The City of Cincinnati and Cincinnati Public Schools could hash out the bones of a new agreement around the city’s tax abatement policy as soon as this spring, City Solicitor Paula Boggs-Muething told Cincinnati City Council’s Education, Innovation and Growth Committee on Jan. 29.
But some CPS board members have taken issue with the city’s characterization of talks so far, and, as interest in changes to the city’s tax abatement policies gathers steam, there are questions about when community input into the deal will be taken.
The city gives out property and payroll tax discounts to incentivize developers who are looking to build residential and commercial buildings in the city. Hamilton County Auditor Dusty Rhodes last year said that more than 36 percent of property in the city is abated, representing 10 percent of the city’s total property value.
The agreement between the district and the city, which expires at the end of this year, allows the city to give abatements to developers in exchange for payments in lieu of taxes to the district. CPS relies on property taxes for a large part of its funding.
The current agreement between the city and the district, struck in 1999, expires at the end of 2019. Some have criticized that framework, which allows the city to deeply abate property taxes on new development and renovations, as being too generous to developers. But some in city administration say those deals are partly responsible for the resurgence in economic development in Cincinnati.
Under the current deal, the city pays CPS $5 million a year up to $100 million to offset tax abatements given to developers to incentivize new projects in the city — a deal reached in 1995 as part of the development of Cincinnati’s two riverfront stadiums, which are tax abated.
CPS can use that money only on capital projects. Some of those developers are also required to provide payments in lieu of taxes (PILOTS) on roughly 25 percent of the valuation of their project — though housing that costs under $330,000 a unit is exempted from that. In return for those payments, the city can offer 15-year property tax abatements on up to 100 percent of the value of improvements or new construction.
Without the deal, the city’s options are more limited: tax abatements at less than 50 percent for up to 15 years, as well as limitations on tax increment financing — where tax money is diverted into an account that helps pay for improvements to the area around a property — and payroll tax abatements.
Negotiations toward a new deal kicked off in June last year with a joint meeting of Cincinnati City Council and the Cincinnati Public School Board. After that, both the city and CPS picked teams to explore a new agreement further. Those teams have met twice so far, Muething said during the committee meeting — an assertion CPS board members dispute. Another meeting is scheduled for February 15.
The renegotiation comes amid increasing interest in the city’s tax abatement policies and charges from some community groups that its practices are too generous to developers, cost the school district too much potential tax revenue and/or don’t weigh priorities like affordable housing, community engagement and other issues enough.
Some have protested that the process toward setting a new agreement thus far hasn’t included public input and engagement, concerns stoked by the suggestion that negotiations between the school and the district are already underway.
Craig Rozen of the Cincinnati Educational Justice Coalition says the city and district haven’t done enough to engage the public around the negotiations and that grassroots groups have been working to fill the gap.
“In the vacuum of public discussions and opportunities to workshop viable ideas and new practices, community organizations and nonprofits are being forced to fill this void,” Rozen said in today’s committee meeting. “Engagement sessions should have been started at least a year ago, hosted by CPS and the city. They were not. Public engagement sessions are fundamental best practices and happen in other cities when they enact significant changes to their tax exemption policies. This needs to happen here.”
Muething told council that so far, the two parties have talked about the city’s approach to tax abatements and TIFs and have come to a good place in terms of a general framework for a future deal. That deal could come in “two or three” months, according to Muething, but there are still a number of details to discuss, she said.
“You asked us to form an internal city team and to begin negotiating with members of CPS administration,” Muething told council committee Jan. 29. “They did the same. So we have had some very productive discussions. I would say that we have met to discuss the framework for a new agreement. I think there is general agreement on the framework and the factors to work through. We have had some very productive and informative discussions. We have more meetings to come, but I would say that we feel like we’re in a good position on negotiations to come to a joint agreement on something that is mutually beneficial.”
But members of the Cincinnati Board of Education disputed that. Four members of the board have said they had no knowledge of any talks about the abatement policies between the city and the school board.
“There has been one phone call at the city’s request,” board member Mike Moroski said in a phone interview. Moroski and other board members say that phone call involved district treasurer Jennifer Wagner and related to state funding for the district, not the city’s abatement policies specifically. “No proposals were exchanged. There are no negotiations going on without board direction.”
“We want community input as these processes continue,” Moroski said. “That’s why we were so surprised by those comments.”
Board member Melanie Bates made similar assertions.
“We have not had any meetings, public or otherwise, other than discussion at our Audit Committee,” she wrote in a Facebook comment thread Jan. 31. “Board members did not agree with the city’s presentation, and we have not responded at this point. This is a complicated issue that affects the school district and the future development of our city. The Board is aware of the timeline and will respond appropriately.”
CityBeat has reached out to the city to clarify Muething’s comments.
Any deal between the city and CPS would need approval by Cincinnati City Council and the Cincinnati Public School Board, which would discuss and vote on the arrangement in public meetings.
The city’s team includes solicitor Muething, deputy solicitor Luke Blocher, Senior Assistant Solicitors Kaitlyn Geiger and Billy Weber, Deputy Finance Director Karen Alder, Department of Community and Economic Development Director Phil Denning and Deputy Director Dan Bower.
Muething said that CPS’ team includes district Treasurer Wagner, Assistant Treasurer Brittany Treolo, district Accounts Payable Supervisor Nathan Tyahur and district General Counsel Daniel Hoying.
A district spokesperson confirmed those members, but did not provide further comment on the meetings when asked. Board members said they were not aware of a negotiating team.
The board’s July 9 minutes mention that “through the finance committee, a project team has been put together to work on negotiations of the 1999 agreement.”
The board’s Aug. 8 minutes lay out a timeline for working on the negotiations. A bullet point under Aug. 1 lists “Team development (Dan, Jen, Outside Counsel, Consultant, Amy T, Brittany).” Under the timeline, the team is slated to have recommendations for the board Feb. 1.
Board members, however, say that team is tasked only with collecting data for the school district and is not empowered to negotiate on its behalf.
“In no way has the board directed the team to do any negotiation at this point,” board member Ryan Messer said in a phone interview. “It’s logical for people to be suspicious. But I can assure you we won’t do anything without enormous public engagement.”
As the city and district face the expiration of the current abatement deal, political pressure from some corners has been growing around changes to the way the city does development incentives overall.
Last month, Council members Tamaya Dennard and Greg Landsman asked the city administration to prepare a report on the feasibility of considering equity initiatives like minority hiring, fair wages, affordable housing and other considerations when striking development deals.
And last year, Over-the-Rhine nonprofit Peaslee Neighborhood Center put together a rubric that scores potential developments seeking public subsidies like tax incentives on similar criteria. The group has been presenting that rubric to community councils, which often weigh development proposals first.
The Cincinnati Federation of Teachers, CPS’ teachers union, is one group pushing for change to the city-district deal specifically. CFT says that even with the $5 million annual payment from the city to the district, CPS is losing about $8.4 million a year on tax abatements. Further, the group says that about 20 percent of the city’s residential tax abatements end up in Hyde Park and Mount Lookout, two of the city’s wealthiest neighborhoods. CFT President Julie Sellers and others say the city needs to change that. The union would like the city to pay the district enough to make up for those abatements, stop abatements in high-income neighborhoods and cut back on the value and duration of many abatements.
Cincinnati City Council member P.G. Sittenfeld said during the Jan. 29 committee meeting that if a deal is struck between the district and the city in the next few months, there will still be plenty of time for community input as the arrangement works its way through the CPS board and city council.
“When the administration brings us a starting point, something tangible to go off of, that’s not the end of the process by any means,” he said. “That’s when the elected officials and all the people we represent, with ample time for public engagement, will have time to dig in.”
This story has been updated with comments from members of the Cincinnati Board of Education.
Correction: An earlier version of this article misspelled Craig Rozen’s name.
This article appears in Jan 23-30, 2019.
