Development without tax abatement isn't realistic

In a January 2020 opinion published in the Heights Observer, Cleveland Heights resident Joan Mallick advocated that CH City Council not approve the final “financial subsidies” required for the Top of the Hill (TOH) project to proceed.

According to Mallick, among the costs to the city that TOH would incur is a tax rebate of $1.2 million a year for a total of $36 million over 30 years, part of a total cost to the city of $43,970,000. She estimated a net loss to Cleveland Heights of $23,719,700 over 30 years.

If this $36 million dollar figure were not included, the total income to the city would actually be $7.97 million over 30 years, instead of a huge loss.

Given the manner in which most development in this region occurs these days, Mallick presents a specious argument.

In the 1990s I was an environmental activist on the suburban sprawl issue for the Northeast Ohio Sierra Club. I pointed out in public meetings that developers have put cities and states in a bind on tax abatements. Tax abatements started in earnest years before then, and were meant only for distressed neighborhoods. Unfortunately the powers that be (property developers of all kinds) lobbied for tax abatement for almost all new construction, which became what we know it as today.

Taking the original legislation to abate taxes in economically deprived areas and corrupting it to spread the benefits to developers across almost all development is onerous and not good for civilization. Even so, we (activists, cities and states) grew to embrace this perverted tax-abatement system that has been in use for at least 40 years. So, if old-time full taxation on new construction is instituted, you’re a city or state that won’t work with developers.

Now, if Mallick wanted to change the whole corrupting tax-abatement system (probably a hopeless task), she might have a colleague in me.

TOH is not for the middle class, as CH resident Don King pointed out in a letter published in the January 2020 Heights Observer. Cleveland Heights has a surplus of so-called middle-class rental suites at this point, even with a large loss of multi-family housing stock in Cleveland Heights in recent decades (you can see for-rent signs in our multi-family districts now). While I have no survey of landlords about this, I know a small landlord who has difficulty renting suites.

Decades ago, it wasn’t like this here. In 1979 I spent much effort finding an apartment in Coventry Village. There were no for-rent signs. Apartments in Coventry Village listed in newspaper classifieds were snapped up like this was Manhattan. Even with Craigslist now, this is no longer the case. So, building more new middle-class housing, which would likely need additional public subsidy, is not an effective strategy for the future of Cleveland Heights.

What residential rental market is vastly underserved in Cleveland Heights, compared to places such as Shaker Heights and Beachwood? It is the wealthy residential rental market. Why are wealthy renters wanted? They pay more in taxes than they consume in public services.

While I’ll likely never qualify financially to take a suite in TOH, I’m looking forward to wealthy people living there. Some of them [will likely] work at the institutions in University Circle, and some of them [will] have raised their families in Cleveland Heights and want to “empty nest” here. 

I want these people to live here, not elsewhere, contributing to our taxes and supporting local businesses. 

Lee Batdorff

Lee Batdorff has lived in Cleveland Heights since 1966.

Read More on Opinion
Volume 13, Issue 2, Posted 12:33 PM, 02.01.2020