The city of Cleveland’s residential tax abatement program has been a boon for the city, according to a study by researchers at Cleveland State University.
A series of tax abatements for new home construction and rehabilitation begun in 1987, jumpstarted new home construction in the city from a virtual standstill in the city. About 3,000 homes were built under the program, or 3.5 percent of the total housing stock in Cleveland. Including rehabilitations, about 5.7 percent, more than one in twenty homes, have been built or improved using tax abatements. This compared to 1980-83, when fewer than 20 new homes were built in the city each year.
A later, more generous tax abatement (15-years, 75%) increased development in the city so much that in 2004, 20 percent of new home construction in the county took place in Cleveland. In total, these investments have increased the value of Cleveland’s residential property by $370 million.
According to the study, almost 50 percent of the abatement recipients moved to Cleveland from a suburb and 60 percent said they would not have purchased the home without a rebate. Furthermore, the study shows that every $1 in abated taxes has generated $1.50 for the city of Cleveland, Cleveland Municipal Schools and Cuyahoga County.