The Cleveland City Council has begun making changes to Mayor Justin Bibb’s proposed tax abatement overhaul, including an amendment that would prevent short-term rentals from qualifying for the tax break.
For years, the city has offered full tax abatements over 15 years for new or renovated homes. The Bibb administration is proposing to cap those tax breaks for more expensive homes and reduce the benefits on the city’s wealthier neighborhoods.
Legislation before the council would also allow the city to revoke abatements for tax-delinquent or neglected properties. The council on Tuesday added limited accommodations such as Airbnb to the list of properties that could have their discounts terminated by the city.
Residential tax abatements are meant to attract new residents, not subsidize investor-owned properties that circumvent hotel and bed and breakfast rules, Ward 3 Councilor Kerry McCormack said.
“I have homes in the middle of the block in our community that are tax cut and are party homes, from investors who don’t live anywhere near the city of Cleveland,” a- he declared. “My residents are fed up and fed up.”
The council verbally approved the amendments at Tuesday’s development, planning and sustainability committee meeting, but the amended legislation has yet to be approved by the full council.
Proponents of an overhaul of the reduction argue that Cleveland’s “one size fits all” tax relief should be replaced with a more nuanced approach that encourages development in disinvested neighborhoods.
The Bibb administration’s proposal classifies city blocks as “market rate”, “mid-market” or “opportunity”, offering abatements of 85%, 90% or 100% for new homes in each of those respective zones. . It also limits discounts to the first $350,000 of a home’s value in the first two zones and $450,000 on “opportunity” blocks.
Council members amended the proposal on Tuesday to make rehabilitated homes eligible for 100% tax abatements – with no cap – regardless of where they are in the city.
Only one council member, Kris Harsh of Ward 13, voted against the proposal in committee. Harsh said middle markets, like his Old Brooklyn neighborhood, should remain eligible for full tax abatements.
In a public consultation session before the meeting, developers encouraged council members to leave the city’s current downsizing policy unchanged. They argued that abatements were essential for financing projects, especially when interest rates and construction costs rise.
Writer and conservationist David Beach, who also addressed the council, called the cuts “fundamentally unfair” and urged the city to limit tax relief to affordable housing. Failing that, the council could widen the differences in discounts offered in market, mid-market and opportunity rate neighborhoods, he said.
The Council must approve a tax abatement plan by June 4, when the current program expires.