CINCINNATI, OH (FOX19) - For years, the City of Cincinnati has offered tax incentives for property owners tackling new builds and renovations through its tax abatement programs.
After decades of declining populations, the city argues the Community Reinvestment Area Residential Tax Abatement program stimulates revitalization, helps retain residents within city limits, and attracts homeowners to the area. Commercial developers are also eligible for tax incentives.
"I think the tax abatements that we have in place now are very smart," Councilwoman Laure Quinlivan said. "They attract people to build in the city and what we should all be focused on is getting as many people as possible to live in the city."
Hamilton County Auditor Dusty Rhodes, however, argues the program is a "free ride" for a select group of property owners that puts an unfair burden on the remaining property owners unable to take advantage of the program.
"Really it amounts to a bribe," Hamilton County Auditor Dusty Rhodes argued. "You have to bribe people to live some place. Why shouldn't you try to make your community a place where people want to be because of the services, the schools, the amenities, that type of thing."
Here's how Cincinnati's residential tax abatement program compares to other cities:
In Cincinnati property owners get 10 years of tax abatements on non-LEED Certified projects and 15 years for LEED certified projects.
In Columbus properties in target areas get 10-12 years of tax incentives for certain renovations and 15 years for new construction.
In Louisville houses must be 25 years or older in a target neighborhood and owners get a moratorium for 5 years.
In Indianapolis they offer limited residential abatements which are governed by state law.
This year the abatements were revised to de-incentivize building regular, non-green projects. Property tax savings are capped based on how green property owners build. Quinlivan, a property owner who owns a tax abated Gold LEED Certified home herself, is a strong supporter of the program's green incentives.
"I support a tax abatement that's structured the right way though so you're incentives to go even higher, build more efficiently," Quinlivan said.
According to the program's webpage, owners that take advantage of the residential abatements are only required to pay taxes on the pre-improvement value of their property for 10-15 years depending on the project.
"This is for the future," Quinlivan said. "After ten years or fifteen years your tax abatement expires and you have to pay taxes like everybody else."
According to Hamilton County records, the amount abatements granted since 2003 peaked in 2007 at $134.8 million and dipped to its lowest at $46.6 million last year.
"We get a teeny little percentage of that so really the property taxes that people pay … that's not what supports your city government," Quinlivan said.
"What they're doing then is giving away money that should be going somewhere else," Rhodes said. "That's really nice when you can give away somebody else's money."
Some developers, however, argue the city is not losing out on any money at all because they say without the program people would not be building.
"You wouldn't have it now because the project wouldn't exist," argued Dan Schimberg, President of Uptown Rental Properties.
Schimberg points to the old school property his company is redeveloping on Short Vine which was generating no tax dollars that will now become a $20 million dollar taxable property.
"This particular project could not have happened and would not have happened without that abatement," he told FOX19.
Schimberg argues while his company is getting a tax break on the new LEED Certified multi-use build, the city is still getting an instant return.
"The immediate benefit to the city is income tax, jobs and removal of blight," he argued.
Schimberg says the tax break helps developers take on the high cost of buying urban properties and results in a nicer product for the neighborhood.
"To be able to take a crime ridden, blighted business district and revitalize it and turn it into a place where a thousand new residents live, park their cars and have a 100,000 square feet of new retail up and down is worth it," he argued. "The city is amply rewarded and so are the citizens of this community."
"It's amazing what is happening in over the Rhine and in Corryville and I think our tax abatements that we have in place have been critical to get people to invest their money in the city," Quinlivan said.
"Well I hope they're right," Rhodes offered. "I really hope they're right, but I just think its bad policy from the start. I think if you trust the marketplace you get a lot farther and it would be a lot more secure."
In 2012, the owners of 256 properties took advantage of the City of Cincinnati's Residential Tax Abatement program. Of those, 110 were new construction while 146 were renovations. An additional 40 properties were LEED-certified.
In a survey conducted by the City of Cincinnati, 81% percent of owners of newly constructed homes said the program impacted their decision to stay in or move to the City.