Jordan: You know I'm not a fan of TIFs, but I think there's also the reality that all the local municipal governments in the region are competing with each other for jobs. As a reminder, the local government funding system in Ohio is set up such that cities get most of their revenue from income taxes, while school districts, townships, and many county agencies get most of their revenue from property taxes. So why is that, via TIFs and abatements, the cities get to reduce/eliminate property taxes - largely without the consent of the governments and agencies which depend on that revenue.
That aside, could it be that the aggressive use of TIFs in central Ohio is both a cause and symptom of the degree of economic growth in the region? In other words, if there were none of these incentives available, would central Ohio, or even Ohio in general, be attracting all this commercial activity?
And is it possible that a primary reason we see so much abatement/TIF activity in central Ohio is that there is a sort of feeding frenzy between the suburbs trying to win the next big project? I wonder if Dr. Partridge has examined this dimension.
For me, the struggle has always been whether we (Hilliard) should oppose all use of the property tax abatements and TIFs, and likely get 100% of nothing because we won't be competitive, or have a reasonable approach to these economic development tools in a way that keeps us competitive for new revenue sources - the best way to attenuate the rising tax burden on homeowners and existing businesses? One way is the language Omar Tarazi and I worked to put into the City Charter (section 12.10), which says that TIFs on developments with a residential component have to be approved by the school district and the township which provides fire/emergency medical service.
Things can work well when the elected leaders of the local governments - city, school district, township - work together for the good of all. That hasn't always been the case in Hilliard. Section 12.10 of the City Charter was created at a time when folks on each of those bodies behaved cooperatively. I'd also note that the current city administration attempted to put language into the Hilliard by Design plan that recommended the repeal of 12.10. Fortunately, members of Council who understood the history of 12.10 put an end to that. But we're always an election away from having all that cooperative effort unraveled.
"That aside, could it be that the aggressive use of TIFs in central Ohio is both a cause and symptom of the degree of economic growth in the region? In other words, if there were none of these incentives available, would central Ohio, or even Ohio in general, be attracting all this commercial activity?"
Would we have attracted say Advanced Drainage Systems from Hilliard to *another* part of Hilliard absent TIF? Literally no benefit in that move for a city full of taxpayers but ADS was in a CRA before this as well so maybe this new tax break is just flat out better than that old one...
Aside from rewarding hometown success stories, a lot of TIF awardees are also simply moving within the county. A lot are moving within the state. It's appropriate to note that 40% of TIF use for the entire state is located within Franklin County when there are 80+ supposedly co-equal citizen filled counties. If TIF were embraced in areas that *needed* incentives surely we would see it more strongly represented in depressed areas?
It's much more likely - and provable - that TIF gets targeted for use most regularly in high value areas that are / were already growing across many measures (as Franklin County was) in the pre-TIF era. So to say growth wasn't or might not have happened is anti-historical, in my view.
"And is it possible that a primary reason we see so much abatement/TIF activity in central Ohio is that there is a sort of feeding frenzy between the suburbs trying to win the next big project? I wonder if Dr. Partridge has examined this dimension."
It's not only possible - the effect is detailed in the report. When one municipality uses TIF there is a noted uptick (.56) in neighboring municipalities also using TIF - which then encourages further adoption and ancillary effects. The size and scale is only limited by the interested developer / owner.
"For me, the struggle has always been whether we (Hilliard) should oppose all use of the property tax abatements and TIFs, and likely get 100% of nothing because we won't be competitive, or have a reasonable approach to these economic development tools in a way that keeps us competitive for new revenue sources - the best way to attenuate the rising tax burden on homeowners and existing businesses?"
As the study makes clear - "100% of nothing" is not actually nothing given the nature of foregone revenues and the 'but-for' potential for other developments that have come demonstrably absent TIF incentives (none issued between 2016 and just recently).
Further, collaboration between local authorities in approving TIF only makes it possible to use a mechanism that - as shown in multiple aspects throughout the study - does not contribute to the overall economic benefit of most taxpayers but rather delivers higher income, property and sales taxes without corresponding gains for shared services.
I studied multiple TIRC reports for Hilliard and our dozens of existing TIF's were approved in a sub 5 minute conversation with the Franklin County Auditor without a single parcel studied in detail or job creation claim tested - though listed as verified.
We can look for all that together, if you like - finding out who in city government is responsible for verifying all the job creation claims etc. - but I'd also suggest the report provided by Dr. Partridge and Messenger already addresses many of these questions in detail and with a better understanding of the granular data than I can provide in the comments section or as someone who does not hold multiple degrees in economics, lol.
Jordan - I think the chances are good that had Equity not been granted the tax incentives for TruePointe, then they could not have offered a deal to ADS that would have kept ADS in Hilliard. Then we would have lost ADS just like we lost BMW Financial (which we gained from Dublin several years ago by outbidding Dublin on their deal).
When the bunch of us (Les Carrier, Andy Teater, Pete Marsh, Larry Earman, Chuck Buck, me) created the ballot issue that put 12.10 in the City Charter, we addressed residential TIFs only because we know the city needed to have this tool available to attract commercial development, and hopefully new well-payment jobs. That's not a belief - there are scores of cases of local businesses "suburb shopping" to get the best deal. We lost BMW Financial to Grandview Yard. Dublin lost a couple of buildings worth of Nationwide to Grandview Yard. Columbus lost Bob Evans and others to New Albany.
Indeed the total revenue from those corporations that moved within the region went down. There was an attempt at one point to create an agreement among central OH governments to not use tax incentives to woo corporations from one city to another. Cities losing corporations supported it - cities gaining corporations wanted no part of such an agreement.
Governments are desperate for new revenue sources as their routine operating expenses, driven largely by the comp/benefits of their teams, grow exponentially. If TIFs/abatements are the necessary tool, then we must not ban them. If we don't want them to use TIFs/abatements, then what do you offer to a corporation that's shopping for a new headquarters location, and we're competing against other governments who are happy to give such incentives. It certainly isn't our oceanfront view.
It's not an abstract or philosophical question. The answer has to be expressed in monetary terms - what's it do to the bottom line. What would it take to get you to move the donut shop into the City of Hilliard? Probably a great deal on rent for a great location, money to move equipment, new signage, etc. Maybe one of the new retail spaces in TruePointe?
Thank you for informing our community as to how TIFs, tax abatements and CRAs work and don’t work for the long-term health of the community. I look forward to the continuation of this dialogue.
Very informative and the discussion was at a level we could easily understand all the nuances involved. I’m curious how this data and analysis will be used by the auditor, county commissioners and other leaders. Across the region, it seems it’s mostly a zero sum game or worst.
Jordan: You know I'm not a fan of TIFs, but I think there's also the reality that all the local municipal governments in the region are competing with each other for jobs. As a reminder, the local government funding system in Ohio is set up such that cities get most of their revenue from income taxes, while school districts, townships, and many county agencies get most of their revenue from property taxes. So why is that, via TIFs and abatements, the cities get to reduce/eliminate property taxes - largely without the consent of the governments and agencies which depend on that revenue.
That aside, could it be that the aggressive use of TIFs in central Ohio is both a cause and symptom of the degree of economic growth in the region? In other words, if there were none of these incentives available, would central Ohio, or even Ohio in general, be attracting all this commercial activity?
And is it possible that a primary reason we see so much abatement/TIF activity in central Ohio is that there is a sort of feeding frenzy between the suburbs trying to win the next big project? I wonder if Dr. Partridge has examined this dimension.
For me, the struggle has always been whether we (Hilliard) should oppose all use of the property tax abatements and TIFs, and likely get 100% of nothing because we won't be competitive, or have a reasonable approach to these economic development tools in a way that keeps us competitive for new revenue sources - the best way to attenuate the rising tax burden on homeowners and existing businesses? One way is the language Omar Tarazi and I worked to put into the City Charter (section 12.10), which says that TIFs on developments with a residential component have to be approved by the school district and the township which provides fire/emergency medical service.
Things can work well when the elected leaders of the local governments - city, school district, township - work together for the good of all. That hasn't always been the case in Hilliard. Section 12.10 of the City Charter was created at a time when folks on each of those bodies behaved cooperatively. I'd also note that the current city administration attempted to put language into the Hilliard by Design plan that recommended the repeal of 12.10. Fortunately, members of Council who understood the history of 12.10 put an end to that. But we're always an election away from having all that cooperative effort unraveled.
"That aside, could it be that the aggressive use of TIFs in central Ohio is both a cause and symptom of the degree of economic growth in the region? In other words, if there were none of these incentives available, would central Ohio, or even Ohio in general, be attracting all this commercial activity?"
Would we have attracted say Advanced Drainage Systems from Hilliard to *another* part of Hilliard absent TIF? Literally no benefit in that move for a city full of taxpayers but ADS was in a CRA before this as well so maybe this new tax break is just flat out better than that old one...
Aside from rewarding hometown success stories, a lot of TIF awardees are also simply moving within the county. A lot are moving within the state. It's appropriate to note that 40% of TIF use for the entire state is located within Franklin County when there are 80+ supposedly co-equal citizen filled counties. If TIF were embraced in areas that *needed* incentives surely we would see it more strongly represented in depressed areas?
It's much more likely - and provable - that TIF gets targeted for use most regularly in high value areas that are / were already growing across many measures (as Franklin County was) in the pre-TIF era. So to say growth wasn't or might not have happened is anti-historical, in my view.
"And is it possible that a primary reason we see so much abatement/TIF activity in central Ohio is that there is a sort of feeding frenzy between the suburbs trying to win the next big project? I wonder if Dr. Partridge has examined this dimension."
It's not only possible - the effect is detailed in the report. When one municipality uses TIF there is a noted uptick (.56) in neighboring municipalities also using TIF - which then encourages further adoption and ancillary effects. The size and scale is only limited by the interested developer / owner.
"For me, the struggle has always been whether we (Hilliard) should oppose all use of the property tax abatements and TIFs, and likely get 100% of nothing because we won't be competitive, or have a reasonable approach to these economic development tools in a way that keeps us competitive for new revenue sources - the best way to attenuate the rising tax burden on homeowners and existing businesses?"
As the study makes clear - "100% of nothing" is not actually nothing given the nature of foregone revenues and the 'but-for' potential for other developments that have come demonstrably absent TIF incentives (none issued between 2016 and just recently).
Further, collaboration between local authorities in approving TIF only makes it possible to use a mechanism that - as shown in multiple aspects throughout the study - does not contribute to the overall economic benefit of most taxpayers but rather delivers higher income, property and sales taxes without corresponding gains for shared services.
I studied multiple TIRC reports for Hilliard and our dozens of existing TIF's were approved in a sub 5 minute conversation with the Franklin County Auditor without a single parcel studied in detail or job creation claim tested - though listed as verified.
We can look for all that together, if you like - finding out who in city government is responsible for verifying all the job creation claims etc. - but I'd also suggest the report provided by Dr. Partridge and Messenger already addresses many of these questions in detail and with a better understanding of the granular data than I can provide in the comments section or as someone who does not hold multiple degrees in economics, lol.
Jordan - I think the chances are good that had Equity not been granted the tax incentives for TruePointe, then they could not have offered a deal to ADS that would have kept ADS in Hilliard. Then we would have lost ADS just like we lost BMW Financial (which we gained from Dublin several years ago by outbidding Dublin on their deal).
When the bunch of us (Les Carrier, Andy Teater, Pete Marsh, Larry Earman, Chuck Buck, me) created the ballot issue that put 12.10 in the City Charter, we addressed residential TIFs only because we know the city needed to have this tool available to attract commercial development, and hopefully new well-payment jobs. That's not a belief - there are scores of cases of local businesses "suburb shopping" to get the best deal. We lost BMW Financial to Grandview Yard. Dublin lost a couple of buildings worth of Nationwide to Grandview Yard. Columbus lost Bob Evans and others to New Albany.
Indeed the total revenue from those corporations that moved within the region went down. There was an attempt at one point to create an agreement among central OH governments to not use tax incentives to woo corporations from one city to another. Cities losing corporations supported it - cities gaining corporations wanted no part of such an agreement.
Governments are desperate for new revenue sources as their routine operating expenses, driven largely by the comp/benefits of their teams, grow exponentially. If TIFs/abatements are the necessary tool, then we must not ban them. If we don't want them to use TIFs/abatements, then what do you offer to a corporation that's shopping for a new headquarters location, and we're competing against other governments who are happy to give such incentives. It certainly isn't our oceanfront view.
It's not an abstract or philosophical question. The answer has to be expressed in monetary terms - what's it do to the bottom line. What would it take to get you to move the donut shop into the City of Hilliard? Probably a great deal on rent for a great location, money to move equipment, new signage, etc. Maybe one of the new retail spaces in TruePointe?
Thank you for informing our community as to how TIFs, tax abatements and CRAs work and don’t work for the long-term health of the community. I look forward to the continuation of this dialogue.
Very informative and the discussion was at a level we could easily understand all the nuances involved. I’m curious how this data and analysis will be used by the auditor, county commissioners and other leaders. Across the region, it seems it’s mostly a zero sum game or worst.