[Editor’s note: We have many clients regularly buying, improving and holding commercial properties within the City limits of Cincinnati, but they are not availing themselves of the simple and valuable property tax abatements available. Please contact Eli Krafte-Jacobs (513.797.2853) on your next project to attain these generous and significant property tax savings on your City project!]
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The City of Cincinnati, Community Reinvestment Area Commercial Abatement Program provides incentives to build and/or renovate commercial, industrial or mixed-use facilities. These incentives are manifest as property tax abatements and allow the developer (or future owner/operator) to reduce the operating expenses associated with the property.
- Significantly, the abatement application must be submitted and approved on commercial projects before the commencement of construction.
Commercial projects in the City of Cincinnati (you need to take care to understand the geographic City limits of Cincinnati) are eligible for a maximum net tax exemption of up to sixty-seven percent (67%) of the improvement value for up to fifteen years. In all cases, the developer must also enter into a separate agreement with the relevant school board to pay an amount equal to thirty-three percent (33%) of the improvement value as a Payment-in-Lieu of Taxes (PILOT) to be eligible for the abatement program. This PILOT cost does not further reduce the potential maximum net tax exemption.
The application review process determines the abatement percentage and the number of years for which it will apply. As part of the application, the developer must submit a $1,250 fee and describe its own development experience, the specific project and why it deserves a tax exemption, any planned community engagement, and anticipated job creation/retention. Additionally, the developer must submit the following supplemental information:
- A detailed breakdown of all sources and uses of funds for the project;
- Supporting documentation for such funds;
- A post-construction operating pro forma for the building and cash flow analysis;
- The developer’s corporate documents evidencing ownership and authority to sign;
- Copy of the title deed;
- Copy of the proposed construction plans/renderings;
- Estimated pre-construction and post-construction real estate taxes; and
- Documents evidencing LEED or Living Building Challenge Certification, if applicable.
In connection with the application, Developers can indicate whether they intend to enter into a Voluntary Tax Incentive Contribution Agreement (VTICA), which factors into determining the percentage and length of time of the abatement. Under a VTICA, the property owner agrees to pay a portion of the abated tax to the municipality for certain uses including, most prominently, the streetcar [applicable as to downtown projects]. City Council has instructed the Department of Community and Economic Development to consider VTICA contributions of fifteen percent (15%) or more of the abatement amount to be a substantial positive factor in reviewing applications.
Factors in Reviewing Application/Determining Level of Exemption:
- Must apply prior to beginning any construction activities[1]
- Must use a minimum of $40,000 on renovation/construction1
- Must result in net, new job creation1
- For residential property, can only receive a Commercial Abatement of five (5) or more units
- Historic Properties may be eligible for an additional 10-year extension
- Election to enter a VTICA, as mentioned above
- New construction vs renovation
- LEED-certified or not
- Handicap accessibility
For assistance with commercial or residential tax abatements (almost exclusively inside the City of Cincinnati), please contact Eli Krafte-Jacobs [513-797-2853]).
[1] These items are absolute requirements
