Tax Abatements and

Cincinnati-Area Public
School Revenues

by
Amy Rose & Greg LeRoy
with
Jacob Whiton

Good Jobs First

April 2023

© Copyright 2023 by Good Jobs First. All Rights Reserved.

 Tax Abatements and Cincinnati-Area Public School Revenues

Executive Summary

New government data reveals that, compared to eight neighboring school districts,
Cincinnati Public School (CPS) students are disproportionately harmed by tax
abatements. Compared to other major Hamilton County school districts, on an
absolute and per-student basis, Cincinnati school children have lost significantly
more revenue to tax breaks given in the name of economic development.

Specifically: CPS lost $80.9 million in the past six fiscal years to tax abatements, or
$2,394 per student.

Among the nine school districts, there is a clear pattern of discrimination by race
and income. The three school districts that are majority-students of color
(Cincinnati, Winton Woods, and Princeton City) all lose three to 23 times more per
student than the six majority-White districts. Those same three school districts also
are the poorest: most of their students are eligible for Free or Reduced Priced Meals.

Table A:
Net Revenue Loss to Tax Abatements 2017-2022, Enrollment, Percentage Students of
Color, and Percentage Eligible for Free and Reduced Priced Meals (FRPM)
Cumulative 6- Cumulative 6- % Free or
% Students
School District Year Revenue Year Net Loss Reduced
of Color
Loss per student Price Meals
Cincinnati Public Schools $80,893,200 $2,394 73% 54%
Winton Woods City Schools $6,861,114 $1,588 84% 66%
Princeton City School
$7,000,744 $1,187 77% 52%
District
Southwest Local School
$1,721,439 $378 6% 29%
District
Northwest Local School
$2,972,465 $359 48% 48%
District
Sycamore Community
$1,817,484 $304 31% 16%
Schools
Loveland City Schools $1,028,687 $255 9% 13%
Oak Hills Local School
$398,128 $104 13% 36%
District
Forest Hills Local School
Unknown Unknown 9% 11%
District
These findings for Cincinnati and the eight most-populous suburban school districts
in Hamilton County come primarily from the districts’ own Annual Comprehensive
Financial Reports (ACFRs). Since FY 2017, under Governmental Accounting
Standards Board (GASB) Statement No. 77 on Tax Abatements Disclosures, most
school districts in the United States have been required to report the amount of
revenue they lose to economic development tax abatement programs. The same is
true for most cities, counties and other local taxing jurisdictions.

Only one of the nine school districts, Forest Hills, did not report any tax abatement
revenue losses in its financial reports. That may or may not indicate it avoided any
such losses.

In some districts, the ACFR disclosures were so oddly reported that we had to
inquire with local officials to decipher them (and we have examined tens of
thousands of ACFRs since 2017). Because the power to grant abatements resides
primarily with cities and townships, those jurisdictions also have disclosure
obligations. In some cases, congruence between the disclosures from actively
abating governments and passively losing jurisdictions was unclear.

Cincinnati Public Schools did not routinely report one major abatement program
that accounts for half its revenue losses. The City’s Residential Tax Abatement
program has cost CPS at least $41.5 million since 2017.1 Even though those losses
meet the functional definition of “tax abatement,” CPS has not been disclosing them
as such in its Annual Comprehensive Financial Reports (ACFRs).

As it has in some other Ohio localities, tax increment financing (TIF) presents a
disclosure problem in the Cincinnati area. Good Jobs First holds that TIF, which
usually diverts tax revenue (to the benefit of one or very few property owners)
should be disclosed as an abatement, especially because its effects on revenues for
schools and other local public services are tantamount to those of a tax exemption
or reduction. Some Cincinnati-area jurisdictions we examined report TIF in unusual
ways, forcing us to contact the governments for interpretation.

To resolve these education harms and racial disparities, we recommend that the
school share of the property tax be excluded from future abatements in Hamilton
County (or at the very least that school boards be given sole control over their
shares of property taxes). To resolve the reporting oddities and barriers, we also
make technical recommendations for Cincinnati-area governments to more
completely and accurately state their abatement disclosures.

GASB shaped parts of Statement No. 77 specifically with school funding in mind. We
believe GASB did that because it knows that the tensions between abatements and
equitable, adequate school funding run long and deep. These tensions are especially
pronounced in states like Ohio where property taxes still comprise a larger-than-
national-average share of school funding.

Introduction: Chronic Problem, New Data

Tax abatements’ harm to school funding is a very longstanding issue in Ohio. Good
Jobs First knows of complaints about the issue from cities such as Cincinnati,
Dayton, Toledo, and Cleveland dating back to the 1990s.

The issue even became so contentious in Cleveland that it went to a ballot initiative
in 1997; the proposal to shield the school increment from abatements failed, but the
city became more cautious after the vote. Abatements and school finance are very
much a public issue today also in Columbus, even figuring into the campaign
platforms of local school board candidates there in a recent election.

In 2003, when we at Good Jobs First released our first 50-state study on this issue,
we included a case study on Ohio and our press conference featured the research
director of the Ohio Education Association.

Today, this debate is more meaningful because of the availability of new official data
on how much abatements cost schools. For all these previous decades, Ohio, like
other states, was forced to have a cost-benefit debate without reliable, uniform data
on costs. Elected officials, as political scientists show us, have always been prone to
exaggerating the benefits of tax-break deals while downplaying costs. Now, thanks
to an obscure new government-accounting rule, we can have a more balanced,
empirical debate.

GASB Statement No. 77 and Its Passive-Loss Provision

The Governmental Accounting Standards Board (GASB) is the independent,

professional organization that establishes and continuously improves standards of
accounting and financial reporting for U.S. state and local governments. GASB’s rules
are known as Generally Accepted Accounting Principles (GAAP).

Most states, including Ohio, legally require at least some localities (cities, counties,
school districts, etc.) to conform to GAAP. Many other localities conform to GAAP as
a condition of federal funding (including Title I funding to some schools) or to get
the best possible credit ratings (and thus the lowest possible interest rate costs)
when they borrow money by issuing bonds.
In August 2015, GASB amended GAAP by adding Statement No. 77 on Tax
Abatement Disclosures. Statement No. 77 requires that state and local governments,
including school districts, add a note in their annual financial statements with
information on revenues lost to economic development tax abatements. For most
governments, the rule first applied to FY 2017 records, which for most governments
ended on June 30, 2017. So, the first abatement disclosures began being issued
months later, in late 2017 and early 2018.

The Statement requires that each taxing jurisdiction report its own portion of the
lost revenue, even when it loses revenue passively as the result of another
government’s tax abatement awards.

That passage of Statement No. 77 was written expressly to cover school districts
because in a large majority of states, including Ohio, abatements amount to an
“intergovernmental free lunch.” Under state laws, the power to grant abatements is
typically given to cities and/or counties, even though the biggest losers of revenue
are the school districts.

Many school districts, including some in Ohio, receive some form of offsetting
revenue to reduce the net cost of abatements. The term Payments in Lieu of Taxes
(PILOTs) is sometimes applied to such offsets. (In Hamilton County, we also see the
term “Revenue in Lieu of Taxes.”) In such cases, we may refer to a gross abatement,
an offset, and the net. Unless otherwise labeled in this study, the figures we present
in this study are net abatement costs.

The term “tax abatement” is usually used in reference to a property tax reduction.
However, for purposes of accounting, as defined by GASB, the term refers to any
kind of foregone revenue for economic development — property, sales, or income
tax.

Equal access to good public services — especially education — is fundamental to

every American debate about economic opportunity, intergenerational mobility, and
civil rights. No matter the public need, everything depends on a fair and sufficient
tax base. That is why Statement No. 77 is such a critical tool for government
transparency and more equitable fiscal policy.

Ohio and GAAP Compliance: A Messy History

According to a national analysis published by GASB in 20082, 61 of Ohio’s 88

counties, 268 of its 2,250 cities, and 574 of its 667 school districts are required to
follow GAAP under state law. Ohio has a significant number of local governments
that do not comply with GAAP and use cash accounting instead.

In 2017, Good Jobs First engaged on Statement 77 with the Ohio State Auditor’s
office. The Auditor signaled then that the state legal code is silent on remedies for
noncompliance with GAAP, leaving the office unable to meaningfully enforce GAAP
compliance. (GASB itself, despite its name, is actually not a governmental entity and
has no enforcement powers over GAAP.)

In that same engagement, the State Auditor’s office made it clear that it does not
regard TIF as an “abatement” as defined by Statement 77, and therefore TIF-driven
revenue losses need not be disclosed in ACFRs. Good Jobs First strongly disagrees
and has long publicly argued that all forms of TIF should be treated as disclosable
abatements under Statement 77 and GAAP. (For purposes of this study, suffice it to
say that this is a complicated issue because there are three major variations of TIF.)
 Key Findings

Between 2017 and 2022, Cincinnati Public Schools (CPS) lost at least $244.4 million
in gross revenue due to tax abatements (including Community Reinvestment Area,
Tax Increment Financing, and Residential Abatement losses). During the same six
years, the school district also received a total of $163.5 million in offsetting
reimbursements, for a net revenue loss of $80.9 million.

Table B: Cincinnati Public Schools Revenue Loss 2017 – 2022

Community Reinvestment Area + Tax Increment Financing Residential

Abatement Total Net Loss
Gross Revenue Net Revenue Program Loss
Offsets
Loss Loss

2017 $28,557,854 $22,852,876 $5,704,978 $8,346,009 $14,050,987

2018 $29,821,020 $23,037,573 $6,783,447 $7,471,595 $14,255,042

2019 $31,697,777 $26,768,763 $4,929,014 $6,183,410 $11,112,424

2020 $34,589,225 $26,166,101 $8,423,124 $5,883,480 $14,306,604

2021 $38,504,044 $33,427,778 $5,076,266 $6,638,708 $11,714,974

2022 $39,753,654 $31,296,709 $8,456,945 $6,996,224 $15,453,169

Total $202,923,574 $163,549,800 $39,373,774 $41,519,426 $80,893,20

Understanding the true impact of tax abatements for CPS is made needlessly difficult
by the district’s chronic inaccuracies in its ACFRs. In 2017, CPS erroneously stated in
its ACFR that the City of Deer Park abated $18.4 million when that abatement was in
fact by the City of Cincinnati. The district also incorrectly reported the amount of
offsetting revenue it received. CPS’s 2017 ACFR notes that it did not receive any
revenue to offset the cost of abatements. In fact, it received $22.9 million.

In total, the district told GJF that it received $163.5 million in CRA and TIF
reimbursements between fiscal years 2017 and 2021; this revenue is not accounted
for in the ACFRs.
 In addition, the disclosure wording in the district’s ACFRs is inconsistent and
ambiguous, sometimes referring to “revenue reduced by CRA agreements” and
other times noting “the total revenue related to CRAs.”

The inaccuracies of CPS’s reporting were first documented five years ago, in a report
by Policy Matters Ohio report entitled “Tax abatements cost Ohio schools at least
$125 million.”3

In absolute dollars, Cincinnati Public Schools’ losses to abatements dwarfed those of

Hamilton County’s next eight biggest school districts — combined. CPS lost $80.9
million (net) while the eight suburban districts reported losses of $21.8 million. This
despite the fact that the combined student enrollment of the eight suburban
districts is about 30% greater than Cincinnati’s.

Table C: Net Revenue Loss Due to Tax Abatements by School District by Year, 2017–2022

School District 2017 2018 2019 2020 2021 2022 Total Net Loss
Cincinnati Public
$14,050,987 $14,255,042 $11,112,424 $14,306,604 $11,714,974 $15,453,169 $80,893,200
Schools
Winton Woods
$409,495 $1,107,675 $1,057,833 $1,372,086 $1,434,079 $1,479,946 $6,861,114
City
Princeton City $424,071 $1,514,913 $1,737,580 $1,339,999 $1,531,573 $452,608 $7,000,744

Northwest Local $145,750 $155,859 $548,114 $548,114 $849,941 $724,687 $2,972,465

Sycamore
$83,760 $148,502 $212,112 $277,411 $361,896 $733,803 $1,817,484
Community City
Southwest Local $243,919 $327,717 $39,973 $351,482 $328,100 $430,248 $1,721,439

Loveland City $506,803 $149,834 $133,122 $119,197 $58,354 $61,377 $1,028,687

Oak Hills Local $2,159 $2,159 $131,270 $131,270 $131,270 $0 $398,128

Forest Hills Local N/D N/D N/D N/D N/D N/D Unknown
Total Annual Net
$15,866,944 $17,661,701 $14,972,428 $18,446,163 $16,410,18 $19,335,838 $102,693,261
Revenue Loss

Losses by type of abatement program

Community Reinvestment Areas (CRA) are the most common kind of tax abatement
affecting school revenues in Hamilton County: seven of the nine school districts
analyzed in this report reported CRA revenue losses. (Three districts — Princeton,
Winton Woods and Southwest — aggregated their CRA and enterprise zone losses).
 For Cincinnati schools, TIF and the Residential Abatement program are also major
financial issues. Cincinnati’s Residential Tax Abatement program alone accounts for
40% ($41.5 million) of all abatement costs documented here, making it the single
costliest abatement program.

CPS does not break down CRA losses from those caused by TIF, but we are able to
estimate the gross costs of each program from the share of offsetting revenue that
was assigned to each of them over the six years. That shows TIF is by far the larger
of the two at $28 million. (The City now has more than 30 TIF districts.)

Using that estimate for CPS, CRA plus enterprise zone abatements cost seven school
districts a total of $30 million and TIF cost three school districts a total of $30.6
million. (Forest Hills reported no abatement losses of any kind.4)

Table D: Cumulative Net Revenue Loss by School District and Program Type, 2017-2022
Community Tax Solar Residential
School District Reinvestment Increment Abatement Brownfield Abatement TOTAL
Area Financing Programs Program
Cincinnati Public
$11,361,745 $28,012,029 $41,519,426 $80,893,200
School District
Loveland City
$528,687 $500,000 $1,028,687
School District
Northwest Local
$903,846 $2,068,61 $2,972,465
School District
Oak Hills Local
$398,128 $398,128
School District
Forest Hills Local
N/D N/D N/D N/D N/D Unknown
School District
Princeton City
$7,000,744* $7,000,744
School District
Southwest Local
$1,721,439* $1,721,439
School District
Sycamore
Community City $1,661,298 $156,186 $1,817,484
School District
Winton Woods City
$6,861,114* $6,861,114
School District

Total by Program $30,038,873 $30,580,648 $398,128 $156,186 $41,519,426 $102,693,261

*Indicates revenue reported as the aggregate of Community Reinvestment Area and Enterprise Zone abatements
Cincinnati’s Residential Abatement Program Deserves Disclosure

Cincinnati’s Residential Tax Abatement program cost the city’s public school system
at least $41.5 million between 2017 and 2022. And even though those losses meet
the functional definition of “tax abatement,” Cincinnati Public Schools has not been
disclosing them as such in its Annual Comprehensive Financial Reports (ACFRs).

The way the program works conforms closely to GASB’s definition of a tax
abatement. A property owner must apply and pay an application fee. The City must
certify the application as eligible. And for the transaction to take effect, the owner
must improve the property — i.e., a community benefit. That “quid pro quo” based
on an agreement — or tax abatement in exchange for a public benefit — is exactly
how GASB defines “tax abatement.”

And even though CPS does not grant residential tax abatements, it suffers revenue
losses passively when the City grants them. Statement No. 77 anticipates such
passive revenue losses and has explicit provisions covering such situations because
they are common in many states.

Tax Increment Financing (TIF) Disclosures

Two of the nine districts analyzed reported Tax Increment Financing (TIF)
agreements in their financial reports (in addition to CRA abatement losses):
Northwest Local School District and Loveland City School District. As noted above,
Cincinnati Public Schools does not report how much revenue was lost due to TIF
and CRA separately, but we estimated the split.

The other five school districts with abatement disclosures also have TIF districts
(created by other local governments), but the school districts do not disclose the
resulting revenue losses in their financial reports. These districts receive offsets that
reportedly cover the full amount of tax revenue the district would have received if
not for the TIF.5

Northwest Local School District’s revenue was reduced via a TIF agreement made by
the Colerain Township. Abatement amounts ballooned from $55,000 in 2017 to over
$588,000 in 2022 — an increase of more than 960%. Total TIF abatements for the
six years equaled $2,070,000.

Loveland City School District’s revenue was reduced by a TIF agreement entered
into by the Symmes Township. The Symmes Station Project TIF agreement was
created in 1991 and lasted for 30 years (it expired in 2021).6 The Loveland School
District lost 100% of the incremental real property tax revenue from this TIF. The
district reported that “the estimated total revenue loss to the Loveland City Schools
since the Symmes Township TIF began exceeds $5,000,000.” Inexplicably, the
district only included this TIF disclosure in 2017. It went silent on the matter from
2018 through 2021.

Other Cincinnati-area school districts referred to TIF in a way we have never seen
before. In their ACFRS, they refer mysteriously to “deferred inflows,” sometimes
making reference to a dollar amount and sometimes making no dollar reference.

When we explored this oddity with one school district official, he told us that tax
revenues from local TIF districts arrive to his district via two different routes. The
pre-TIF “base value” revenue flows directly (as is normal with TIF). However, he
stated, the incremental (or increase in) school-tax revenue (generated by the
subsidized redevelopment activity) does not go to the TIF district (as normal).
Instead, he said, it goes to the Hamilton County Auditor who then remits it to the
school district. Given this second payment of “deferred inflows,” the school districts’
ACFRs claim, it is not losing any net revenue.

Race and Income Disparities

The abatement disclosures reveal a clear pattern of discrimination by race and

income among the nine districts. Nearly three-fourths (73%) of CPS students are of
color and over half (54%) are eligible for FRPM.

The two districts with the next-greatest cumulative net losses per student —
Winton Woods and Princeton City — also have the highest shares of students of
color and students eligible for the Free and Reduced Priced Meal (FRMP) program –
a proxy for low-income.

Indeed, these three school districts (Cincinnati, Winton Woods, and Princeton City)
all lose three to 23 times more tax revenue per student than the six majority-White
districts.
Table E: Net Revenue Loss to Tax Abatements 2017-2022, Total Enrollment, Percentage
Students of Color, and Percentage Eligible for Free and Reduced Priced Meals (FRPM)
Cumulative
Enrollment % Students of
School District Net Loss per % FRPM
2023 Color
student
Cincinnati Public Schools 33,795 $2,394 73% 54%
Winton Woods City Schools 4,320 $1,588 84% 66%
Princeton City School
5,899 $1,187 77% 52%
District
Southwest Local School
4,554 $378 6% 29%
District
Northwest Local School
8,287 $359 48% 48%
District
Sycamore Community
5,976 $304 31% 16%
Schools
Loveland City Schools 4,028 $255 9% 13%
Oak Hills Local School
3,822 $104 13% 36%
District
Forest Hills Local School
6,848 Unknown 9% 11%
District

Uneven Compliance with Statement No. 77

As described elsewhere in this report, the ways in which Cincinnati-area

governments disclose tax abatements are irregular and inconsistent. While it is
beyond the scope of this study to go into great detail about these problems, we do
address some of them in our Policy Conclusion.

The net effect of these irregularities is to make analyses such as this needlessly
time-consuming. The intent of Statement No. 77 is to allow diverse stakeholders —
taxpayers, parents, teachers, bond investors, credit ratings agencies, state and local
policymakers — to get a more accurate picture of government expenditures.

For to be sure, economic development tax abatements are expenditures, specifically

tax expenditures (for which every state and the federal government account). The
historic significance of Statement No. 77 is that it marks the first time that local
governments have had to report any kind of tax expenditure. We urge all concerned
citizens to join us in exercising these new rights to better public accounting.
 Policy Conclusions

To address the disproportionate impact of abatements on low-income students and

students of color in Hamilton County and the uneven quality of abatement
disclosure among its school districts, we make two sets of recommendations:

Remedy #1: Shield School Funding

We recommend that every school district’s share of the property tax should simply
be 100% shielded from abatements.

Alternatively, school boards should be given full, sole control over their own tax
bases with strict caps on how much or how long they can abate. No state or local
agency, board, municipal or county government, or any other political sub-division
besides a school board should be allowed to abate school tax revenues unless the
districts are guaranteed to be “made whole” by offsets or reimbursements to the
district to make up for lost revenue.

(If as claimed, suburban school districts are made whole on TIF via a circuitous
route through the County Auditor, why not keep them whole to begin with?)

Remedy #2: Make Reporting Complete and Uniform

We recommend that the Hamilton County Auditor enforce complete, uniform tax
abatement disclosures by school districts within the County.

Of the nine districts in Hamilton County analyzed, only two (Loveland City and
Northwest Local) report revenue losses due to Tax Increment Financing (TIF)
agreements in their ACFRs tax abatement-disclosure notes. Good Jobs First found
that at least six out of seven other districts analyzed have TIF agreements with local
jurisdictions, but they do not disclose these amounts or specific agreements in their
financial reports.

These districts claim to receive “deferred inflows” (i.e., the funds routed via the
County Auditor) equal to the share of incremental revenue they would have
received if not for the TIF. However, that claim is often not clearly stated or
quantified. The County Auditor’s office, since it serves as the intermediary for these
deferred inflows, should publish an accounting of them to all affected jurisdictions.
And each school district should, in turn, report their gross abatements, offsets, and
net abatements per the data from the County Auditor.
 Appendix A:
Scope and Methodology

This report covers Cincinnati Public Schools and the eight next largest (by
enrollment) school districts in Hamilton County:

− Northwest Local School District

− Oak Hills Local School District
− Forest Hills Local School District
− Princeton City School District
− Sycamore Community City School District
− Southwest Local School District
− Loveland City School District
− Winton Woods City School District

Good Jobs First reviewed the Annual Comprehensive Financial Reports (ACFRs, the
backwards-looking spending reports) for the nine school districts for fiscal years
2017 through 2022.

Most of the disclosures report property tax abatements granted under a program
enabled by state law, the Community Reinvestment Area (CRA) program.

We accessed data about the school districts’ student population size, racial
composition and FRPM shares from the Ohio Department of Education’s Fall
Enrollment Headcount data series for October 2022.7

In some cases, we corresponded and/or spoke with officials at the school districts,
the Hamilton County Auditor’s Office, and the City of Cincinnati to clarify our
reading of their ACFRs.
 Appendix B: Economic Development Incentives
Used by Ohio Localities that Abate School Revenue

Community Reinvestment Areas (CRAs)

Community Reinvestment Area (CRA) program is state-enabled and administered

by municipal and county governments. It provides tax breaks to property owners
who renovate existing property or construct new buildings in certain areas. Local
governments must petition the Ohio Department of Development for approval to
designate as CRAs certain geographical areas where investment has lagged.
Property owners in CRAs who choose to renovate or construct new buildings can
receive real property tax exemptions up to 100% for a duration of up to 30 years.
CRAs created for residential purposes do not require school board approval, those
for commercial or industrial purposes do. CRAs created with the agreement of a
school board may abate up to 100% of taxes on renovations or new construction;
those created without a school board’s agreement may abate up to 50% of taxes.

Enterprise Zones (EZs)

The Enterprise Zones (EZs) program is also state-enabled and by municipal and
county governments., It provides tax breaks to business owners in geographically
designated areas (“enterprise zones”). Ohio’s EZs can provide real and personal
property tax exemptions up to 100% to companies that promise to bring new jobs
to the area and last up to 30 years. In Ohio, municipalities must only notify school
districts in advance of most EZ abatements. Municipalities must get the consent of
school districts only if the tax exemption exceeds 75 percent of the new investment
for cities and villages or exceeds 60 percent of the new investment for townships. In
1994, the state passed regulations that allowed school districts to be compensated
for lost revenues due to property tax exemptions. However, the compensation rules
are complicated, do not apply to all exemptions, and compensation to school
districts depends largely on the number and type of new jobs.

EZs are located in economically depressed areas, the theory being that poverty can
be alleviated by encouraging reinvestment. However, there are many problems with
this theory, especially the fact that it is very hard to ensure that zone residents
actually benefit from corporate investment and job creation. State enterprise zones
have been studied extensively by academic researchers, state evaluators, and by the
Government Accountability Office. The results are not encouraging. They show that
zones generally induce little new economic activity, and that even when zone
employment increases, job gains for zone residents are quite modest. Ohio’s own
Department of Development published a report in 2009 indicating that tax
abatement programs (including Enterprise Zones) adversely impact school district
revenues, particularly in Ohio’s most urbanized counties – with Hamilton County
suffering the greatest proportionate revenue losses among all counties.8

Payment in Lieu of Taxes (PILOTs)

PILOT agreements are payments negotiated between companies and local

governments to cushion the blow to public services caused by property tax
abatements. Sometimes PILOTs are pegged to cover a specific portion of a
company’s normal property tax liability, such as the school increment. The net effect
of PILOTs is to provide property tax discounts to selected companies.

Tax Increment Financing (TIF)

Tax Increment Financing (TIF) is a geographically targeted economic development

tool Ohio localities in Ohio may use to finance public infrastructure improvements
and, in certain circumstances, residential rehabilitation. TIF captures the increase in
property taxes, and sometimes other taxes, resulting from new development, and
diverts that revenue to subsidize that development. That diversion means local
public services do not get the new revenue they would normally get from new
re/development. Ohio state law provides that property owners receiving the
exemptions make a payment in lieu of taxes (PILOT) to the local government
granting the exemption. The PILOT is equivalent to all or some portion of the tax the
property owner would otherwise have been obligated to pay. TIFs created with the
agreement of the Board of Education may apply to up to 100% of increased value for
up to 30 years; those created without the agreement of the Board may apply to up to
75% of new value of project or incentive district for up to 10 years.

Residential abatement program – City of Cincinnati

The City of Cincinnati’s Residential Property Tax Abatement allows owners to pay
no tax on the increased value of their property generated by new construction or
renovation for 10-15 years.9 Between 2017 and 2022, Cincinnati Public Schools lost
$41.5 million in foregone tax revenues to the residential abatement program, with
no offsets paid to the school district. The City does not include the residential tax
abatement program costs in its ACFR, though it clearly meets GASB’s definition of an
abatement — it includes an application requiring a taxpayer action that creates a
community benefit (better housing), an eligibility determination and certification,
and a government quid pro quo (foregone revenue).
 Endnotes

1
The Cincinnati Residential Abatement program is also the subject of race-
discrimination litigation.
2Governmental Accounting Standards Board. “State and Local Government Use of
Generally Accepted Accounting Principles for General Purpose External Financial
Reporting” March 2008, at: GASB Research Brief: State and Local Government Use of
Generally Accepted Accounting Principles for General Purpose External Financial
Reporting
3Zach Schiller, October 2, 2018. “Tax abatements cost Ohio schools at least $125
million,” Policy Matters Ohio, at:
https://www.policymattersohio.org/search?search_text=Tax+abatements+cost+Ohi
o+schools+at+least+%24125+million .
4The lack of an abatement disclosure does not necessarily mean this school district
had no revenue losses. GASB Statement 77 does not have a negative-disclosure
requirement. So the lack of a disclosure could mean “no abatements,” or it could
mean the jurisdiction has not yet started complying with Statement 77.
5The districts analyzed use different terms to refer to offsetting payments.
Cincinnati Public Schools refer to offsetting payments as “Revenue in Lieu of Taxes”;
Sycamore Community School District uses the term “Payment in Lieu of Taxes”; and
others do not have use a specific term, just note that they receive funds forwarded
to them by the city.
6The $500,000 TIF revenue loss reported is a conservative estimate, as the district
notes that over the 30-year lifetime of the TIF, they lost $5 million.

7At: https://education.ohio.gov/Topics/Data/Frequently-Requested-
Data/Enrollment-Data
8Ohio Department of Development. Ohio Economic Development Incentive Study.
(2009)
9 City of Cincinnati - Choose Cincinnati Community and Economic Development