You Paid For it: Are Columbus tax abatements a burden on taxpayers?

COLUMBUS (WCMH) — It’s a long-standing way to spur growth in a city, offer developers and residents a deal, namely a tax break in order to invest in a struggling neighborhood.

Columbus is no stranger to offering tax abatements but as the city has grown, critics complain city leaders are giving tax breaks for developers to build and residents to renovate in already thriving neighborhoods like the Short North. And with all those properties not paying taxes that contribute to schools, roads, and parks, then that means you’re paying more for those services.

To be clear homeowners given tax abatements still pay property taxes, but only for the unimproved property total for the duration of the abatement.

Tax abatements allow a developer or resident to forgo paying property taxes for a specific amount of time in exchange for bringing jobs to the area or revitalizing a neighborhood. In the past City Councilors have argued such abatements have made popular areas into what they are today.

“The Short North is hottest property probably in central Ohio,” said Michael Council, a past developer of several Columbus properties, including the Dakota in the Short North in the mid-2000s, “We asked for a tax abatement but we were told by the city we don’t do tax abatements in the Short North,” Council said.

That has changed, right now there are at least 34 Community Reinvestment Area tax abatements in Columbus, a number of which are in the Short North.

“I call them wealth giveaways at this point, because there is no need for tax abatements in the Short North,” Council said.

Across Franklin County the number of abatements skyrockets. According to the Franklin County Auditor’s office in 2000 there were about 400 abated properties receiving some sort of tax abatement. In 2017 there are more than 21,000, most of which are in Columbus.

Critics believe they are shifting local tax burdens for services like schools onto you.

“These tax abatements don’t come out of the air, the money is still needed for these services,” Council said.

But does the benefit of a revitalized community outweigh the cost?

Franklin County Auditor Clarence Mingo.

“No one has taken the time to really study this particular issue,” said Franklin County Auditor Clarence Mingo. He recently commissioned a first of its kind study that looked at Franklin County tax abatements and their effects on homeowners.

“The benefit to taxpayers has only been marginal,” Mingo said.

The study found in 2015 the county forgave $65.4 million dollars in property taxes, but for each homeowner it did save money. The study found if you owned an $100 thousand dollar home, you save $11 dollars in taxes each year, directly from economic development the abatements encouraged. You also live in an arguably better neighborhood.

However the study found schools missed out on significant funds at a time when those same taxpayers are being asked to additional taxes in levies for schools.

The study found Groveport-Madison students missed out on an average of $2,156 per student, Columbus missed out on an average of $338 per student.

“On some level I think it’s irresponsible to continue using abatements as a tool for economic growth and development, unless there are simultaneous studies done to show the benefit to taxpayers,” Mingo said.

Columbus city council approves all abatements for the city. Council President Zach Klein released a statement saying these abatements played a key role in making the Short North into what it is today.

“Incentives play an important role in economic development,” Klein added, “Like all city programs it’s appropriate to periodically review their effectiveness and appropriateness.”

City council is currently reviewing their policies with the help of a third party real estate and economic advising company. They plan to have those results in July.
It’s important to note that Clarence Mingo’s study only looked at two types of tax abatements, and made what it’s authors note are reasonable economic assumptions.

You can view the study here: http://www.franklincountyauditor.com/public/documents/pdf/a6e852f0-b103-b773-5b6bda0b187cd1b3.pdf

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