CLEVELAND — Mayor Justin M. Bibb on Monday introduced new legislation that could drastically overhaul Cleveland's tax abatement program.
During City Council's regularly scheduled meeting, the mayor pitched his plan he says will be "focused on growth and equity instead of the 'one-size-fits-all' plan currently in place." Cleveland's current tax abatement system, which made its debut in 2017, is set to expire on June 4.
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"Residential tax abatement is just one of many tools we will be using to incentivize equitable development in all corners of our city," Bibb said. "These changes recognize that our policy must promote growth while addressing growing inequity in our neighborhoods."
Under Bibb's proposal, abatement percentages would be different based on certain neighborhoods, with the goal being to spur economic growth and development in underprivileged communities. Neighborhoods designated "Market Rate" would received an 85% abatement over 15 years, "Middle Market" zones would get a 90% reduction, and "Opportunity" areas would be issued a full 100% tax abatement. You can view a full interactive map of the affected neighborhoods here.
In addition to the new tiers, abatements will be limited to the first $350,000 of new property values for all for-sale, single-family developments, in line with recommendations from the city's 2020 tax abatement study. Other proposals include incentives for affordable housing, environmentally friendly building standards, and community benefit agreements for multi-family facilities.
Any plan that receives both City Council and the mayor's approval would include a grace period allowing property owners to be in compliance with new guidelines by June of 2023. Bibb's office says it is "working closely" with lawmakers to reach a final agreement, and on Tuesday, Council President Blaine Griffin signaled his support for the basic goals of the administration's proposal:
"City Council is not in favor of a one-size-fits-all program and other cities are changing their policies similarly. Most importantly, residential tax abatement should promote equity and push investment into neighborhoods that haven’t seen much development but also ensure the city remains competitive, both with the suburbs and peer cities."
Cleveland's current tax abatement ordinance—issued under former Mayor Frank G. Jackson—allows all residential development and improvements in the city to receive a 100% tax abatement for 15 years as long at the EPA's Green Building Standards were met. While the new mayor's office says abatements are "still needed" to help the city's housing market recover, it claims they "are increasingly concentrated in higher pressure, higher price markets."
You can read more details on Bibb's proposals below: