July 29, 2014

Medina
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Brunswick: End of new home tax abatement considered

BRUNSWICK — City leaders are looking to get rid of a tax abatement that lets new homeowners get a 25 percent property tax abatement on their home for the first 10 years.

At City Council’s Planning and Zoning Committee meeting Thursday, Mike Abella, at large, said he wants to rescind the perk, arguing it’s unfair to homeowners who bought their homes before the abatement was created in November 2009.

Mike Abella

Mike Abella

“It doesn’t sit well for people who are paying the full value,” said Abella, who chairs the committee. “Any way we write the legislation would have to protect (the abatement) for people who already have it.”

The abatement was instituted as part of an amendment to the citywide Community Reinvestment Area created in 1987. Anyone who builds a new home in Brunswick is eligible for a 25 percent abatement on the value of their home for 10 years. The abatement does not apply to the value of the land on which the house sits.

City Economic Development Manager Tim Smith encouraged Council members to reconsider the impact of the abatement before yanking it.

“There’s an economic development angle to this,” Smith said. “You’re attracting people with higher incomes to the new houses, and they’re building bigger houses.”

Smith said median household income is $68,000 in Brunswick, but median income on new households is approximately 34 percent higher.

“These people are often paying more than the average in property taxes after the abatement, and they’re paying more in income taxes,” Smith said.

Planning and zoning coordinator Pam Plavecski said most builders in town inform new homebuyers about the credit and include it in the brochures for their Brunswick housing developments.

“The Autumn Creek subdivision people want to know a date if you plan to pull it,” she said. “That development is filling up fast.”

According to Smith’s statistics, 135 homeowners have taken advantage of the abatement since it was instituted. In the first year, 41 homeowners received the credit and in the second year 45 residents took advantage of it. But in its third and fourth years, only 26 and 19 homeowners, respectively, applied for the credit.

Smith said a slump in the housing market tanked the numbers between 2011 and 2012, but construction has picked up and he expects more people to take advantage of the abatement in the coming year.

But Abella persisted in opposing the abatement.

“It’s very uncommon,” Abella said. “I just want to get rid of it.”

In addition to the new home abatement, the 2009 CRA amendment also instituted abatements for people who improve their property, including a 25 percent abatement on a remodel or new build on a property that’s less than 10 years old, a 50 percent abatement for remodels on properties between 10 and 40 years old, and a 100 percent abatement on remodels or new construction on properties more than 40 years old. The abatements vary between 10 and 15 years.

Abella said he would keep those abatements intact.

“The only thing I don’t agree with is the 25 percent abatement on a new home,” he said. “We have subdivisions where some people have it and others don’t.”

Committee members Vince Carl, 2nd Ward and Brian Ousley, at large, agreed, and Carl said he thinks other members of Council are also in agreement on pulling the abatement.

Carl’s only concern was how the city would eliminate the abatement without amending the reinvestment area. Under Ohio law, CRAs formed before 1994 are entitled to two amendments; after the second, the CRA has to go before a state board to determine whether it meets CRA requirements passed in 1994.

“I have no issue with getting rid of the abatement, but I don’t want to use our last amendment to do it,” Carl said.

Council members said they have a legal opinion from city Law Director Ken Fisher that says a section of Ohio Revised Code could allow them to make a change without amending the CRA. Still, Carl said he wants to check with state lawmakers before making the move.

“I don’t have a reason to doubt Ken,” he said, “I just want to check with the state.”

If Council moves to pull the abatement, Abella said he would ensure it would be in 2015 at the earliest, and said he would include language to protect all people who are currently benefiting from an abatement.

“We don’t want to hurt anybody who’s expecting to get this,” he said. “And we don’t want to hurt anybody who already has this.”

Contact reporter Loren Genson at (330) 721-4063 or lgenson@medina-gazette.com.