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Commercial Tax Abatement

 

PROGRAM:  The City of Cincinnati Department of Community Development’s Community Reinvestment Area Commercial Tax Abatement Program encourages rehabilitation and new construction of structures through property tax incentives.  Property tax abatement is available for any increased valuation that results from the improvements to the property for both new construction and renovation.  Multi-unit residential (4 or more units), mixed-use, commercial, and industrial structures are eligible based on the project and an agreement that must be executed between the property owner and the City of Cincinnati Department of Community Development (DCD) before construction begins.  For one, two, and three-unit residential structures, see  Residential Tax Abatement Program. 

 

PROGRAM GOAL:  Commercial tax abatements are designed to facilitate the retention and expansion of businesses and the retention and creation of jobs.  

 

TYPE OF ASSISTANCE:  Real Estate Tax Abatement.  Tax abatement is the temporary elimination of increased real property taxes.

 

INCENTIVES:  Developers pay less real estate tax.  Savings can be used for other purposes.  Green designs reduce energy costs. 


BENEFITS:  The program decreases development costs by reducing on-going operating expenses in commercial projects.  There is an added benefit for companies who adopt environmentally friendly practices through green building and encourages businesses to consider and value LEED building standards when locating or expanding within the City of Cincinnati.  If the property is transferred, the property owner must notify the City otherwise the tax abatement benefits are nontransferable. 

 

MAXIMUM AMOUNT:  The multi-unit residential abatement is a net 75% abatement; the property owner is required to execute a School Board Agreement, which obligates the property owner to pay 25% of the increased taxes.  The term of the abatement is up to 8 years for both new construction and renovation (the market value limit increases by 3% compounded each year), with a minimum of $40,000 in costs and a maximum unit cost of $275,000.  Terms will be adjusted according to the project.  The Commercial/Industrial abatement is a net 75% abatement after the School Board Agreement.  The term of the abatement is up to 15 years for new construction and up to 12 years for a renovation.  The cost of improvements must exceed $40,000 to be eligible; there is no cap amount for the commercial/industrial abatement.  Mixed-use developments employ a combination of the above.

 

ELIGIBILITY:  Real property must be within the City of Cincinnati.  Residential, commercial or industrial facilities are eligible for abatement.  Any improvement for making a building more structurally sound, more habitable, or for improving the structure is eligible.  Eligible uses for the commercial tax abatement include renovation or new construction of multi-unit residential (4 or more units), mixed use, and commercial/industrial structures.  Residential multi-unit (4 or more units), commercial and industrial facilities that are constructed to LEED standards receive automatic tax abatement.  An agreement must be executed with DCD before construction begins. 

 

CRITERIA:  Multi-unit residential (4 or more units), mixed-use development and commercial development, both rehabilitation and new construction, are subject to program criteria such as gap analysis, cost/benefit analysis, and relation to other City subsidy.  Jobs created and retained will be considered where appropriate.  Multi-unit residential (4 or more units), mixed-use development and commercial development, both rehabilitation and new construction, that meet LEED standards are eligible for an automatic tax abatement.  An agreement must be executed with DCD before construction begins.

 

LEED PROJECTS:  The Commercial Tax Abatement Program offers property tax incentives to encourage new construction and rehabilitation of commercial and multi-unit residential properties (greater than three units) that meet Leadership in Energy and Environmental Design (LEED) Certified, Silver, Gold, or Platinum standards.  Commercial LEED projects do not have to demonstrate financial need to be approved for the tax abatement.      

 

For LEED projects, there is no cap on the maximum market value eligible for abatement.  The Commercial/industrial and multi-unit residential abatement is up to 15 years for new construction and 12 years for renovation.  It is a net 75% abatement after execution of the school board agreement.  A minimum of $40,000 in costs is required.  Additional information regarding LEED standards can be found on the United States Green Building Council website.  

 

RATES/FEES:  Mixed use, commercial and multi-unit residential developments have an annual fee of 1% of the annual tax abatement, but not less than $250 or more than $2,500.  A $750 application fee is required by the Ohio Department of Development, Office of Tax Incentives.

APPROVAL:
  Multi-unit residential, mixed-use, and commercial abatements are approved through Cincinnati City Council.

EVALUATION:  Abated properties will be monitored for building code violations, property tax default and contract terms, i.e. jobs, completion of renovation, etc.

REPAYMENT:
  Tax abatement can be rescinded or terminated by the City of Cincinnati if contract terms are not met.


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