Study: Much Misinformation Surrounds Cleveland's Residential Tax Abatements

Cleveland’s housing market is has made steps toward recovering from the 2008 recession. A study released Tuesday shows residential tax abatements have helped in that tenuous recovery.

The number of active tax abatements has dropped significantly since a peak in 2006, but the dollar amounts homeowners save per abatement has gone up, according to the study.

But the tax break programs often come under fire for perceived connections to foreclosures and other misinformation, said Cleveland’s Director of Community Development Tania Menesse. Abatements in Cleveland did not correlate with foreclosure, according to the study, and a majority of homeowners stayed or planned to stay in their homes once their abatements ended.

“From a cumulative view, the amount of tax abatement that’s come off the tax abatement rolls is significantly coming back into the community, primarily going to the schools,” Menesse said.

A majority of residential tax abatements since 2004 have gone toward the construction of new single-family homes, according to the study.

Many residents don’t consider abatements for renovation, Menesse said, although it is often more affordable than building a new house or moving.

“I think there’s an education piece there, people don’t really know that and they’re not necessarily applying,” Menesse said.

But tax abatements aren’t the primary driver for development across neighborhoods, Menesse said. While the housing market is improving in some parts of Cleveland, she said, it doesn’t always correlate with neighborhoods where abatements are concentrated

“In the areas where we have tax abatements that are already distressed, most of that tax abatement is for subsidized housing and affordable housing,” Menesse said, “which is very important, but we’re not seeing the market improve at a fast enough rate.”

Subsidized housing projects relying on abatements are on the decline in the city, Menesse said.

The study is just the first step in a process to develop a 10-year housing and investment plan for Cleveland. Community input in this round shows many residents want to keep tax abatements as an option for the future, but they’d like to see some other changes in the city’s policies.

Study participants also said they support variable abatement options that consider the economic status and needs of the neighborhood, an idea supported by Councilman Anthony Hairston at the city council’s Development, Planning and Sustainability Committee Tuesday meeting.

“We can throw something out there, yeah, a few people might buy for a short period,” Hairston said. “But how do we impact future generations? How do we have everlasting impacts in these communities? I believe that is how we make that happen.”

Urban sprawl is a concern for more than a few committee members as Cleveland residents move to buy cheaper houses in the suburbs.

“We know we need to grow, but how can we do it in a smart way that is tailored to create more affordable housing, that is tailored for investment in areas that may not be seeing it?” asked Councilman Kerry McCormack.