Cleveland City Council tables tax-abatement package amid confusion over wording

At Monday’s finance committee meeting, the Bibb administration and council members made some notable tweaks to the proposal. The current language says:

• The city will maintain 100% abatement for 15 years on all rehabilitation projects, in all neighborhoods. That applies to everything from single-family homes to vacant schools and downtown office buildings being converted to apartments.

Multifamily projects will be subject to community benefits agreements that require developers to include a certain number of “affordable” units — or to pay into a new housing trust fund.

The prior version of the ordinance pared abatement to 85% for renovations in parts of downtown and other bustling areas, including Ohio City, Tremont and University Circle.

• For new for-sale housing, abatement will be limited to the first $350,000 in real estate value in hot markets; $400,000 in so-called middle neighborhoods, on the fringes of the city; and $450,000 everywhere else. (Here is an interactive map, updated this week, of how the city is split into three categories.)

Builders and buyers will receive 100% abatement across most of the city, but the tax breaks will be reduced to 85% downtown and in the busiest submarkets, including the near West Side.

• The city adjusted its definition of affordable housing, for purposes of the new set-aside requirement for multifamily projects.

The original legislation mandated that rental units be affordable to tenants at 80% of area median income.

The updated language raises that bar to 100% of area median income — a figure based on the Cleveland metropolitan area, not the city. That equates to just over $1,000 in monthly rent for a one-bedroom apartment, said Jeff Epstein, the city’s chief of integrated development.

By raising the ceiling, officials hope they will see more developers weave workforce housing into their projects, instead of simply paying into the housing trust fund to satisfy the city’s rules.

Affordable housing projects universally will qualify for 100% abatement.

• The 12-month grace period outlined in the original legislation will instead run for 18 months. That means builders and developers will have until late 2023 to prepare for the changes.

Applicants who file preliminary abatement paperwork and submit schematic project drawings to the city during the grace period will qualify for incentives on today’s terms, even if their projects are awaiting city approvals when the new rules kick in.

The city proposed the additional time to acknowledge that builders and developers are grappling with inflation, supply-chain disruptions and volatile construction costs, Epstein said.

“This may not be the perfect piece of legislation,” Griffin said during the finance committee hearing. “But I come from the school of thought that I won’t let the perfect be the enemy of the good. So I do think this is legislation we can live with.”

Committee members also set a citywide cap on abatement for single-family rehab projects at $450,000.

And at Spencer’s request, they agreed to offer 100% abatement, on up to $450,000 in new real estate value, for aging-in-place housing anywhere in the city. It’s unclear what the criteria will be for that component of the program.

Spencer criticized many of the changes to the policy, calling it increasingly generous to developers.

“We started weighing the growth over the equity tonight,” she said.

She also asked how council members are going to explain the complicated, layered, policy to city residents. Real estate developers and builders have spent the last two weeks trying to parse the legislation, with conflicting interpretations of the wording.

“This is confusing as hell,” councilman Mike Polensek, who represents Collinwood and parts of Glenville, muttered during the committee hearing.

City officials said they’re striving to balance diverse, sometimes competing, interests as they refine a program that, in the end, is one hot-button piece of the administration’s emerging housing policy.

“We want to have growth,” Epstein said. “We want to continue to see growth in our city. But we want to move in the direction of more equitable growth.”