This presentation was delivered by Mark Samaan at the public forum on public education and TIFs hosted by the Cincinnati Federation of Teachers and the Cincinnati Education Justice Coalition on December 8, 2019.
3. 3
What are TIFs?
• Municipality Creates (ORC #5709.40 - #5709.73 - #5709.78)
• Designed to subsidize improvements in “blighted” areas
• Captures “incremental” property taxes ABOVE base value
•Around since 1980’s for individual projects - usually one site
• In 2002, Ohio allowed creation of ‘District TIFs’
• Can last up to 30 years
• PILOT provision for schools if exceeds 10 years
4. 4
What are TIFs?
•Municipality creates TIF for 1 site or a district up to 300 acres
•Existing property taxes paid in the TIF are frozen at base year
amounts
•As property values in the TIF rise over the years due to new
construction and reassessment, the revenue that would have been
paid to general tax levies is diverted to a TIF Account
•TIF Revenue can be spent on improvements to public
infrastructure and private development - hard costs only
•Due to agreement between Cincinnati and CPS, 25% or 27% of
the amount diverted is paid to CPS as a PILOT
5. 5
What are TIFs?
416 Parcels in
Walnut Hills TIF
$53.5M in Base
Value - the district
value in 2002
$33.7M in TIF Value
- 63% increase in
values as of 2018
General taxes are
only collected on
the 2002 Base
Value - until 2032
The TIF Value is
diverted to the TIF
Account - until
2032
6. 6
How Do TIFs Work?
After that, all property tax
increases above the base
are channeled to the TIF
district
The property taxes
collected from properties
inside the district BEFORE
the district was created
that go to units of
government stays FLAT
for the life of the TIF
Tax on
$53.5M
30 years
Tax on
$33.7M
7. 7
How Do TIFs Work?
THIS MONEY GOES TO
CITY HALL
IT IS “OFF THE BOOKS”
IT IS NOT INCLUDED IN
THE NORMAL
BUDGETING PROCESS
THIS MONEY IS USED
FOR UNITS OF
LOCAL GOVERNMENT.
IT IS “ON THE BOOKS”
30 years
Tax on
$53.5M
Tax on
$33.7M
8. 8
Money From TIFs Taken From?
$53.5M in Base Value
~$1.5M in Property
Tax
30 years
9. 9
Money From TIFs Taken From?
30 years
$33.7M in TIF Value
~$640k in TIF Diversion in
2018 alone in Walnut Hills
2141 Gilbert
Avenue
2018 Market Value:
$2.14M
2002 Base Value:
$0.01M
2018 TIF Value:
$2.13M
14. 14
• Supposedly before any TIF funds are appropriated, the City
consults with the community council/business association of the TIF
District
• Promises made to spend money on public improvements and on
spurring ‘development’ after community engagement
• In reality, most TIF spending is approved via ‘emergency’
ordinance in large batches with little debate
• TIF spending usually provides public funds to private development
17. How much is the TIF Budget?
Have you ever heard that number?
How much do our TIFs generate?
What is the account balance of each TIF?
A Few Questions...
24. ● TIFs = Property Taxes
● Increment $ Diverted by TIF
● Run Outside of Normal Budget
● Lasts Up to 30 Years
● Blight Conditions
● Can Be Used for Private Owners
To Sum Up...
26. 26
2018 Market Value: $243.1M
2018 TIF Value: $241M
2003 Base Value: 2.1M
$4.7M Diverted in 2018
$1.2M PILOT paid to CPS
-$850K Net Loss by CPS
-$2.5M Net Loss by All Other
Levies
27. 27
$1.4B in 2018 Market Value
$754M in 2002 Base Value
$630M in 2018 TIF Value
+83.5% in Value Increase
TIF Value not taxed for
general levies
Downtown & Over-the-Rhine TIFs
Not Included in
These TIFs:
Great American Tower
84.51 Building - 5th/Race
Paul Brown Stadium
Distinction of “project” type of targeted Parcel TIF vs. a District TIF - How can $ be used – NOT for direct subsidy to developer? Make note of “but for” test – not present here – but is in Chicago.
PILOT
Neighborhood improvements?
Base is flat for life of TIF. In 2018 the TIF Value was $33.7M, before this year it was lower, the next year it will be higher, and so on
Need to visualize PILOT – quantify loss to schools, other public services – Are we voting for the pie or the real pie? Need “real” pie chart.
Show both pie charts
By the way – whole city coded as “blighted” – so TIFs can be anywhere!
Anything can be TIF’d. 2 or more of these…”Who blighted who”
How TIFs are supposed to work in Cincinnati
Any similar analysis for Cin City Council votes? Mention “Emergency Passage” of laws in Cin – no opportunity for community input. TIFs example of “emergency”
bills that must pass NOW!
Any headlines for how budget discussion and voting goes in Cin? Comments on community input into budget process. Additional levies recently? Expensive debt?
In addition there are the “Project TIFs”
Need cumulative per TIF
Need total in TIF accounts end of 2018
We liken TIFs to the famous Frankenstein monster – you’ve seen the movie – the doctor thought he could control his creation but it burst its chains, trampled the people and set the village on fire. Oh well. The Cin 2020 budget = $417 million.
Who has heard this # before? What, no one has?
According to “Improving TIF for Economic Development” by Prof. David Merriman, University of Illinois Chicago, Lincoln Institute of Land Policy, 2018
TIFs supposed to take 50 cents of every property tax dollar – so USA schools ripped off to tune of $20 billion annually.
Summing up – remember – it’s our property taxes we are talking about.
Details – 41 stories, tallest bldg. in region, 800,000 sq ft, developed by Eagle Realty Group, led by President Tom Stapleton. Eagle Realty Group is part of Western & Southern Financial Group. W&S is a number of insurance companies plus development – has $60 billion assets as of 2013. led by John Barrett who served on the boards of many Cincinnati arts organizations, including the Cincinnati Arts Association, the Cincinnati Art Museum and the Taft Museum of Art. Barrett has served on the board of directors of Convergys Corporation since 1998 and Cintas since 2011.He formerly served on several other boards, including Fifth Third Bancorp, The Andersons, Inc. and Touchstone Investment Trusts. Add how much TIF $ received.
Details – 41 stories, tallest bldg. in region, 800,000 sq ft, developed by Eagle Realty Group, led by President Tom Stapleton. Eagle Realty Group is part of Western & Southern Financial Group. W&S is a number of insurance companies plus development – has $60 billion assets as of 2013. led by John Barrett who served on the boards of many Cincinnati arts organizations, including the Cincinnati Arts Association, the Cincinnati Art Museum and the Taft Museum of Art. Barrett has served on the board of directors of Convergys Corporation since 1998 and Cintas since 2011.He formerly served on several other boards, including Fifth Third Bancorp, The Andersons, Inc. and Touchstone Investment Trusts. Add how much TIF $ received.
In the 2017 Cincinnati mayor’s race the biggest set of contributors to the incumbent Cranley was the construction and real estate industry – over $431,000.
The two candidates combined raised more than $1.35 million between July 2016 through the end of June for both this spring's primary election as well as November's general election. (reporting from Cincinnati Enquirer). My friends in Illinois call this “pay to play.”
Sense of alarm – the fire bell you hear ringing… Elaborate – do the people in THOSE communities know what is coming? Add slide of soccer stadium TIF.
Ask folks if they live in one of the pink areas.