my Pixel 7 using Tapatalk

The new construction btw in the Steelyard is a new CLEAN car wash. Opens in May I believe.

Sent from my Pixel 7 using Tapatalk

cool they are getting new stuff still. I like Steelyard and think it is useful for us that live downtown. Quick drive out and I can do like 3 or 4 stops all at once. But good god they have way too much parking. They can definitely add some more plots on either side of steelyard drive to get some more density. 

 

Edited March 24, 20232 yr by dwolfi01