City Council/School Board Start Talks To Redo 1999 Tax Abatement Agreement

Jun 5, 2018

Cincinnati City Council and the Cincinnati Board of Education are getting ready to re-negotiate a 1999 agreement concerning tax abatement policies.

The current one expires December 31, 2019, and the two bodies are beginning discussions about what the agreement will look like in the future.  

A city council committee and the school board held a joint meeting Tuesday evening to begin those discussions.

As part of the 1999 agreement, the city has been providing a $5 million annual payment to the school district.  That was part of a deal for the school district to support construction of Paul Brown Stadium and Great American Ballpark, which are exempt from paying property taxes.

In addition, developers in the city who receive tax abatements on some projects are required to make "payments in lieu of taxes (PILOT)" to the school district, which again is designed to make the district whole because of lost property tax revenues.  Those are set at 25 to 27 percent of a project's value.

Part of the discussion is whether the $5 million will continue, or if it will be increased or decreased.  The PILOT percentage levels could also be adjusted for developers.

The city's Department of Community and Economic Development is charged with offering tax incentives to developers who do work in the city.

"This agreement has been a hugely impactful and effective tool for growing the city, growing CPS, and so much of the renaissance that we're experiencing can be attributed in part to these incentives," said Phil Denning, the interim director of the department.

Getting the abatement amount right and the length of time it's offered is balancing act.  Council member P.G. Sittenfeld said it comes down to "good math."

"That simultaneously maximizes development, and the incentivizing of development, and in turn as a function of that, maximizes the dollars that end up flowing to the school district," Sittenfeld said.

Credit Provided / City of Cincinnati

Cincinnati Federation of Teachers President Julie Sellers sent a letter to Sittenfeld Monday stating the city's abatement policies in some neighborhoods "short changes our schools and local services."  She also said the policies place "an unfair and increasing burden on owners of older homes and businesses."

Sellers is asking that the city's annual payment to the school district increase "to an amount that will cover CPS's lost revenue from current abatement."

She also suggests new abatements be limited to blighted neighborhoods "in genuine need of new investment," and that the amount of future abatements be reduced and the length that they're offered be shortened.

City and school board staff will be discussing the future of the agreement, and there will likely be more joint meetings between the council committee and the school board to debate the issue.