Saturday, May 29, 2004

Development districts survive

Legislature overrides tax commissioner's ruling

By Debra Jasper
Columbus Enquirer Bureau

COLUMBUS - After heavy debate in the Legislature, Cincinnati can now move forward to create special taxing districts to help pay for key development projects downtown, on the riverfront and in neighborhoods.

The projects - at least 11 of them, totaling $150 million over 30 years - had been in jeopardy because of a ruling by the state tax commissioner requiring everyone in a district to agree to be included.

But lawmakers, after negotiations with officials from Hamilton County, decided to give cities broader discretion.

The districts could benefit projects such as the riverfront development known as The Banks, and a retail and student housing development in Clifton Heights.

"I'm very happy," said City Council Finance Committee Chairman John Cranley, who led the effort to create 11 tax-increment financing districts in 2002. "This gives us an unprecedented opportunity for urban revitalization."

Sen. Mark Mallory, D-West End, had initially sponsored an amendment to a jobs bill that passed the Senate in April clarifying state law on tax-increment financing districts.

He attached the amendment after city officials expressed concern that the development projects could be stalled by Ohio Tax Commissioner William W. Wilkins, who had interpreted state law to mean that every property owner must agree to be placed in a tax-increment financing district.

City officials said that might have required getting signatures of thousands of property owners.

Mallory said Friday that lawmakers never intended to require city officials to get the signatures of every property owner. "That would have been a monumental task and we would have lost the opportunity to do these projects," he said.

He noted the tax districts are needed to spur investment, help increase property values and push up property tax revenue.

Here's how they work: As property values rise, the added tax revenue, or increment, is paid into a special fund that pays for the capital improvements. Those projects, in turn, contribute to the higher property values.

Mallory's amendment to the jobs bill had sailed through the Senate, but it bogged down in the House after county officials complained that the districts would take away some of their revenue.

State Rep. Bill Seitz, R-Green Township, said he helped work out a compromise that gives the county half the taxes generated by a normal reappraisal - before improvements are made - in a taxing district. The other half goes to the city. Mallory and Seitz said the amount of such taxes would be very small.

Seitz said the city still gets 100 percent of the money attributable to subsequent improvements built on the property after the taxing district went into effect.

Seitz said he is pleased with the compromise, because counties will continue to get some tax money even with districts in place.

"This debate was useful to opening up folks' eyes to how (taxing districts) operate. And it was most useful as a case where our entire delegation from Hamilton County worked together," he said.

Mallory agreed. "Sharing the revenue among the levels of government makes sense, and allows the city to move on with its projects."



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