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I am delighted to be personally involved at whatever level Mayor Justin Bibb, his administration, members of the Cleveland City Council, and others may believe that my 20 years of experience of working in this space and advocating for, and training black women and girls, may be needed.
By way of background information, we have a database of over 30,000 emails, 75% of which are women, and more specially, women of color. It is important to note, that for this effort to be successful we must collaborate with partners and allies from all aspects of the community. (No matter their race, gender, and their station in life)
We are all in this together, but it is time for black women and girls to be valued and appreciated as a force for a change and equity in the City of Cleveland.
Thanks
FROM: Arthur Hargate, Ward 6
RE: Ordinance No. 482-2022
I am writing to provide public comment on the reauthorization of Cleveland’s Residential Tax Abatement program.
The bottom line is the tax abatement proposed reauthorization before Council as amended by its Development, Planning and Sustainability Committee doesn’t go nearly far enough to encourage housing equity in Cleveland.
The last several years of high end development in high end areas of the city has exacerbated the affordable housing crisis in Cleveland. The City of Cleveland’s (hereafter “City”) panicked efforts to increase its tax base due to population loss has functioned to increase inequity, racial segregation and income / wealth disparity. Meanwhile, developers and property managers of high end rental have gorged themselves on the largesse of the City’s taxpayers.
Council should immediately end tax abatements for market rate and luxury apartments. 85% abatement in the “hot” market neighborhoods is ridiculous, entirely unnecessary and an abusive insult to those of us that pay ever increasing real estate taxes in this city. Investors and developers need no subsidies whatsoever to build high end apartments. Council should also reduce the 15 year abatement term for anything other than affordable housing.
Council should provide robust incentives for home renovation and first time home ownership. Council should also end the giveaway to remote investor developers and property managers extracting the economic vibrancy from our neighborhoods in excess rents. This will serve to restore much needed cash flows to Cleveland schools, libraries and the Metroparks.
Further, the Area Medium Income should be pegged to that which it is in the City itself, and the $20,000 fee to enable affordable units is absurdly low at $20,000. Tax abatements should be limited to one in a lifetime so that people cannot move from abated property to abated property and never pay property taxes in the City.
This current legislation as amended isn’t transformative in terms of equity, and it can and should be. It doesn’t do enough for forgotten neighborhoods and their disenfranchised residents, and the legislation appears to still cater too much to the posh, the privileged and the powerful in our community.
An unvarnished and common sense driven perspective on tax abatement is shared by many, many Cleveland residents who have witnessed the ugly, unfair and inequitable effects of this policy for decades, both at a macro and ground level.
It’s time to stop catering to the well-to-do and finally do something bold with tax abatement policy to help address directly Cleveland’s two critically debilitating issues: affordable housing and poverty. Doing something bold with tax abatement policy now can create significant velocity in that direction.
Conceptually the legislation of course makes sense and is long overdue, after almost twenty years of allowing the affordable housing crisis to proliferate, but even in committee Council seems to water down provisions that other major cities have had in place for years, so as to make the developers, banks and property investor elite happy.
Many worthy organizations involved in making recommendations to the City appear to have also been especially tactful, seemingly to not alienate the powerful, influential and well-connected investor, developer and contractor community, as well as their ubiquitous power-broker attorneys. Are we that desperate to encourage population growth and tax revenues (other than property) that we must make the finance, investment and real estate community wealthier to an extreme while forgotten citizens in forgotten neighborhoods see their infrastructure crumble around them?
The obsequious catering to profits before people was obvious in the 2020 Tax Abatement Report and the 2030 Equity Housing Plan. There were many good things in both but also monumental accommodation, as no one appears to be willing to be clear and call out the way the posh, privileged and powerful in our city have profited for decades by driving a civic agenda that has had the net effect of helping to keep poor people poor and living in costly, substandard housing.
You’ve heard this from many smart people and its true: poverty is a policy choice, and it wasn’t a policy choice of our government officials here. It was a policy of the power elite in the greater Cleveland area, of which the finance, investment and real estate cabal is an integral part and driving force.
It was their policy towards economic and property development that focused on the downtown playground for the well-to-do and a handful of Cleveland’s neighborhoods. It was their policy that refused to acknowledge and attack directly endemic poverty, overwhelming racism and housing discrimination in a truly effective way. It was their policy that to this day rewards rich people for catering to rich people.
Every stratum of the real estate market here has been poached by investors, and as a result affordable housing is in crisis and poor people have only stayed poor. We remain the poorest big city in the United States, and every economic development decision in the City must now be viewed through the filter of this one question: what directly will this do for poor people in poorer neighborhoods in this city? That exact question must be asked of the reauthorized tax abatement policy.
It is clear that our tax abatement policy and practices have contributed to both entrenched problems: lack of affordable housing and poverty, saying nothing of the money it has stripped from our schools. Increased urban density in certain “chosen” areas to get income tax revenue, other regressive taxes and retail activity never “trickles down” to actually address either problem in a meaningful way and largely just benefits the Cleveland power elite.
Take a ride around Gates Mills, Hunting Valley, Chagrin Falls or Pepper Pike. Then take a ride around some of our forgotten Eastside neighborhoods and tell me this is not a fact.
The income and wealth disparity in this community is as stark as anywhere in the United States, and tax abatement policy has only served to help keep it that way. The suburban elites investing in real estate and pulling the strings have done quite well in taking advantage of this tax abatement policy. Those living in Cleveland’s neglected neighborhoods have not.
Yes, tax abatement is just one tool and we need to use a big tool kit to get on top of affordable housing and poverty, but tax abatement policy must be used boldly going forward in its next iteration to preferentially help Cleveland’s most vulnerable, and I ask that you focus on amending the legislation in ways that will directly do that.
For too long developers, many with investment funding from outside the city, have profited handsomely building and acquiring, then becoming the property managers of high end rental. As well, we know that “vulture” investors have gobbled up tracts of cheap homes and rented them at exorbitant prices while letting them deteriorate.
Developers claim they are meeting insatiable market demand for high end rental. Intuitively, this makes no sense. A far more likely scenario is that the finance, investment and real estate cabal has successfully manipulated the market by squeezing the supply side and profiting from the run up in pricing and demand.
The tax abatement goodies have also been so lucrative that you have seen a proliferation of developers evolving to also become property managers of the high end rental they just built. The profitability must be staggering, and it would be wise to gain visibility to their economic model.
Developers have pocketed the tax abatement, played the spread between low cost to acquire land and buildings and high rent and have extracted the economic vitality of neighborhoods in excess rent. That’s one way that poor people stay poor, and moderate income people never get ahead. Every dollar spent on excess rent flowing out of the community to remote landlords is a dollar not spent on local goods and services, so how is that wise economic development for the City of Cleveland?
The market demand story is likely just another “big lie” created by crafty investor marketers. Who do you think funds the market studies that are promoting this lie of insatiable market demand for high end rental?
Rentals are filled because there is little or no affordable housing that can be purchased. There is no “silver tsunami” not conjured up and mythologized by investors, and truly independent studies reveal millennials would much prefer to buy a house if they only could, rather than throw their money away on stupidly high rent. But Wall Street has invested in high end rental and made affordable housing impossible to find, so we’re stuck with paying way too much for way too little.
People rent because they cannot afford to buy, because they rent and pay too much.
And all the while tax abatement was a key to making that lush deal for investors, developers and property managers pay off like crazy in Cleveland. Other cities acted years ago to stem this kind of feeding frenzy by rapacious real estate investors.
It also would be good to know exactly who is hiding behind those secretive LLC’s for high end rental projects or bulk acquisition of distressed homes? Investors from New York, Texas, Detroit, Hong Kong, Singapore, Moscow? We know the U.S. real estate market is a favorite for the international dark money laundering racquet. How much dark money is invested now in Cleveland’s high end rental real estate market? Would it be a good thing for the City to know that?
It’s time to end the money grab by investors, developers and property managers and help average and poor people in this city. End abatements for market rate and luxury rental. Assure we know who the investors are behind each real estate development LLC. Clearly understand how their business model works. Know exactly who is benefitting, who is paying and how much for each. Assure robust public participation in the property development project planning and implementation. Provide ample protections against gentrification.
Restore much needed cash flows to our schools, libraries and Metroparks. Provide highly scaled abatements that target forgotten neighborhoods and especially home renovation and first time home buyers. Give preference to owner occupied purchased homes and help lower income people get into them. Help keep seniors in their homes. Make homeownership the vehicle for wealth creation it should be in every Cleveland neighborhood.
Help people first, not corporations.
Cleveland can do this. One candidate for County Executive says we don’t think big enough; we don’t have enough big ideas. Here are a few.
Provide plenty of living wage jobs for poor people in Cleveland. Revitalize the poorer neighborhoods, refurbished and rebuilt by minority contractors and filled with local business fed by local investors. Assure every Clevelander has housing that is affordable for them in their income bracket.
Tax abatement policy can help. Please amend the legislation such that it preferentially helps our most vulnerable residents in every ward of the City.
Thank you,
Arthur Hargate, Ward 6
But, short of that, I’d like to recommend some specific ways the current legislation should be strengthened.
First, the proposed legislation to renew tax abatement divides the housing market into three tiers — strong market, middle market, and opportunity market — with the percent of allowed abated value in each being 85, 90 and 100%. This differential is so small it’s meaningless. To have an impact, it should be something like 0% in strong markets, 60% in middle markets, and 100% in the opportunity markets.
Second, there’s an in lieu of payment of $20K/unit for the affordable housing set-aside requirement for multi-family developments. That seems way too low. Developers will just pay it to reap the larger windfall of the tax subsidy. It’s also too little to allow the city’s affordable housing fund to produce a unit of affordable housing. So the amount should be increased substantially.
Third, why do tax abatements have to run for 15 years? What research shows that this is the appropriate length of time? You should not be afraid of reducing the term — perhaps testing 5 years.
Finally, to quality for tax abatement projects must comply with the city’s green building standard. This is a really good requirement, but the standard should be strengthened, especially for new construction. The current options are for low levels of green building certification, such as LEED Silver, which is easy to achieve with modern building techniques. At a time of climate crisis, we should be requiring new buildings to have near net-zero for energy use.
In conclusion, the proposed tax abatement legislation moves the city incrementally in the right direction, but it needs to be strengthened in a number of ways.
For far toooooo long, we’ve made it to ez to drive everywhere. We ‘ve made it too EZ to drive fast & carelessly. It’s a national issue and a local one.
It’s in the best interests of the humans of this city to make drivers PAY ATTENTION by slowing down cars & trucks & allocating more space for bikes/people/scooters/etc.
Many of us have spoke with our Council person Mr. Jones and Mr. Terelle Pruitt during both of their terms. What is the problem? Is RITA tax collection not providing the funds for resurfacing?
Woda is a very short street. Every street surrounding the school has been repaired except Woda and the upper part of Glendale. Why?
The residents are tired of complaining. My elderly neighbors have called and complained many, many times over the years. It is that difficult to get the fund from the RITA account to fix that street. Our taxes go up, up the services are down.
Please, reply back on what plans are in place or who else do we need to complain too? In order to get WODA Ave. Not a patched up repair again, but completely replaced and resurfaced in 2022.
Thank you for this space.