TAX REFORM SHOULD GO BEYOND CORRUPTION ISSUE

If there’s going to be an investigation of the integrity of commercial property appraisals here, we ought to also probe tax reductions awarded to downtown property owners by official County and State of Ohio agents.

 

County Treasurer Jim Rokakis, concerned about the validity of commercial property appraisals because of the corruption charges involving County Auditor Frank Russo, has requested a probe by state officials. Rokakis apparently doesn’t trust the values on commercial properties. Who would?

 

The values given properties, of course, provide the measure of the taxes property owner’s pay. The lower the value the lesser taxes are due to be paid.

Commercial property owners are expected to seek large reductions in property values next year. They have lawyers and ability – far greater than ordinary homeowners – to pursue reductions. This could have a serious impact on Cleveland schools and the city. Cleveland schools get the majority share of property tax revenue.

 

It will be most important for the news media, particularly the Plain Dealer, to closely follow and report request by the big property owners for reductions. The slow economy suggests that many commercial entities will seek reductions by claiming tough economic circumstances.

 

A watchful eye provides needed oversight of both public agencies and private interests.

 

In recent writings, I’ve been pointing out that owners at the Tower City complex and the Ritz-Carlton hotel – both controlled by Forest City Enterprises businesses – have been requesting value reductions this year as they have in past years.  

 

Other downtown property owners have also made appeals. Amtrust (Ohio Savings) has requested a $2.6 million reduction in its property tax valuation for 1801 East 9th Street. National City Bank’s new owners are seeking reductions of $2.97 million on its building at the corner of E. 9th & Euclid. Cleveland Catholic Diocese is even seeking a $557,940 reduction in the property value for a parking lot on Rockwell Avenue.

 

I requested information from the Board of Revision only for a portion of downtown for these reports.

 

MORE TOWER CITY TAX REDUCTIONS SOUGHT

 

Here’s another batch to add to the previous listing of requests by Tower City for reductions that I previously posted. They were all made to the Board of Revision in March. None have been acted upon to this date. The property numbers and request for reduction follow:

 

- 101-23-085C: $9,832.

- 101-23-108F: $71,952.

- 101-23-103F: $63,752.

- 101-23-101F: $105,736.

- 101-23-085D: $20,151.

- 101-23-085B: $365,889.

- 101-23-085A: $1,297,634.

- 101-23-072F: $19,925.

- 101-23-072B: $160,296.

 

The reductions total to $2,115,117 for Tower City properties. I previously reported $850,529 in tax reduction on other Tower City properties, not including one devaluation request of only $17 on a piece of Tower City property.

 

You can add reductions in value asked by Forest City interests at the luxury Ritz-Carlton hotel – recently coming off 20 years of 100 percent tax abatement - of $241,440. Yes, back on the tax rolls finally. But seeking new reductions in taxes already.

 

The grand total comes to more than $3 million in reductions requested at Tower City.

 

Yes, the beat goes on.

 

We really need – as a community and as a state – to look not only to rigged tax valuations because of outright corruption reported in recent days but to the practice of giving wealthy interests lower and lower valuations on the properties. They have access to lawyers who can pursue these deductions.

 

CLEVELAND SCHOOLS HURT MOST BY DOWNTOWN CUTS

 

These efforts result in lower taxes for big property owners and thus less revenue for our schools, counties, cities and libraries. This also means others – homeowners – have to pick up the tax burden by paying higher property taxes. Because of the concentration of properties in downtown Cleveland the reductions hurt Cleveland schools the most. Some 55 percent of property tax revenue goes to the Cleveland schools.

 

The public also should DEMAND an end to tax abatements and tax shifting of the TIF program. TIF (tax incremental financing) is a form of abatement by which the taxes are paid normally but are diverted to be used for development, usually of the taxpayer’s project. That means tax revenue goes for private uses instead of public.

 

At minimum there should be a state law that makes it illegal for one community to give a tax abatement to a business to attract that business from another community in Ohio.

 

I’ve been examining the desire of leading downtown interests for tax breaks, either through tax abatement or lowering the value of their properties for taxation.

 

The above requests for valuation reductions are nothing new for Forest City at Tower City.

 

TOWER CITY WON REDUCTIONS AS ITS OWNERS CLAIMED GAINS

 

In 1994 in negotiations over the taxes due from Tower City officials agreed to hefty market value reductions for the years 1990,  1991, 1992 and consequently 1993, by the following percentages:

In the year 1990: 21 percent; in 1991: 20 percent; in 1992: 17.3 percent and in 1993: 12.4 percent.

 

Tower City opened The Avenue shopping complex in 1990 and had two new buildings – the Skylight Tower and the Chase Financial Tower (which includes the Ritz hotel) opened in 1991. These improvements resulted in higher property values.  

 

The same week in 1994 that I reported the 1990-1993 reductions in my newsletter, Point of View, a Pee Dee story was headlined: “Tower City could add 2 anchors to complex.” The Pee Dee reported that Forest City Enterprises chairman Albert Ratner “said he hopes to add two new department stores to the Tower City complex soon.”  (Such is the nonsense of our leaders and the vigor with which the Pee Dee takes is responsibility to report honestly. Of course, Dillard’s vanished and the building remains essentially unused.)

Then at the same time, it quoted Sam Miller, advisor to mayors, that the commercial real estate industry here “is well on its way back to once again become the darling of the investment community.” (You may have noticed all the skyscrapers going up in Cleveland since 1994, haven’t you?)

“The better news is that it is going to stay back for a long time,” said Sam. (He can get the Pee Dee to report just about whatever he wants.)

Despite the then rosy economic outlook expressed of the corporate executives, the same executives were seeking reductions in property values at Tower City going back to 1990, claiming economic problems.

For the year 1990, the total market value of Tower City was $152 million (rounded off) and the reduction was $32 million, a reduction of 21 percent.

For 1991, the total market value of Tower City was $241 million and the reduction was $49 million for a reduction of 20 percent.

For the year 1992, the market value of Tower City was $262 million and the reduction was $45 million for a reduction of 17.3 percent.  

For the year 1993, the market value was $274 million and the value was adjusted by $34 million for a reduction of 17.3 percent.

 

It’s time the big boys paid their taxes just like everyone else.